Nov 6, 2012

Horse and hat parade easily tramples the F1 crowd

The money behind the Australian Grand Prix must stare in envy at the endless parade of horses, hats and money that flock to the Birdcage during Melbourne's racing season.

Adam Schwab — Business director and commentator

Adam Schwab

Business director and commentator

It's a tale of two cities ... in one city. The Victorian Racing Club's spring carnival at Flemington continues to draw public support and garnering tens of millions of sponsorship dollars, while its cross-city rival event, the Formula One Australian Grand Prix, attracts meagre crowds, flailing sponsorship and continues to cost Victorian taxpayers upwards of $56 million each year. While both events are held in sports-mad Melbourne, the grand prix resorts to alleged crowd tampering (and unlike virtually every other sporting event globally) refuses to officially count attendance. In 2011, the grand prix reported ticket sales of only 60,000 -- compared with a claimed attendance over the four day event of 300,000. Compare that to the VRC, which in 2007 was forced to introduce a ticket cap (at 120,000) to prevent over-crowding. Derby Day on Saturday drew more than 98,000 spectators -- up 6% on 2011. The VRC has a critical advantage over the grand prix -- largely, that its base infrastructure (the heritage-listed Flemington Racecourse) has been in existence for almost 150 years. The grand prix by contrast is temporarily set up each March, right in the middle of Melbourne's elite leafy Albert Park. This substantially adds to the cost of staging the event, and infuriates hundreds of thousands of local residents. But simply to compare infrastructure is to understate the shrewd marketing of the VRC, especially in the past decade. The turning point came in 2000 when the VRC completed a $46 million investment in its member's stand -- rejuvenating the tired racecourse favoured by bookmakers and an aging membership base. Simultaneously, the VRC undertook two separate moves. The first was to target the young and affluent (who tend to congregate in the Nursery car park during the Spring Carnival). Recognising a clear gap, the VRC created a young members division, with lower cost and specific events. The second was the development and expansion of "Millionaire's Row" -- the expensive marquees which now garner the vast majority of free media attention during the carnival. There has been no better exponent of Millionaire's Row than Emirates -- previously a little-known Middle Eastern airline, Emirates has remarkably leveraged off its sponsorship of the Melbourne Cup and its eponymous Birdcage marquee to create one of Australia's premier luxury brand names. While most corporate hospitality during the carnival is aimed at clients (James Packer's Crown marquee this year was virtually off limits to media outside specific times), Emirates (along with Lavazza and Suisse) have used the marquees largely as brand building exercises. Since Emirates' sponsorship of the Cup carnival (as well as its sponsorship of Arsenal, AC Milan and the Ryder Cup), its international operations have flourished -- globally, the airline now carries 33.9 million people annually -- up from 4.7 million in 2000. Emirates' marquee manages a remarkable blending of Australia's cultural, business and political elite. On Derby Day, former David Jones boss (now Solomon Lew's Premier Investments chief) Mark McInnes was there, rich lister Rhonda Wyllie, as was the ubiquitous Eddie McGuire and chef Neil Perry. Canberra was represented by Opposition Leader Tony Abbott and deputy Julie Bishop. Melbourne's newly re-elected Lord Mayor Robert Doyle, along with pop stars Ronan Keating and Brian McFadden, also attended. Union chief Paul Howes made an appearance after last year defending Emirate's new joint venture partner Qantas during its bitter industrial dispute. Adding to the glamour, Hollywood has-been Mischa Barton is expected on Cup Day. The celebrities and top shelf champagne create a virtuous cycle -- boosting the Emirates brand, which in turn boost the credibility of the spring carnival itself, flowing through to higher VRC membership and improved general admission gate takings. The grand prix corporation can only look on with envy.

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