Tag Archives: US GP

US GP under threat as Texas cuts state subsidy by $5.5m

The future of the US GP has been thrown into doubt by the news that the Texas state government has dramatically reduced the subsidy it pays to to the Circuit of the Americas, and which in effect covers a large chunk of F1’s sanction fee.

Originally the state had made a $250m commitment over 10 years, and the race received $25m per year in 2012, 2013, and 2014, but this has been cut to $19.5m for this year. The circuit was made aware of this number before the race weekend, although the news has only just emerged.

It comes on top of the losses caused by the bad weather at this year’s event, which led to reduced sales of concessions and also had an impact on the event’s viability.

“To use a technical term, I think we’re screwed,” circuit chairman Bobby Epstein told the American-Statesman. “It hit us cold. No one could foresee this coming. But the big question now is, ‘Is the race coming back?’”

Meanwhile Bernie Ecclestone told the paper: “If it’s changed, it’s going to be difficult to continue the race in Austin.”

The whole COTA project was built around the idea that the race qualified for a subsidy that is paid to major events to reflect the income that they generate for the cities that host them. This is in effect based on how much tax revenue out-of-state visitors generate during their stay.

The Texas Major Events Trust Fund payment for the Grand Prix was approved by previous state governor Rick Perry and administered by the office of Comptroller Susan Combs, who worked closely with event founder Tavo Hellmund and Ecclestone when COTA was still in the planning stages.

However, on September 1 responsibility was transferred to the office of current Governor Greg Abbott, who took over from Perry in January this year. Following an audit by Texas State Auditor John Keel Abbott’s staff have used a different formula and concluded that the event is worth around 20% less to the state than previous figures suggested.

In his report Keel noted: “Although the Comptroller’s Office prepares post-event studies after a major event, those studies cannot accurately determine whether the estimated incremental tax receipt increases were actually collected.

“Specifically, those studies state that determining the measurable change in tax receipts due to a major event is difficult due to the size and population of the state. In addition, taxes are remitted to the State based on receipts from 30-day to 90-day periods, which makes it difficult to isolate the economic effect of a particular major event.”

He also made it clear that in the past some tax types had incorrectly been included in the calculations: “The Comptroller’s Office inappropriately implemented that methodology by including certain information in its calculations that is not permissible. Specifically, when the Comptroller’s Office used economic modeling software to estimate the incremental tax receipt increases associated with major events, its estimates included tax impacts for tax types that statute does not permit to be considered.

“Based on output from a demonstration that the Comptroller’s Office’s staff performed using the estimated direct spending amounts for an actual major event, auditors determined that 22 percent of the total funding that would have been approved for that major event was caused by the inclusion of tax types that were not permissible.”

Keel’s report can be found here: http://www.sao.state.tx.us/reports/report.aspx?reportnumber=16-001


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FIA confirms change of qualifying format for 18 cars

The FIA has confirmed that the qualifying format will change in Austin to reflect the fact that there are only18 cars in the entry.

As predicted by this writer last weekend four cars will be eliminated in Q1, and a further four in Q2. However Sebastian Vettel has already declared that he won’t participate in qualifying as a change to a complete sixth power unit will mandate a pitlane start, so in effect three cars will be bumped in Q1 this time.

Meanwhile the stewards have formally confirmed that Marussia and Caterham have both breached the regulations relating to entry in the championship by failing to turn up for the US GP.

The stewards have taken into account the ‘current financial circumstances’ of the teams had applied no penalty. However the matter has been referred to FIA President Jean Todt.


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Ecclestone: We’ve compromised enough on New Jersey

Bernie Ecclestone insists that the Grand Prix of America could still find a place on the 2014 F1 calendar, despite having said last week that the New Jersey event definitely won’t be happening due to lack of funds.

However, he has also made it clear that he is running out of patience, having already postponed the race’s debut from this season.

Meanwhile the matter has been complicated by plans for an event in Mexico City gaining momentum, crowding the calendar still further.

A 2014 F1 schedule is expected to emerge either at or just before the FIA World Motor Sport Council gathering on September 27, and Bernie confirmed that is “more or less” the cut-off point for New Jersey.

In essence the promoters have to come up with some funding, and it’s easy to speculate that Bernie is now simply counting the days until the deadline for the event to meet its commercial obligations formally passes.

“They have a contract,” Ecclestone told this writer at Spa. “If they can comply with the contract, we want to be there. If they come to me next week, and show they have complied with whatever it should be, it’s alright. They’ve got to finish the circuit, so they need to pay, and they need to comply with the conditions for us.”

Asked if he really wanted the race to happen, he said: “Yes, of course. We’ve been mucking around and waiting long enough. We’ve compromised enough. We sent them 10 million to pay some of their debts, and keep the doors open, so we’re a little bit serious.”

He made some interesting observations about the efforts of Leo Hindery Jr, the man behind the NJ event, to raise the necessary finance.

“When they signed the contract, the guy definitely looked over 21. Allegedly he’s a very good business guy, and he knew what he was signing. When we made the agreement with him there was no fear about or discussion about could he or couldn’t he afford to pay.”

Ecclestone added that, if the race is eventually confirmed, it is set for an autumn date.

“We’ll worry about it when it happens. But it never was going to be June. Let’s see. We used to have the race in Watkins Glen in October.”

Meanwhile asked whether a recent plea for government funding by the Indian GP promoter suggested that there was a financial crunch for the Delhi event he said: “I’ve no idea. I don’t count people’s money, I rely on them to know what they are doing.”

Bernie also confirmed that the new Austrian event will move from the July 6 slot originally announced by Dietrich Mateschitz: “We’ve changed that date. It will be in the calendar.”


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