The creative city proposition has proven highly attractive to policy makers and urban managers all over the world. Creative cities are construed to be dynamic places characterised by diversity, openness and tolerance. As a specific manifestation of this ethos, festivals are equally positioned temporal manifestations of community diversity that foster social development in space. However, not all is as positive as such notions would infer as festivals also herald negative outcomes. Drawing upon a case study of the Clipsal 500 V8 Supercar race and associated motor-sport festival held annually in the City of Adelaide, this article explores this complex policy terrain. Evidenced through analysis of policies pertaining to festival promotion, marketing agendas, participant observation at the Clipsal 500 and interviews with key stakeholders from government and non-government organisations, this article presents a richly textured discussion of the opportunities and challenges facing policy makers considering and managing festivals. In doing so, the article contributes to the literature on festivals and creative economies revealing the complex and contested terrain that confronts policy makers and planners managing festivals as part of a wider city marketing agenda.