M9, OLD OAST OTORSPORTVENT ^EVIEW - =ANUAR'l ::010 Contents 1 Preface 3 2 Background and Terms of Reference 4 3 Methodology 6 4 Executive summary and recommendations 8 5 Legislation governing the Gold Coast Motorsport Event 12 5.1 Motor Racing Events Act 1990 12 5.2 Motor Racing Events Regulation 2003 12 6 Stakeholder organisations involved in the Gold Coast Motorsport Event 14 6.1 Sport and Recreation Services - Department of Communities 14 6.2 Gold Coast Events Co Pty Ltd 15 6.3 Gold Coast Motor Events Company 16 6.4 International Management Group of America 18 6.5 V8 Supercars Australia Pty Ltd 18 6.6 A 1 GP World Cup of Motorsport 18 6.7 Confederation of Australian Motorsport 19 7 Historical overview of the Gold Coast Motorsport Event 20 7.1 The first Gold Coast Motorsport Event 20 7.2 The cost to government of the Gold Coast Motorsport Event 21 7.3 Awards for the Gold Coast Motorsport Event 22 7.4 Measuring the value of the Gold Coast Motorsport Event 23 7.5 The 2009 Gold Coast Motorsport Event 24 8 Circumstances surrounding the staging of the 2009 event and the inclusion of A1GP and V8 Supercars in the program' 26 8.1 V8 Supercars' participation at the Gold Coast Motorsport Event 26 8.2 Indy Cars' participation at the Gold Coast Motorsport Event 29 8.3 Negotiations with the Indy Racing League 29 8.4 Selecting a new international motor racing event 31 8.4.1 Risk profile of the A1GP series 33 8.4.2 Financial viability of the A 1 GP series 34 8.4.3 Public infonnation on AIGP series at the time of signing the contract 35 1 CONFIDENTIAL 009 OLD ;OAST ;OTORSPORT : ;VENT ^'EVIEW - ANUARY 010 8.4.4 Chronology of meetings between GCMEC and AIGP executives 36 8.5 Finalising the contract (Promoter Agreement) with Al GP 38 8.6 The termination of the Al GP contract and development of a contingency plan 41 9 Ministerial responsibility for the Gold Coast Motorsport Event 44 9.1 Governance structure of the Gold Coast Motorsport Event 44 9.2 Briefings to the Minister on AIGP 45 10 Future options for the Gold Coast Motorsport Event 50 10.1 Summary of Gold Coast stakeholder views 50 10.1.1 Gold Coast City Council 51 10.1.2 Surfers Paradise Alliance 52 10.1.3 Gold Coast Chamber of Commerce 53 10.1.4 Main Beach-Tedder Avenue Association Inc 54 10.1.5 Gold Coast Tourism Corporation Limited 54 10.2 International event a priority 55 10.3 Road barriers and infrastructure 55 10.4 The tone of the event 56 10.5 Gold Coast Rapid Transit Project 56 10.6 Sustainability of existing Gold Coast motorsport street circuit 57 10.7 Television broadcast 58 10.8 Gold Coast tourism 59 10.9 International motorsport event categories 61 10.9.1 FIA world championships 61 10.9.2 FIA cups, trophies and challenges 62 10.9.3 FIA international series 64 10.10 Shortlist of international motor racing events for the 2010 Gold Coast Motorsport Event 66 10.10.1 Option 1 - FIA GTI World Championship 67 10.10.2 Option 2 - American Le Mans Series 70 10.10.3 Option 3 - GP2 Series (Europe) 72 11 . Recommendation of a new international motorsport event 75 12 Appendices 78 ® 124 2 CONFIDENTIAL F 009 - OLD OAST ^OTORSPORT :VENT -EVIEW - .'ANUARY °010 PREFACE In October 2009 I was contracted by the Queensland Government's Department of Communities to undertake an independent review of the 2009 Gold Coast Motorsport Event. The review was to provide a detailed analysis of the circumstances surrounding the failure of the Al Grand Prix to attend the 2009 Gold Coast Motorsport Event and to also provide advice as to whether the Gold Coast Motorsport Event should continue and to consider options to secure a new `headline' international motorsport event. Two staff from the Department of Communities were seconded to assist in the review, Ms Alanna Vaisnys and Mr Michael Rheinberger. I want to thank Ms Linda Apelt, the Director-General of the Department of Communities who was the contract manager for the review , for her support, and Ms Vaisnys and Mr Rheinberger for their significant contributions in supporting me in undertaking the review. CONFIDENTIAL 3 '/'009 'OLD I<OAST 'OTORSPORT VENT EVIEW - JANUARY %010 BACKGROUND AND TERMS OF REFERENCE The failure of Al Grand Prix (A1GP) to meet their contractual obligations to feature at the 2009 Gold Coast Nikon SuperGP resulted in great embarrassment for the event promoter , the Gold Coast Motor Events Company (GCMEC), and the Queensland Government, which contributes $ 11.6 million per annum towards the operating costs of the event. The late notice from A 1 GP that they would not be attending the 2009 event and the failure of GCMEC to have a contingency plan resulted in the intervention of the Minister for Sport, The Honourable Phil Reeves MP, to request V8 Supercars Australia to develop an alternative event program one week before the Nikon SuperGP was to take place. The Queensland Government made a Cabinet decision to commission an independent review of the governance, management and due diligence issues surrounding the failure of Al GP to attend the event. At the time of commissioning, the objectives of the review were to: 1. provide a short contextual history of the Gold Coast Motorsport Event over the past 19 years, including the cost and economic benefit of staging the event 2. provide a description of the circumstances surrounding the staging of the 2009 event and the inclusion of the A1GP and V8 Supercars Australia in the event program 3. provide an analysis of the circumstances , with a focus on governance and due diligence , including the adequacy of contractual oversight and management of the event - in particular, the Al GP sanctioning agreement 4. provide conclusions and recommendations on the implications for government with regard to governance and due diligence for the future staging of the event, and 5. provide advice from an event perspective on future options for a motor racing event on the Gold Coast. At the same time as the Government announced its review of the 2009 Gold Coast Motorsport Event the Auditor-General also announced that he was conducting an audit that would review the event and would also encompass corporate governance and due diligence issues. The two reviews ran side by side until the Government decided to approach the CONFIDENTIAL 4 009 OLD -OAST OTORSPORT :VENT REVIEW - - ANUARY `010 BACKGROUND AND TERMS OF REFERENCE Auditor-General and request him to take responsibility for reviewing all aspects of governance and due diligence contained in the Independent Reviewer's Terms of Reference (points 3 and 4 above). The Auditor-General agreed to take on those responsibilities and an amended Terms of Reference was provided to the Independent Reviewer. They were: 1. Provide a short contextual history of the Gold Coast Motorsport Event over the past 19 years, including the cost and economic benefit of staging the event. 2. Provide a description of the circumstances surrounding the staging of the 2009 event and the inclusion of A 1 GP and V8 Supercars Australia in the event program. 3. Provide advice from an event perspective on future options for a motor racing event on the Gold Coast. CONFIDENTIAL 5 e009 = `OLD -`OAST r 'OTORSPORT EVENT 'EVIEW - JANUARY ,010 METHODOLOGY The review was facilitated through face-to-face interviews , telephone interviews and submissions presented to the reviewer . Individuals who were interviewed during the review are listed in Appendix 1. The organisations consulted included: • The Department of Communities • The Office of Sport and Recreation (Department of Communities) The Department of Transport (Rapid Transit Project) • Queensland Audit Office • Gold Coast Motor Events Company (GCMEC) • Gold Coast Events Co Pty Ltd (GCEC) • V8 Supercars Australia Pty Ltd ® International Management Group of America (IMG) Queensland Events ® Queensland Tourism Gold Coast City Council • Surfers Paradise Alliance • Chamber of Commerce - Surfers Paradise branch • Gold Coast Tourism Corporation Limited • Confederation of Australian Motor Sport (CAMS) • Al Grand Prix World Cup of Motorsport (Australia) Pty Ltd • Al Grand Prix (Team Australia), and ® BAM Media. In addition, local and state politicians were interviewed . They included: ® The Hon. Phil Reeves, Minister for Child Safety and Minister for Sport, Member for Mansfield, Queensland State Government ® The Hon. Judy Spence, former Minister for Police, Corrective Services and Sport, Member for Sunnybank, Queensland State Government ® The Hon. Peter Lawlor, Minister for Tourism and Fair Trading , Member CONFIDENTIAL 6 009 OLD `"OAST ';'.OTORSPORT VENT ` EVIEW - ANUARY '010 METHODOLOGY for Southport, Queensland State Government Mr John-Paul Langbroek, Leader of the Opposition, Leader of the LNP, Shadow Minister for the Arts , Member for Surfers Paradise, Queensland State Government ® Mr Ray Stevens, Shadow Minister for Tourism and Fair Trading, Member for Mermaid Beach , Queensland State Government • Mr Jack Dempsey, Shadow Minister for Child Safety and Shadow Minister for Sport, Member for Bundaberg , Queensland State Government ® Mr Ron Clarke, Mayor, Gold Coast City Council, Gold Coast City, and • Ms Susie Douglas, Councillor for Division 7 (Surfers Paradise), Gold Coast City Council. The review also considered submissions , correspondence and chronologies provided by: The Hon. Phil Reeves MP • Gold Coast Events Company Gold Coast Motor Events Company • V8 Supercars, and • BAM Media. CONFIDENTIAL 7 009: OLD 1 OAST OTORSPORT VENT EVIEW -- 'ANUARY ' 010 EXECUTIVE SUMMARY AND RECOMMENDATIONS The Gold Coast Motorsport Event was Queensland' s, and one of Australia's, largest and most successful event, with attendances of over 300,000 and the winner of numerous state and national tourism awards .