Cash-strapped Allan government spends record $130m on Grand Prix Corporation

Victorian taxpayers forked out a record $130 million last financial year to fund the body tasked with staging the Australian Grand Prix.

The annual report for the Australian Grand Prix Corporation (AGPC) revealed that despite record attendances and revenue at this year’s grand prix, the government-controlled body remained heavily reliant on taxpayer funding as costs to stage the major event continued to increase.

The cash-strapped Allan government poured a record $130 million into the Australian Grand Prix Corporation for the 2023-24 financial year. Credit: AP

The report, tabled in parliament on Thursday, was the first under the corporation’s new boss, former AFL heavyweight Travis Auld. It was also the first year under chairman and ex-sports minister Martin Pakula.

The corporation runs the Formula 1 grand prix in Melbourne and the Australian Motorcycle Grand Prix, held at Phillip Island in October.

The report revealed the cash-strapped state government poured $130.1 million into the corporation last financial year, up from $120.2 million in 2022-23.

The F1 grand prix, held over four days in March, attracted an estimated 452,055 spectators and generated record revenue of $215 million – but the cost to stage the race increased to $223.6 million. Victorian taxpayers forked out $106 million on the event.

Travis Auld, the new chief executive of the Australian Grand Prix Corporation, at the Albert Park track.Credit: Joe Armao

The 2023 grand prix generated $193 million in revenue and cost $223.5 million to run, with a taxpayer bill of $100 million.

The $130 million forked out by taxpayers includes the cost to operate the free tram service to Albert Park for four days, amounting to $1.8 million in 2024 and $1.5 million in 2023.

The increased cost to taxpayers was blamed on global supply chain constraints and inflationary pressures.

The AGPC improved its net operating balance for the year, posting a $4.7 million loss. In 2023, it reported a $35 million loss.

In response to questions about its increased reliance on government funding, an AGPC spokesperson said it was proud to host the two racing events.

“These events make substantial contributions to Victoria’s visitor economy, boosting tourism, hotel occupancy, visitor spend and showcasing the state on the world stage,” they said.

“With the extraordinary interest in Formula 1 continuing, the growth of this event looks set to continue into 2025 and beyond.”

Major Events Minister Steve Dimopoulos said the race continued to represent value for money.

“The Grand Prix attracted record crowds this year and continues to represent value for money for the state – we are proud to invest in this iconic event that is secured for Melbourne until 2037.”

The state government has defended the amount it spends on staging the F1 grand prix for nearly as long as it has hosted the F1 event, which it nabbed from Adelaide in 1996.

In 2023, a government-commissioned report conducted by auditing giant Ernst & Young in found the event delivered direct expenditure of $144 million for the state.

Opposition sports spokesman Sam Groth said while the race was the “key pillar” of Melbourne’s event calendar, the Allan government needed to ensure it was cost-effective.

“For the second year in a row, Victorian taxpayers will be picking up a more than $100 million tab for an event that has no incentive to deliver the best return possible for Victorian taxpayers,” Groth said.

“With the event locked in long term, we must make sure that the Australian Grand Prix Corporation do everything they can to make sure the event is not just a great product for the State but also financially sustainable.”

The annual report also shows 112 free tickets for the 2024 F1 race – valued at $97,000 – were provided to Auld, AGPC board members and Dimopoulos.

Credit: Matt Golding

Despite last-minute cancellations impacting the 2023 Phillip Island MotoGP, the racing event reported an improved balance sheet, reducing its costs by $1.8 million and generating $5.8 million more than the 2022 event. The government also contributed about $2 million less to the race than 2022.

In 2019, the last race before the pandemic garaged the event for two years, the grand prix spent $115.5 million, leaving taxpayers with a $60.2 million bill.

Pakula helped secure a deal in 2022 as minister for tourism, sport and major events that meant the event would remain in Melbourne until 2035.

However, in 2023, the state government agreed to a 12-year contract extension with the global owners of F1, Liberty Media, to keep the race until 2037. This included renegotiated terms for the rights it already held to promote the grand prix between 2023 and 2025.

Revelations of ballooning spending on the high-octane operator follows a scathing review of the state government’s financial management, handed down by the state’s financial watchdog this month.

The probe of the state’s reports for the past financial year found the Allan government had no “clear plan for long-term fiscal management” as government departments and agencies incurred another operating loss.

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