MOTORSPORT: Liberals split on grand prix

January has been the month of floods but now Melbourne's lord mayor Robert Doyle has lit a fire with comments that the city's Formula One grand prix has run its race - and he has GP chairman Ron Walker -- like Doyle, a Liberal - mighty hot under the collar

Comment

Two months out from the Australian Grand Prix the future of the Formula One event in Melbourne is at the centre of a new storm.

There's a rift in the ranks of the Liberal Party, which snatched the GP from Adelaide in the mid-1990s.

Melbourne's lord mayor, Robert Doyle, a former Victorian Liberal parliamentary leader, says "time's up" on the costly GP -- that it ought to end in Melbourne when the existing contract expires in 2015, predicting that annual losses will have hit $70 million by then.

New Victorian premier Ted Bailleau is not that categorical, although he says the GP may have to go unless the costs -- i.e. losses, now running at $50 million a year -- can be substantially cut.

Then there's Ron Walker, the Liberal Party's former federal treasurer who has been the Australian Grand Prix Corporation's chairman for its entire life in Melbourne, who has stoutly defended the event he grabbed for the Victorian capital soon after former Liberal premier Jeff Kennett came to power.

Not surprisingly, Walker has taken a swipe at Doyle, calling his comments "sad", and it's certain he will be working hard behind the scenes on Bailleau, who rose to the Liberal leadership with the endorsement of the unelected but nonetheless powerbroker Walker.

The GP has become a political football in Victoria as its losses have mounted since the modest $1.7 million bill to the state's taxpayers on Melbourne's first Melbourne F1 event in 1996.

The red ink became a flood in the mid-2000s as revenues -- ticket  sales and sponsorship -- sank while costs -- including F1 commercial master Bernie Ecclestone's annual fee for the race -- continued to escalate.

Yet this latest storm has erupted -- with Doyle's views splashed in Melbourne's Sunday Herald Sun newspaper -- at a time that Australia has a very competitive F1 driver, Mark Webber, and may soon have another on the grid, Daniel Ricciardo.

Webber, winner of six GPs now and third in last year's world championship after having led it longer than any driver, will come home for this year's March 24-27 event with his best -- and a very realistic -- chance of winning it.

Ricciardo, 21, from Perth, will take part in Friday F1 practice with Scuderia Toro Rosso, the former Minardi and now the second of the teams owned by the Red Bull energy drink.

The other, for which Webber races, is the reigning world champion team.

Ricciardo has almost been guaranteed an F1 race drive by Red Bull's motorsport chief, Dr Helmut Marko, by the start of next year.

Doyle says that Melbourne's GP is no longer value for the money it costs -- that it has outlived its welcome.

Doyle says that getting the GP for the city in the 1990s was "a stroke of genius" but that it has run its course, that there "will be no successful negotiation" with Ecclestone on reducing the annual race fee, and that it's time to find a replacement major event for Melbourne.

"In the end, it [getting rid of the GP] will be a government decision and one of the tough ones that Ted Bailleau faces in his first term," Doyle said. "Does he undo the legacy of Jeff Kennett, his mentor, in his very first term?

"My judgement would be: Get ready. Time's up."

Bailleau said -- ironically at the Australian Open tennis, another of Melbourne's major international events -- that the GP had been great for the city and would see out its contract to 2015.

However, he added:  "We look forward to the GP performing financially better than it has and we will be looking to make sure that happens.

"I am confident we can reduce costs and we look forward to that happening."

Beyond that, Bailleau said he would not be drawn on "speculation and hypotheticals".

Walker said his AGPC did its best every year to contain costs and that the event was worth $180 million a year in economic benefits to Victoria, although in another breath it was $160 million.

"All Mr Doyle's hotels, all his restaurants do a very good trade," Walker said. "Then, of course, there's the tax that's collected of about $18 million a year.

"It's a huge profit for Melbourne."

And then there was the "priceless" international exposure that came with the GP.

"It is one of the few free-to-air television spectacles Australia has," Walker said. "The F1 GP goes free-to-air to 300 million in 132 countries and, because we now have a twilight race, it goes into some of our biggest trading partners -- Russia, India and China -- at midday on Sunday.

"This is huge penetration for the brand of Melbourne."

Walker said there was not a major event in the world, apart from the soccer World Cup and the Olympics, that went free-to-air to as many people as F1.

The latter point is valid, although there is no substantiation for Walker's claimed audience numbers -- something we have noted here before.

Last year's TV numbers from Ecclestone's Formula One Management, announced at the weekend, claim 527 million viewers for the 17 races in the 2010 world championship.

What weekend reports on that 527 million did not make clear was that that is a cumulative figure for the season -- not the audience for each race.

That's an average of 31 million per race -- and, based on the authoritative work of London research firm Initiative futures + sport to which we have referred here previously, Melbourne is right on that average -- i.e. 31 million viewers in the 55 countries that account for 95 per cent of the world's gross domestic product.

If Walker is claiming "penetration" of 300 million viewers, without substantiation, he's exaggerating the proper interpretation of the FOM figure(s) and the credible Initiative research 10 times.

If there have been recent increases in countries like Russia, India and China they may have been at the expense of viewers elsewhere, as Planet-F1.com reports that the FOM TV figure for 2009 was 520 million -- 7 million less than 2010 -- and that for 2008 it was "over 600 million".

And now the Liberals in Victoria are arguing among themselves over the value of Melbourne's GP.

The recently ousted Labor government in Victoria had the same concerns that Ted Bailleau now expresses about the costs of the GP -- and how to contain or reduce them.

It is remarkable that under governments of both political persuasions Walker has remained chairman of the AGPC as these losses have mounted into, cumulatively, hundreds of millions of dollars now -- after he and then premier Kennett told Victorians in December 1993, when news broke that they had snatched Adelaide's GP, that it would effectively cost Victoria nothing and perhaps operate at a small profit.

Now that the GP is again the centre of controversy perhaps it's time to ask whether Ron Walker has been trying to serve two masters in all of this -- Victoria, in dealings with Bernie Ecclestone, and Ecclestone, in dealings with the Victorian government? And whether it's possible to serve two masters, or whether that is at the nub of the problem with the GP in Victoria.



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