QCA should investigate V8 Supercars funding in industry assistance review

The Townsville V8 Supercars event appears not to have delivered the huge visitor numbers and economic benefits that were once forecast by its organisers, given the announcement of a new joint marketing campaign with other V8 races. The Townsville Bulletin reports (V8 plan to draw tourists):

A UNIFIED Queensland marketing campaign could result in a boom of interstate spectators heading north to Townsville for the 500 V8 Supercars event in July.

The Queensland Government signed a three-year deal in 2013 to ensure the Townsville event, the Ipswich 360 and the Gold Coast 600 would all continue until 2016.

And all three Queensland V8 events will be marketed as a package for the first time this year in a bid to breathe new life into all three races…

…All three events have faced their own challenges in recent years, with Townsville posting its worst attendance in its five year existence in 2013. The Gold Coast lost the crowd-drawing Indy cars in 2008 and Ipswich recorded its lowest ever attendance following a crash into spectators during the Mini Challenge series at the 2010 V8 event.

Clearly the races have not achieved the stellar forecasts of visitor numbers and economic benefits that were once made. For example, in 2007, Townsville Enterprise Chair Geoff Plante said: “the Townsville V8 Supercars…will have a huge economic impact for the city bringing visitors in from around the country”, as reported in the Sydney Morning Herald. It now appears the race hasn’t had the huge economic benefit expected.

It is well known by economists that claims made about the economic benefits of major events – particularly regarding flow-on or multiplier benefits – rarely stack up, as posted on a couple of years ago by Mark Beath at Loose Change: Events extravaganza expose. For further discussion of the limitations of the typical claims about the benefits of major events, I’d recommend the excellent 2007 report from the Victorian Auditor-General’s Office State Investment in Major Events, which questioned the purported economic benefits of the Melbourne Grand Prix. A cost-benefit analysis undertaken for VAGO by Applied Economics found a net loss to the State from the 2005 Grand Prix of almost $7 million.

Given doubts about the economic merits of government support for major events, the Queensland Competition Authority should investigate Government support of V8 Supercars as part of its current review of industry assistance. It should push vigorously for the Queensland Government to reveal the full details of funding agreements for these races, to help determine if the claims of net benefits to the State are justified. Unfortunately the Government has been reluctant to disclose the level of funding – reported to be $7-8 million p.a. (see V8 Supercars secured until 2016)– due to commercial-in-confidence considerations.

Governments obviously worry that the public might question the scale of subsidies to commercial events, but they are also, somewhat justifiably, worried that if other States find out what they’re paying, the other States might out-bid them. Ironically, given that many major events are a net loss to the State holding them, it would be in the State’s best interest to be out-bid.

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3 Responses to QCA should investigate V8 Supercars funding in industry assistance review

  1. Mike Shearer says:

    Re the V8 events and Townsville: the JCU SChool of Business study that claimed a $32.4 million boost to the local economy from the 2012 races contains no data whatsoever that supports that amount – it could have been pulled from a hat. The study, like those for the previous Events, are not in the public domain, but I managed to get a copy of the first report which used a multiplier of 2.13 without any justification, and has presumably been used in subsequent analyses. The estimates are based solely on expenditures reported by about 1200 race fans at the track, and do not take into account what new money comes into the region and what goes out from residents. Comments by local traders support the belief that the Events actually cost Townsville heavily.

    (Email me if you want copies of the reports; and/or my critique of the 2012 report)

  2. Alexandra says:

    I qam writing to get into contact with someone that could give me a higher understanding into the economic effect of the Townsville V8’s, I have found multiple people that support the development of the V8 supercars. But i would like more information for my assignment.

    (Please contact me at; asext2@eq.edu.au)

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