US GP in Austin Discussion and Speculation...

QUOTE=iamthesimpleone: Besides, next budget they pass, they could appropriate more funds to be put in the trust fund to cover any increase in Bernie's fees. All they have to do is have the tax revenue increases to back it up

LMAO!

Ben, to the contrary, I believe. Not just the METF, but ALL economic development programs are up on the chopping block. After the ill-performing Emerging Tech Fund and the Texas Enterprise Fund, the economic development funds are slated for hearings this year. You can bet the METF, maybe even the ETF, will be up for discussion. After all the F1 bad press and OWS protests, I don't think there will be any expansion or added funding for the METF. We'll be lucky if its still law after 2013.

 

Bernie requires governments to finance the race, because he wants to be sure he gets paid. "Companies" go out of business and you are left pursuing them (at large expense) in debtor's court to recover a fraction of what's owed. A mere $25MM is nothing when the race gets cancelled the 3rd year into the contract and Bernie is left looking for another venue. Since the METF became unavailable, I'm sure COTA's terms were for the full 10 yr amount (and probably more than $25MM/yr), or perhaps the full amount in trust, but still it's certainly quite a lot more than just $25MM.

Note that Bahrain paid their fee this year even though they didn't hold the race. You think "COTA" or "Full Throttle Productions" is going to do that?

Leo Hindery has gone on record saying there are no public funds covering the NJ/NY race, but I'm sure there is some kind of government guarantee or some other kind of assurance to Bernie that he will get paid, perhaps just because of the fact that it is NY.

Exactly.

 

There's an update that CofA have mailed Bernie a check plus their interpretation of the contract

http://www.pitpass.com/45299-Austin-bosses-ready-to-pay-race-fee

 

http://adamcooperf1.com/2011/11/24/cota-ready-to-pay-bernie-for-2012-us-gp/

COTA says that it is ready to pay Bernie Ecclestone the sanctioning fee for the 2012 US GP – but in the same breath accuses the F1 boss of making “unrealistic and unfeasible demands.”

COTA has signed its own version of the contract presented by Bernie and returned it to him. It remains to be seen what bernie thinks of this unusual counter offer.

A statement today said: “Circuit of The Americas has responded to Formula One Management’s contract requirements by agreeing to an immediate cash payment of the sanctioning fee for the 2012 United States Grand Prix (USGP). In addition, Circuit of The Americas has offered to establish an advance payment schedule for USGP races beyond 2012. The offer comes after several weeks of talks, and once accepted, will secure the USGP on the Formula 1 race calendar.”

“We have been ready to send Mr. Ecclestone a sanctioning fee check for some time now,” added COTA’s Bobby Epstein. “He hasn’t received it yet because the new contract presented to us two weeks ago contained unrealistic and unfeasible demands. We have signed and returned a contract similar to what we anticipated receiving.

“This race should be a reality, but if we are going to make the 2012 race date, we must receive a countersignature in the coming few days. We believe the teams, fans, sponsors and local business share our enthusiasm and hope that their voices will be heard.”

 

....the contract contained unrealistic/unfeasible demands? Since when are Bernie's contracts negotiable. If you want a race you do biz his way. So they sent a counter offer expecting him to sign. In the face of NJ being approved and moving on why would Bernie entertain a counter offer?

"We have signed and sent a contract similar to what we anticipated receiveing" SO they sent a contract based on what they would like to see from Bernie, but its not one he sent? So 1 year is paid for and they have offered a proposal for the following years but its not a done deal unless Bernie agree's? I guess its progress but its not solid.

 

Bless 'em!...... Seems they don't know the Pygmy very well.....

Don't mess with the used car salesman!

Cheers,
Ian

 

Simon thanks for the insight. I was thinking 'damage control' when I posted! Posturing would be a more appropriate term possibly.

 

http://adamcooperf1.com/2011/11/24/cota-ready-to-pay-bernie-for-2012-us-gp/

wonder if Bernie is going to sign their contract.....

 

Repost.

 

From Reuters:

Asked by Reuters at the Interlagos circuit whether he thought the Texas race might now happen, Ecclestone was dismissive.

"I doubt it," he said, with a copy of the Austin statement in his hands.

"The truth is they're not complying with the terms and conditions of the contract. And as we make the contract, we will award the event or not award the event. They are not awarding anything to us.

"It's normal," he added.

"They have been messing around now for four months, there's two partners arguing and two different groups arguing with each other and in the end none of them have got the money".

Asked whether his contract was really "unrealistic and unfeasible", Ecclestone replied: "Yeah, well they shouldn't sign it. My advice to them is don't sign it. And they probably won't get the opportunity".

 

hellooooo tract housing........

(sung by a fat lady)

 

Oh come on - it was one thing when you are putting a positive spin on an otherwise messy situation, but at this point you're trying to put a band-aid on a decapitation and tell us "don't worry, he's going to be OK!". Time to acknowledge the facts here!

It is not simply a matter of timing - that previously the money would be paid in advance, now it will be paid after. There is a lot more to it. Combs has said the money would be paid after the actual receipts were discovered. That is a BIG difference. Before, she was willing to commit to the money on the assurance of ROI, now it will be calculated. That alone is a massive, huge, game-changing difference. The unspoken bigger-picture is that Combs is no longer on board with this project politically. And other people are sensing blood in the water. I would be surprised if the METF money gets paid at all.

I can accept fans and encouraging optimists, but you're jeopardizing any and all credibility when you suggest that Combs change of stance is simply a logistical difference. It's so much more than that and everyone sees it.

 

Not to toot my own horn but most people on here didn't think I was right when I said Bernie was looking for a guarantee (LOC) for the FULL $250MM for 10 years worth of races. Everyone assumed it was just a one-year LOC with renewing $25MM fees due on an annual basis in advance of the race. I said Bernie wasn't going to do that because he's being asked for a 10-year contract and he will want 10 years worth of fees guaranteed.

Well, turns out COTA is willing/able to pay this years fee, and is willing to pay each year in advance, but claims Bernie's terms are "unreasonable and unfeasible". I am willing to be Bernie did exactly what I said - wants the LOC to cover the full 10 years.

And why not? He's being asked for a 10-year contract. If COTA is unable to pay in year 3, it's no sweat off their back - they just walk away. But Bernie is left with a hole in the calendar that he can't fill. It takes him at least 2-3 years to reliably fill a slot, so what COTA wants is unreasonable and unrealistic.

You can bet on the Texas government being around over the next 10 years, but COTA? Their odds are probably less than 50/50. Negotiation 101... Why on earth would Bernie take less (a MUCH less solid guarantee) for less? Remember, when he committed to the original contract, it was a sole US race. Now it's a second US race, and one that is less attractive/alluring than NYC is. COTA is offering a lot less to Bernie than they did 18 months ago, yet they are asking for much more.

Epstein still doesn't get it.

And Bernie is saying precisely the truth... "if they want a contract, they should be talking to the bank". He wants a LOC that covers 10 years. COTA won't be able to do it.

They already said they won't be able to meet the November '12 deadline, so at this point they are suing for peace and hoping for '13. Bernie needs to drop these chumps like a hot potato. They bluffed with a pair of 2's and now they are gonna pay.

 

Until the legislature dissolves/defunds the trust funds, or Combs looks to allocate the funds for other events, it's still up for COTA to grab. Been saying for a while, that they'd be better off going through the Event Trust Fund instead of the METF to get the money in the first place, as the event qualifications are less vague. That'd be on the table now, without the early dispersal.

The tide may have turned. but I don't think she's abandoned the project entirely. It'd still be good for TX.

Never doubted your LOC inferences. What I question though, is, if NJ would be under the same requirements. I just don't see any investors wanting to put up that kind of up front guarantee for running a street circuit. Too many variables, and they're GOING TO LOOSE money doing it. Unless Bernie is offering vastly better terms in their contract than COTA, I still say Austin is more likely to materialize than NJ.

 

Typically Bernie controls and collects absolutely everything within the circuit for the three days of the event, in NY/NJ there is much more outside than at the average track that can be income producing. In Indy the concessions belong to the track, but had to sell only the approved beverages (Fosters back then). note that all the team gear and sponsor deals were inside and paid FOCA dearly. You'll see a lot of street vendors paying fees to the local government in NJ than at most tracks. Although the teams and crowd liked to see our Historic GP cars at Indy, Mr E did not, the fees became unreal and we stopped being a support race. A street circuit is much cheaper to provide especially when being done by Chris Pook with all the various walls and junk around from other venues. Sure it'll be a 10 and out event with diminishing attendance, but Mr E will be amply rewarded.

 

With all the lack of funding on major projects in Texas don't expect anymore state help. Maybe if Perry had a chance in hell of getting in he could have had the Feds pay for it George W style.

 

But at the end of the day, COTA would be left with a world class facility to be used throughout the year for other things. NJ, has a week to recoup their costs....

 

Like I said way back when, if F1 is a loss leader to justify a venue that makes money on other things, then why do they need F1 at all? If it would have been profitable to build a $450MM facility (or $250MM facility) in Austin that would be profitable from MotoGP, ALMS or other series, then an investor would have done it, and the loss of F1 wouldn't currently matter.

NJ may only have a week to earn their ROI, but with all due respect to Texas, BrianS is right - there are about eleven billion things more to do in NYC than in Austin, TX and the draw for tourists isn't even in the same league, or hemisphere, or galaxy. And that's another problem for Austin. If I was an investor looking at places like Korea, China, Bahrain, Turkey and other venues that built big tracks and entered with a splash, only to suffer lackluster ongoing ticket sales, I would be very concerned about the NYC race. The north east is the most densely populated area of the nation, so they have an infinitely bigger market to draw from locally, and in terms of international travel, NYC is easier to get to by far, a more desirable destination, better known internationally and as Simon said, they are starting $450MM ahead.

As a business case, NYC is much more desirable. And as Simon Says (haha) if COTA had money problems before, it's not like they are going to get better now. The economy hasn't improved and all the stuff that's happened is going to be making investors run for the hills, I would think.

 

I wasn't clear- my bad.

What I mean is that if I was an investor in Austin, I would be very concerned about the NYC race because it would siphon off a lot (or most) of the sales I was hoping to make at Austin.

I would have seen a lot of tracks (Korea, Turkey, Bahrain) come on the scene having spent a ton of money, only to fizzle out in a year or two. I am sure Tavo/Epstein would have been reassuring me that this is the only US GP, how huge of a deal that is... and then I open the newspaper one day and see the NYC GP, and my jaw would drop I would feel like I had bought a ticket on the titanic, especially seeing all the better financed deals that went before and failed.