Hard to gauge economic impact of Grand Prix for downtown

Arielle Kass

Millions of dollars from fans and drivers that ow into metro Detroit from an annual racing event are more likely to be concentrated in the city, backers said, as the course moves downtown from Belle Isle.

e isolated nature of the island park meant that fans and participants in past years’ Detroit Grand Prix races didn’t have any reason to come to or stay in the city center, said Mark Rosentraub, a professor of sport management at the University of Michigan. Rosentraub, who created an economic impact study of the race’s move downtown, said there’s now more incentive to stay near the race, eat in the city and spend money nearby — as opposed to driving to hotels and restaurants far a eld.

“If you do move it, you increase the probabilities that more spending takes place there than in Oakland County,” he said. “ e only reason to have the race is to get spending in the city of Detroit. It’s not in your interest not to have the race downtown.” e 2021 summary says more than half of attendees were from metro Detroit and that the race’s impact included $22.8 million in net increment, or money that he said would not have otherwise been spent in metro Detroit.

Neither Rosentraub nor anyone connected with the Grand Prix would make the study available for review, but an executive summary provided by the Grand Prix said the $64.5 million in total regional spending associated with the race in 2017 was 20% higher than in 2012, when adjusted for in ation. e race was on Belle Isle both years.

Rosentraub expects the downtown location to result in a 10-20% bump in spending overall, making it a $77.4

Grand Prix

From Page 1 unlikely to help ticket sales.

“We could have built more grandstands. is thing isn’t a moneymaker. It never has been,” Denker said. “Our intentions at Penske are di erent. is is our hometown. is race means a lot to the city and the state. Right now, with vacancies downtown and a lot of people working remotely, we need these types of events downtown.”

Denker said accessibility was the major reason for the move o the island, but the event will take a hit.

“ is event is gonna lose millions, but with the help of our sponsors, we’ll put on a great show.”

Getting ready for racing

Much has changed downtown since 1991, including a host of new and reopened buildings, restaurants and other businesses. And there will be even more changes before the June 2-4 race weekend.

“Take a ride around the circuit and it’s amazing what you can see,” Denker told Crain’s. “ e bridges are up. “ e grandstands are up for the most part. We’re on path to being ready for the weekend; everything is going to plan now. We’re transforming the city for this event. It’s going to be big.” e race will feature 27 IndyCar drivers, according to Michael Montri, president of the Detroit Grand Prix, and is the seventh IndyCar race of the million event. e summary says Detroit could capture $10.1 million in spending from nonresidents, but Rosentraub said he didn’t have a base for how much of the total was spent in the city limits in 2017.

He said he based the estimated increase on what happened when professional sports teams — like the Detroit Pistons — moved to the city center from the suburbs.

But Stefan Szymanski, also a professor of sport management at the University of Michigan, said such studies tend to be overblown.

“It’s all bullshit,” he said. “ ese are numbers plucked out of the air.”

Limited impact

Szymanski, whose book “City of Champions” includes a chapter on the earlier downtown iteration of the Detroit Grand Prix, said businesses that were “sitting in the middle of the course” had a great day, but others su ered because people who would have otherwise come to the city decided to stay away from downtown.

“As is often the case with these booster events, it didn’t really do anything,” he said. “ ese one-o events tend to have a limited impact because they’re one-o events.” e e ect on Detroit, he said, is likely the equivalent of adding one more Tigers game to the schedule. He said he suspects the city would be better served by keeping the race on Belle Isle and allowing people who are interested in IndyCar racing to come.

“You’re just going to annoy a lot of people,” he said. “I don’t see the bene t of the relocation.”

Others disagree. Noah Resnick, an associate dean and professor of architecture and urban design at the University of Detroit Mercy, said one of the bene ts of being in a city is unexpected occurrences that enrich daily life, something the race’s move downtown can provide. When the Grand Prix was on Belle Isle, he said, it could be happening without the rest of the city knowing it was going on.

While he said it can be disruptive and there are legitimate questions about whether the city could better spend its money on other things, Resnick said he was optimistic overall about the race’s impact. In particular, it has the opportunity to bring people into Detroit who might not ordinarily go downtown.

“Something like that would help Detroit more than most other cities,” Resnick said. “ ere is still a persistent stigma outside Southeast Michigan. e general perception of Detroit is still not great.” e city would bene t, he said, from getting more people to give it a second look.

A national broadcast of the race will “reach audiences who wouldn’t normally be thinking about Detroit,” said Eric Larson, CEO of the Downtown Detroit Partnership. Larson said in addition to more spending in the city, he expects moving the race so coverage includes views of Detroit’s riverfront and downtown skyline will help change people’s perspectives. Michael Montri, the president of the Chevrolet Detroit Grand Prix presented by Lear, said he expected it to be “a three-hour commercial for the downtown.”

Szymanski said that, too, will have little e ect.

“It doesn’t draw a huge television audience to begin with,” he said. “ at they would fancy going to Detroit is very, very unlikely.”

Successful advertising for the city would be more targeted, he said.

7:55 in the morning is going to be the rst time cars go down the track at speeds in excess of 155 miles an hour.” is year’s event has more than triple the 23 suites available on Belle Isle, according to Denker. e prices are $75,000 for a 20-person suite and $125,000 for a 50-person suite. Suites and sponsorships, from race sponsors Chevrolet, Cadillac Racing and Lear, account for 80% of the event’s revenue. e remaining 20% comes from concessions and ticket sales.

With two weeks to race weekend, 10,000 grandstand seats have been built, tickets for Sunday are sold out and only 30% of tickets remain for Saturday. And nearly all of the 70 available suites have been purchased.

The bene ts

Larson said the bene ts for the city are broad. ey include “infrastructure improvements that last well beyond the race,” he said, like the repaving of Je erson Avenue over the stretch where the race will take place and other road and sidewalk improvements. Temporary pedestrian bridges could lead to more permanent structures.

e Downtown Detroit Partnership is planning to activate seven public spaces for the event, including with small businesses that Larson said could further help keep dollars in Detroit. He said he’ll have better gures about the true nancial impact of the event after the fact.

Larson also expects people to come earlier and stay later than they had when the race was on Belle Isle. More tickets have already been sold than were sold last year, Montri said; 2022 revenues were exceeded with nearly three weeks to go before the event, and tickets are still on sale.

In 2017, Rosentraub said, there were nearly 60,000 unique viewers, with a three-day total of about 100,000 people attending the event.

Montri said with the economic impact study showing an expected $77 million spend in the region, he expects downtown hotels to get a good piece of that. It will make sense for drivers, crews and visitors to simply walk to the track, he said. He estimated about 100 drivers over four di erent races, plus their teams, would lead to 4,000 room nights over the course of the weekend, most of them in the city.

upgraded materials, like cement in the pit lane, he said. e city, the state and General Motors paid for the roads to be repaved, depending on ownership.

“We try to keep as much as we can local, for sure,” Montri said of the spending.

In announcing the Grand Prix’s move in 2021, Detroit Mayor Mike Duggan said he never understood why the race left. He called the relocation a win-win and said he was excited for what else might happen on the track, including its use for automated vehicles later on.

“You can see what this could do for the Motor City all the way around,” he said. “ is is going to be a great asset not just Grand Prix week, but I think for other events.”

Szymanski aside, others were in agreement that the race and city would bene t from the new location. e question, Resnick said, wasn’t whether the race should happen at all — but where it would do the most good. He added that it probably did more damage to Belle Isle than what was gained from its presence there. For the city, Rosentraub said, it doesn’t matter how much money the

“YOU CAN SEE WHAT THIS COULD DO FOR THE MOTOR CITY ALL THE WAY AROUND.”

—Detroit Mayor Mike Duggan

race brings to Southeast Michigan — it only matters what is spent within Detroit’s city limits. e best strategy, he said, is to make moves to bring as much of that spending to downtown.

e Grand Prix also pays for some police and re service from the city and contributed engineering work for the track, as well as paying for some lieve that gure is going to be higher than what the UM study concluded.”

Along with the races, four concerts will take place on June 2-3, featuring rapper Big Boi and DJ Steve Aoki. Comerica Free Prix Day is set for June 2, which will o er free seating in two of 10 grandstands on a rst-come, rstserved basis.

History of the Grand Prix

“Detroit can’t function on regional impact,” he said. “ e best thing they could do is move it o the island, no question about it.”

Contact: arielle.kass@crain.com; (313) 446-6774; @ArielleKassCDB more than 30,000 people a day and we didn’t want more than that because we couldn’t support it.” season, following the Indianapolis 500. e event will run on a 1.7-mile course over 100 laps and 170 miles. e circuit will run along Je erson Avenue, Bates Street, Atwater Street, St. Antoine, Franklin Street and Rivard Street. at means it will be more accessible and have more public access points than races held previously at Belle Isle.

Comerica Bank Michigan Market President Steve Davis said the move back downtown shows a commitment to o ering major events to more people.

“I’ve rode the route many times but not at the speed fans are going to witness during the races,” Denker said.

“I’d love to have the drivers come test the track. Usually there’s a test to check if the road is smooth, but we don’t have that ability. ere have been some simulations done. You can see where the bumps are that need to be smoothed out. (June 2) at

Denker, though, said he is unsure of the economic impact the move from Belle Isle will ultimately have. A study conducted by the University of Michigan projects the event to bring at least $75 million to the city, an increase of 50% from the Belle Isle years. But that was conducted before organizers announced half of the race circuit would be accessible for free.

“You can watch along Je erson, go to the entertainment at Hart Plaza. I don’t know what that means in terms of people coming down. With the Super Bowl, you could come down and be a part of the NFL Experience, but you couldn’t go to the game without a ticket. For this race, you can come down for free,” said Denker. “Naturally the Super Bowl is a bigger event, but this is going to be great. I’ve got to be- e Detroit Grand Prix was introduced in 1982 and for 10 years was run on a 2.5-mile course near the General Motors Renaissance Center. e race moved to Belle Isle from 1992 until 2001 when it was dropped for a stretch until Roger Penske and the Detroit Downtown Partnership resurrected it in 2007 and 2008. It was revived again on Belle Isle in 2012 and has been held there every year since.

Denker said the race had run its course on Belle Isle. e move came after organizers over 13 years invested about $13 million into the park, including roadwork, casino improvements and $6 million given to the Belle Isle Conservancy.

“We had to close portions of the island down for ve or six weeks. It’s a state park. e race is a bit intrusive,” Denker said. “A next generation of racing (on Belle Isle) would have required a lot more investment. at race in my mind was an exclusive race. To come down, you had to get on a bus. You couldn’t access more than half of the race circuit. It had a lot of limitations. You couldn’t have

“With the return to the Downtown streets, the Detroit Grand Prix has furthered its dedication to connect one of Detroit’s signature events to fans and families across Metro Detroit,” Davis said in a statement. “We are honored to once again partner with the Grand Prix to provide free, unique access to Free Prix Day while impacting the youth of our community through STEM-focused engagements.” at increased accessibility could turn some into new IndyCar fans, Denker said.

“As I went to the mayor and City Council with the vision of coming back downtown, we wanted to make this event open for the citizens of Detroit,” Denker said. “We want to see everybody down here. We want people who have no idea of what a race is to be a part of this. We want the city to be abuzz. NBC will broadcast this event to the world. e whole world will see our beautiful riverfront. ey’ll see cars going 200 miles an hour down Je erson. ere’s only 15 cities in the world that have racing on their city streets. Now we’re one of them. at’s pretty signi cant.”

Contact: jason.davis@crain.com (313) 446-1612; @JayDavis_1981