Formula one Australia

Melbourne has staged Formula One Grand Prix since 1996. During the past 2 decades, the event was organized and promoted by the Australian Grand Prix Corporation (AGPC) and partially financed by the Victorian Government (Anonymous, 2011). As a Victoria’s annual major international event, the race was held in March in Melbourne Albert Park and normally lasted 4 days.

Concerning the evaluation of this event, it is difficult to provide absolute answer, because both benefits and costs were brought to Melbourne and Victoria. The direct favourable economic impact was sales and sponsorship revenue generated from the race. From 2010, the race can generate more than $30 million total revenue each year (AGPC annual report, 2014). By holding the race, Melbourne and Victoria were promoted nationally and internationally. Therefore, significant economic benefits such as increased Gross State Product (GSP), inward investment and tourism attraction were brought to the state (Milman, 2014). According to Cochrane (2011) Grand Prix also helped retain Victorian expenditures, which was beneficial for Victoria economy. Moreover, the race also created more job opportunities for Victorians and generated local business expertise which was advantageous for Victoria to improve the performance of holding other major events (Anonymous, 2011). From these aspects, it can be stated that the event was successful.

Both financial and non-financial costs, however, incurred by the race raised great concern in recent years. From financial costs perspective, this event continually generated a net economic loss since 2005 (Save Albert Park Inc., 2008). Additionally, the Victoria government annually invested a large amount of capital in the event and the investment increased to more than $50 million since 2011 (AGPC annual report, 2014). Redrup (2014) also stated that a majority of government investments were covered by taxpayers and the amount even raised to $60 million in 2014 because of reduction in ticket sales and increasing costs. The community group Save Albert Park raised concern about the actual amount of taxpayers’ money invested in the race and even doubted whether the investment worth it (Milman, 2014). From non-financial aspects, the welfare of Victorians was reduced by millions of dollars (Campbell, 2013). Specifically, Albert Park use and amenity was affected during the race, which caused severe inconvenience for Victorians. Furthermore, traffic congestion and noise of the event also seriously influenced local residents and businesses, which caused extra non-market costs, such as traffic diversion costs and decrease in surrounding property prices (Campbell, 2013). From these discussed aspects, the event is not that successful.