Combs promised Ecclestone full payment a year before first Austin race

Yesterday’s statement from Texas state comptroller Susan Combs to the effect that no state funds will be paid out in advance of the 2012 US GP would appear to contradict a letter she sent to Bernie Ecclestone in May 2010.

In that letter – sent just before the Austin race was confirmed and clearly key to clinching the deal – she promised that the $25m sanction fee for the first race would be paid by July 31 2011.

The letter entered the public record earlier this year when a group of Texan taxpayers challenged the expenditure on the race, claiming that it contravened several elements of the guidelines for the Major Events Trust Fund.

The 13-page legal document, which I acquired in June, contains some fascinating details, but if you have not seen it yet the real gem is the letter. Addressed to Ecclestone, it reads as follows:

May 10 2010

Formula One World Championship Limited

Attn: Mr Ecclestone

Dear Sirs,

In response to the requirements for the race promotion contract for the Formula 1 United States Grand Prix in Texas, I hereby certify the following:

With the understanding that the first full Formula 1 Grand Prix will be held in Texas in 2012, full funding for the entire sanction for 2012 will be paid to Formula One World Championship Limited (‘FOWC’) no later than July 31st, 2011.

In subsequent years, two through ten, of the race promotion contract, ie 2013 through 2021, we will be sending $25m to FOWC by the end of July 31st of each year preceding the actual race.

We look forward with great enthusiasm to this event and a successful mutually beneficial relationship for many years to come.

Sincerely

Susan Combs

Texas Comptroller of Public Accounts

However, not only did that payment not come through by July 31 – which presumably played a big part in creating the current crisis – Combs now says that no payment can be made until after the event has taken place.

Yesterday she said in a statement: “Let me state clearly: We have not paid out any money for the Formula 1 event. The only dollars that can be spent on the United States Grand Prix are tax revenues attributable to the successful running of a race.  The state of Texas will not be paying any funds in advance of the event. Further, as is the case with all METF events, each application will be reviewed and analyzed for its likely economic impact and only after the race occurs would any funds be disbursed.

“If an METF application is submitted, it will be thoroughly vetted and economic impact data scrutinized based on the actual circumstances for that event. Ultimately, I am responsible for protecting the interests of Texas taxpayers, first and foremost. I will not allow taxpayer dollars to be placed at risk. My position on that has not changed.”

In fact it seems that her position has changed since she wrote to Bernie.

8 Comments

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8 responses to “Combs promised Ecclestone full payment a year before first Austin race

  1. Cliff

    Enter the lawyers. By the end of all this I believe Ms. Combs is going to wish she had sent the check for $25M. I still have faith, though. This seems to be the norm with new tracks lately, i.e. Korea and India. Both of those races were up in the air as little as a week prior to the running.

  2. Airhog

    This is a side issue. The real issue is why didn’t FTP transfer the rights to the race to the track?

  3. RedLIneTire

    @Airhog – my guess is that it was the ultimate game of chicken. COTA probably decided to lowball Tavo for the contract and Tavo was gambling they’d eventually cough up the money he wanted. But the clock ran out, Tavo’s contract is now worthless and COTA starts over again with Bernie – at a much higher price. And no state funds to seed it with…

  4. Joe

    She sounds as bright as the Texas Governor, Perhaps she could be his running mate if he is nominated for the Republican Presidential race. :)

    Joe M

  5. Bubba

    Adam I don’t think you are fully aware of how the fund works. The state isn’t legally able to pay the funds more than a year out from the date, and needs confirmation that the date will happen. That confirmation is the WMC meeting when they finalize the calendar. When she issued the letter I don’t know that she was informed that the date would be provisional until the Dec meeting. Simply, funds for a Nov race can’t be released any earlier than the Nov the year before and that is only if the event is confirmed. With a Nov date she’s not legally able to release the funds in July as it’s more than 12 months out and as it was still provisional on the calendar.

    • Why do so many people not get this? I probably know more about the fund than you having read the legal documentation in June and watched the city hall hearing online. It’s not just about the November change. Fact is she wrote that letter and promised Bernie $250m over 10 years some 25 months before the first possible race date (June 2012), and thus 13 months before the first possible legal application.

      And if you work it out, she was promising money 11 years and one month before the first legal application for the 2021 event! Regardless of the Jun/Nov change, she was also promising that the payment would be made 10.5 months before the first possible race date.

      The deal only happened because Tavo could demonstrate that the government would pay the fee, on time, and clearly the investors got involved on the same basis.

      So how she not understand her own rules? How could she make such a commitment if there was no application coming for 13 months? How could she promise money 10.5 months ahead of an event and now say that funds are only available afterwards when it’s clear that the state has gained from tax revenues?

      Read what she says now and she washes her hands of the whole thing, doesn’t know anything etc…

      And regarding the November change, despite concerns about the heat, and a specific discussion of June being unacceptable at the city hall meeting, Tavo now says Bernie changed because the track was behind schedule. So the change resulted from COTA’s failure to get the job done – if that then created a METF problem, who’s fault was it?

      • Hal Raimey

        Isn’t she saying that there is now some doubt about the viability of the F1 event, due to the addition of the NJ/NY race, the lack of timely funding by the COTA investors and inability to conclude the contract? Those are all new factors to consider when you are trusted with the people’s money, no?

      • Meesta Spawko

        Combs accepted $66,000 in campaign funds from two IT consultancy companies who proceeded to leave a server at her agency exposed with SSN and identity information publicly available for over a year.

        When the breach was discovered back in April, Combs had to earmark about $21 million for legal and identity protection service fees for anyone whose information was exposed.

        She has a lot of political enemies, and it’s not hard to imagine that she was less than successful convincing other departments to share in that expense so she could write Bernie’s check.

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