Since the announcement of the new F1 track site in southeast Austin was made, there have been many opinions offered about the wisdom of this venture. Was it going to really happen? Most of the Austin and Texas ‘big’ real estate and finance players seemed to not know about it until after it was announced.
Opponents wanted to know how in the midst of the ‘Great Recession’ how anyone could consider spending money to build a race track. Is using of taxpayer’s dollars to support the event a sound investment, especially in the midst of school systems suffering financially and teachers being laid off?
In order to have an informed opinion on F1, let’s move forward with some basic questions and answers.
Q: What is Formula One?
Very different from NASCAR in cars, the track, and in the kind of fans it brings
Highest class of auto racing with speeds up to 220mph
Most popular in Europe, Asia, and Latin America
Q: What is the Formula One audience?
Wealthy, international, well-educated
Q: What types of crowds and economic impact should we expect?
300,000+ people, as much as $400m in additional spending each year
Global television of 30 million per race
F1 in Indianapolis brought 90-225K attendees and $270m to the local economy
Visitors will spend up to $1500 per day, with many hotels requiring a four day stay
65% of guests from other parts of US, 20% from Texas, 15% international from Mexico, Canada, Britain, and Australia
45% increase in sales tax revenues during the race
Additional jobs from support staff, media operations, facility operations, hospitality
Q: What other economic impact will F1 generate for the area?
F1 site is currently valued at $11.7m, which is about $148,350 in property taxes for the Del Valle school district
After the $300m investment from Circuit of Americas, Del Valle schools will collect about $4 million a year
Government support contributed $410m to F1 last year, average of $21.6m per race, but the races generated $1.9 billion in economic activity – a 533% rate of return.
Circuit of America events will generate $400-$500m a year, or $4-5b over ten years
Q: Won’t it also cost taxpayers a lot to handle the crowds?
SXSX with 225,2000 attendees cost the city about $341,000 in police overtime and other expenses. However, F1 will occur outside Austin in Travis County, and Sheriff’s officials have yet to fully price out the event.
What non-economic impact will the track have on Austin?
$200m worth of television exposure for Austin for free
Expose Austin on a global scale to very wealthy people
560,000 people are expected to move to Austin in the next ten years, without the considering the impact of F1
Q: What peripheral economic impacts can we expect from the F1 track?
Full real estate development
New hotels, convention centers, automobile research centers, real estate services, engineering and construction firms, restaurants, catering, security, and general support services
Q: What effects will F1 have on local real estate?
Except for the area around the track, little to no impact on real estate appreciation on an annual basis
Exorbitant rates for short term rentals during race week
Highlight the lack of hotel capacity in Austin (only 2,200 high end convention style hotel rooms in downtown Austin compared to 8,800 in San Antonio)
Q: Tell me about the facility
3.4 mile track with capacity for 120,000 fans, with 5,000 person VIP area above the pits
Amphitheater with room for 17-20,000
Media center that can be used as a smaller venue for 1,000 attendees
Q: Was there an economic impact study done?
Yes, F1 must generate at least $25m for the state’s treasury
Q: Is this study accurate?
The $26.6m in projected tax revenue closely tracks the amount of economic activity projected by Texas Comptroller Combs’s office in 2008
If the government’s “profit” is $26.6 million but it returns $25 million of that to F1, that’s a 6.4 percent rate of return.
Q: What is the role of the comptroller’s office?
To review the numbers in economic impact studies accompanying applications for its trust fund program
No study has ever been rejected as fallacious, but some have been revised down
Q: What should we expect during the race weekend?
November 16-18th is the race, with trials the week before.
Fan Fest downtown open to the public with music and other attractions
Downtown street closures starting as early as Tuesday the 13th
Some tips on interacting with F1 visitors…
Show that southern hospitality. These visitors are helping keep your taxes lower. And if you are going to wave to them, use all your fingers on your hand.
Most will go to restaurants to dine (longer time at the table). They are not here to eat and run.
Howdy and y’all are expected, but don’t use peoples first names when first meeting them. Mr. and Mrs. are preferable.
Business cards are of upmost importance in most countries, have plenty of them available and;
Receive business cards give to you with your right hand or both hands. NEVER take a business card with your left hand.
Never write on cards.
Always give a card with the print showing.