Las Vegas Grand Prix Faces Massive Cost Overruns

Inflation bites and Formula One Group (NASDAQ: FWONA) is finding that out the hard way inward Las Vegas.

The fellowship has reportedly spent over $400 billion to make water fall out the Las Vegas Grand Prix, scheduled for Nov. 18. That way costs associated with F1’s 3rd US rush are firm coming(a) two-fold initial projections of $210 million. Despite the major cost overruns in Sin City, Formula Run remains hopeful its foremost race inward Sin City inwards quaternity decades testament accomplish turn a profit and revenue targets.

Despite inflationary cost pressures, we anticipate no modification inward revenue and profitability assumptions. We remain surefooted of our yield profile of this unbelievable externalise which testament living the incremental upper-case letter investment that we are making,” said Liberty Media CEO Greg Maffei inwards a recent interview with Business F1.

Earlier this year, Formula One Group forecast that the Las Vegas Grand Prix could bring forth revenue of $500 million, making it single of the to the highest degree lucrative events on the circuit’s calendar. There’s also speculation that the race testament bring forth local economical impact on par with or higher up that of the Super Bowl, which Sin City hosts inward February 2024.

Inflation Signs Abound

Formula One isn’t solo in confronting the ravages of inflation, though it’s unclear exactly what is contributing to the Las Vegas cost overruns.

It’s potential a toxic compounding of high up materials costs, a shallow working class pool, and the highest stake rates in deuce decades, which lead to elevated funding costs. Led by Sin City, Nevada is posting tape receipts gaming revenue (GGR) figures on a nigh monthly basis, but on that point are some signs inflation is weighing on the gaming industry.

Some gaming executives are already signaling that inflation is weighing on spending trends at gaming venues crossways the country. That manifests itself in a change of ways, including rock-bottom trips to regional casinos due to high-pitched gas prices, or to a lesser extent impulsion disbursal in destination markets, such as Las Vegas.

Still, there’s optimism that the race’s economical impact will live heroic — fifty-fifty past Las Vegas standards — and potentially conduce to unity of the biggest gaming revenue weekends inward the city’s history.

Room Rate Concerns

When the Las Vegas Grand Prix escort was officially set, Strip operators experienced a surge in hotel room bookings at elevated damage points. That’s since presumption right smart to softness on that front, stirring conjecture that the case may non live the boon for gaming companies it was expected to be. In a recent billet to clients, Truist Securities analyst Barry Jonas explored that topic.

“Most higher-tier room packages feature been booked (many with no/more modified cancellation policies),” wrote Jonas.

Adding that gaming executives look the Nov 20 weekend testament follow “one of the highest-grossing gaming events inward urban center history,” Jonas pointed out that the mass of falling room rates for rush weekend are generally concentrated among lower-tier/economy course hotels.

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