tip off

Open for debate? Taxpayers’ big investment in a fortnight of tennis

The Australian Open costs taxpayers millions to keep in Melbourne, but is it money well spent? Crikey intern Broede Carmody reports.

Taxpayers are generously funding hundreds of games of tennis in Melbourne over the next fortnight. But unlike with the Grand Prix and some other sporting fixtures, nobody seems to mind.

The Victorian government has helped build arguably the best big-match tennis facility in the world, with hundreds of millions of dollars to upgrade the precinct. It’s announced a further $338 million for a new stage of works, and a third stage is unfunded but on the drawing board. The government says the investment is needed to ward off other cities poaching the Australian Open.

The government is regularly criticised for its investment in the Australian Grand Prix in Albert Park, a $50.7 million fee that returned just over $40 million in 2013. The tennis has been more successful in becoming embedded into Melbourne’s culture, according to Victoria University events management lecturer Martin Robertson. He calls it the “halo effect”.

It means it is already established and therefore it is widely accepted,” Robertson told Crikey. “The Australian Open was grown here, and therefore it grows with people … whereas the Grand Prix, it is the cousin people don’t know as well.”

In the 2012-13 financial year, the Melbourne and Olympic Parks Trust — the government agency that owns the sports and recreation centres that host the Australian Open — received grants from the Victorian government of $114.38 million. The Melbourne Park redevelopment is aimed at creating “an unbeatable sports and events precinct” and keeping the event in Melbourne until 2036.

Stage one of the redevelopment had an original budget of $363 million, boosted by a $3 million contribution by the federal government. On Sunday, the state government announced plans to contribute over $298 million for stage two, with the Melbourne and Olympic Parks Trust providing an additional $40 million.

Robertson says when it comes to government investment in major projects, there needs to be an ongoing discussion.

Particularly with the mega-events, trying to stack up the figures are difficult unless you look at the fact it is part of a longer narrative,” he said. “What is the legacy? Things like the Open are part of a bigger story. The facilities are not just for the Open, they’re to be used throughout the year. It is going to make money.”

Victorian Minister for Major Projects David Hodgett said via a press release on Sunday that the $338 million investment into Melbourne Park was estimated to generate over $2.27 billion in economic benefits to Victoria, including the creation of 1300 construction jobs.

But Jeff Borland, a professor at Melbourne University’s department of economics, points to two studies in the United States that show there is little evidence to back up the justification of local economic development and job creation when it comes to subsidising sporting events. For example, the 2000 Olympic Games cost $6.6 billion, with money being diverted from health and education programs. In the years immediately following 2000, Sydney’s Olympic Park was criticised for being under-utilised.

Melbourne and Olympic Park is home to a variety of events other than the Australian Open with Rod Laver Arena and surrounding facilities hosting numerous music concerts, conventions and other events throughout the year.

Although it’s hard to track down how much it costs to hold the Australian Open each year, the tournament does generate plenty of revenue for stakeholders. The Melbourne and Olympic Park Trust earned $95.2 million from the sale of goods and services in 2013, a portion of which can be attributed to the Australian Open. Similarly, Tennis Australia’s revenue in 2013 was $186.41 million — the majority of which came from tickets sales, TV rights and sponsorship. And tournament reached 172 million viewers in the Asia-Pacific region in 2013, with 5.7 million people from China visiting the Australian Open homepage alone.

Robertson says the benefit of the Australian Open isn’t just economic. “We are part of Asia,” he said. “So let’s imagine that Li Na wins — think of all the people who would switch on to watch from overseas. She gives a great face to China but also to Melbourne.

This event is part of world diplomacy. You’ve got to make it is exciting and show people why they should come to Melbourne.”

6
  • 1
    Chalkie Kev
    Posted Wednesday, 15 January 2014 at 2:21 pm | Permalink

    If they keep playing in heatwaves, there’s going to be a dead/seriously injured tennis player/official - and pressure to forget about Melbourne as an “Open” venue. The balance sheet probably won’t look as good if that happens.

  • 2
    Reechard
    Posted Wednesday, 15 January 2014 at 5:52 pm | Permalink

    Ah, but for all those (What %age, by the way?) who “Luv sport” it is other’s money well spent.
    Forget the toher many things it could have been used for. Or not.. Like reducing the Land Tax grab or the ‘Stamp’ theft on property purchases, for instance.

  • 3
    Reechard
    Posted Wednesday, 15 January 2014 at 5:52 pm | Permalink

    Ah, but for all those (What %age, by the way?) who “Luv sport” it is other’s money well spent.
    Forget the other many things it could have been used for. Or not.. Like reducing the Land Tax grab or the ‘Stamp’ theft on property purchases, for instance.

  • 4
    Peter Goad
    Posted Wednesday, 15 January 2014 at 9:29 pm | Permalink

    This article misrepresents the financial and economic effects of the F1 grand prix. The 2013 annual report of the Austraian Grand Prix Corporation (page 46, Revenue and Expenses table)shows that the Corporation spent $98.4m to stage the 2013 event and received revenue (excluding govt. contributions)from ticket sales and sponsorship of $38.8m.
    This indicates an operating loss of $59.6m.
    A cost benefit analysis of the event caried out by Rod Campbell of Economist at Large showed that it produced an economic loss of $54.3m.

  • 5
    Pointy Hatted Party Monster
    Posted Wednesday, 15 January 2014 at 11:42 pm | Permalink

    I think one of the important differences between the tennis and the Grand Prix is that the Australian Open doesn’t shut down a suburb for four months every year. People do mind the loss of public amenity involved in staging the Grand Prix in Albert Park, whereas the tennis takes place in a purpose-built sports venue with easy access to public transport and the city.

  • 6
    CML
    Posted Thursday, 16 January 2014 at 12:59 am | Permalink

    Who on earth would want to visit Melbourne, with or without the Oz Open, when temps are well above 40C.
    With players being injured and falling like flies, where is the incentive for the players or spectators?
    For heaven sake, why doesn’t somebody in the tennis hierarchy grow a brain and shift the event to autumn or spring? There are only four grand slams for the year, so that leaves plenty of time to schedule them when the climate suits the venue.
    Holding the Oz open in January is about as suitable as playing Wimbledon in January would be.

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