V8 Supercars – Is the ROI worth the outlay?

As this is being written, rev heads were flocking to the V8 Supercar race at Darwin’s Hidden Valley raceway.

Going by attendance figures alone, it is the biggest event on the territory’s sporting calendar with the race attracting up to 40,000 spectators and injecting $8 million into the local economy each year.
There is no doubt that sports events such as V8 Supercars bring in the crowds. As a business it is hugely successful but hosting an event is a very costly exercise.
Is it worth the outlay?
For established events like Adelaide and Bathurst it certainly is – in fact the V8 Supercar series could not exist without these cornerstone events. But to others the benefits may not outweigh the ever-escalating costs.
Street circuits – where race fans get their real highs – are expensive to set up, disruptive to locals and a two-edged sword for councils with ratepayers aghast at their hard earned cash being forked out for a weekend for petrol heads, while businesses that benefit hugely from such an event demanding that the council do whatever it can to sustain the attraction.
Some councils are buckling. Years ago Canberra ditched its V8 Supercar event. Hamilton in New Zealand has cried enough and won’t host an event next year.
Hamilton ratepayers were left $9 million out of pocket from the 2011 event and an Audit New Zealand review found the race’s chief executive had spent millions of that without authorisation.
Last September Hamilton City Council announced it had accepted a $1.25 million offer from V8 Supercars Australia for the city’s race assets and the event would leave the city after the 2012 race. The 2011 race, the first organised by V8 Supercars Australia after the previous promoters went broke, is understood to have cost the city $9 million.
A cloud has been hanging over the future of the Townsville race beyond 2013 with the state government committing $2.5 million until next year under the existing five-year contract. Townsville City Council provides $500,000 of this funding but Townsville mayor Jenny Hill seems unenthused about continuing beyond that date. Queensland sugar giant Sucrogen has extended its deal as exclusive naming rights sponsor of the Sucrogen Townsville 400 V8 Supercar event for a further two years. But then Sucrogen’s BioEthanol powers the V8 Supercars on track at every event with all cars fuelled by its E85 blend.
According to V8 Supercars media manager Col Hitchcock, the Townsville race generates between $22 and $25 million for the Townsville economy. “There’s anywhere upwards of 500 to 1000 jobs made over a period of time to build the track and working at the event,” he says.
There is also doubt about the blue ribbon grand finale event in Sydney going beyond its current contract that also ends with the 2013 event. The Sydney 500 at Homebush pulled in a three-day crowd of 172,000 for the 2011 race, down from 185,000 on the inaugural event.
There are concerns within the NSW government over funding the event because V8 Supercars are seeking an extra $1 million. Another complication for the O’Farrell government is that the original event was founded by now disgraced Labor minister Ian Macdonald, who is now facing two corruption investigations.
However, as one venue expresses doubt about continuing to run a V8 Supercar race, another shows enthusiasm: Cairns MP Gavin King, mayor Bob Manning, Advance Cairns chairman Cam Charlton, motor dealers Richard and David Ireland and motorsport competitor/journalist Peter Roggenkamp have started drumming up support to take over from Townsville should that city decide to forfeit.
“As the local member I fully support the community’s push to bring the V8 Supercars to Cairns but any talk of that happening is premature at this stage because the current contract still has two more events to run, through until after the 2013 race. Events Queensland will begin renegotiations in due course,” Mr King, who is also assistant tourism minister, said.
A circuit has already been suggested – a 6.2km street circuit at Aeroglen, incorporating the Captain Cook Highway and the pits in the general aviation section of the airport. Other mooted circuits are at the Portsmith industrial area and a permanent circuit in cane fields north of the airport.
But everyone is wary of starting a bidding war as V8 Supercars Australia P/L, the operator of the V8 Supercar series, is renowned for their spiralling pricing strategies.
Regional races like those at Symmons Plains in Tasmania and Ipswich attract 50,000 as does Sandown Park in Melbourne – but these are permanent tracks and by no means as expensive as the upheaval of a street circuit in a busy city.
V8 Supercars Australia P/L is banking on greater manufacturer involvement following a new one chassis formula based on the super successful NASCAR series in the USA. It hopes to lift the profile and race day attendances of V8 Supercars from the traditional but outdated Ford versus Holden duopoly of the last decade or so to entice new events on board. Organisers are also relying heavily on after event rock concerts to boost attendances and even use Pink in its promotions to enthuse potential racegoers.
Though the current series is the closest fought in many years, attendances are at best stagnating. Television ratings were down 23% in 2011.
But even the Gold Coast is having a rethink. When the Surfers Paradise race weekend highlighted the Champ Car openwheelers, three-day crowds of 300,000 plus were the norm. With V8 Supercars this has slumped to 170,000 and there have been approaches to the IndyCar series (that merged with Champ Cars) for a possible return to the streets of Surfers Paradise. That also guarantees a sizeable US television audience, not to mention the band of trackside followers that take every opportunity to see single seater racing live.
The reality for Cairns and Townsville is can they afford V8 Supercars as a marketing exercise? Does the return on the investment stack up?

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