The review will examine the event’s marketing, structure and return on investment from government subsidies.
More than 10,000 people attend the two-week annual event, which includes the Manx Grand Prix Races, the Classic Trial, the Two Day Trial and the Vintage Motor Cycle Club Festival of Jurby and Rally. The MGP was launched as the Amateur Road Races in 1923 and renamed in 1930.
The review of the festival, which is seen as the sister event to the island’s TT race, will be completed by the end of April 2012.
Department of Economic Development chief executive Colin Kniveton said that motor sport events had encountered "difficulties" this year and it was important to ensure a reasonable return on taxpayer investment.
He said: "The Manx Grand Prix Festival requires significant funding and costs are increasing year-on-year. However, this is not just about reviewing costs but also ensuring that we maximise the potential of any event the Island hosts, in terms of generating visitors, obtaining media coverage and stand-alone revenue as well as safe-guarding its long-term viability."
MGP chairman Bill Bennett told Event: "We're confident we have a viable event, but it is always worrying when you have a review. It's like sitting an exam: you're not sure if you'll pass or fail. We're in an unusual situation for a sporting event in that we can't charge an entry fee as the races are on public roads."
The 2012 MGP is scheduled to run from 18 August to 2 September and will not be affected by the review, according to the governement.
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