Formula 1 crashing in Texas
Update: Austin Formula 1 falls apart: Construction stops, the U.S. Grand Prixwithdraws their application and Texas withdraws financial support
Update: November 15th, 2:35pm
Today, Circuit of the Americas (COTA) suspended construction of the Formula 1 track being built in Elroy, just southeast of Austin.
A press release sent this afternoon makes clear that Circuit of the Americas and Formula 1 have reached a road block in agreeing to a contract. "�We have spent tremendous resources preparing for the Formula One and MotoGP� Championship races, but the failure to deliver race contracts gives us great concern,"� said Bobby Epstein, founding partner of Circuit of The Americas.
According to COTA, the track and Formula 1 agreed to a contract timetable which has not been met. Without a contract with Formula 1, there can be no race; despite plans for MotoGP and concerts, without Formula 1, the track has no chance.
The news comes on the heels of a State Comptroller statement (detailed below) withdrawing $25 million in funding from the State's Major Events Trust Fund (METF) until after the race is run and not before, as previously committed.
Neither the Comptroller, nor COTA were willing to talk on the record, pointing to the press releases as their entire statements.
What this means is simple: As of this moment, the highly touted and very expensive Formula 1 United States Grand Prix in Austin is little more than the pipe dream it started as over a year ago.
The track construction has stopped; the state's most ardent proponant, State comptroller Susan Combs, has withdrawn financial support. There is no contract with Formula 1, and there is no application for funding from METF. It even appears there is little—if any—discussion happening between Formula 1 boss Bernie Ecclestone and COTA. So what is happening? Nothing.
Clearly, as CultureMap reported on Monday, investors made a tactical mistake in pushing Tavo Hellmund out of the inner circle. Hellmund and Ecclestone are close friends, and with Tavo gone, so might be the race.
November 15th, 12:30pm
In a statement issued at noon Tuesday, State Comptroller Susan Combs cites the high profile and very public disagreement that has emerged between Tavo Hellmund's Full Throttle Productions and the investor group funding the Circuit of the Americas track.
According to the State Comptroller’s statement: “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.”
No money will be committed before the race happens. This is a complete change from what had been discussed by the COTA and the State Comptroller’s office just 5 months ago.
This is the first public acknowledgement that Austin’s U.S. Grand Prix is in great jeopardy. And it’s led Combs to change the State’s stance on a commitment to helping the track financially, even if a new application is submitted.
Again according to the statement: “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.”
That means no money will be committed before the race happens. This is a complete change from what had been discussed by the COTA and the State Comptroller’s office just five months ago.
Combs has been a vocal proponent of Austin’s Formula 1 deal and was one of the first to support it publicly. Her commitment to the race came in the form of a promise to pay $25 million dollars per year for 10 years out of the state’s Major Events Trust Fund (METF). The money was to be used to help pay the Formula 1 license fee and could be paid as early as one year before the race was held.
The METF money comes from tax revenue collected from those who attend big events around the state. Their hotel stays and sales taxes go into the fund.
As reported by CultureMap on Monday, the investor group, led by President Steve Sexton, appears to be working to move Tavo Hellmund out. Hellmund, however, is the main connection COTA has with Formula 1 boss Bernie Ecclestone. Tavo and Bernie are life-long friends.
The U.S. Grand Prix is now in deep trouble and may not happen at all.