A lawsuit filed by three Austin citizens could disrupt preparations for the US GP.
The suit claims that it seeks to prevent “the unlawful plunder of public funds for promoters of a Formula One race at a time when the State of Texas claims it cannot afford to adequately fund essential services, such as its public education system.”
One of the plaintiffs is a teacher who lost her job in a recent round of spending cutbacks.
A key element of the financial plans for the race is that the sanctioning fee due to Bernie Ecclestone is to be taken care of by a $25m grant of public money from the Texas state’s Major Event Trust Fund.
This was guaranteed to Bernie Ecclestone by Texas State Comptroller Susan Combs in a letter of May 10 last year, in which she assured him that the $25m fee for the 2012 race would be paid to Formula One World Championship Limited by July 31 2011, and that a similar amount would be paid for the remaining nine years of the contract, always before the end of July of the previous year.
The legal suit has been filed against Combs, in essence on the basis that the processes related to the Major Event Trust Fund were not correctly followed, and that she was not authorised to guarantee the payment to Ecclestone.
Among the key points cited by the plaintiffs are that there was no “highly competitive selection process” for the event.
They say that “offering public funds after the site selection has been made is an illegal gift for private purpose.”
It’s also claimed that the incremental increase in state and local tax income derived from the F1 event – and which justifies the use of the METF funding – has not been properly calculated.
Adam Cooper F1 
Here we go…
This is like suing Peter’s cousin because Paul is broke. State monies don’t go into one big pot from which everyone grabs a handful. The money allocated for the event is being used in the exact way in which it was intended. I feel for people not working, I’m one of them. Let’s see whom I can sue.
That’s a shell game that only a politician would defend. It all comes from the taxpayer my friend – into the coffers of one state government. People should be outraged that teachers are being furloughed so that a billionaire can pocket another $25M of taxpayer money. Small government means hands off the taxpayer – let the rich pay for their F1 race if they want it.
Red, you have it all wrong. The METF was created to attract large sporting events like F1 to local communities. The fund is funded by collected taxes not from our back pockets but from people going to these events and speding money, like for hotels, rental cars, bars and so on. None of this money is coming out of our pockets. It is not a subsidy.
This lawsuit happened because the anti-business environmental crowd that has been running Austin for decades has no other way to stop what they think isn’t a good fit for “Green” Austin. This is the American way, sue.
And what about the jobs that f1 created in construction for the track to be built? Typical stupid Americans. Teachers sad because her Mcshite diet and lifestyle cant be sustained.
What a very American way of doing things – if you object, sue. As such a great democracy why not just vote them out if you donb’t like it? Two questions spring to mind – (a) how can an unemployed schoolteacher afford to launch such a lawsuit and (b) how much will it cost the State in legal fees to defend flivolous actions like this? You’d hit a figure of £25m pretty quickly.
(a) by taking on the case herself, or by having the case be taken pro bono by a lawfirm (most firms take on a substantial amount of pro bono work, for a multitude of reasons, not the least of which would be publicity).
(b) a lot, no doubt, but you’ve got to learn ’em somehow. they could also weigh up the facts and their options and choose to accede to the terms of the lawsuit.
Here is a great article from the Austin Post on this subject.
http://www.austinpost.org/content/f1-metf-fact-vs-fiction
The arguments are quite simple
1. The METF fund as has already been pointed out is funded by sales tax dollars from the events themselves.
2. The fund was used for the Superbowl in Dallas ($32M for Jerry and Co) – didn’t see anyone complaining about a “billionaire” getting state money on that occasion.
3. The average economic impact for a city hosting a F1 GP is around $250M. That’s a 10x return on investment, if I could get that on half my stocks I would be a rich man!
4. The money get’s paid back into the fund based on the tax collecred during the event – how many government/state subsidies can you say that the money is returned 100% – in effect it’s a loan not a handout.
5. The additional money raised (see above) by the city can be used to pay the people who are not whining about it!
Let’s try ignoring headlines, lawyers and polticians and try using the facts.
3. The average economic impact for a city hosting a F1 GP is around $250M. That’s a 10x return on investment, if I could get that on half my stocks I would be a rich man!
Bullshit !
It’s just an estimation, and their estimation is wrong.
You want to know a fact ?
Most of the Grand Prix in Europe are UNPROFITABLE. Silverstone made one million of benefits two years ago. They spend 100 millions for the week-end and get 101 millions of receipts = 1 million of real benefits. How impressive !
And most of the grand prix spend more than they get in return.
All of this is just a lobby-bribing-corrupted-politician-business.
I really wait for the day when the people in charge have the guts to tell Bernie : “#### you ! We’re not willing to pay your bloody racket ! If you want to keep on with Formula 1, be less greedy.”
It’s a shame, a real shame. And, as a fan of formula 1, I hope these people gonna win their lawsuit.
You can’t compare Silverstone with Austin. One is in the middle of nowhere and is nothing to do with promoting the area, one is attached to a major city that will get huge benefits in terms of PR – and that’s what is hard to calculate and has hardly been mentioned in all this.
Sounds like Austin have got themselves in a real muddle. On the one hand the local goverment may have to pay a large legal fee defending its position over the F1 deal. On the other, should they accede to the lawsuit then Bernie may file one of his own on the basis of breach of contract. Very messy
Ah, don’t worry, as The Great One usually says, ‘It’ll all just blow over’. Speaking of the great one, and the 2012 calendar, as I write, there appears to be a comprehensive report by Aljazeera being screened. It features a former member of parliament, speaking about his past and present persecution- and apparently in exile- and a human rights activist from the U.K. Oh, and some crass propagandist from the government/ruling family. Somehow, I doubt, as you have basically said, that this will ‘blow over’ by December, and the 1st anniversary would surely see another surge in activity…
Does not help having Bernie’s daughter in the news here buying the most expensive house in America last week….
This is such an american way of doing things, if you don’t like something sue. A laughing stock to the rest of the world. Can’t believe how short sighted people are and the amount of revenue and advertising this will do around the world is immense. Not many people in the world would have heard about Austin around the world so this is a perfect opportunity to showcase the area and its real green credentials (if there are any).
Give her a job at the concession stand and tell her to STFU!
Tom Baker had given a good suggestion……………….
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Sumanth