The event is the first promoted directly by F1 owner Liberty, and the company has borne the cost of buying the land for the pit and paddock area and creating the permanent buildings that are on it.
The costs have risen over the construction period, while other expenses connected to putting on the race have also escalated.
An insight into the rising CapEx costs was given by Liberty Media CFO Brian Wilding in a call with Wall Street analysts.
In August, he noted that the company expected to spend “close to” $400 million on the project and that $155 million had been spent in the first six months of 2023.
In Friday’s call, he noted that “through the third quarter we incurred approximately $280 million of CapEx related to the pit building structure and track preparation”.
That would put the running total for 2023 to the end of September at $435 million, or already some $35 million above his earlier estimate, without counting any expenditure from October onwards.
However, Maffei insisted that some of the costs are one-time only and that the event will be more profitable in future years.
“We did incur significant expense in launching year one in Vegas,” he said.
“And that included extra provisions for safety, security and traffic planning, which was required by local regulators.
“And we had several non-recurring items, for example, our first-year-only opening ceremony, and the design and launch of our multi-purpose app, and creation of a fan database.
“We remain highly confident in the increased efficiency to operate there and our growing profitability in years two and beyond. And we remain bullish on the broader value creation at LVGP that far outweighs the increased investment and startup costs.”
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F1 Las Vegas atmosphere
Pressed on the rising costs, he added: “I outlined some of them, increased security, one-time things like the opening day ceremony, but there were other ones like consultants that helped us set it up, permitting costs that were unusual, and the like.
“So there are a bunch of initial costs that are probably higher than we originally estimated. I remain very bullish, we remain very bullish on, as I said, the impact on F1 overall by Las Vegas, and the potential for this race to be a profitable exercise itself.”
Maffei has previously suggested that Las Vegas will be in the top five most profitable F1 races from the start, and he stands by that claim.
“That’s still a reasonable estimate on profitability,” he said. “I think I noted, we’ve seen some one-time and start-up costs that may have been larger than anticipated.
“But remembering how this is impactful to us, not only directly, but indirectly, this is a very profitable race for us.
“As far as being measured as a top five obviously, we don’t tell the world what the top five are. But we have noted that this one will have that impact. I still think that’s true.”
Maffei also downplayed a possible impact on the event from industrial action threatened by Las Vegas hotel workers.
According to the Associated Press, the strike would affect 18 casinos, including the Bellagio, MGM Grand, and Caesars Palace, as 35,000 workers are ready to walk off ahead of the F1 race.
“We have worked with the unions, and I believe our race will not be impacted directly,” he said. “We’re obviously watching what impact that may have on the overall Las Vegas market.”
Liberty also insists that the first event will eventually be a sell-out, suggesting that there was always going to be a late take-up by fans.
“We have a handful of tickets left,” said Las Vegas promoter Rene Wilms.
“And the demand coming in the last minute, which knowing Vegas it’s a last-minute market, we did in fact hold tickets back for that purpose. So we are very excited. And we will be sold out by the time of the event.”
Maffei added: “A lot of people from Los Angeles book for Las Vegas relatively late.”
https://www.autosport.com/f1/news/f1-not-alarmed-about-spiralling-rising-las-vegas-gp-costs/10542196/?utm_source=RSS&utm_medium=referral&utm_campaign=RSS-ALL&utm_term=News&utm_content=uk F1 not alarmed about spiralling Las Vegas GP costs