Bernie Ecclestone on Austin Q&A: “They never had the money…”

The future of the US GP in Austin should become clearer this week, as Bernie Ecclestone has set a deadline of Wednesday for COTA to conclude its deal to run the race.

Such an eventuality seems unlikely given that COTA doesn’t like the new contract that Ecclestone has offered (after the original held by Tavo Hellmund was cancelled), and has returned its own version to the F1 boss – with a predictable response.

Ecclestone is not confident in COTA’s ability to pay for the race over the long term, especially after the $25m sanctioning fee promised by Texas State Comptroller Susan Combs in May 2010 has not been forthcoming.

This blog sat down with Bernie in Brazil for a chat about the situation.

Q: What’s the deadline for Austin?

“The 30th [of November].”

Q: So if the money’s in the bank by then?

“What’s more important than money in the bank is we want security for the future, so we’ve tried to help them with that. We want a letter of credit up front before every race.”

Q: So even if they get the first $25m you want the next few years guaranteed…

“We want to know that next time it’s going to happen again. We’re changing the calendar a lot to accommodate these people, and if suddenly they’re not there, we’re in trouble.”

Q: Is it fair to say that you wouldn’t have given them the deal without that $25m promised by the state?

“It’s not just the $25m, that’s a small part of it, it’s the whole package. Everybody else seems to be happy and comply. I think the problem is a simple one, they never had the money. It’s simple.”

Q: Tavo told you he had the state money, and you got a letter from Susan Combs promising you the state would pay…

“We don’t have to deal with… We deal with the promoter and that was Tavo, and it’s up to him to respect the contract. He didn’t, couldn’t, and we terminated the contract.”

Q: Was it purely that money wasn’t paid, or were there other things he didn’t do?

“Yeah, lots of things. I’ve spent more time with these people and these races in the States than anybody else. India’s come and gone and other places have come and gone, and we’re still messing around.”

Q: Normally you are dealing with governments, but while they can be a pain, they do get the job done…

“Absolutely. I expect people to do what they say they’re going to do, which is what I do.”

Q: Were you disappointed with Tavo? Obviously he wouldn’t have got in the door if you didn’t know him already.

“I was disappointed insofar as he had what he thought were partners that could finance the business and wouldn’t let him down. Really, they let him down and they’re trying to steal from him, get him out of it, and do the whole thing themselves.”

Q: Was he a bit out of his depth?

“He was a bit out of his depth in relying on trusting people.”

Q: Personally, you don’t have a problem with him now?

“With him, not at all, not in any shape or form.”

Q: Bobby Epstein is saying that when you cancelled Tavo’s contract, the one you offered COTA was different. Is that right?

“Correct. Different insofar as their deal with Tavo, knowing that they were going to be the people bankrolling him, and knowing what happened to them, we don’t feel that they are as reliable as they should be.”

Q: So you want the guarantees that you’re talking about?

“They have a contract, which if they want to sign it, they’re OK, and if they don’t, it’s OK as well.”

Q: They put out a release saying they sent a revised contract to you. It’s not normally your style to sign contracts people send back to you…

“They’re not in a position to do that. Well they are and they have, but we are not interested.”

Q: If it doesn’t happen, will you juggle other races around?

“It’s probably a bit late now. This what these people don’t understand, they’re sitting there on their own, thinking about their race, buying something that they can’t afford, thinking the world is going to change for them. Which it isn’t.”

Q: You could move Abu Dhabi for example, which is now back to back with India.

“We could do, we’ll have to have a look. But I think the India/Abu Dhabi back-to-back is good anyway, the teams like that.”

Q: What’s happening with Korea?

“We’re tidying up bits and pieces, trying to help them.”

Q: So that’s looking good for next year?

“Yeah, yeah. The trouble is they got rid of the guy who in my opinion they shouldn’t have got rid of. He knew what he was doing. They put somebody in who’s brand new, and brand new to motor sport as well, and has had to learn a little bit. He’s had a few surprises.”

Q: So would you say Korea is 95% or better or worse?

“Well, we have a contract with them, I hope it’s 100%. We’re just trying to help them.”

Q: You’ve said that you don’t have any problems with Bahrain, but it’s clear that there are still problems.

“If they’re prepared to put the race on, we’ll be there racing, for sure. Obviously something was wrong. But I’m not so sure if we’d have gone this year we would have had problems anyway. I was happy to go.”

14 Comments

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14 responses to “Bernie Ecclestone on Austin Q&A: “They never had the money…”

  1. Kenny

    So do you think there will ever be an F1 race in Austin?

  2. Kenny

    And if so when do you think it will be?

  3. Simon Benedict

    Doesn’t Ecclestone realise that the tracks holding races WITHOUT government support are almost always the best on the calendar?

    The problem here is Ecclestone’s greed.

    The Austin track looks amazing and appears to be run by enthusiasts, not faceless Sheiks who can easily dip into government money because they’re essentially running dictatorships.

    • Kurt

      Precisely true. Spa, Interlagos, Monza, Silverstone are still the best races. Austin is building what looks like an exciting venue that I am looking forward to seeing. Between Bernie expanding and changing the calendar so all of the dictatorships who will pay lots of thier country’s money to get a few days on the world social calendar and the FIA rules smoothing the technical variability and pure driving out of racing (DRS and KERS, anyone?), F1 has become less fun to watch. I miss Watkins Glen!

  4. livenbreathefootball

    I see Ecclestone’s daughters in the tabs all the time with their over the top livestyles. How much of that taxpayer funded money is going directly to Ecclestone to keep his spoiled daughters happy?

  5. bret branon

    Austin Fan here. Consensus on the ground here in town is that Our Side dropped the ball. For once Bernie looks like a good guy, at least to the fans here in Texas. It seems Our Side didn’t follow the rules of “Straight Talk”, and “Handshake Deals”, that still apply for many of us in this State. Bernie would make a good Texan.
    I feel sorry for Tavo.
    I’m still praying the deal gets done though. We had pretty high hopes for an F1 race in our backyard. And we came out hard to support and educate folks and local businesses around here(including many city council visits) about how good F1 would be for our Area. If all that effort was in vain, it will be the local supporters that will have egg on our faces.

    • BD

      A lot of this interview and the preceding Statesman articles are maybe illustrating a form of hyperbole within negotiations that is not familiar to Americans/Austinites.

      Perhaps if COTA created a way for Tavo (and thus Ecclestone) to save face the whole thing would smooth out.

      It’s possible to conclude that that is the bottom line from what Ecclestone is saying.

  6. Fred Kreiner

    Epstein soured the deal when he tried to squeeze Tavo out. In the end, Tavo’s relationship with Ecclestone was what made this race make the schedule in the first place. Beyond the guarantees, it wouldn’t surpise that me if the $25m had now become 30, and if Epstein actually does the deal on Bernie’s new terms, some portion of what Bernie gets, over and above the original 25, he’ll pay to Tavo, just to make his point about people keeping their word.

  7. Chris Lehman

    At one point this race and the necessary race track were going to cost Epstein’s investors and Red McCombs the price of the land and a $250M for a new race track. Texas has begun to see the difference between 100% of the market for a Super Bowl or Olympics for an entire year and 1/20th of the F1 market. Without the original F1 contract the race will cost Epstein’s investors two to three times as much; hundreds of millions more. There may also be less revenue now that Texas will share the US market with New Jersey and its vastly superior flight service.

    20 equal GP events per year means that proximity matters. And while some attendees travel from afar, the vast majority come from within an area much smaller than Texas. So far the numbers “justifying” the Texas tax subsidy have been based on the opposite. At one point the projections of additional sales taxes available for Formula 1 even included over $1M of sales tax revenue on gratuities. No one should have known better than State Comptroller Combs and Gov. Perry that there are no sales taxes on gratuities.

    Gov Perry cut back on education and fire fighting as Texas suffered its worst wildfires including over 1,500 homes lost to subsidize a racing league of foreign manufacturers.

    • Thanks for the post, interesting stuff

      • Steve C

        It may sound interesting to you Adam but it’s wrong. Chris doesn’t know the difference between the Superbowl and an F1 race and clearly doesn’t understand what an F1 race does for a community in as far as economic impact. The estimates (conservative at best) were for the State to bring in $26.1 million in sales tax gain from the event based on $288 million in economic impact (spending dollars from the F1 fans coming here to Austin). This more than pays for the $25 million the State would rebate back AND we get the benefit of having all those people come here and spend their money at our shops, bars and places to eat. What Chris also doesn’t understand is that without the race there wouldn’t be any economic impact and therefore no sales tax dollars coming in.

        There is no reason America can’t have two races, this shouldn’t be about one vs. the other.

        What the State does to make sure it stays solvent has nothing to do with a funding process that is suppose to help local communities gain large out of State events like Formula One. The METF pays for itself by producing the necessary revenue from the event to pay for the event.

      • Chris Lehman

        Thank You.
        My point about the difference between F1 and the Super Bowl is that the state of Texas can only subsidize a major event to the extent the event brings in additional sales tax revenue above and beyond what we already normally have for that weekend and that increase can only include revenue from out of state visitors.
        The projections that show $25 million in additional out of state visitor sales taxes ignore existing baseline revenue and exaggerate the number of out of state visitors.

  8. Chris Yu Rhee

    I was really interested to hear some more of the details about what happened. You’d thing that they would have had all the financing in place for the construction and the race before even breaking ground, but there is still something that isn’t being shown, as Bernie and Tavo are still buddies, despite a broken contract…

    It was also good (I think) to hear that Korea is still a possibility. I chose not to go to the first two races here because I knew the first would be a giant cluster #@&# because of the construction schedule (I used to be in large commercial construction in the U.S.). The second because the almost complete lack of promotion here made me apprehensive about spending close to $1,000 U.S. on tickets to see the race, not to mention driving 5-6 hours for the privilege to do it.

    I honestly don’t see how the Yeongam government is going to cough up the money for another race. The problem is I bet the local government doesn’t understand that they’ll have to pay the money to Bernie whether they have a race or not (unless there is a buyout clause).

    I hope that the Texas track becomes a reality, because it WILL attract other events besides F1.

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