If you’ve been reading news reports over the last 12 months, you’ve no doubt been aware of several Formula One race promoters attempting to reduce their fees or re-structure the deals in light of the current economic climate. South Korea, Germany, India and others have approached Formula One Management about new deals.
So too is the traditional first race of the season in Australia. If other circuits are able to reduce their sanctioning fees, why not Australia? After all, it is a beloved circuit and terrific season-opener.
Tourism Minister, Louise Asher, says she’s keen to keep the race but the cost is simply too high. The race was estimated to cost Australian taxpayers for the 2011 race was $50M, according to The Age newspaper, and that’s simply too much regardless of the benefit:
“I’d love to have the race beyond the 2015 contract, but the contract that we discuss has to present value for taxpayers and I’m not comfortable with this level of subsidy,” she said.
The cost was blamed on the escalators written in the contract and it is believed they are approximately 10% per year:
“The Brumby Labor government signed off on a contract that is too expensive for the taxpayer in my opinion,” she said.
“This is a very, very expensive race and I personally am not happy with this level of subsidy.”
The sentiment is echoed throughout the local government. Save Albert Park group spokesman Peter Logan said the government missed the opportunity to have a opt-out clause in the contract and this is mismanagement in his eyes:
“This is a failed business model … every other event in Melbourne is run by people who know what they’re doing with very little government subsidy in purpose-built venues,” Mr Logan said.
“The grand prix is run by the government on the most expensive model you could invent and that’s why it costs so much money. And it’s on a secret contract as well.”