05/02/2011
FEATURE BY GLEN CROMPTON
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The Lord Mayor of Melbourne, Robert Doyle recently published an article in which he broadly opined the Australian GP at Albert Park is overly expensive to the state, past its use by date and should be abandoned. Not an irrational rant but I didn't find it particularly illuminating either. Unfortunately he included a comment about Bernie being cranky, a move ensuring a response from London. The predictable response swelled local media coverage as other public figures weighed in to dispense their two penn'orth and served to reignite local debate on the event's value - an event that has never been universally popular since its arrival in Melbourne in 1996. Doyle's one little article just might be the spark that lights the fuse…
Just to clear up a misnomer the Lord Mayor of Melbourne has little say in the future of the race. The City of Melbourne municipal frontiers do not include the GP site at Albert Park. Mind you the City of Port Phillip, within which the park lies, could hardly be called fans of the event either. In any case the State government of Victoria negotiates for, and conducts, the GP not local councils. Amusingly, if not ironically, an addendum to the initial press coverage about Doyle's article noted that just days before his article was published, his council signed a "lucrative" sponsorship deal with the event. So the man who wants to scrap the event thinks it's worth spending his council's funds sponsoring it? As a cynic I cannot decide if this smacks of ineptitude or skullduggery.
Among those driven to respond to Doyle's calls was Victoria's Premier Ted Baillieu. This was more concerning because as things stand, he is the man in charge of the race. He made no direct threats but did say he expected the Australian Grand Prix Commission (the statutory body responsible for the event) to cut its costs. The implication was unclear, lessen the burden on taxpayers or… or what?
What worries me the most about the comments of Doyle and Bailieu is that as politicians, both are in the business of populism. They stand or fall professionally based on their grasp of public sentiment. Such is the way of democracy in the age of holy-tics. That both men felt the need to speak against the Grand Prix bodes poorly for public support of the race.
From the moment the announcement was made that the race was to be held in Melbourne's Albert Park, opponents popped up. The most rational opposition came in the form of the curiously named "Save Albert Park" group (I'll get back to why I think the name curious). The park is slap dab in the middle of a desirable residential area a stone's throw from the beach. Right or wrong, it is typical of any community nearby expansive parkland to view such acreage with a degree of ownership. Excluding park access with temporary fences was never going to meet with enthusiasm. Likewise by the prospect of street blockages and traffic jams. Finally there is the matter of the shattering noise generated by F1 cars. I have heard F1s clearly from a dozen suburbs away and a couple of hundred meters from the track you cannot converse outdoors without leaning into the listener's ear and yelling.
That last point deserves an aside. I have never understood why no effort has been made to restrain the obscene noise levels of F1 - especially given Bernie's love of City Centre events. I'm not suggesting F1 cars should purr by like modern passenger cars but if they did, they'd have a lot fewer enemies in Melbourne. Having taken a Sound Pressure Level meter trackside I assure you that the audio output of an F1 is a scary number such that only a dullard bent on long-term hearing damage would dare omit ear protection. Upcoming regulations see a greening of F1 with lowered rev limits, KERS and little 1.3 litre turbo engines running on biofuel. It is not understood in the Place de la Concorde that noise too is pollution - particularly at the levels F1 generates?
Then there is political debate that rages year after year and runs roughly thus: Opponents say the race loses money since it costs so and so and only returns this and that. Advocates claim that this is rubbish because the bigger picture must be considered. Accordingly they supplement the event's direct revenue with the revenue generated by the event including such things as hospitality and accommodation. This produces a desirable number and thus they claim the event is worth it. They also argue that the whole point of the event is to "showcase" Melbourne to a global audience - though I think this notion is lifted directly from sales literature distributed by a certain B. C. Ecclestone. Has anyone ever sat on the other side of the world watching the AGP and been suddenly dumbstruck by the thought "bugger me, what a lovely place I must go there and inject wads of my cash into their economy"? The current numbers being bandied about are a $50 million cost and an "economic benefit" of $130 million. Personally I'd like to see a bit more of the detail supporting both side's numbers but as there are political agenda afoot, I'm not holding my breath. Try finding the Australian Grand Prix Corporation's Annual Report online and you'll see what I mean.
I happen to hold that a very good indicator of the event's popularity and therefore presumably profitability, is the body count through the gates. Having been to Melbourne for every Grand Prix since 1996 I consider myself a reasonable judge of crowd numbers and trends. I've previously aired my doubts about the official attendance numbers and indeed I seem to recall that the AGP Corporation was once forced to admit it didn't actually count heads so much as use "other" methods.
Initially the race was quite popular as is usual in sport-mad Melbourne. But as the 1990s drew to a close, a run of McLaren dominance (in 1998 the two McLarens lapped the entire field) combined with a waning novelty factor saw popularity fall. Things bounced back a well when Melbourne, with its considerable Italian population, turned out in force to regard Ferrari's return to ascendancy with Michael Schumacher at the wheel. Locals were also whipped into an attendance frenzy in the 2000s with the debut of Australian Mark Webber albeit in a Minardi. But again, things tapered off. Attendances pretty much bottomed out in 2007 when the immensely popular local V8 Supercar series was left off the programme. Official figures claimed the resulting attendance drop was less than 1,000 but that did not tally to what I observed unless there were 30 or 40 thousand people secreted behind shrubberies.
In 2009 I was tapping out articles wondering what the heck Bernie was doing by insisting that the Melbourne race had to be a night race. I believe his claim was that this better suited TV audiences in the F1 heartland of Europe and the UK. That would be the same heartland from which he is steadily shaving Grands Prix only to pass them on to the Middle East, Asia and the former Soviet Bloc. I speculated Bern was perhaps knowingly laying an impossible demand as a means to leverage public opinion against the event and force the government to abandon its hosting contract. It made sense to me when I considered the glut of cashed up "customers" queuing outside Bernie's door seeking a slot on the brimming F1 calendar. If the Melbourne public already thought the race was too big a burden on their tax dollars, adding the cost of lighting was likely to push them over the brink. Equally, dissenters who already disapproved of having to raise their voices to converse in their own homes were bound to be livid at the thought of attempting to sleep over the wail of 2 dozen F1 cars. A government agreeing to a night Grand Prix at Albert Park is a government on its way out of office.
The matter was partially resolved to the extent that the race started late in the afternoon and was run in "twilight" - that is if twilight means not all that dark but having to squint hard when looking in the direction of the descending sun. That's just me moaning as a spectator; imagine what great fun it must be to regard those conditions while steering an F1 car. A few of the drivers spoke up but it is notable that those whose wealth is dependent upon Mr. Ecclestone are rarely forthcoming in their criticisms of his will.
Crowds were, at best, Spartan for that first twilight GP in 2009. At the time I wrote of walking to the circuit ten minutes before the start of the race and even then having my choice of viewing location among the many gaps found along the fence. Arguments were floated that Melbournites simply needed time to adjust to the new schedule. I regarded this as bollocks. The late afternoon start time coincides with the evening meal time, thus alienating many families. Besides in 2010 it wasn't much, if any, better though the official attendance number was up 13,000 on the previous year. I should also note that by now a number of grandstands and corporate facilities that had been part of the trackscape since 1996 had disappeared. I'm no economist but I'm fairly sure this equates to diminishing revenue.
Which brings me back to costs. Premier Baillieu's declaration that the AGP Corporation needed to cut costs interested me. Being as I am not privy to the detail of the contract between the Victorian government and Formula 1, I have no factual basis on which to assess who is paying how much for what. Certainly I am aware of a hosting or license fee for event and I'd be pretty confidant that this is a significant chunk of the total cost. A cost I doubt can be cut. I'd also feel safe speculating that the cost of readying Albert Park to F1 standards and returning it to a park is born by my tax and that too would be a significant spend but again, hard to see how it could be reduced. Likewise the actual running cost - security, staff, transport of the F1 circus to Australia and whatnot. What does that leave of the alleged $50-odd million? I'm guessing not much. If I am right, I wonder where Mr.Baillieu is hoping the AGP Corporation might find the savings he expects? Even if there are some fat salaries, consultancy costs or retainers, economizing on these fronts is unlikely to dredge the AGP Corporation's books out of the red.
The thing that struck me about this idea of cost cutting is that it's only half the story. Like any venture, there are two sides of the ledger which can improve profitability. Cutting costs is sound enough but increasing sales is a better aim. It seems to be widely accepted that much of the money made from F1 and its events goes the way of Mr. Ecclestone's firm. Certainly we know this of the broadcast rights and to some degree, trackside advertising. I understand however that at least a portion of ticket sales generate retained revenue for the promoter, as does corporate sponsorship.
Here, I believe there is much scope to improve. It is a matter of record that other government agencies contribute to the sponsorship pool. It doesn't take much marketing nous to have a government lean on its departments to sponsor other departments. A need I contend shouldn't even exist if the event was being sold effectively. The event's recent book losses have, in part, have been blamed on the global financial crisis but as a recent interviewee on Pitpass indicated, that is fast becoming an excuse rather than a reason. Besides, I don't believe the AGP Corporation has EVER turned a profit per se so it's not like the GFC came along and wrecked the business model. I'd suggest the Corporation needs to find a proven sponsorship expert from F1-land and retain them on a commission basis to assure results.
My view of the direct marketing undertaken by the AGP Corporation to sell the event to public patrons is even harsher. I've found its print and electronic media efforts promoting the event to be lame, shotgun affairs though I'm sure the enriched agencies that conceived them don't agree. I've said it already, crowds are down, grandstands and corporate platforms have evaporated - the record is obvious, it's not being sold well enough. Remedying this doesn't mean spending more. I mean ensuring the right people, with the right datum are effectively targeting the right markets and efficiently selling what Bernie has proven to be saleable. Last year for the first time since the Australian GP began in Adelaide, an Australian almost won the world championship. If you can't sell that to sport-mad, victory loving Australians, you can't sell jack!
I cannot leave off without drawing attention Lord Mayor Doyle's call to walk away from the race prior to the contract expiration. For me he drifted into the world of fantasy on this point. There is a contract in force that commits Melbourne to the race up to 2015. Ecclestone has rarely been lax in the field of commerce so I so I would fully expect that the price of breaking the contract would include paying the remainder of the term of licensing fees plus a penalty as is typical in such contracts. Yes, there would be no ongoing costs to conduct the event in that case but I've already opined, I believe that the bulk of the race cost is the license. Against that must be factored the reality that with no race, there would be zero revenue. I've a strong hunch that my state would be substantially worse off financially to break the contract.
So has Robert Doyle achieved with his article what the Grand Prix's opponents have dreamed of since 1996? Has he provided the spark that lights the fuse that blows the charge? I don't know and only time will tell. What I do know is that the debate is running hot, perhaps hotter than ever before.
Oh, I was going to mention why I found curiosity in the name of the "Save Albert Park" (SAP) group. You see I am old enough to remember the Park before the GP was hosted there. Purveyors of Real estate might have invoked terms like "opportunity" and "renovators' delight". My word would be derelict. Barren playing fields studded with shards of broken bottles, run down amenities, plenty of opportunity to be impaled by discarded syringes and a swampish lake. It was only when the Grand Prix arrived that the park underwent a massive refurbishment. Albert Park is now a wonderful place, in 1992 it was not. So as much as I partly sympathise with the SAP mob, I do find their name a little misleading as I doubt unless their unstated aim is returning the park to its pre-GP condition. Then again, they could hardly call themselves "Get The GP Out Of Our Park Now That It's All Nice Thanks To A Big Spend By The State Government That Probably Wouldn't Have Happened Otherwise"! Oh and before any of you SAPers start sending me hate mail, I suggest you refer to page 1 of your April 2009 newsletter. Oh, look, right there in the middle of the page is my name along with a quote from a Pitpass article I DIDN'T AUTHORISE! I didn't make a fuss about that so I'd appreciate you repaying me in like kind!