‘The best week Vegas has ever had’: will $650m gamble pay off for F1 and the city?


F1 has staked hundreds of millions of dollars on the Las Vegas Grand Prix, and the city itself is banking on a surge of visitors. So the last thing it needed was a disastrous first day. Can the gamble still pay off? asks Cambridge Kisby

Fireworks over Las Vegas at F1 opening ceremony

One-off Las Vegas GP opening ceremony was a lavish event

David Becker/F1 via Getty Images

It was not meant to go like this: after the enormous firework display over a brand new pit complex and hospitality suites awash with champagne and oysters, all it took was a water valve cover to puncture the pomp.

Coming loose on an untested new circuit, it wrecked Carlos Sainz’s Ferrari and triggered a delay that saw fans thrown out after seeing just nine minutes of action.

It would be a disaster for any race, but if there was anywhere that F1 could have avoided this, it would have been Las Vegas. Because, for both championship organisers and the city itself, there’s more nervousness than the glitz would suggest, as both pin their future hopes on the success of the new Grand Prix.

Reports that F1’s fan growth is slowing, while Las Vegas continues to recover from the Covid shutdown, means that they are seeking a shot in the arm for their fortunes. This latest race is their answer, offering a surge in visitors to Vegas, plus increased revenues and a wider audience for F1. But, as befits its location, it has required a colossal gamble.

Rather than signing a deal with a race promoter and banking a hefty fee as it does elsewhere, F1 is promoting the race itself, keeping the revenue from ticket sales. Firstly, however, it has had to plough hundreds of millions of dollars into buying land and constructing a permanent pit building.

Its investment was initially projected to be $400m (£322m); latest estimates are around $650m (£523m). Those costs — and the reluctance of others to take them on — are a major reason why F1 has taken this approach, and why the stakes are bigger than usual.

It’s not going it entirely alone: major hotel groups in the city have partnered with the race and guaranteed a proportion of ticket sales while the Las Vegas Convention and Visitors Authority (LVCVA), which promotes the city, is also involved.

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The Las Vegas authorities have spent millions, as well as incurring the wrath of thousands of voters due to the traffic problems in resurfacing the public roads used by the circuit. There are reports of tourists being put off by the disruption too.

But for Steve Hill, CEO of LVCVA, who spoke to Motor Sport before the start of this weekend, the pain is about to pay off. “This weekend and the week before Thanksgiving has historically been the second-lowest week for the year [economically] for Las Vegas,” he said.

“With F1 here, it will now be the best week we’ve ever had.”

He continues to predict that the race will add $1.3bn to the Las Vegas economy, with an influx of visitors this week, and expects that to be an upsurge in tourists as a result of the global publicity.

That’s welcome news for a city where unemployment reached 30% in Covid and which still hasn’t recovered. International visitors are down on pre-pandemic levels and hotels have more available rooms — although guests are spending more.

Las Vegas construction work ahead of Grand Prix

Vegas authorities thought the disruption of resurfacing was a price worth paying

Matthew Ashton/AMA via Getty Images

“This event is on a totally different scale,” says Hill. “The eyes of the world are on Las Vegas this week. And whether people are race fans or not, they are going to see Las Vegas shine and that combination of the Vegas brand and Formula 1 is just something that can’t be replicated anyplace else.

“It’s a global projection that we could not get any other way. It’ll be a great week, but it will have ripple effects throughout the future.

“This first year will be a lot harder than any future year. We’ve had to repave the entire Las Vegas Boulevard all in about a four-month stretch this summer and then we started to build all the facilities to actually host people and hold the race.

“So it’s been six and a half months of congestion and traffic. But that will be much easier going into the future because the circuit will last for years. And as it wears out, we’ll be able to patch and fix parts of it at a time and not have to repave the entire thing all at once again.”

Loose drain cover Las Vegas GP 2023

Water valve cover repairs after FP1 failure

Getty Images

Although only a three-year deal has been penned, it’s thought likely that a new ten-year contract is in the offing, and the scale of commitment suggests that’s just the start.

Because it’s not just Las Vegas that has long-term plans around the Grand Prix. F1 itself may well make a loss on the race this year, with revenue predicted to be around the $500m mark.

In the coming years, though, its spending will be dramatically reduced, with the pit building constructed on land it now owns. There won’t be a lavish opening ceremony at future rounds either.

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That should help F1 in its constant search for increased revenues, as demanded by its publicly-listed owner, Liberty Media. It’s also hoping fan growth will be boosted by the buzz around the race, as well as the presence of the pit building, which will be used by the series year-round.

It has already opened F1 Arcade venues in Britain, with simulators as well as food and bar service, but hasn’t confirmed its plans for the Las Vegas building.

However, the plans are predicated on enticing enough spectators to pay a premium to attend. This year, the cheapest weekend general admission ticket costing £400 and hotels raised prices by 300% or more.

But as the race has moved closer, F1’s bullish predictions have appeared weaker. At the beginning of the month, Renee Wilm, CEO of the organisation set up to run the grand prix, said “we will be sold out by the time of the event”. But tickets remain available and hotels have been cutting room prices, raising the question of whether they will make the same level of commitment next year, and whether the prices are sustainable.

Ferrari of Charles Leclerc at speed in 2023 las Vegas GP

Charles Leclerc in practice ahead of the race

Chris Graythen/Getty Images

And then came the loose water valve cover. It shouldn’t have happened, after extensive preparation to learn from other street races. “Singapore, we think, is the race that is most like Las Vegas,” says Hill. “We went there last year and took a whole crew to figure out every aspect of how to host a night race: from construction, what can be permanent, what needs to be temporary, how to close streets, how to secure an area like that etc. We’ve even taken our police and fire departments to a number of races so that they could learn how the security around F1 works.

“Singapore also does a one of the best jobs that we’ve seen on the calendar for hospitality, with a bunch of really innovative thoughts around hospitality suites to entertain the guests that are there to attend the race and make it a great experience for them. So that similarity with us and their cooperation has just been really helpful.”

The failure to secure the water valve cover appears to have been compounded by the lack of any contingency for the first day’s practice sessions to overrun. Only time will tell how images of spectators being cleared from the grandstands and cars running in front of empty seats will affect demand for next year. If the two remaining days can produce a thrilling spectacle, then all may be forgotten. But if the race doesn’t live up to the hype, then F1 may find sales falling short of its ambitious projections.

Will spectators be prepared to pay the highest prices on the calendar? Will hotels be as willing to take as large a tranche of tickets? Will high-rollers continue to come?

Hill says plans are already in place to make the race more affordable. “We pulled back on a couple of ideas this year,” he said. “We were looking at a FanFest area which would could hold an extra 20,000 people and that would have also enabled much lower pricing for the grandstand tickets.”

Las Vegas 2023 Fans

Not the image F1 was hoping for: fans register their displeasure at being cleared from their seats

Getty Images

That’s not all that could change either. The circuit has come in for some criticism — not least from Max Verstappen — for its unexciting layout and it could be modified, says Hill, potentially to take in additional hotels that want to be part of the action.

“There’s also some possibility to add an extra twist and turn or two to the circuit,” he said. “But this year we just wanted to make sure everything worked — making sure security was in place, making sure the traffic would work etc.

“The spectacle in this race is going to be fantastic and it will be completely different to what it was 40 years ago. It was a car race in the desert, now it’s an event in a city with a spectrum for even more opportunity.”