Austin’s state funding under serious threat

Susan Combs and Tavo Hellmund (far right) at Silverstone in 2010

The saga of the US GP in Austin took another turn today when Texas State Comptroller Susan Combs confirmed that no state funds would be paid out in advance of the event.

The race was built around the expectation that the Major Events Trust Fund would pay an annual sum of $25m, which would in effect cover the sanctioning fee collected by Bernie Ecclestone. Such payments are always made well in advance of races and thus far none has been made to cover the inaugural Austin event.

Combs, who visited the 2010 British GP and met with Ecclestone, has been a keen supporter of the race, and has fought off any criticism of public money being used to fund an F1 race.

However in a statement today she appeared to be back pedalling in terms of that support. She makes it clear that the arrival of the New Jersey race in 2013 will have an impact and is clearly concerned about the behind the scenes dispute between Tavo Hellmund, the original driving force behind the race, and those involved in the Circuit of the Americas.

If the $25m is not forthcoming then the sums do not add up for those behind the Austin race and clearly the whole event could be under threat.

Combs’s statement reads as follows:

“It’s no secret that I’ve supported Texas hosting a Formula 1 race since 2008. I believe a well-organized event of this magnitude can be a tremendous benefit to Texas if done right. Investors, businesses and event organizers want to come to Texas because we’ve developed an economic climate that is attractive, our state is a great location for events, and we’ve got space and potential to grow.

“A tool for recruiting large events to the state is the Major Events Trust Fund (METF), which was created by the Texas Legislature in 2003. In the past two years, eligible METF recipients have included the NFL Super Bowl XLV, the NBA All-Star Game and the NCAA Men’s and Women’s Final Four tournaments. The support provided by the METF comes from sales, hotel, beverage and other tax revenue generated by out-of-state visitors who attend the event.

“When the United States Grand Prix was formally announced, it was the only Formula 1 race scheduled in the U.S. During the past 18 months, organizers have taken many steps to bring high-profile motor racing to Central Texas, including the development of the Circuit of the Americas, and the announcement of the global MotoGP and V8 Supercar race series starting in 2013.

“The recent announcement of an annual Formula 1 race in New Jersey is a concern, as additional races have the potential to reduce the number of attendees to a Texas race, thereby decreasing the economic impact.  Additionally, the reports of a slowdown in construction at the Circuit of the Americas, and recently publicized disagreements between the race rights-holder and the circuit developers have prompted speculation about whether the Austin race will even occur. The ongoing controversies are a concern and we will continue to monitor them.

“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.”

When Combs visited Silverstone this blog asked her about criticism of the F1 plans from Texas taxpayers.

“The legislation has been passed, it’s a done deal,” she said. That no longer seems to be the case…


Filed under Uncategorized

6 responses to “Austin’s state funding under serious threat

  1. Black Knight

    This certainly complicates things. Now the COTA $$ group will not only have to pay Tavo his finders fee to assume the rights, but come up with $25m up front – and hope the state of Texas makes good on the support funds. Actual timing on the payment (and net amount) of said funds TBD.

  2. Jodum5

    Well it was a done deal until FOM and the race promoters decided to complicate things with the extra race and shenanigans at the track. The U.S. will not deal with the shadiness of F1 characters particularly with public money at stake.

  3. Airhog

    The best thing to happen to the event is the State effectively saying they are out. Now if COTA and FTP/FOM can settle their pissing match racing can again. If not look for criminal fraud charges against FOM/FTP plus a rather large civil suit.

  4. Pandabater

    Bernie should offer an early settlement bonus.

  5. Steve C

    Tavo has zero dollars in the venture, he just holds the right to the race (at Bernie’s special rate). CotA, wants those rights and went around Tavo to Bernie. This is the problem, a few big egos (Bernie and Bobbie Epstein) dealing with one person, Tavo (who is too small for that big of an ego – but wants one anyway). I hope Bernie and Tavo didn’t have something under the table beforehand.

    Get these people in a room and get this figured out. They are too close and too much money has been spent for this to fall through.

  6. John

    C’mon people. 2 races in the US is going to cause interest in the sport to explode. We speak to F1 fans in the US everyday . We hear repeatedly folks making plans to go to 3 GP’s in one year Canada,Austin and New Jersey without having to fly around the globe.
    I agree with post above, get all the folks involved in the room and get this worked out!
    John @Grand Prix Investors Fund

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