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Grand Prix spending far below expectations

When the promoters behind the Baltimore Grand Prix needed to win city support for the race, one of their strongest arguments was an economic impact study showing the event would pump $119 million in direct and indirect spending into the area.

But a follow-up study, commissioned by Visit Baltimore, the city’s convention and tourism bureau, showed that number to be nowhere close. According to the study, conducted by Pittsburgh-based Forward Analytics Inc. and released Friday, the inaugural race was responsible for $27.6 million in direct spending and $46.9 million in combined direct and indirect spending.

While the numbers came up short from initial projections, the head of Visit Baltimore said the weekend was a boon for the city and he hoped it would continue to be an annual event as planned.

“I can’t think of another event we’ve had in Baltimore that’s had a bigger economic impact,” said Visit Baltimore CEO Thomas Noonan. “A single event generated $46 million and did it on a weekend that’s generally slow for us.”

A phone call seeking comment from Mayor Stephanie Rawlings-Blake’s office was not returned Friday.

The Baltimore Grand Prix was held on Labor Day weekend, Sept. 2-4 and consisted of a 2-mile, 13-turn course on city streets that ran past the Inner Harbor and around Oriole Park at Camden Yards.

Michael T. Friedman, a research assistant professor at the University of Maryland, College Park, who co-authored a separate economic impact of the race, said the initial estimates were groundless. He said making such bold estimates for a first-time event amounted to little more than a way to make the expense of the event palatable for city officials.

“It was a purely political document — a way to justify an expense the city wants to pursue,” he said. “It was a way to justify the city spending $7 million in highway funds at the Inner Harbor when there are roads throughout the city that had a much higher need.”

The city’s economic impact study showed that the event disappointed in nearly every major category when compared to the initial projections. The race generated tax revenue of $1.7 million for the city and $2.1 million for the state; the original estimate was $6 million.

In the first estimate, attendees were predicted to book 58,000 hotel room nights over the weekend, valued at $12.7 million. The follow-up study indicated visitors spent $7.12 million at local hotels, booking 37,230 room nights.

The study also pegged some of the blame on city hoteliers, who required a three-night minimum on race weekend. According to those surveyed, the strategy backfired and hotels outside the city saw the biggest increases.

“There were some successes, but there were lessons to be learned, too,” Noonan said. “I think our hotels stayed too long thinking it would be a three-night weekend. We could have done a better job with that.”

Friedman said the over-inflation of the economic impact actually ended up doing a disservice to the race, which was better attended than originally thought. Initial crowd estimates were placed at 100,000.

“It set such a high bar for expectations that when they ended up having 160,000 people, well above what they thought, even with those crowds they still couldn’t meet expectations,” Friedman said.

Outside of the economic study, problems continue to mount for the race organizer, Baltimore Racing Development LLC. Beset with lawsuits and outstanding bills from vendors and investors, the organization has promised to make organizational changes. Baltimore Racing Development, though, has been able to raise money for future races.

According to an October filing with the Securities and Exchange Commission, Baltimore Racing Development has raised $733,500 from 13 vendors. It is trying to raise $1.5 million. An estimated $200,000 will go to executive officers, directors or promoters, according to the filing.

Baltimore Racing Development officials did not return calls for comment on Friday.