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The Globe and Mail

Edmonton puts its IndyCar money where its mouth is

Australia's Will Power take the first corner during the Edmonton IndyCar auto race, in Edmonton, Alta., Sunday, July 24, 2011.

Jeff McIntosh/Jeff McIntosh/The Canadian Press

When Champ Car arrived in Edmonton six years ago, the city embraced the open wheel series and its citizens came out in record numbers to watch its race.

Getting fans in the stands wasn't much of an issue in the first few years, with the worst weekend attendance in the three years Champ Car raced in the city adding up to 160,000. Unfortunately, translating the impressive attendance into profits proved more challenging.

After spending a reported $12-million last year to cover the losses from previous events to keep the Edmonton IndyCar race afloat, Mayor Stephen Mandel knew that throwing more money at the event would be a bit of a hard sell.

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"At the beginning citizens were very excited about it and it was an event that everybody bought into, but somewhere along the way it had some challenges and then the convincing started," Mandel said.

"I think city council showed great leadership and understanding of why his event was so important to the city - it's a marquee event that is broadcast all over the world - and the business community was always behind it."

In the mayor's favour was the fact that the cash the city poured in to keep IndyCar going would be more than recouped by even the lowest estimate for economic activity generated by the race.

Conservative estimates put the figure at $20-million annually whereas the high end of the scale tops out at $60-million. The actual number is likely somewhere in between, considering that estimates have the Toronto IndyCar race generating somewhere in the neighbourhood of $40-million and Montreal's Formula One Canadian Grand Prix - the largest single sporting event in the country - bringing $90-million to that city.

The Champ Car Series first raced in Edmonton in 2005 with huge success. The three-day crowd in the first year broke attendance records for the series, as 200,052 people filled the stands. While the number of bums in the seats decreased in subsequent years, the event continued to be one of the best draws on the old Champ Car circuit. IndyCar added the race to its calendar when it swallowed rival Champ Car just prior to the 2008 season and it's been running with the new series since. IndyCar does not release attendance figures.

The problem was that the inexperienced racing promoters that ran the events could not turn the successes at the gate into profits on the balance sheet, and the bill ended up on the mayor's desk.

Mandel spearheaded the city's $6-million pledge as part of the three-year deal that brought Octane onboard as the promoter. He believes the new group will change his race's direction because the Montreal-based group that runs both the Formula One and NASCAR Nationwide races in that city bring loads of experience to the table.

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"It was not very profitable when it was in non-professional hands," the mayor said.

"But we made a deal with Octane because it's their business, so they understand importance and nuances of what things cost, what to buy and what not to buy, and what to spend and what not to spend. I have great confidence that they will be successful."

For the life of the new three-year agreement, the city will provide $1.5-million in cash and another $500,000 in kind annually toward the event. It also spent $3-million repaving some of the runways used for the track.

Even if the race only meets the low figure for economic generation every year until 2013 when the new deal with IndyCar expires, it will bring $60-million to the city from a $21 million outlay. That's a 185 per cent return on investment, a profit margin most money managers would kill to get.

The city's long-term plan calls for more dollars going into a permanent racing circuit to be built somewhere in the city to replace the airport circuit now used by IndyCar, which is slated for redevelopment after the 2013 race. Mandel said it was too early to discuss any potential locations, but added the city was examining a few scenarios.

The outcome of a request for support by the IndyCar race in Edmonton was quite different from the one Octane had with Quebec, whose tourism minister refused to lend a hand to the August NASCAR race at the Circuit Gilles Villeneuve in Montreal. Octane had asked for $500,000 in matching funds from both the federal and provincial governments for a race that brings an estimated $25-million into the city.

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Quebec's tourism ministry said Octane hadn't demonstrated the value the event brings and seemed to indicate Nationwide wasn't an "A" level series worthy of support. Strangely, only weeks before refusing Octane's NASCAR proposal, the province agreed to pour $250,000 into the Grand Prix de Trois-Rivieres, an Indy Lights race that is much less prestigious than the Montreal event, has a tiny fraction of the fan following, and doesn't get the international television exposure garnered by Nationwide. In addition, Indy Lights is lucky to rustle up 15 cars for its races and is definitely not an "A" list series. Nationwide has a 43-car field.

Considering the Quebec government pledged $20-million over five years to bring the Formula One race back to Montreal last year and now backs Indy Lights - both open wheel events - perhaps it has a huge blind spot when it comes to cars with fenders. There certainly appears to be no other logical reason to fund Trois-Rivieres over Montreal's NAPA 200, which is the second largest motor race in Canada.

"I'm surprised and I can't really explain it," said Octane boss Francois Dumontier, when asked about the province's decision.

"But you need to put it in perspective. Keep in mind the [Canadian]Grand Prix receives a lot of support, but it is a shame that NASCAR doesn't. It is a tremendous event. We are still working on it with the government of Quebec."

Tracy helps grant wishes

Paul Tracy's day may have lasted less than a lap in Edmonton's IndyCar race, but his car went much farther than the dead last finish on the score sheet.

His No. 8 Dragon Racing IndyCar raised $90,068 from IndyCar fans in Toronto two weeks ago and Edmonton yesterday in support of Make-A-Wish Canada. The campaign was backed by Honda Canada, which paid for the foundation to be on Tracy's car. Tracy retired on the first lap after a collision.

The Make-A-Wish foundation grants wishes to children with life-threatening medical conditions.

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