Another Blow for Detroit, Belle Isle GP Canceled
ESPN reported last night that the 2009 Detroit Belle Isle GP has been canceled due to the faltering economy. The event featured IndyCar, ALMS and Speed World Challenge. Yet another example of tough economic conditions affecting the sports industry. It’s really too bad, Detroit desperately needs something positive. It’s football team is 0-14 and the American auto industry, which is the foundation of the area’s economy, is on the brink of collapse.
While it’s sad, it’s also predictable. Street races like the Detroit GP are incredibly expensive to stage, as the entire facility infrastructure must be built and taken apart on an annual basis. That means truckload after truckload of concrete block, fencing, bridges, etc. Usually on a very tight schedule; sometimes just six weeks from laying the first block to removing the final one. I can tell you from experience, that without a rock solid national title sponsor (they didn’t have one) and a slew of local/regional sponsors (not really any of these either), the event will be a financial disaster. While large attendance numbers are great for TV, they’re just not nearly enough to offset the tremendous costs of such an event. While I have no specific information to back this up, I would venture to guess that ticket revenue for last year’s event was likely less than $4 million. Add some corporate hospitality revenue to that and you might get to $5 million. With an annual budget which is likely in the $7-11 million range, the business case for the event just simply doesn’t exist. …unless of course, you have a large corporate sponsors kicking in $2+ million and a host of other local sponsors totalling another $2+ million. In the current economy, particularly in Detroit, these sponsors are few and far between.
Agree, disagree, or think my writing stinks? Let me hear about it.
Matt Breeden (SportsLawGuru.com) is an internationally respected business advisor and attorney based in Indianapolis, IN. His practice is focused on Sports & Entertainment, Intellectual Property, Commercial and Corporate Law. He represents Sports & Entertainment properties, as well as many other businesses, in a variety of matters, including: Broadcast & Digital Media Agreements, Licensing Agreements, Sponsorship Agreements, Commercial Agreements, Athlete/Driver Contracts, Insurance & Risk Management, Employment Agreements, Litigation Management, Mergers & Acquisitions, Business Formation and Corporate Governance.
