Friday, April 19, 2013

Baltimore's Costly Cars

By Dean Fleyzor

In 2011, Baltimore's Labor Day Weekend inaugural Grand Prix left the city in a tough financial position. Initially, the Baltimore Sun claimed that the races were a success because profits for hotel revenue in the downtown area increased by $270,000 and food and drink sales increased by $155,000 compared to 2010's Labor Day Weekend. Although the 160,000 attendees at Baltimore's first Grand Prix in 2011 brought money into the city, the event amassed $47 million due to the increased presence and spending of tourists. However, the races failed to bring in $23 million needed to meet the city's goal of $70 million from hotel, food, entertainment and shopping revenues.

2011 map (from Wikimedia Commons)
The impact of this past Labor Day Weekend’s Grand Prix may never be fully known. According to the Baltimore Sun, in September 2012, Mayor Stephanie Rawlings-Blake said Baltimore would not conduct an "economic impact study" of the race's revenues to the city.

Unofficial estimates report that the impact of the race in its second year was around $42 million, a 10% drop from the inaugural Grand Prix. While the official numbers may never reveal the failure of Baltimore’s second Grand Prix, there might have been some positive impacts to the city. Anirban Basu, owner of an economic policy-consulting firm in Baltimore, told ABC News that the Grand Prix "continues to be a risk for Baltimore but the reward may eventually be priceless."

The race could possibly grow in reputation in the coming years, and eventually see profit. Basu noted that if the racetrack could be redesigned to induce more people to walk to Federal Hill or Little Italy, the economic impact could dramatically increase. Some changes were already implemented after the Grand Prix in 2011, such as efficient exits for spectators and race times that increased the impact of tourism downtown. The city has a contract to host the Grand Prix races through Labor Day 2015.

Tom Noonan, President of Visit Baltimore, said he saw an increase in the number of organizations interested in holding conventions in Baltimore after the Grand Prix began. So there may be a silver lining in the underwhelming Grand Prix after all. If the races can attract the eye of more investors, the short-term financial loss may increase the chance that Baltimore will host more large events in the future.

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