The fact that the Baltimore Grand Prix happened at all — much less that it went smoothly — is remarkable and a testament to the professional management its new organizers brought to the event. Race On LLC and Andretti Sports Marketing took over management about 100 days before the race, and many — including this editorial page — questioned whether they could pull it off in that time. They did, and by many accounts they improved on some aspects of last year's grand prix.
That said, we defer judgment on whether the race should be considered a success. Last year's grand prix looked like a winner on race weekend but turned out to be a colossal failure, as vendors and the city and state treasuries got stiffed while a last-minute investor reaped a windfall profit from a race-saving loan. There's reason to think that won't happen this time. Race On and Andretti have promised that vendors will get paid this year no matter what, and the group has already made a payment to the city to help compensate it for the expenses of putting on the race. Admissions and amusement taxes are also being held in escrow. Still, it's become clear that the true measure of the grand prix's impact takes months to be tallied.
It is not particularly fair to judge this year's race based on the fact that the crowds were apparently smaller than they were for the inaugural event. This year's organizers had little time to market and sell tickets, and the uncertainty about the event based on last year's debacle likely kept some away, as did the rain. For that matter, it appears that the first-year crowd estimates were inflated by a large number of non-paying attendees. A much more valid comparison will be the crowd next year compared to the crowd this year.
From a financial perspective, we won't get a complete picture of the tax revenue the event generated until the end of November at least. We do know, however, that the impact fee the race organizers paid as part of their contract didn't come close to reimbursing the city for its expenses. City officials estimate that Baltimore spent about $800,000 on police, fire fighters, sanitation workers, traffic control and other costs, but Race On's contract called for only a $350,000 payment, $50,000 of which goes to grants for neighborhoods affected by the event. That means Baltimore subsidized the race to the tune of $500,000. It's not unusual for the city to pick up some of the costs for big events like 4th of July fireworks or Artscape, but it is unusual for it to do so for a private and (theoretically) for-profit enterprise. City and race officials had said they hoped to reduce the city's expenses this year, but they didn't. Indeed, the way the city's contract with Race On works, the management team had no real incentive to do so.
No doubt the event had a broader economic impact than can be tallied in city expenses and tax revenues, but exactly how much is hard to nail down with certainty. A Visit Baltimore-sponsored study of last year's race found that it had a $47 million impact, but no such study is planned this year. Even so, such calculations are open to interpretation, as it is difficult to make precise judgments about how much money spent by race patrons would otherwise have been spent on other activities. Both the American LeMans Series race on Saturday and the IndyCar main event on Sunday were broadcast nationally. That exposure is surely worth something, but how much?
Perhaps the biggest problem in evaluating the race stems from the outsized importance it has taken on in Mayor Stephanie Rawlings-Blake's administration. She championed the 2011 race in the middle of a mayoral election, and her references to it as a game-changer for the city meant that she had a great deal of political capital tied up in its success or failure. She and her staff spent a tremendous amount of time and energy in making sure the 2011 race went well, and after the collapse of the event's first organizers, they spent even more time lining up another group for 2012 (which also collapsed) and then eventually bringing on the current organizers. That's time didn't spend figuring out how to lower property taxes, raise student test scores or reduce crime.
Looking forward, the success or failure of the grand prix as a Baltimore event will be determined by how effectively City Hall can reduce its involvement. Baltimore needs to find ways to lower its out-of-pocket expenses for hosting the race, and it needs to devote less time and energy to making sure the event is successful — a trend that appears to be underway amid more professional race management. The grand prix can become a nice event for Baltimore, but it is unlikely to make much of a dent in Mayor Rawlings-Blake's goal of attracting 10,000 new families to the city. The more she can focus on that and the less on a three-day road race, the better.Copyright © 2014, The Baltimore Sun