Austin, Texas to Enjoy Long-Term Revenue from Formula One Racing
August 17, 2010 by ryanlynch
Residents of Austin are excited to learn that the Formula One will be coming to the capital city, but few realize just how much effort has been put into bringing the event to the city. In fact, according to documents, the Comptroller Susan Combs met with auto racing promoter Tavo Hellmund more than 20 times since April 2, 2008.
Traditionally, the Formula One event has taken place at exotic locations such as Istanbul, Singapore and Monte Carlo, so having Austin selected as the next location for the event is certainly quite the honor. While there are going to be some costs involved with hosting the Formula One event, the city also anticipates bringing in a significant amount of revenue. Reportedly, state officials have committed to provide $25 million for the sanctioning fee required for the first year, with the funding coming from the Texas Major Events Trust Fund. The City of Austin will be able to request money from the fund in order to cover the costs associated with the hosting the event, including fencing costs, security expenses and the cost of providing portable bathrooms. At the same time, the event is expected to draw in 120,000 people, with about 65% of them traveling from a different state.
According to Dan Hoyte, who is a former office employee for the comptroller, Formula One fans, racers and support staff are likely to spend approximately $244 million while in the area. As such, they will generate an additional $17 million in direct tax revenue for the state of Texas. Robert Wood, who is the director of the local government assistance and economic development for the comptroller, estimates that that the tax income will like be around $29 million each year. Documents from the comptroller's office, on the other hand, estimate that the sale of Formula One race tickets will like generate about $24.5 million per year for the promoters. Other events, including nonracing events and naming rights, are expected to bring in an additional $46.5 million.
Simply put, there will be some significant upfront expenses involved with brining the Formula One event to Austin. In addition to the $25 million sanctioning fee, the city will also be spending $26 million each year to repay the $200 million needed to build the facility. Given the long-term revenue that it will bring to the city, however, most agree that the investment is well worthwhile.
