Grand Prix, Supercars 500: public pain, private gain

by | Jan 20, 2021 | Business

The rescheduling of Victoria’s Grand Prix, following its Covid cancellation last year, has again put the spotlight on urban racing events including Supercars 500. While governments continue to spruik the supposed economic benefits, the lack of transparency around these events simply highlights an endemic culture of cronyism. Christine Everingham and Patricia Johnson investigate.

State governments continue to push car racing events as a tourism strategy that brings huge benefits for state economies. While the visitor numbers themselves are extremely unreliable, what is never included in the conjuring up of the miraculous figures is the huge costs these events put on taxpayers and the local community.

Vast amounts of public money fund these events. Public land is alienated from public use for long periods of time. Local small businesses and residents suffer negative economic and environmental impacts and the supposed benefits from tourism are never validated.

Urban motor racing events are a prime example of the subterfuge of major event promoters in the name of the visitor economy. The Grand Prix, in Melbourne’s Albert Park, is probably the most well known. According to Save Albert Park, which is still protesting against the take-over of local parklands after 25 years, this event has cost Victorian taxpayers more than $1 billion since being “pinched” from Adelaide in 1996.

Supercars has adopted a similar modus operandi, although as a private corporation it doesn’t have to reveal its costs.

In both cases, overnight visitor expenditure is calculated with reference to the race attendance figures, which are issued by the promoters. Promoters are not required to count the number of people who actually attend. Community protest groups have shown that these figures are highly inflated and even the mainstream media regard the figures with suspicion. Nevertheless, government tourism agencies use them to justify the vast expenditure of public funds.

Ropey attendance figures

For example the Newcastle Herald revealed that there was a significant discrepancy in the attendance figures provided by Supercars for the 2017 event and those obtained from the Telstra data used for the evaluation by the Hunter Research Foundation Centre (HRFC) on behalf of Newcastle council. This discrepancy meant there could have been no more than 77,380 attending the event over the 3 days, yet Supercars claimed 192,241 attended. Further examples of how the attendance figures are manipulated are available here.

The HRFC report into Newcastle’s first Supercars race inflated its economic benefits by 56 per cent, according to a retired University of Newcastle professor. Dr Janet Aisbett said the report had “grossly overinflated” the number of visitors in the city for the race because it had used the weekend of May 19 to 21, 2017, as a baseline “ordinary” weekend, when the number of visitors to the city that weekend had been unusually low due to poor weather.

The Newcastle Herald reported that the HRFC director Will Rifkin, one of the report’s authors, wrote to Dr Aisbett that the May weekend “was not the choice of the HRF Centre. We recommended another date”.

Supercars Newcastle 500

When the Supercars 500 hit the streets of the heritage precinct of Newcastle East in 2017, more than 2000 residents were caught inside the circuit.

Some 50% of the racetrack is lined by homes and businesses – less than five metres away from the racing cars. The community protested and set out to discover how this could have happened, given there was no consultation or evidence available to back the promoter’s extravagant claims.

However, because of the level of secrecy afforded private corporations in public private partnerships, it proved a lengthy fight.

Supercars had a commercial-in-confidence agreement already signed with the NSW government when it rolled into Newcastle. Local MPs were not privy to the contents, and locally elected councillors were not informed of the costs. Residents had to rely on freedom of information requests to discover information that was often withheld on the basis of commercial or cabinet-in-confidence.

While information dribbled out over time, Supercars was way ahead, chainsawing trees and re-designing the rustic heritage ambience of Newcastle East into a race track and hyping up the event to stir the public’s pride of place. Newcastle councillors have repeatedly stated that the small number of trees replanted in the Foreshore Park since the mass tree removal for Supercars will create 20 times more usable shade. However, more than 240 trees were removed for the race, yet only 40 Norfolk Pines and 10 Kentia palms have been planted, with the Kentia palms on a median strip in the middle of a road so don’t offer shade to park users.

Control of public land ceded to private corporation

Urban street racing events require the suspension of environmental and local planning legislation, the Roads Act and any liability for nuisance or compensation for economic loss.

Control of all land within the declared race area needs to be transferred from private landowners and local authorities to a private corporation, in the case of the Newcastle 500 this was Supercars Australia Pty Ltd. The necessary legislation is passed on the pretence that these events are “temporary”, without long term impacts. The Motor Racing (Sydney and Newcastle) Act, passed in Feb 2017, contained all these provisions and was passed with the support of both main parties.

Destination NSW is Supercars partner in the promotion of the event. Leading up to the inaugural 2017 race, the community was assured that Destination NSW would “work together” with the government agencies charged with ensuring public health and safety. Yet Freedom of Information requests by the Newcastle East residents group showed that these government agencies had as much trouble getting information out of the Supercars/Destination NSW partnership as did residents.

One month before the inaugural event, NSW Health was still seeking information from Destination NSW on behalf of residents. More than 80 Newcastle medical practitioners had signed a letter expressing grave concerns about the impact of noise and access issues on the vulnerable residents enclosed by the circuit.

It takes months to install and take down the extensive infrastructure – alienating public land and disrupting traffic for months every year. Many local businesses suffer economic losses over this period but are unable to claim compensation under the Motor Racing Act.

No longer economically viable

When the Grand Prix was cancelled just prior to the start of the Melbourne event in 2020, the Australian Grands Prix Corporation reported a loss of $40 million, with the Victorian government contributing $68.3 million for the event that year.  The more invasive of Supercars street events also had to be cancelled during 2020, including the Newcastle 500.

The South Australian government recognized the end of street racing was nigh. The Adelaide 500 was axed as from 2021, with the SA Premier admitting that street racing was “no longer economically viable”. The race was consigned to a permanent, purpose-built track. (However, South Australian Labor has promised to bring Supercars back to the streets if elected.)

No such economic honesty from the Victorian or NSW governments, who are determined to push ahead with these races. The Grand Prix promoters have been given “the green light’ to run a “Covid safe” event through Albert Park in 2021 and the Newcastle 500 has been resurrected to replace the Adelaide 500 in 2022.

Promoters push for street events primarily to secure advertising dollars. Lucrative deals are done with broadcasters – $200 million over five years in the case of Supercars and Foxtel. The circuit’s fencing around public streets and parks also serves as extensive billboards for promoters to entice the sponsorship advertising that is shared by the promoters and broadcasters.

Unfortunately, the lack of transparency afforded to public private partnerships ensures race promoters avoid any real requirement to prove value for money and it is the perfect cover for an endemic culture of cronyism.

Read more: Wrong Track: What Drove Supercars to Newcastle. Christine Everingham and Therese Doyle 2019
The juggernaut effect: community resistance and the politics of urban motor-racing events, Annals of Leisure Research

ABOUT THE AUTHOR

Christine Everingham

Christine Everingham

A retired academic Dr Christine Everingham is a long-term member of the Newcastle East Residents Group. She was a lecturer in Sociology at the University of Newcastle, Wollongong University and Macquarie University. Together with Greens councillor Therese Doyle, she investigated the politics behind the staging of the Supercars event, publishing Wrong Track: What Drove Supercars to Newcastle in 2019. She continued researching urban motor racing events with Patricia Johnson, from the University of Newcastle, and published The juggernaut effect: community resistance and the politics of urban motor-racing events in 2020.

19 Comments

  1. Avatar

    Interesting article, whilst not monetary value; one cannot ignore the increase in morale for those who enjoy the sport.
    It creates opportunity for like-minded people to meet up in a professional setting, creating exposure to motor sport brands and putting Australian cities in the spotlight (which I imagine can only assist tourism for the cities).

    Just because you cannot see the value in the sport and/or its events doesn’t mean there isn’t value there!
    I have personally seen the benefit to many young motor sport enthusiasts, often assisting them to deal with any mental health issues they may be battling (i.e. depression as it gives them a comfortable setting to discuss their hobby with like-minded people).

    • Avatar

      How does the race being held in a city help ?

      Why not dedicated motorsport venues that can be used year round ?

    • Avatar

      No doubt that is important. All the more reason to advocate for purpose built tracks. No reason enthusiasts can find like-minded support at a dedicated race track. Please don’t under estimate the impact on mental health of the communities who have no say in how street racing changes their lives. Unfortunately, street racing has huge impacts on the morale and mental health of those who live and work there. Their community is pounded by trucks, delivering the cement barricades and fencing and grand stands that is set up months before the event. Healthy, established trees are cut down and never replaced. There’s demountables and port-a-loos through the parks. Then it’s repeated weeks after race teams and their fans have left, while the barricades come down. While all that goes on, parks are either difficult to access or not accessible at all, people don’t visit local businesses because they can’t park, it’s ugly, confusing, depressing and just too hard. On top of that, the ratepayers pay enormous amounts of money for it, aren’t allowed to know what it coasts and have to listen their elected members spout the economic “benefits” that no one is allowed to proof or details of and hear them repeat the crowd numbers that are well-known to be grossly inflated and just not true. Motor racing needs to be on dedicated race tracks. Motor racing needs to be transparent. Motor racing should not be at such expense to taxpayers or local communities.

    • Avatar

      Re “whilst not monetary value; one cannot ignore the increase in morale for those who enjoy the sport”, let me say this is the Alan Jones argument for knockdown-rebuild of Sydney Football Stadium at Moore Park. The seats for the average punter would remain the same, but the board would have much finer boxes in which to entertain their friends, at a cost of only $1.2b or so in public funds. The footy codes are all big business with hundreds of millions in broadcast rights. Why aren’t they being charged reasonable annual rent, if the state really does have to outlay such ridiculous capital sums?

    • Avatar

      All of that can be extracted from dedicated facilities though.

      If an economics department can’t find the value, it probably doesn’t exist.

      But to put that anecdote into perspective, if that public funding went towards the dedicated motorsport facilities to help people get into the passion wouldn’t that be as good if not better than watching some carbon fiber clad space frames bash doors?

  2. Avatar

    What else do you expect from Matt Kean the enviroment minister

  3. Avatar

    As a motor racing enthusiast, I enjoy the spectacle of racing, but if the promoters and governments, are losing money on the deal, lets just be honest and stop saying it supports local businesses and makes a profit if it doesn’t.

    If customers can’t get to their shops/offices for what could be upto 4wks then they miss out on sales and that is not a good thing. Quite often there is a viable motor racing track or three in each state, so running them on these street circuits, which most drivers aren’t so keen on, is a bit silly I reckon.

    In WA, We have a purpose built track and is reasonably far away from houses, so no real disruption except for excess traffic, though they have buses which offset that fair bit.

    • Avatar

      Do you even like the street circuits? The drivers don’t, as far as I can tell no one I know likes them. Not many people attend.

      Don’t see the point.

  4. Avatar

    A counter view http://www.theracetorque.com/2021/01/motorsport-australias-2-9-billion-industry/ The link is to a study undertaken by the Queensland Government.
    Do we assess the cost of every major sport? Most large public sporting events have government support. The Arts (when not shutdown by COVID) are also in receipt of government funding. Organisations like Australian Opera would not function without government funding. I am not suggesting these activities should not be funded, but we should acknowledge the facts.
    The current economic environment means a great deal of discretionary spending will be up for review. We need to be careful in assessing costs and benefits.

    • Avatar

      Well said, there is exactly zero return on many sports that get funded from the public purse.

      But, the difference here is the private benefit. This isn’t some fledgling industry, they turn solid revenues and seemingly get support for money losing ventures on street circuits.

  5. Avatar

    This is not a story about motor racing. It’s a story about gross overreach by government, on behalf of private interests, with no recourse for the community effected. It’s undemocratic and demonstrably dishonest, and therefore quite possibly corrupt. The only recourse the community has is to vote out the governments that took them, and the taxpayer, for granted.

    • Avatar

      Unfortunately there seems no alternative in our political system.

  6. Avatar

    There is a business case for showing off locally produced vehicles…. not imports!

    • Avatar

      Nah, the cars haven’t had road relevance for decades. Plus, street circuits are normally crap anyway. The narrow designs don’t lend themselves well to good racing.

  7. Avatar

    The media love the car races, and the cowards who are elected to represent the people dare not risk a negative media reaction.

    Consider too, the special treatment of football during the pandemic.

    And we really should stop calling it “sport”. Any event where the bulk of the audience is on TV is part of the entertainment industry.

    • Avatar

      You are watching sport FOR entertainment… it has never, ever been anything different.

      Do the media really love car races? As far as I can tell the whole thing is in massive decline. Hard to see anyone really making any money out of it. The smart capital is on shows like Love Island, MAFS, et al.

  8. Avatar

    This is not just cities, Targa Great Barrier Reef rally closes public roads and causes much inconvenience to us, local residents.

    • Avatar

      Yeah but Targa is cool. Actually has grass roots ties too.

      The inconvenience isn’t so bad when there is a defined benefit. Inconvenience alone should never be a reason to stop something good. But if there is no benefit…

  9. Avatar

    Besides the pretty clear corruption, I want to know how a track like Newcastle got through the Motor Racing Association Safety checks. It was “designed” by Skaife who must have known it couldn’t meet safety guidelines but they enthusiastically ticked it off anyway! Got anything to do with most of CAMS being ex-Supercars? No… surely not!

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