The Grand Prix is cancelled, but no thanks to a quick-thinking Victorian government.
The decision was ultimately made by the race’s corporate backers, raising questions about the government’s reluctance to pull the plug — even as team members expressed an unwillingness to race and were being dragged off for testing for the deadly coronavirus.
Last night, as world champion Lewis Hamilton lashed out at organisers for going ahead, the official line from the government was that there was still no reason to cancel. A spokesperson said in response to Inq’s questions: ‘’The only consideration is the advice of the chief health officer and we will continue to follow his advice.”
But a secret agreement between the Victorian government and Liberty Media, the US company that owns Formula One, could reveal financial motives for trying to stay the course.
It would leave the government on the hook for certain costs should the government cancel the event. It’s possible this includes the payment of a one-off race licence fee, estimated to be worth up to $70 million.
But like much of what goes on at the Grand Prix, the deal with Liberty Media is not public. Therefore it’s impossible to know what the ultimate cost of postponing or cancelling the event is to taxpayers.
The closest thing Inq could find to a cancellation policy was contained in a risk warning to investors, buried in corporate documents filed to the US Securities Exchange Commission earlier this month.
It says that if a race is cancelled due to a force majeure event occurring prior to the Thursday before an event, the race promoter — in this case the Victorian government — is not required to pay Formula One a race promotion fee. In other words, if “the event” — in this case the coronavirus — occurred before Thursday, then the government should have some bargaining power to cancel without paying the promotion fee.
But what this promotion fee is, and whether it is different to the license fee, is unclear.
So why did the government refuse to cancel the event earlier? And did their dawdling cost taxpayers money?
Hamilton, who on Thursday night expressed his shock at the event going ahead, had one brutal response: “Cash is king. I can’t add much more to it. I don’t feel like I should shy away from my opinion.”
The Grand Prix has long been criticised for running at a loss and lacking transparency around even around the most basic things like attendance figures. The government agency in charge of the event, the Australian Grand Prix Corporation (AGPC), was unavailable for comment.
When asked whether Victorian taxpayers would foot the bill for the cancellation, AGPC CEO Andrew Westacott told reporters this morning: “A cancellation of this nature has a lot of consequences and some of those are contractual and financial. We will work those through with the commercial rights holder in the days and weeks.”
Liberty Media is run by US billionaire Chase Carey and makes most of its Formula One revenue through licence fees with governments around the world. With the Chinese Grand Prix postponed and the Bahrain Grand Prix closed to spectators due to the virus, the company has a lot riding on races going ahead. A spate of cancellations would trigger huge losses for the company.
Activist and long-time critic of the event, Peter Goad, says the chaos over this year’s event yet again highlights that Victorians deserve to know what is in the agreement.
“It’s a cancer that eats away at the legitimacy of the Grand Prix,” he told Inq.
A cynical person may suggest there were Victorian government heavies in receipt of privileged gratis Gold Passes who would have a vested interest for the race & 5 star hospitality to proceed. But only a disillusioned cynic would think this.
One could cynically think that privileged gratis Gold Passes knows no party allegiances.
Indeed. Did the Victorian Opposition demand a cancellation decision?
The Grand Prix was stolen from us in SA some years ago…so we can now ‘get our own back’ with Victoria having to cancel the event, and probably pay out lots of money for the pleasure.
The current Victorian government has nothing to do with the event contracted to their state all those years ago…look to whoever thought they were being clever by moving it to Melbourne in the first place!
The ALP Brumby government renewed the contract in 2008, and last July extended it to 2025. There’s been no diminution of governmental enthusiasm for this near-sacred cow, regardless of who’s been in power in Victoria.
Seriously!
“ The government agency in charge of the event, the Australian Grand Prix Corporation (AGPC), was unavailable for comment.”
I note the rest of the media had no problem yesterday, perhaps just show up at the one hour live press conference.
What an eye opener!
The same secret deals may be why the ACT government didn’t cancel the notorious Summernats event in Canberra in January during the bushfire crisis.
The Summernats ‘burnouts’ event on January 4 2020 was a key attraction for the 30000 attendees ( a key goal for competitors is to create noxious smoke and set tyres alight). The previous evening a riot nearby requiring both ACT and NSW police attendance provided an unlawful side event for Summernats fans practicing their own burnouts on the highway to Sydney and drew on emergency services resources needed elsewhere.
Despite calls for the burnouts part of the Summernats event to be cancelled on January 4 – a peak fire day when temperatures hit 44 degrees and winds strong to gale force – because of the fire risk and the potential problems of evacuating 30000 people in the threatening event of a bushfire incursion into the ACT, the ACT government refused to withdraw the exemption from pollution and noise laws which allow the event to go ahead.
It would be very interesting to know is there is a similar contingent liability on the ACT taxpayer underpinning our ACT government exposing Canberra residents to these extraordinary health and safety risks during this past fiery and smoky January. When asked, organisers stated they had no evacuation plans covering such an imminent possibility. The ACT government left the decision to cancel with the organisers and would not intervene.
Someone should ask whether such nasty (and probably unlawful) deals are more widespread across Australian states and why taxpayers are unknowingly burdened with the financial risk of public regulatory action and event cancellation, rather than organisers and their shareholders managing and insuring such risks as would be appropriate . …. and why our governments expose us to such risks without revealing their secret conflicts of interest which mean we can’t trust regulatory decision making when it comes to governments’ fundamental role of protecting public health and safety.
The secrecy of the agreement between the Vic govt and the Grand Prix Corporation is not only ‘a cancer which eats away at the legitimacy of the Grand Prix’ but at the legitimacy of the Victorian government as a party to such a disreputable arrangement. Remember Kennett’s undertaking (broken annually) that no public funding would be required? Good for Hamilton: cash is king. Who are the proponents and beneficiaries of this secret deal?
Those diamond ear studs of Lewis truly sparkled before he spoke ….and good on ‘im…