The Australian Grand Prix is 'crucial' to Victoria, the state's Premier has insisted - despite the race having made a record financial loss in 2008.

The event - whose future on the Formula 1 calendar was the subject of fevered speculation for much of the opening half of the year - lost a staggering $27 million this year, the Victorian state government has confessed. That is a loss of some $5 million more than was registered in 2007.

The race has run at a financial deficit for some years, but after months of negotiations with the sport's commercial rights-holder Bernie Ecclestone - who had been pushing for a night-time outing, in the same mould as the inaugural Singapore Grand Prix this year - it was announced back in the summer that Albert Park in Melbourne had been granted a five-year contract extension through to 2015 [see separate story - click here].

Under the new deal, the grand prix will move to a twilight rather than evening slot, beginning at 5pm local time in an effort to generate greater European viewing audiences at Ecclestone's behest.

Victoria tourism and major events minister Tim Holding countered that the race generates millions of dollars in economic benefits to the state. Whilst Premier John Brumby agreed it is an important event, however, it will not be held at absolutely any cost.

"We won't be writing a blank cheque," Brumby is quoted as having said by international news agency AFP, "and we clearly haven't reached the limit.

"If we didn't have this events calendar, if we didn't have our grand prix, if we didn't have our major events strategy - we wouldn't be getting the tourists in Victoria that we're getting at the moment.

"The grand prix, it's one of the events that is crucial to our state, [but] all of these events cost money - there's no such thing as a free event."

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