Question about GP costs

[franciscoevaldez]

Hi, I've been reading for some while that many racing tracks loose money when they organize an F1 event.

How is this possible?

I'm no genius on economics but F1 is one of the biggest shows on the planet. I guess Bernie has a big share of the blame, but does anyone know where is the real loss when organizing an F1 event?

here's what i ment: http://www.f1technical.net/news/11518?s ... c035757664

[Kester]

Bernie owns commercial rights, so the track get very little if anything from the advertising that is displayed at a F1 event. Bernie also asks for a sizeable sum just to host the race at a track.

[donskar]

How does an F1 race organizer lose money? By taking in less in gate receipts than the amount they must pay for the "honor" of hosting the Bernie Hugestones and Spanky Max Flying Circus. AND Bernie and his masters get all or most of all the secondary income streams.

Seriously, Spa reported something like 63,000 spectators for their most recent GP (?!). That seems really pathetic, given that there is only ONE Belgian GP, while American professional football games (each one of a 16-game season) regularly draw larger crowds than that. (COLLEGE football games in Pennsylvania and Texas regularly draw over 100,000 fans.)

I am NOT making any comparisons or value statements, I'm just wondering why crowds are (relatively) so small. Exhorbitant ticket prices, I suppose. It's a vicious circle: the organizers must pay huge fees and have high expenses maintaining the courses, yet they have little way to increase revenues except by increasing ticket prices. That reduces attendance, driving down revenue, ad absurdum.

[Miguel]

Donskar, I see you live in Texas, so chances are that the US GP taking place in Indianapolis has been the only one you might have attended. It just happens that the US GP was the cheapest by far.

In Barcelona, general admittance costs 128€ ($170), the cheapest seat goes by 195€ ($250) and main straight tickets can be as expensive as 500€. In Spa, sitting near Eau Rouge in Belgium costs more than 400€, although you can go to Pouhon using general admittance (145€). Those prices only go up with time. General admittance is 125 pounds (almost 200$) in silverstone, but grandstands are not much more expensive.

Now, with those prices, plan a trip for a weekend, hotel, and food. It's a bloody expensive wish, that only gets aggravated if you know that MotoGP tickets in montmelo cost 60€ (General admittance), 80€ cheapes seat and 120 the most expensive

[donskar]

Thanks, Miguel. I knew F1 was expensive, but it is clearly now available only to the wealthly, to "beautiful people" poseurs, and the fanatical.

I am none of the above. I enjoy F1 on TV -- used to attend the US GPs back in the days of Watkins Glen and the Canadian GP at Mosport (yes, I'm a dinosaur!)

Shame that F1 has been taken away from the vast majority of race fans.

[shir0]

Well, let Bernie have his fun (and huge sums of moolah...). It could all be for naught come 2012anyways...

I know this is a really bad thing to say and hope for. But seriously...I hope he dies a horrific death and soon. Heck, I'd hire 47 for $500k to get him whacked the way I want to. Of course, 47 is not real...and I don't have $500k.

I hope someone just whacks him... Wuhahahahaha!

[donskar]

shir0, you are very sick -- and I agree with you completely.

[djos]

The Melbourne GP looses 30 Million per year depsite getting over 100,000 spectators most years.

The State Gov foots the bill because it put Melbourne on the map internationally and brings in a lot of tourism etc which is good for the local economy.

[franciscoevaldez]

Wow, i thought the high prices were only in Argentina. Back in 98 the prices were between 120 and 300 U$S. Thanks for all the answers, i get a much more clear picture now.

BTW if anyone is gathering money for contracting 47, im down

[donskar]

djos wrote;

The State Gov foots the bill because it put Melbourne on the map internationally and brings in a lot of tourism etc which is good for the local economy.

That's the usual defense, but it does not always stand up to scrutiny. And in the current economic climate the cost of supporting a GP is a "hard" (easily quantifiable) number whereas purported gains in tourism et al are "soft" numbers. Things could get very sticky for promoters who depend on government support. I seem to recall several references to the Olympics always being a long-term loser for the host cities (?)

When Compaq enetered into the Williams sponsorship, we came up with a lot of SWAG (Silly Wild-A**ed Guesses) to support the cost. Anyone with a few hours of PowerPoint experience and a modicum of imagination can construct an argument for sponsorship, especially when the return on investment is not rigidly quantifiable. Unfortunately, gullibility is usually an early casualty of a down economy.

[donskar]

djos wrote;

The State Gov foots the bill because it put Melbourne on the map internationally and brings in a lot of tourism etc which is good for the local economy.

That's the usual defense, but it does not always stand up to scrutiny. And in the current economic climate the cost of supporting a GP is a "hard" (easily quantifiable) number whereas purported gains in tourism et al are "soft" numbers. Things could get very sticky for promoters who depend on government support. I seem to recall several references to the Olympics always being a long-term loser for the host cities (?)

When Compaq enetered into the Williams sponsorship, we came up with a lot of SWAG (Silly Wild-A**ed Guesses) to support the cost. Anyone with a few hours of PowerPoint experience and a modicum of imagination can construct an argument for sponsorship, especially when the return on investment is not rigidly quantifiable. Unfortunately, gullibility is usually an early casualty of a down economy.

[Chaparral]

The cost to Victoria was $45 mil for the GP last year but it is deemed a good return for the money spent and I believe that also - on the other hand the 2000 Olympics in Sydney cost the state $5 billion and basically nearly bankrupted the state - the government (and state) have never recovered - we're screwed on money for infrastructure expenditure - pretty much based around the cost of the Olympics - Samaranch and the Labour government go --- yourself

[djos]

djos wrote;

The State Gov foots the bill because it put Melbourne on the map internationally and brings in a lot of tourism etc which is good for the local economy.

That's the usual defense, but it does not always stand up to scrutiny. And in the current economic climate the cost of supporting a GP is a "hard" (easily quantifiable) number whereas purported gains in tourism et al are "soft" numbers. Things could get very sticky for promoters who depend on government support. I seem to recall several references to the Olympics always being a long-term loser for the host cities (?)

Well in Australia's case it does, Im from Adelaide and when we lost the GP to Melbourne it had a big impact on the flow of money into the state so we replaced it with the "Tour Down Under" and the Clipsal 500 V8 SuperCar race.

The former has only just got Pro-Tour Status last year and this year with Lance A showing has now really started show economic benefits to the state after 11 years and the latter started paying for itself after only a few years.

I lived in Melbourne for the 1st seven years of the noughties and I can assure you that the benefits to Melbourne in particular are very real, the gov may shell out $40 Million a year to hold it but it is estimated to bring in $150 million into the state economy each year.

[donskar]

djos wrote;

The State Gov foots the bill because it put Melbourne on the map internationally and brings in a lot of tourism etc which is good for the local economy.

That's the usual defense, but it does not always stand up to scrutiny. And in the current economic climate the cost of supporting a GP is a "hard" (easily quantifiable) number whereas purported gains in tourism et al are "soft" numbers. Things could get very sticky for promoters who depend on government support. I seem to recall several references to the Olympics always being a long-term loser for the host cities (?)

Well in Australia's case it does, Im from Adelaide and when we lost the GP to Melbourne it had a big impact on the flow of money into the state so we replaced it with the "Tour Down Under" and the Clipsal 500 V8 SuperCar race.

The former has only just got Pro-Tour Status last year and this year with Lance A showing has now really started show economic benefits to the state after 11 years and the latter started paying for itself after only a few years.

I lived in Melbourne for the 1st seven years of the noughties and I can assure you that the benefits to Melbourne in particular are very real, the gov may shell out $40 Million a year to hold it but it is estimated to bring in $150 million into the state economy each year.

This is good to hear, and I am -- of course -- all for government support of F1 (and any other support!). We do need to be able to counter the arguments of those who are opposed to such support. For example, could the same amount of $ spent in other ways (support for local industries, etc) paid the same dividend?

[Chaparral]

Posted by djos: Well in Australia's case it does, Im from Adelaide and when we lost the GP to Melbourne it had a big impact on the flow of money into the state so we replaced it with the "Tour Down Under" and the Clipsal 500 V8 SuperCar race.

djos - couldnt agree more - I was posted to Adelaide 84-87 and saw 7 consecutive GPs there - brilliant job by the state and organisers and it bought in tens of millions in international tourism. When Melbourne stole the race Adelaide smartly leased them the infrastructure each year for something like $10 million PA and still do. The SA government then turned to V8 Supercars and gate takings are around 270,000 over the weekend equalling what the GP used to bring at a fraction of the cost v Melbourne GP gate takings of around 300,000 people - I believe they pay V8SA around $6 million in fees each year and its a carnival event just the same as the GP used to be. The 'tour downunder' will invariably bring focus internationally - how crazy are you Adelaide people what was it 110,000 people on one section of the climb in 37c heat - your crazy mind you thats slightly cooler than the 45c + heat youve had this week