Fashion, fillies and fun epitomise the Melbourne Cup carnival. Photo: Jesse MarlowAs major events go, the Melbourne Cup carnival has often been a bellwether of the state of the Australian economy.
In tougher times, conspicuous corporate spending has not gone down well with the public, in particular with shareholders and consumers.
The 2008 Melbourne Cup was held against the backdrop of the global financial crisis, and corporate largesse was not a good look.
But if 2008 was the nadir for the Melbourne Cup carnival in terms of corporate spending, then times have certainly changed. With the return, an interesting change has swept through Flemington.
Melbourne Cup day has now been usurped by Derby day on the first Saturday as the key corporate event, and it’s no longer just parochial Victorians filling the coffers of the VRC.
Interstate visitors and companies, primarily from the booming economy of NSW, are leading the charge.
The attendance numbers tell the story.
Overall attendance has fallen pretty much every year since 2008. Last year just 331,000 racegoers attended the four days of the carnival, down 65,000 since the GFC.
Despite the significant fall, more than 16 per cent, revenue is on the rise.
Since then the number of interstate visitors has almost doubled, from 51,862 in 2008 to 99,843 last year, although a change in methodology has accounted for some of that jump.
Economist Michael Emerson, director of the company Economic and Market Development Advisors (EMDC), says the rise of interstate attendance and spending at the carnival is not surprising, given the difficulties the Victorian economy is enduring.
“There is much stronger economic growth in NSW centred around more construction activity and NSW consumers opening their wallets more,” Mr Emerson said.
Mr Emerson notes that, since the start of the year, NSW has added 23,600 full-time jobs to September 2014, whereas in Victoria full-time employment has fallen by 5800.
“NSW has a stable unemployment rate of 5.7 per cent, while economic growth is much weaker in Victoria.”
Victoria now has the highest unemployment rate of 6.7 per cent, the second-highest of any state or territory after Tasmania, while other parts of Australia have been booming.
Against that backdrop, the VRC has stretched its horizons.
A national tour of the Melbourne Cup, undertaken for the past 12 years, has helped lift the profile of the race and attracted interstate visitors.
Michael Burn has seen the tough times and the good. Burn, executive director with Macquarie Group, was appointed to the VRC Committee in 2003, became vice-chairman of the VRC in 2008 and chairman in 2011.
Just over a week out from the first race, Burn says the event is sitting nicely.
“The numbers are looking very healthy, but we still have our biggest week for ticket sales to come,” he said. “In terms of forward bookings and interstate visitors, there is no doubt that national tour of the Cup has assisted us greatly. It has been a call to action for tour groups and corporate players.”
Such is the demand from interstate, cruise ship company P&O will bring 6000 visitors to Melbourne for this year’s carnival aboard three floating gin palaces, which will spend the week docked in Port Melbourne.
Next year four ships will arrive in Melbourne, swelling that number to 8000 cruise ship visitors.
The spending at corporate level has also returned, with this year’s carnival looming as the most lucrative since 2008. This year will see 17 bespoke private corporate marquees in the Birdcage enclosure at Flemington, where corporate Australia wines and dines its best clients, and where celebrities and sports stars rub shoulders with the nation’s executives, the highest since the GFC.
Last year Schweppes, Penfolds and Incognitus arrived in the Birdcage, as two high-profile companies dropped out in Crown and Swisse. This year Swisse has returned to fulfil the final year of its contract, and Sydney-based Diageo Australia has a marquee for Johnnie Walker.
For the first time since 2008, not one Birdcage player has dropped out.
It’s in sharp contrast to the dark months leading up to the 2008 carnival, when Lehman Brothers had collapsed, Merrill Lynch had been taken over by Bank of America and sharemarkets had crashed.
While the bad news from Wall Street didn’t stop the punters – with almost 400,000 racegoers turning out over the four days of the event – life in the Birdcage enclosure was bleak.
James Packer’s Ellerston Capital was the biggest name to pull the pin in 2008.
Ellerston had one of the largest marquees at the previous year’s spring carnival but the the listed investment fund, named in honour of the family farm and polo team, had fallen victim to the GFC.
Others to pull out that year included L’Oreal, Moet & Chandon and Fairfax Media, which announced plans to cut about 390 jobs from its Australian operations just weeks before the big race.
Even big-spending Emirates, which had raised the bar in terms of race day spend by lifting the rook of its marquee to two stories, cut back its spending, from an estimated $1250 per guest to just $900 a head.
A garden was hastily cobbled together by the Victoria Racing Club, to mask over the site where Ellerston’s grand marquee was meant to stand. For the next few years various patches of the Birdcage were blocked from public view, as marquee numbers declined.
With the dark days of the GFC long gone, the cost per head for the big corporate players is again approaching $1500 a head.
Add to the spending the growing number of shared corporate and members marquees this year, which have also increased in capacity. These include six Hedges marquees, six Chalet marquees, the large Pavilion area, a Show Pony marquee and an area called The Perch. The cost per head for these events varies from $750 to $950 per guest, depending on the day, with Derby day on the first Saturday now the most expensive.
But the growth hasn’t just been confined to the Birdcage.
Across Flemington next week will be a total of 375 marquees covering 21,000 square metres. To keep it all ticking over, the carnival will employ 1800 contactors working for 850 companies.
With that growth, little wonder the VRC has notched considerable year-on-year growth. As of Friday, revenue for public and corporate hospitality was up 8.5 per cent, and sponsorship revenue up 5 per cent.
“All the forward estimates are looking good,” said Burn. “We are now enjoying very healthy growth in the corporate area. The last factor is the only one we can’t control, and that’s the weather.”
Mark Hawthorne is Senior Editor of The Age.
This story Administrator ready to work first appeared on Nanjing Night Net.