Taxpayers have spent more than a billion dollars on the Australian Open. Is it worth it?

Victoria pours tens of millions of dollars into hosting the Australian Open under an opaque deal with Tennis Australia that the state government insists delivers economic dividends.

Unlike the controversial fee Victoria pays to host the Australian Grand Prix, which rose to $102 million in 2024, Tennis Australia says there is no equivalent payment for hosting the Australian Open.

But taxpayers have spent more than a billion dollars since 2011 to bring the Open’s Melbourne Park venue up to world-class standards and secure the event in Melbourne until at least 2046.

“The AO stands on its own two feet financially as well as making a major contribution to the Victorian economy,” a Tennis Australia spokesperson said.

“It is also the major revenue source for Tennis Australia to fund the sport and facilities throughout Australia.”

The exact terms of the agreement between Tennis Australia and Victoria are confidential but has involved a series of commitments by the state to spend $972 million over 10 years to improve facilities at Melbourne Park, which were completed in 2021.

A $106 million state-government bailout during the COVID-19 pandemic extended the agreement further, with the event now locked in for the next 20 years.

The Melbourne and Olympic Park Trust, which manages the precinct, has continued to make substantial investments to support the Open, however.

In the 2024 financial year the trust spent at least $20 million on tennis-related upgrades, including work on John Cain Arena’s retractable roof and new plunge pools and ice baths for players at Rod Laver Arena, according to its annual report.

Last year it spent $45 million in infrastructure upgrades across the precinct, including work to ensure Melbourne Park “continues to meet Grand Slam standards” and supporting other events year-round.

Melbourne and Olympic Park hosts more than 500 events every year, including major concerts, rugby and soccer at AAMI Park, and National Basketball League and Super Netball games at John Cain Arena.

Tennis Australia is also the largest tenant at Melbourne Park, which last year billed it $68.7 million for rent and other expenses, the trust’s annual report shows.

Tennis Australia says the Open generated “total expenditure stimulus” of $565.8 million last year and claims the economic boost to the state will top $600 million this year.

KPMG chief economist Brendan Rynne said he supported the Open and was confident it delivered a positive return for Victoria’s investment.

But he cautioned that the Open’s economic appraisal could be overstated if it includes spending at the event by Melbourne locals. They made up 63 per cent of spectators last year and would spend that money on hospitality, events or other expenses even if the Open was not held, he said.

The real economic boost came from those who travelled for the Open from overseas (8 per cent of spectators) and interstate (10 per cent), he said.

Rynne said many of the benefits from the Open could not be captured in an economic assessment, including the burst of civic pride and optimism it generated among Melburnians.

“That positive feeling of knowing that we are one of the global destinations like London, like Paris and like New York; that we’re held in top-tier regard. There’s a sense of goodwill and positiveness associated with that,” he said.

Rynne also said the Open helped Melbourne build its capacity and reputation to host other large and lucrative events, from the Grand Prix through to Taylor Swift’s record-breaking three-night stint at the MCG in 2024.

Tennis Australia’s economic assessment of the 2025 event, by research firm IER, found it resulted in 442,887 nights being booked in Victoria hotels and generated 2722 full-time jobs.

The Melbourne Park trust pays Victoria Police around $1.3 million a year to cover the cost of policing the Open and other events.

Other expenses for the event this year will include Transport Victoria operating around 5000 extra tram trips, 400 extra trains and 150 bus services for spectators across the three-week event.

A state government spokesperson said the Open generated $3.46 billion for the Victorian economy over the past decade by creating jobs, boosting tourism and promoting Melbourne to the world.

“We’ve invested almost $1 billion in upgrading Melbourne Park and will continue to work with the Melbourne and Olympic Parks Trust to ensure its state-of-the-art venues host a vibrant and diverse line up of world-class events into the future, including the Australian Open,” they said.

Tennis Australia’s revenue from events and commercial agreements, including with Victoria and other state governments, was $575 million last year – an increase from $370 million in 2019.

It received $19 million in government grants to support its events in 2022, but it has not disclosed this revenue stream in subsequent financial reports.

The Victorian Auditor-General’s Office has said it will probe the state’s spending on major events in the 2026-27 financial year, and look at whether the government can demonstrate economic and community benefits from its investments.

The Auditor General last investigated the issue in 2007 and found that major events had “undoubtedly delivered economic value to Victoria” but called for more rigorous assessment of events to ensure the levels of funding provided for events were justified by their likely benefits.

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