City on hook after Edmonton Indy loses $5.3M in 2008
City taxpayers are on the hook after organizers of the 2008 Edmonton Indy revealed Wednesday that the event lost $5.3 million, far more than the $1 million that was originally projected.
An event summary released by local organizer Edmonton Northlands revealed the city had agreed to cover any losses.
The projected losses got larger after negotiations for the race contract took longer than expected, Northlands president Ken Knowles said.
"We were precluded from marketing the event, which really put us behind the eight ball because when the contract was signed and IRL [Indy Racing League] confirmed the dates for 2008, we had eight weeks to market the event," he said.
The race, which took place in July, was the first Indy Racing League event ever held in Edmonton.
The Champ Car League had operated a Grand Prix event in Edmonton since 2005.
But a new agreement was needed to continue the Edmonton event when Champ Car merged with the IRL last year.
The transfer from one league to another raised costs right out of the gate, Knowles said.
"We incurred a million dollars in expenses in the transition alone," he said.
He said the larger number of competitors in the Indy Car race also added to the costs.
The city estimates the race generated $80 million in economic activity for Edmonton, and brought exposure to the city because it was televised around the world, making the $5.3 million deficit worth it, according to Mayor Stephen Mandel.
"It's a great advantage for the city and an awful lot of potential for publicity that we couldn't buy for anywhere near that," he said.
The city has a three-year commitment to absorb any losses, although organizers hope they can balance the books over the next two years.
Knowles said there will likely be a loss in 2009, but he couldn't put a number on it because Northlands is currently working through the budget with the city and IRL for this year's event, which runs July 24-26.