Further to my previous post, I see that Forbes has paid me the compliment of going through my analysis, trying to pick holes in it. I trust that if I am proved to be correct they will dump their current correspondent on such matters and come to me for help… I used to work with them on their rich lists but in the end I didn’t see the point as they didn’t pay.
So let me follow-up on why I don’t believe a word about a race in Sin City.
When F1 visited Las Vegas in the early 1980s it was a place with a population of less than 500,000. Today it has four times that population but it effectively stopped growing in 2007. Gambling has been stagnant as well as a result of the rise of Internet gaming, deregulation in other States, and foreign expansion by the casino companies, notably in Asia. Today more visitors go to Las Vegas for its attractions (fake though they may be) than go for gambling. Land on The Strip that used to be used for parking lots has disappeared beneath vast hotel complexes. The city has 150,000 hotel rooms and fills them in dramatic fashion, but the rates are low and nearly 60 percent of visitors still come by road. The Las Vegas Convention and Visitors Authority recognises that international visitors spend more money and has set a goal of boosting foreign visitor numbers to 30 percent of the total by 2020. This will require a serious hike from 6.4 million to 12 million. Thus one can see that there is an argument that Vegas could benefit from a Grand Prix and I am sure that some of the local entrepreneurs might be willing to invest in the idea, but are they really willing to invest sufficient money to make a race happen? And do they have the clout to close The Strip?
The Cirque du Soleil and a few other organisations are not going to pay $50 million a year, plus construction costs and the city is not going to want weeks of disruption on The Strip. If Bernie Ecclestone was not willing to compromise on a brilliant track plan in New Jersey, why would he in Vegas? It is a market that is about 10 percent the size of New York.
Races these days need government money: Singapore has proved that. Billionaires are not stupid with their money and they want numbers that pretty much guarantee success before they commit to vast investments.
The idea of a private-public partnership is good if the city is able to pay. They might consider additional taxes on hotel rooms for the race week, but there is going to be huge opposition to that from hotels at the other end of town. If the tax was to cover only a certain area then a percent of the business would switch to the cheaper districts. And would all this drive away regular business and end up costing money? Would F1 draw enough people to make it worthwhile. In this respect places where there is limited tourism (such as New Jersey and Long Beach) are much better bets than Vegas.
Would the city pay and give all the necessary permissions? It is doubtful, judging by recent attempts to get a soccer stadium built. The city has never had a major league sports franchise of any kind but there are attempts to get a Major League Soccer team going on at the moment. This will require a stadium and the promoters of the idea (quite rightly) feel that the city should pay some of the costs. The money being discussed is peanuts compared to F1 fees, but the city has been baulking at the idea for months because the growth of Vegas has meant that the money available is really required to sort out infrastructure problems, such as water and sewerage, not to mention schools and policing. There is also a strong tradition in the city – the capitalist Mecca – that private money should pay for new developments. These days many casino companies are listed entities and thus less willing to take risks and they have sought growth outside Vegas. Some have over-extended themselves, notably Caesar’s which is teetering on the brink of bankruptcy, with an impressive $24 billion of debt.
At the height of the recent financial crisis in 2009 the city did agree to allow the Las Vegas Marathon to close The Strip for the first time in its history, but that was for one day and not at times when the gamblers are going places. There would be a lot more resistance if there was to be an F1 race, which requires weeks of construction work and disruption. The Singapore GP has been a big success, but a lot of the city’s shopkeepers and taxi drivers hate it because it means they make less money. The flow of traffic affects all of the casinos and not all will be in favour of an event.
There is no real scope in Las Vegas for novelties such as night races as the time zones would mean an 8pm race would be shown in Europe at 5am, a worthless hour for TV viewing numbers. The only race that would work in F1’s big markets would be early in the morning and that would not work for Vegas.
All things considered, none of it really makes sense in real terms.
In the past Vegas has tried racing and has failed. In the 1990s a promoter called Tommy Baker tried to sell the city on a race with free admission. It did not work. Later Champ Car managed a race down in the backwoods behind the downtown area and that failed.
Remember too that this story came from Bernie Ecclestone by way of media who print whatever he wants them to print for fear of losing the access they currently get. Bernie has always known how to play suckers and he’s doing just that with this story. And, of course, it is completely out of character for him to talk about deals that are under discussion unless it serves his purpose to make them public. And his folk tend to get their knickers in a twist when such stories leak out. So why is it put there?
The only sensible conclusion is that this is either part of the process to get F1 talked about in the US in the run up to Austin (an old Ecclestone trick used all over the world) or he wants someone else to feel pressure and sign a deal. Having failed to get races off the ground in Long Beach and New Jersey (when both would have been possible and desirable if the Formula One group had been willing to invest) a success in the world’s largest consumer market is long overdue. Austin is OK, but in global terms it is still just a small town in Texas. Vegas is not ultimately a big market, in the way that New York and Los Angeles are.
I am going to go on watching for action in these markets. And given Vegas’s location I’d say LA is still the place watch.