[UPDATE: This post was written when it looked like the deal had fallen through. It has since been revived for 2011-2013, a decision I did not support.]
I think this is a good thing on the whole. Council took a gamble on Indy in late 2007, and it didn’t pay off.
The idea was if we could bail out the flagging Champ Car race, then perhaps under new management we could make it work. At the time we were told that for a million or two in the first year, and maybe a million more in the second, we could put it on stable footing and maybe even make money. So Council unanimously supported taking the chance, myself included. I learned a valuable lesson about rosy projections, and my vote on this matter was a mistake I am not eager to repeat.
Shortly afterward, Champ Car and Indy merged and suddenly we had an Indy race, which changed the scale of things. The projections turned out to be optimistic, to put it kindly, especially with the onset of the recession: we’ve spent $9.2 million in cash on the three year deal, plus more in in-kind sponsorship (special event transit service, extra policing, etc). [11:20am Correction: it's on the order of $12 million in cash including 2010, the $9.2 million was just for the first two years.]
After getting the news about the second big loss in 2009, the debate turned to whether we should pay the cancellation fee or eat the operating loss for the third year of the contract. They were both in the $3 million range so we thought, why not run the race? But my message was clear at the time: if it can’t break even for 2011 I’m not interested.
So this past summer Council was faced with the question of whether to renew the agreement for another three years at a proposed cost of $5.5 million. It was a very close vote, and I was on the minority side in voting to not continue with the race.
As I understand it, the City and Octane Racing out of Montreal (the promoter who was in talks to partner with the City) could not come to terms on costs related to the track, semi-permanent grandstands, etc. The city’s statement on the matter is here.
Much will be made of the relationship with the runway closure at the airport, which I understand did complicate the negotiations, but there was more to it. In any case, this was always about money: I never thought carrying on with Indy was a good idea, so while I’m disappointed at how this has unfolded, I do think it’s for the best.
This is an opportunity to get focused again on the festivals and other events that create unique experiences in our city at far lower cost.
Update [further thoughts November 8 at 4:45 pm]: A key point I failed to mention is that this event failed to secure partnership from all orders of government. Much of the case in the comments below for spending further public money on this relates to the economic impact of the race. It bears mentioning that very little of this show up in the property taxes or user fees the city collects – as such there is a poor direct return on investment. Communities still host these events all over the world because they do have some value, but usually the state/provincial and national governments chip in. Remember that our superior orders of government failed to do so in a meaningful way, at least measured against the benchmarks in Montreal and Toronto. So one of my main hesitations last summer about spending any more City money is that your city has the least out of all orders of government – five cents out of the average personal tax dollar. I should note that the business community came on board, but you need cooperation from private and all orders of public to make these events work. Mind you there is risk there that funding from other orders of government, which is not endless either, may support Indy but there may be a zero-sum issue in that other worthy events might get blocked from the pool of limited public funds to support events.