2012-11-17

When Governments Lie: The City of Austin and the State of Texas Exaggerate F1 Impact

The lie: Formula 1 will attract 300,000 people to Austin.

The reality:
120,000 people spending over a hundred dollars for a sporting event is impressive. The fact that many of those 120,000 will be attending the event over 3 days, requiring a hotel stay, even more so.

Facts: The Austin Formula 1 is the only formula 1 race in the USA. The nearest is in Montreal (held in June). Formula one is to Europe what Indy racing is to America: a fairly niche product, aimed at men that attracts lucrative sponsors.

Austin is a fairly small city (area wide population: 1.7 million). Obviously, just like in Montreal (pop 3 million), people from out of town will show up. People from San Antonio and Houston could do it as a day trip, but could be convinced to spend the night because of the practice sessions and qualifying on the Friday and Saturday. In Austin, the tickets are sold as a 3 day package (you can't buy them for individual days like you can for some tickets in Montreal).

Many people will also fly in from Latin and North America, free of jet-lag  Flying is expensive, but with a Saturday night stay, flights can be relatively affordable when booked far in advance.

Austin has developed a couple of music festivals that attract tens of thousands of people. Being near San Antonio and Houston, that is understandable. Even without music, it is the capital of Texas and a fairly nice place to visit.

The most successful festival, South by Southwest, has a film and software element, and attracts up to 30,000 people over 9 days (ie, there are never 30,000 people in town at once).
 
The Formula 1 race has 120,000 tickets. The state of Texas somehow concluded that 300,000 people from out of town would show up in Austin! Never mind that race fans from Houston and San Antonio could show up at the track without setting foot in the city (the track is located south-east of town, outside city limits), or that some could go directly from the airport on race day (the track is a few miles away from it), even if all 120,000 F1 ticket holders came from out of town and spent the weekend, that would still not get anywhere near the 300,000 figure.

Some say the 300,000 number came about because the event is 3 days. So 100,000 X 3 is 300,000. But clearly, both the state and the city have been spreading falsehoods about the number of people that the F1 would attract.

But why?

The State
Austin was able to land an F1 race because of the promise of 25 million dollars a year from the State of Texas. $25 million is $208 per attendee. Somehow, the state plans on extracting that amount of sales tax out of the event (there is no income tax in Texas). It's not completely out of the realm of possibilities. The 400 million dollar track had to be built, workers will have spent much of their salaries in Texas. Visitors to F1 are often well healed. So even if the numbers of people attending aren't that high, the local spending could be. 

The City
The city annexed the track (will take effect by next year's race). In theory, that is a windfall: The City of Austin has a sales tax. In practice, the city could be on the hook for things like water, sewers, road maintenance, public transportation, policing and fire prevention. So regardless of the sales tax and property tax base, there are no guarantees the city will break even.  

By exaggerating the economic impact, local officials hoped to help nudge the event out of the expense column into the revenue column. They don't have to convince all of the people, just some.

Lies can be found here:

Lies repeated in the Texas media
  1. Austin prepares for Formula 1 traffic, crowds

    KVUE-Oct 31, 2012
    AUSTIN -- The City of Austin is preparing for an influx of 300,000 Formula 1 visitors, which could make traffic congestion one of the event's ...
  2. Survival Tips For Formula One Weekend (Hint: Check The Map)

    Austinist-Nov 15, 2012
    Formula 1 has descended upon Austin, chartered DJ, gold flake ... Anywhere from 100,000 to 300,000 visitors are expected to be here this ...
  3. Haulting Downtown Construction for F1

    Austin News-Oct 28, 2012
    As the countdown continues ahead of Austin's first Formula One race city ... With 300,000 visitorsexpected in Austin during F1 weekend, ...

    "Starting Grid" event kicks off F1

    1 Nov 2012 – In two weeks, up to 300,000 visitors are expected in Central Texas forFormula 1 festivities. Just a few months ago there were questions about ...

    1. Austin's Formula 1 race to bring money to San Antonio | News - Home

      1 day ago – With 300000 fans projected to attend the Circuit of the Americas and theFormula 1 United States Grand Prix, San Antonio can expect a boost to the economy. ...International visitors expected to flood central Texas ...
    2. Your Guide To Surviving F1 Weekend In Austin

      9 Nov 2012 – ... grandstanding by Bernie Ecclestone, Formula One will at last make its ... be one of city officials have said they re expecting 300,000 visitors to ...
    3. Circuit Of The Americas | Protocol & Etiquette Worldwide

      To put things in perspective, Formula 1 weekend is beyond just a large local event. 300,000 visitors are expected to come to Austin from Friday November 16 to ...
    4. Welcome to ATCEMS

      Austin-Travis County EMS Welcomes Formula One Fans! ... With an expected 300,000 visitors coming race weekend, including many from around the world, ...
    5. Others

      Lap crowds and dodge traffic at this year's Formula 1™ races ...

      31 Oct 2012 – ... of 300,000 people will visit Austin during the first Formula One™ race ...These tips from officials can help natives and visitors alike stay one ...

      1. Survival Tips For Formula One Weekend (Hint: Check The Map ...

        austinist.com/2012/11/15/survival_tips_for_formula_one_weeke.php
        2 days ago – Formula 1 has descended upon Austin, chartered DJ, gold flake ... Anywhere from 100,000 to 300,000 visitors are expected to be here this ...
      2. I am a local business owner and want to find out more about ...

        ... Austin wants to ensure that local businesses and organizations are prepared to welcome the estimated 300,000 visitors coming to Austin for the Formula One ...
      3. Austin prepares for Formula 1 traffic, crowds - kvue.com | Austin ...

        31 Oct 2012 – The City of Austin is preparing for an influx of 300,000 Formula 1 visitors, which could make traffic congestion one of the event's biggest ...
      4. Buda Tourism, TX - Official Website - Formula 1

        Austin is gearing up to host the 2012 Formula 1™ United States Grand Prix on ... With an expected 300,000 visitors coming race weekend, including many from ...
      5. Maybe Texans thought they were in Australia.

         

        Tourism Australia Media Centre - Formula 1 Grand Prix

        5 days ago – Around 300,000 Formula 1 fans flock to the event, which is all ... trends and insights about Australia's top tourism markets and visitor arrivals.


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