A huge event
This weekend’s Las Vegas Formula 1 Grand Prix has attracted a lot of attention since its announcement last year. The unique nature of the racetrack which snakes around the iconic Strip will undoubtedly appeal to fans and casual onlookers alike.
In the build-up, there have been teething problems, including traffic issues and disruption to local landmarks. Of course, teething problems are part and parcel of a city holding such a race for the first time, but local politicians, business owners, and race organizers are hoping that the disruption will ultimately be worth it.
an economic impact of about $1.3bn
Applied Analysis estimated that this year’s Las Vegas Grand Prix will have an economic impact of about $1.3bn in the region, creating 7,700 jobs and $361m in wages. If we contrast this with a 2020 NASCAR race in the region, that only generated about $120m, the Las Vegas GP has a seriously high potential.
To put these figures even further into perspective, the total economic output relating to visitors to Las Vegas was $79bn last year.
Benefits of hosting
There are numerous ways in which a city can benefit from hosting an F1 race. The most obvious one is an influx of tourists, splashing their cash at hotels, restaurants, and in this case casinos. F1 fans spend more than the typical tourist too, with the average outgoing per person reaching $1,940 during the Miami F1 last year, double the usual expenditure for a visitor to the city. ?
Early November is usually one of the quietest times of the year in Las Vegas as it is the lead-up to Thanksgiving. This year, the city is expected to welcome 105,000 visitors over the course of the race weekend.
Advertising and sponsorship in and around the host city can also generate significant income for local businesses, while the event also shines a spotlight on an area and helps drive future tourism. Races will lead to job creation, with a large workforce needed to construct the track, grandstands, and paddock. Thousands of people will also work in temporary roles during race week, including security, ticketing, food, and beverages.
Another benefit of hosting an F1 race is the updating of infrastructure, even if it might cause temporary disruption in the build-up. F1 and Clark County invested $80m to improve the infrastructure ahead of the race. Developers tore up Las Vegas roads and repaved them, with the new surface estimated to be sufficient for six years.
Rising popularity in the US
F1 has taken off in popularity in the US over the past few years, having previously not garnered much interest due to the conservative business model of former CEO Bernie Ecclestone. The Liberty Media takeover and the ‘Drive to Survive’ Netflix series have both contributed to increased popularity in America, bringing a lot of new eyes to the sport in different demographics.
the impact of this year’s Miami race reached $449m
While the US just had a single F1 race for many years, now there are three. Miami held its first event in 2022. An independent economic commission report estimated the impact of this year’s Miami race reached $449m. According to Angelou Economics, the United States Grand Prix in Austin has a total economic impact of $1bn, double the impact of a Super Bowl on its host city.
On the back of this growing interest, F1 signed a three-year US media rights deal with ESPN in June 2022 that is worth upwards of $90m annually. This year, ESPN’s F1 viewership is down 8% from 2022, with an average of 1.1 million viewers per race. However, that is largely down to the dominance of Max Verstappen, with the Dutchman winning 17 of the 20 races that have taken place so far.
Big money
A lot of money is changing hands as a result of this big event. A total of 105,000 grandstand seats were made available, with a three-day ticket starting at $1,500. Access to the Paddock Club starts at $15,000 per person and it sold out well in advance of the race. Hospitality areas and fan zones will be dotted around the city, with Team Mercedes spending almost $15m for its hospitality unit that will be able to host 1,000 individuals.
Race organizer and F1 owner Liberty Media expects to spend up to $500m for the first rendition of this race. This includes paying $240m for an empty lot at the bottom of the Strip to situate the paddock, for which subsequent development costs have reached $160m. At least 400 workers transformed the site into a 300,000-square-foot paddock in about 14 months.
Some concerns
While race organizers expect the event to be a sell-out, some reports suggest that a large number of tickets are still available. Hotel room rates have also dropped significantly, with the average decrease from the announcement in November 2022 to the present day being as much as 75% at some properties.
The preparations for the event have also led to a lot of disgruntled locals. Traffic around the year has been snail-like in recent months, with many regulars avoiding the area as a result. This has played havoc on the commute times of local hospitality workers.
Other issues the event organizers have been dealing with include alleged unsafe conditions for construction workers, prospective strikes from casino staff, and complaints about the race going ahead at 10pm local time.
Less reliant on gambling
Las Vegas is trying to diversify and not be as reliant on gaming, which is why some major sports teams now call Sin City home. The Oakland Raiders NFL team transferred to the region in time for the 2020 season, while the Las Vegas Golden Knights NHL franchise formed in 2017.
regular talks for an NBA team to come to the area too
The Oakland A’s MLB team hopes to move to the city soon, while there have been regular talks for an NBA team to come to the area too. One of the next big sporting events on the cards is Super Bowl LVIII, which will take place in February at Allegiant Stadium.
The Las Vegas Grand Prix is another piece of this puzzle. Now, all Liberty Media and Las Vegas locals can do is hope that everything goes down without a hitch for three days of nail-biting action.