Formula One
Formula 1 crashing in Texas

Why Formula 1 failed: Tavo Hellmund, Bernie Ecclestone and the clash of super-rich egos

Why Formula 1 failed: Tavo Hellmund, Bernie Ecclestone and the clash of super-rich egos

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Construction at Circuit of the Americas Photo by Kevin McCauley
Austin Photo: News_John Flood_Tavo Hellmund_Nov 2011_press conference 2
Tavo Hellmund (seated at right) adressing the media. Photo by Kevin Benz
Bernie Ecclestone
Bernie Ecclestone
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Austin Photo: News_John Flood_Tavo Hellmund_Nov 2011_press conference 2
Bernie Ecclestone
Austin Photo Set: News_Formula one Austin:4_pit

If Tavo Hellmund is to be taken at his word, and there is really no reason not to, he is a reluctant victim.

“I’ve been working for six and a half years to make this race happen,” he said during a 30 minute press conference late Thursday afternoon. “I will do whatever it takes to make it happen this year.” If he said it once, he said it a dozen times.

 “We don’t have a contract because we have failed to fulfill our financial obligations to Formula 1, it’s as simple as that,” said Hellmund. 

Not that what he wants matters anymore. Tavo Hellmund no longer pulls the Austin Formula 1 strings. Tavo is out.

Listed still on the website as a co-founder, Hellmund was paid a salary as a contract employee of Circuit of the Americas (COTA). His title was Chairman of the U.S. Grand Prix.

But Hellmund says he hasn’t been paid by COTA in a “couple of months,” and is “currently in buy-out negotiations” with them.

It’s all evidence that the rift reported between Tavo Hellmund and Circuit of the Americas is real. It also seems clear that COTA under-estimated the power and influence Tavo Hellmund holds with Formula 1 boss Bernie Ecclestone. When they split with Tavo, they split with Formula 1 too.

Even so, Hellmund says he hasn’t spoken to his life-long friend Ecclestone in over a week—presumably since Ecclestone canceled Hellmund’s Formula 1 race contract.

“We don’t have a contract because we have failed to fulfill our financial obligations to Formula 1, it’s as simple as that,” said Hellmund.

Now it appears it’s Tavo’s string that’s being pulled. Sitting with his attorney, Tavo Hellmund described a classic battle of money and egos playing out on an international stage.

It’s a multi-hundred million dollar deal between super-rich men and the wealthiest sport in the world. One might assume that deal to be convoluted and complicated. You would be wrong. This is the simplest issue you can imagine.

A check for $25 million solves it—right now.

"There’s a solution. If Mr. Ecclestone and FOM [Formula One Management] get their money, there’s a Grand Prix next November. It’s that simple.”

Again, these are super-rich guys we’re talking about here—not Tavo Hellmund—but COTA co-founder Bobby Epstein, and to a lesser extent, co-founder Red McCombs, who probably blew through $25 million a month when he owned the Minnesota Vikings. Of course the Vikings also had money coming in, and that's not the case with Circuit of the Americas.

The little bit of money they thought would come in the form of a  $25 million check from the State of Texas (that amount is not coincidental), didn't materialize, and in fact is now off the table since State Comptroller Susan Combs decided the project was too risky, and the partnership too messy now to committ to. Combs is one of the Austin F1's biggest supporters but she couldn't give the project any money even if she wanted to—COTA pulled their Major Events Fund application two months ago, and haven't filed a new one.

So, that $25 million check to Ecclestone is not forth-coming, because ego got in the way.

You see Tavo Hellmund had the Formula 1 contract, but Bobby Epstein has the money. Somewhere along the way, the guy with the money always wants the power. Perhaps Epstein wanted Hellmund out as a power play, maybe it was something else. Whatever the reason, rumors started drifting out months ago that there was trouble in paradise, then two weeks ago, major investors began suggesting the "deal is dead."

Now Hellmund is out, and Epstein and the COTA partners are left with nothing, unable to get a contract with Ecclestone on their own. Calls to Epstein and COTA President Steve Sexton were not returned.

"These other people [COTA] came on the scene, saying that they wanted to do things, but that they had problems with Tavo,” Ecclestone told the British Press Association on Wednesday. “They said they had the circuit and that they wanted an agreement with me. I told them they had to sort out the contract with Tavo, which they said they would.” They didn’t.

Hellmund described his relationship COTA like a family—“families bicker,” he said.

Yes, they do, and sometimes bickering leads to messy divorces, as it seems to be in this case. But rarely does bickering end with the house being burnt down, which is what’s happening now.

The U.S. Grand Prix is stalled out exactly one a year before it was set to run on November 18, 2012.

The Circuit of the Americas track stopped construction on Tuesday, before it was half finished; the relationship between the main promoter and the money men and the F1 boss seems stuck in neutral; and thousands of American race fans are left wondering—like so many high ranking racing officials around the world—how could this happen?

 "Mr. Ecclestone gave us opportunities for three months, literally, and I like to think that my relationship with him, although strained and tested now, allowed us that flexibility. When they ask you for payment and you don’t do it repeatedly, over and over and over, eventually…” 

It happens like this… Tavo Hellmund and his Formula One race promotion company, Full Throttle Productions started this deal 18 months ago. It was Tavo who had the contacts, and put the monied people together. He also signed contracts with MotoGP and V8 Supercars so they would race on this elite circuit. "There is no facility in the world that can claim Formula 1, MotoGP, and V8 Supercars on one circuit," bragged Hellmund. "I've done everything I promised and more." Formula 1 was Tavo Hellmund’s dream for Austin.

It's hard to believe that all these very smart, very rich men could not figure out how to get the money they needed before embarking on a project of this size and scope. But apparently that's what happened. And Hellmund would have us believe he had nothing to do with it the money. "My partner's role was money. I know nothing about that," he explained.

"Right now we should be praising Mr. Ecclestone," he added. "We were in breach on multiple issues since as late as May. He sent numerous requests and letters that we were all aware of, of how to fix it, and we failed to do that. More than anything this project needs to meet its financial obligations to Formula 1. It’s just that simple. We can put a spin on it, other people can point fingers at who’s to blame. I don’t want to do that.” That's good, because he might not have enough fingers to point at all people contributing to this mess.

The mess might have started earlier this year, when the race was originally set to run in June, 2012. That schedule was far too tight to finish construction of the track, as CultureMap first reported last July. COTA denied it at the time, insisting the track schedule would be just fine.

Then, in August, 2011, the schedule abruptly changed moving the race to November, 2012. “That’s normal for F1,” said COTA.

On Thursday Hellmund revealed the truth for the first time—the track was way behind schedule and couldn’t be finished by June, 2012. Ecclestone changed the date of the race to accommodate construction. But Ecclestone’s patience continued to be tested. That pesky $25 million license fee needed to be paid.

"I think the thing that’s disappointing is that the timing was just barely off. Mr. Ecclestone gave us opportunities for three months, literally, and I like to think that my relationship with him, although strained and tested now, allowed us that flexibility. When they ask you for payment and you don’t do it repeatedly, over and over and over, eventually…” and his voice trailed off.

Ecclestone told a British news agency that he’s offered one more contract to COTA, a ten-year deal starting in 2013, not 2012. He also suggested that if COTA got their shit together (read… pay me), by the end of next week, there is a chance for the 2012 race. "It's all very simple,” Ecclestone told the Associated Press. “They don't have the money. We don't have a contract. If they want to come back to us, if it's not signed before the end of next week, I suppose it won't be on the calendar next year."

Tavo Hellmund, describing himself as an eternal optimist, says there is a better than 50% chance a 2012 race will happen although he has no evidence supporting that statement. “I’m sad but hopeful,” he said, his voice clearly breaking from emotion, “this project means the world to me.”

“Someone needs to jump on a plane, talk to Bernie, and get this done,” Hellmund said. I asked why he wasn’t the guy on that plane, particularly since he is the one with the relationship. “I’ve made that offer,” he said. In other words, no one is talking to Bernie. If that strikes you as stupid, you’re on the right track. Egos are in charge now.

Whatever happens, it’s clear this mess could have been, should have been, avoided. Austin’s Formula 1 dream turned into a nightmare for the players.

As for F1 fans, they are left out of the conversation. State economists estimated Formula 1 would bring $200 million each year into Texas, most of it to Austin.

While no public money has been spent yet, that’s a lot of cash to leave on the track.