In April La Presse published an article about a new study that will be conducted about the economic impact of the Canadian Grand Prix. Here is a Google translation (below) with tweaks by me.
As the article points out, maybe this study should have been done before the signing of a new contract last year. The planned study sounds like it will collect some meaningful data from actual spectators. But since the sponsor of the study (the provincial government of Quebec) is also involved in funding the race, there is an obvious conflict of interest. It's hard to believe that the government of Quebec would publish a study that makes it look like it wasted taxpayer money by subsidizing the Grand Prix.
These kinds of studies are controversial among economists who analyze them. For example:
Do Economists Reach a Conclusion on Subsidies for Sports Franchises, Stadiums, and Mega-Events?
The evidence reveals a great deal of consistency among economists doing research in this area. That evidence is that sports subsidies cannot be justified on the grounds of local economic development, income growth or job creation, those arguments most frequently used by subsidy advocates. The paper also relates survey evidence showing that economists in general oppose sports subsidies.
La Presse.ca April 23, 2015
A more serious study of the impact of the Grand Prix
Vincent Brousseau-Pouliot
Less than a year after it signed a $CDN 219 million 10-year contract with Formula 1, the Quebec government will conduct a comprehensive study of the economic impact of the Grand Prix of Canada, La Presse has learned.
Earlier this month, the Quebec government launched a tender for a study to measure the "Economic Impact of the Canadian Grand Prix." For the first time, the Quebec government will make an economic impact study based on actual data from the spectators of the Grand Prix. About 5,000 spectators will be recruited for a survey conducted after the event.
Since 2009, the Quebec Ministry of Finance has estimated the economic impact of the Grand Prix to be $CDN 89 million per year. The ministry has made its calculations based on data collected by Tourisme Montreal. However, the tourist organization has never assumed responsibility for the data it has distributed in press conferences, public statements and through the promoter. According to what the federal government stated last summer the economic impact of the Grand Prix is $CDN 71 million per year.
The new economic impact study will take place after Ottawa, Quebec and Montreal already signed a 10 year agreement with Formula 1 last year for the staging of the Grand Prix of Canada. The three governments will pay a combine $CDN 186.7 million over ten years, and the City of Montreal will be responsible for renovations to the site amounting to $CDN 32.6 million.
So why wasns't a more complete study made of the economic benefits before agreeing with F1? "This study has been requested by the tourism industry for many years. The important thing is that we are doing it now," said Cynthia St-Hilaire, the press secretary of the Tourism Minister Dominique Vien. Tourisme Québec is also preparing a guide to standardize studies of the economic impact of festivals, and the tender will be a test for the new guidelines used in the study.
$CDN 33 million in Melbourne
In Australia, a 2011 study by Ernst & Young found that the Grand Prix in Melbourne generated an economic impact of $CDN 32.6 million. Yet the two events are similar in size (about 300 000 spectators over the three days, 30% of visitors from outside the state of Victoria and 40% of visitors from outside Quebec).
The study on the impact of the Canadian Grand Prix will be funded equally by Tourism Quebec, Tourism Montreal and Octane Racing Group, the local promoter of the Grand Prix. "What is important for us is to have figures on which we can rely. No matter what has happened in the past, we want credibility. It is important to have reliable figures for what we want to build for our advertisers and partners, "said Louis-Philippe Dorais, Strategic Advisor to the President and Head of Press Octane Racing Group.
The Quebec Coalition of Major International Events (
REMI), which does not count the Canadian Grand Prix among its members, welcomes the decision to make a more complete study.
"In recent years, many figures have been floated, increasing threefold, says Martin Roy, CEO of REMI. It seems pretty obvious that the benefits will be greater than the money invested by governments, but it could show that the Grand Prix is not in a separate category as they seem to think in certain circles. Other events such as the Jazz Festival can be compared in some respects with the Grand Prix, and Osheaga attracts 67% of tourists from outside Quebec. "
In the past, many economists have been critical of the figure of 89 million for the economic impact of the Grand Prix as calculated by Quebec - especially compared to the impact of 32.6 million in Australia. Professor of Financial Accounting at Concordia University, Michel Magnan estimated that the gap between the two figures "has the effect of a cold shower." "Achieving a more substantial study to quantify the economic impact of the Grand Prix is certainly a good idea, but the only reason I can see is to retroactively legitimize the decision [by the government]," says Magnan.
"Obviously we should have done the study before it makes a 10-year agreement with Formula 1. Yes, the economic impact of the Grand Prix is great, but it does not make sense we did not do this kind of study before, "says economist Jean-Marc Bergevin, which calculates benefits to about 58 million, mainly on the basis of the data used by the Government of Quebec.