The Las Vegas Grand Prix is over, with only one practice session being canceled after a race car was wrecked when it hit a loose drain cover, with spectators who paid $200 a ticket being sent home after eight minutes of action without refunds. (They’re now suing.) But organizers say it was projected to create $1.2 billion in economic impact, so it must have been great for local businesses, right?
Key roads were closed as public streets along the race course were repaved not once but twice. Thousands of Strip corridor workers have stories to tell about lengthy waits to leave parking garages. Small businesses like pizzerias, delis and souvenir stores saw a significant drop in foot traffic.
And:
"We had no way in and out of our restaurant parking lot." A restaurant right outside of the Formula 1 track says accessibility was just part of the struggles being in the shadow of the #LVGP. Meantime organizers say Vegas' economic impact: $1.2 billion @KhaliaPatterson @News3LV pic.twitter.com/DccRHeOqi7
— Marie Mortera (@MarieNews3LV) November 20, 2023
So where does that $1.2 billion number — which, as J.C. Bradbury points out, would be more than $5,000 per Vegas household — come from? From race organizers Liberty Media, but the number (then, weirdly, $1.3 billion) was reported as far back as January, based on a consulting report by Applied Analysis that projected $966 million in visitor spending and $316 million in event operations and support costs.
Did organizers and visitors actually spend that much? We don’t know yet, obviously, and maybe never will. But there are plenty of other reasons to think that those numbers are hot garbage:
- If Grand Prix visitors were taking up hotel rooms that otherwise would have gone to regular Vegas visitors, then that’s not all a net positive. As has been seen for decades with events like the Super Bowl and Olympics, major destination sporting events don’t actually show a major uptick in local spending, presumably as many people avoid the area during event week because they don’t want the hassle. (Applied Analysis told LVSportsBiz’s Alan Snel that Grand Prix visitors spend $3,400 per person vs. $870 per person for average visitors, but didn’t provide a source for those numbers.)
- A large chunk of any visitor spending was presumably on tickets, and that doesn’t circulate in the local economy, it just goes to Liberty Media, which is based in Colorado and is more likely to re-spend it on things like overpriced relief pitchers for the Atlanta Braves.
- Applied Analysis is the firm run by Jeremy Aguero, who you’ll perhaps remember from that time he was simultaneously providing Las Vegas with economic impact numbers on a potential Oakland A’s move to the city while also working for the A’s as a lobbyist. Plus Aguero is not an economist, but rather a lawyer with a bachelor’s degree in hotel management.
If there’s a silver lining, it’s that not too much public cash seems to have gone into the event, though from the sound of things Liberty Media is still trying to recoup $40 million from Clark County toward “infrastructure spending.” Plus, of course, Vegas turned over four miles of city streets to the event, which is a subsidy in its own right. But still, a fun time was had by all, right?
Reigning three-time Formula One champion [Max Verstappen] called Saturday night’s race “99% show, and 1% sporting event” while complaining he felt like “a clown” standing on the stage during Wednesday night’s opening ceremony that featured multiple musical acts.
The Las Vegas Grand Prix has a 10-year contract, so we’re going to get another nine years of this. If nothing else, that should provide lots of data for an enterprising economist to check Mr. Hotel Management’s figures.
