A phoenix rose from the dirt mounds of Elroy, Texas early this morning as the god of Formula 1 racing, Bernie Ecclestone opened an email from Texas to find confirmation of a $25 to $30 million deposit in his bank account and a signature on the dotted line of a Formula 1 licensing contract.
Yes, Circuit of the Americas (COTA) founding partner Bobby Epstein wrote the proverbial check.
In turn, the FIA World Motor Sport Council kept the U.S. Grand Prix on the Formula 1 race calendar.
Come Nov. 18, 2012, the high-pitched scream of F1 engines will likely fill the air at the Circuit of the Americas track southeast of Austin.
The decision sets off a number of events. Most importantly, today hundreds of COTA construction workers are back on the job beginning what will be a frenzied dash to get a race track completed by race day.
Hopefully someone will make a movie about this. Formula 1 is into drama like Lehman Brothers was into credit default swaps. And the drama is enthralling: the characters larger than life, the egos as big as Texas, and the money — oh the money — that surrounds Formula 1. Johnny Depp should play Bernie Ecclestone.
Formula 1 is like nothing ever seen around these parts. It will bring some economic development yes, but more than that, Formula 1 puts Austin, Texas in the headlines on the international stage of the world’s richest most elite sport.
“Mr. Ecclestone received his check today,” said co-founding partner Red McCombs via press release. “We want to thank the fans supporting us, the local officials and businesses that have encouraged us, the State of Texas, Circuit of The Americas’ staff and Bernie himself.
“I want to thank and commend Bobby Epstein for getting us across the finish line. Bobby's perseverance and leadership kept the project on track despite unfair and unfounded criticism.”
It’s hard to say how unfounded or unfair the criticism of Epstein was since both he and McCombs have refused repeated requests for interviews. Neither has made any public statement outside of carefully crafted and very short press releases.
“Our investors have believed all along that this project has tremendous benefit for our region, and provides a strong economic engine for the future,” added Epstein. “We remain committed to reaching our goal of being valuable community partners as we establish a platform for sports and entertainment. Were glad that Tavo's vision of bringing F1 to the people of Texas will become a reality.”
And thus the deal was done — apparently making a reality of Tavo Hellmund’s vision without necessarily keeping Tavo involved.
It was Hellmund and his promotion company Full Throttle Productions that brought the idea of resurrecting a United States Grand Prix (USGP) to his close family friend Bernie Ecclestone. It was Hellmund who managed to get Ecclestone to sign off on a sweet deal of an F1 licensing contract, and it was Hellmund who worked to put together a team of investors capable of pulling it off.
Then, it was Hellmund who became the first road-kill of the USGP. We’ll probably never know why Tavo Hellmund got cross-ways with Bobby Epstein and Red McCombs, but one day Tavo was in, and the next he was out.
And the dominoes began to fall
Clearly Epstein, and to a lesser extent McCombs, underestimated the power Hellmund carried with Ecclestone at F1. It’s also clear that Ecclestone wanted his money, and that money was not going to come from Texas State Comptroller Susan Combs.
Combs was an early and vocal proponent of the Grand Prix in Texas. She traveled to F1 races and took pictures with Tavo and Bernie in Europe. She also promised a $25 million license fee payday to Ecclestone. The money was to come out of the Texas Major Events Trust Fund (METF) which helps pay for things like Super Bowls and Formula 1 races. It’s made up of tax revenue from out-of-state hotel stays and tourism.
But, when the shit hit the Formula 1 fan, Combs was the first to duck. Her press release started a round robin of statements and counter-statements. The release announced that due to “recently publicized disagreements between the race rights holder [Tavo Hellmund] and the circuit developers [Epstein and McCombs],” among other things, she was taking that $25 million per year for 10 years, off the table, at least until a race was actually run.
Not long after, Ecclestone cancelled the contract offer he had on Tavo Hellmund’s desk, and made another, certainly less sweet, to Epstein and COTA. Epstein said the new contract “contained unrealistic and unfeasible demands,” and proceeded to write a new one himself. Ecclestone, clearly unhappy with that statement (to be kind) promptly turned it down and went on the offensive.
Deadlines came and went, press releases and statements flew through the ether and Tavo Hellmund held an emotional news conference trying to explain, without actually saying much, why the whole thing went south.
And then it didn’t
Today, everyone but perhaps Tavo is back in the Formula 1 sandbox playing nice. Bernie has his money, COTA has their Grand Prix, and Susan Combs appears back on the hook for $250 million in Texas tax revenue over the next 10 years once COTA reapplies for the METF funding.
And there are plenty of winners
The city of Elroy and the Del Valle Independent School District are ecstatic — they get their tax revenue windfall back. And at least 300 construction workers get their jobs back.
If there’s a lesson to be learned here it’s probably lost on almost everyone. Clearly those involved all wanted a U.S. Grand Prix, and this is a group of people used to getting what they want.
However, there are still plenty of hurdles to overcome:
• Construction is reportedly well behind schedule, and if the track isn’t ready, there will be substantial penalties to be paid
• Formula 1 races do not have a great track record of financial profitability for the hosts
• There are plenty of folks ready to file a lawsuit stopping the payment of any Texas tax revenue
But let’s stop a moment, take a breath and appreciate the momentousness and sheer awesome cool that is now likely coming to Austin.
Formula 1 is like nothing ever seen around these parts. It will bring some economic development yes, but more than that, Formula 1 puts Austin, Texas in the headlines on the international stage of the world’s richest, most elite sport. Damn, that’s worth having a drink over.