Edmonton debates if Indy worth the cost
Last year’s $5.3M loss puts pressure on race organizers
The course is constructed, the grandstands are up, the weather forecast is good. This weekend, cars will hit the pavement at the Rexall Edmonton Indy.
Edmonton Journal ArchiveThe financial sustainability of this weekend’s Rexall Edmonton Indy has become the topic of almost as much discussion as the race itself after a deficit last year put Edmonton taxpayers on the hook for $5.3 million.
But the sporting event’s financial sustainability has become the topic of almost as much discussion as the race itself, after a deficit last year put Edmonton taxpayers on the hook for $5.3 million — $4 million more than anticipated.
Edmonton city councillors appear split on whether the costs have been worth it.
“It’s a question mark,” said Coun. Ed Gibbons. “It’s still early to say whether the Indy was right or wrong to do, and you can’t cancel it, anyway.
“We went in with the business plan thinking we’d do well by it. A vote’s a vote and we’re living with it. And I’m hoping for the best.”
Indy boosters such as Coun. Tony Caterina have no doubt the cars and crowds are good for the city.
“The publicity, you can’t even put a price tag on it. The Indy is being seen by countries around the world,” Caterina said.
“We know the Indy has huge, worldwide appeal,” said Coun. Karen Leibovici.
“Every time the cars go around the track on the TV screen, people see Edmonton,” Leibovici said. “We can’t afford the kind of advertising we get.”
When councillors agreed in 2007 to backstop any losses on the Champ Car World Series — which has since merged with the Indy Racing League — they anticipated losses of around $1 million for at least two years. But the exposure Edmonton would receive in international television markets would be worth it, they reasoned.
The $5.3-million loss caught everyone by surprise. Now, in the midst of a recession, Northlands is under intense scrutiny to run the $14.5-million event on budget. The expected deficit this year is $1.5 million.
The organization has been tossed a few surprises. Last week it emerged the Edmonton Regional Airports Authority will charge for the use of its land, a fee waived last year. Add $250,000 to costs.
Last week, Caterina said federal funding had been secured. Add a potential $400,000 to revenues.
Coun. Ron Hayter, who unsuccessfully petitioned for an audit of last year’s Indy, thinks Northlands is prepared for the race.
“They’re working very hard to make sure that expenditures are looked at very closely and they’re putting on a strong promotional effort. I’m cautiously confident they’re going to put on the event this year without hitting the taxpayer between the eyes.”
Northlands has had a full year to promote this year’s Indy, unlike 2008, when the merger of the two racing leagues left the organization with two months to market a new and much larger event.
Indy merchandise, which was conspicuously absent last year, has made it across the border, which should boost revenues.
And the Edmonton Indy should be able to play off the race’s reintroduction in Toronto this year.
One week before the race, ticket sales were “going well,” Northlands major events director Mike Burton said. The Indy Racing League, however, does not permit the release of ticket sale numbers.
Burton said his organization has been running a tight operation this year. It’s expensive, however: major expenses include a sanctioning fee to the racing league, grandstand construction and television rights.
“Watching every dollar that we spend has been an important part of this process, and I can tell you, I’m really satisfied with the way we’ve managed our expenses this year,” Burton said.
The Indy Racing League has said it’s interested in keeping the race in Edmonton beyond the 2010 contract. It’s unclear whether councillors will be willing to support an event that has yet to break even.
“I’m interested in seeing what our citizens are thinking moving forward, and Northlands would have to agree that they’d want to continue to do it,” said Coun. Kim Krushell.
“After three years, that’s when it will be time to decide whether there’s a business case or not. It will be a cost-benefit analysis.”