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Austin's Formula 1 crashes: If Tavo Hellmund is out, the U.S. Grand Prix might not run

Austin's Formula 1 crashes: If Tavo Hellmund is out, the U.S. Grand Prix might not run

Last week I wrote about the rumors concerning the US Grand Prix scheduled for Austin in November 2012. Then, last weekend, Bernie Ecclestone told the teams at the Indian Grand Prix that there were “problems in Austin. I don't think they are struggling [with building the track] at all," he explained. "I think there has been a disagreement inside the company."

The company he was referring to is Full Throttle Productions (FTP) run by Tavo Hellmund, and the problem is the relationship FTP has with the owners and investors of Circuit of the Americas (COTA), led by Red McCombs and Bobby Epstein, and managed by CEO Steve Sexton.

 If the contract between Formula One Management and the organizers of the USGP in Austin is under threat of revocation, those of us who support the event may find ourselves watching NASCAR thunder around Wandering Creek. That’s not exactly what anyone had in mind. 

The only leverage Tavo has in this deal is his relationship with Bernie Ecclestone and the contract they agreed to. He has no money and his importance has been questioned by those who are funding this event. COTA has been trying to buy him out, but have only offered peanuts—they do not seem to understand his value to Formula One Management (FOM) and Bernie Ecclestone.

In an effort to improve his position and increase his leverage, Hellmund asked the Texas State Comptroller’s office for an opinion regarding the event’s funding. Susan Combs is the State Comptroller and a supporter of the F1 event in Austin; she has worked to ensure the state's major events fund will support the U.S. Grand Prix (USGP) to the tune of $25 million dollars per year for ten years.

Hellmund asked Combs whether the major events funding agreement would be threatened by a change in management for the USGP. He asked whether a transfer of rights to COTA would render the funding agreement moot. Many seem to think, erroneously, that he was working through possible changes in investors as rumors suggested that a major investor had backed out. That was not the case.

The circuit managers had in fact been trying to find a way to disassociate Hellmund and Full Throttle Productions from the event. Hellmund hoped the comptroller’s office would say a change in management would void the original deal and that any new management team would need to start from square one. That’s not what happened. They agreed to support the event regardless of who the managers and owners were.

Combs sent a letter to Ecclestone regarding a change in management that said, “Should the proposed assignment be consummated, the State of Texas, through this agency, looks forward to working with the Circuit of the Americas to bring the Formula One United States Grand Prix to Texas in 2012."

With that pronouncement, Tavo lost $25 million dollars of leverage ($250 million total) and his own value to the effort was reduced to whatever amount of money COTA was willing to pay him for the rights.

I was told of these developments “off the record” a few weeks ago, but now there are enough public statements from the parties involved to confirm what I had been told. Ecclestone said this weekend at the Grand Prix in Abu Dhabi, “Austin? I wouldn’t want to put my money down that that will happen.” For those of us who over the years have gotten to know how Ecclestone thinks and deals with his business relations, this is an ominous development.

Having heard what Ecclestone said, COTA CEO Steve Sexton replied to defend the Circuit, but his statement didn’t make people feel a lot better. “There is no question that if he wants the USGP race to happen here in 2012, it certainly will. Our funding is secured and construction is on schedule, so we don’t understand Mr. Ecclestone’s comments. He has expressed great interest in the Austin race and in expanding the F1 brand into the United States.”

My, my... Sexton says it would happen if Ecclestone wants it to happen. This must also mean that it will not happen if Ecclestone doesn't want it to. This implies that Hellmund’s contract may not be transferable without Ecclestone’s approval. This is interesting stuff. It seems as if Bernie is on Tavo’s side of this argument and I understand why: they have known each other since Tavo Hellmund was a child.

I believe that Ecclestone is trying to raise the stakes and to improve Hellmund's leverage with COTA. The two have known each other for more than 30 years. As a teenager in the 1980's, Hellmund spent some time in Europe working for Ecclestone’s Brabham F1 team. Tavo’s Dad promoted the Mexican Grand Prix. They have a long history together.

Many of us found Tavo’s overt support of the recently announced Grand Prix of America on the shores of New Jersey to be a bit unusual and somewhat overstated. He released his statement from London. What was he doing in London, networking with Bernie?

Perhaps the deal between Hellmund and COTA has already been done. Hellmund’s own statements seem to support this. “It is now the responsibility of the Circuit of the Americas to make this project happen before Mr. Ecclestone’s patience runs out.  I don’t plan to be a track operator. My mission has always been to put the whole deal together and get it going and then continue to broaden my horizons.” He also expressed interest in promoting events in South America and Africa. It sounds as if he is already out of the picture and moving on to other projects.

Bobby Epstein is said to have negotiated with Ecclestone for a direct contract with F1, and Ecclestone has offered one to COTA. But at this point no agreement has been reached, probably because Ecclestone upped the fees considerably. A deadline has been set and a line has been drawn. The deal must be closed before the World Motor Sports council meets in December to approve the final schedule.

There have been a number of issues that have threatened the USGP in Austin: Environmental concerns, public complaints about the State’s financial commitments, investments and funding, public roads and infrastructure; but this seems to be the most serious threat to date.

If the contract between Formula One Management and the organizers of the USGP in Austin is under threat of revocation, those of us who support the event may find ourselves watching NASCAR thunder around Wandering Creek. That’s not exactly what anyone had in mind.

Austin Photo Set: News_John Flood_Tavo Hellmund_Nov 2011
Bernie Ecclestone, Suzanne Combs, and Tavo Hellmund at the British Grand Prix June, 2011