Spending a dollar to make a dollar
March 2013
The Australian Open Tennis Championship, Avalon International Air show, Grand Prix, Red Bull Air Race – all are magnificent sporting spectacles brought to Victoria for us as residents of the world’s ultimate sporting city, to enjoy.
But our major sporting events are so much more than sporting spectacles. They are a key driver of our economy, and by far and away are our most significant and successful international marketing tool. After all, outside of a discussion on the world’s Grand Slam tennis tournaments, how often do your hear the cities of New York, London, Paris and Melbourne all mentioned in the same sentence?
Yet despite the importance of these events, despite our love of all things sporting, and despite our long-standing recognition as the “world’s ultimate sporting city”, we seem to take exception to some of these events and consider them wasteful extravagances and inconveniences.
So in defence of events, before you cast down your judgement, let’s consider them in terms of their full value.
It is estimated that as an economic driver, our major events deliver a combined economic impact to Victoria of around $1.4 billion annually. The Australian Open Tennis alone is estimated to contribute around $240 million in direct spend annually, while the Grand Prix’s direct spend is calculated at around $32 – $34 million each year, with an additional $148 million in calculated spin-off benefits from international broadcast branding.
Even our smaller events make a considerable economic contribution. When Tiger Woods came to town, it is estimated his appearance at the Australian Masters generated around $34 million in economic spin-offs for each visit. When you start to look at the full picture, and consider the $180 million or so the Grand Prix generates each year, or the $34 million Tiger Woods’ visits generated, these numbers start to stack up quite favourably in comparison to the $57 million the government invests in staging the Grand Prix, or the reported $1.5 million paid for Tiger Woods’ appearance at the Masters.
To fully understand the benefits of these events and why such significant dollar and infrastructure investments are made to attract and keep these events, you must consider the added benefits to the economy of staging these events across a range of sectors.
Take hospitality. The Australian Open Tennis attracts more than 300 players (and their considerable entourages), and more than 700 journalists, photographers and camera crews from 44 countries. The majority of them require hotel accommodation for two to three weeks on average. The premium prices charged for these services play a significant role in allowing hotels to apply lower tariffs during the low season.
In addition to filling our hotels, a significant portion of the 686,000 people who attend the tennis or the 300,000 attendees at the Grand Prix will eat in our restaurants, drink in our bars, shop in our retail outlets, or be served by one of the 7,500 event and catering staff engaged during the tennis or 10,000 staff on site during the Grand Prix. All of these things are vital stimuli for a vibrant economy.
Along with these direct benefits, major events also bring a raft of international expertise to Australia, and showcases Melbourne and Victoria as an economy of intellect and innovation. The recent Avalon International Air Show, for example, is so much more than a magnificent display of state-of-the-art jet fighters and surveillance aircrafts. It is also one of the Asia Pacific’s most prestigious aviation, aerospace and defence events that showcases cutting edge products, technologies and services from Australia and around the world.
In addition to the near 200,000 spectators in attendance, large contingents of government, military, civil, commercial and scientific delegations and trade visitors also attend the event to view the latest developments from major players in the international aerospace industry including Lockheed Martin and Boeing (US), Rolls-Royce (UK), Airbus Industrie (France), Russian Helicopters and Israel Aerospace Industries. From this single event comes a myriad of indirectly linked benefits – tourism, business connection, research and industry development, and inward investment.
Last but not least, these events also provide valuable international broadcast exposure. In 2013, the Australian Open Tennis was broadcast to more than 200 countries, and the Grand Prix was watched by more than 25 million people worldwide, including 2.5 million people in the UK, 2.4 million in France and 5.2 million in Germany. This international broadcast exposure is highly effective in taking Melbourne to the world.
So why invest big dollars to attract such big and costly international events? Quite simply because these events play a key role in keeping the economy ticking over and keeping Melbourne on the map.
Unlike some other states, Victoria relies heavily on our events calendar to attract tourist dollars. We don’t have a Great Barrier Reef, a Harbour Bridge or rich mineral deposits to mine. What we do have is a wealth of magnificent major international events that provide worldwide exposure for our city and our state. So next time, before we complain about the investment made to retain and grow our major events, remember that every dollar we spend on them is returned into the economy many times over; and that is why our major events are so vital to our city.
Kate Roffey is CEO, Committee for Melbourne.
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