Tavo Hellmund: New North American GP Project

Hopefully all that can change with the introduction of an American team (Haas)

 

Rob,

The Scotsman knows more than I do...I'm subject to rumor and won't spread that. I have never met nor discussed this directly with the parties I understand were the seed investors and those individuals and institutions they brought in for debt and equity investments. Best I could quote is two people that know Epstein that have supposedly repeated to me what they have been told, and that is worthless without hearing it directly from the source. I did a ton of research for the purpose of proposing a road racing track in Texas 14 years ago. My numbers indicated that a successful effort (you know...profitable for the investor) would likely have to be capped at $50MM using the standard MUDS and other available tax abatements and available funds from the public tills. The sport has a number of systemic problems, especially in the US. Professional motorcycle racing is practically dead in the US, and car racing outside of F1 is not attracting as many young people as old fans are dying off. I am around a ton of 20 somethings and few if any care enough about F1 racing to pay the price of admission.

 

I too never understood the economics of it honestly. They pay F1 what 25M for each race and get ~100k fans once a year? How the hell does that make money...ever?

 

To cut to the chase, pave the rest of the lots, even stabilized gravel would do.

There are THREE major lots, they use for housekeeping storage.
To lose the amount of money they cry about, when a little dry season investment would solve it, is simply poor management.

The closing of the Track Saturday AM (I guess they didn't tell the two young lads that zoomed me in!) was hugely bad idea.

Even the Main GS was not adequate weather protection.
Well, it was nice in the Suites....

 

"COTA Investors"...they have a nice Paddock box.

I once took some kids there, must have been Dad's money, they stayed about two hours of the entire weekend.
I could not believe it, seeing them leaving....

Anyway, Bobby, and Red are the headlines stakeholders, but there are hundreds....

 

They can declare bankruptcy (Chapter 11) and still operate the track. The important thing will be creditors’ willingness to negotiate the debt and COTA’s (Assuming it is the entity filing for bankruptcy and on charge of the USGP) guarantees of performance if they are to assume or reject the executory contracts.

It would be an interesting bankruptcy proceeding.

Can you guess what type of Law I practice?

And coming to the great state of Texas in 2016.

 

The day that check does not clear, it's all over.

I don' think there is a "mortgage" per se, on the track.
Bobby Epstien built it (with investors), they own it.

Like a game of musical chairs, they have to SELL it, to get out of the trap.
He always said he did not want to own a race track, but he does.

As to taxes, that the interesting part.
It's not worth what they spent to build it, so less than $450M (which as usual includes things like Tilke's design fees, that are not "equity" in the facility)...

City of Austin should settle for some value, greater than a cow pasture, but probably "about the same" as a residential housing project. That's what was planned before.

That's what Texas World Speedway in College Station is returning to.
Starter houses remains the "best land use" in Texas as long as the Mortgage companies are churning loans.

 

If you don't have a contract with Bernie, the Track has little real world use......Willie Nelson only has one picnic a year.....

Driving schools and tire testing might keep the lights on, but they won't pay all the "executive salalries" that it seems to take to run this place.

 

You are correct my friend. One of the first things to should be to terminate the salaries and have the executives be compensated on a performance basis (I know that both recommendations will never happen). The second task that should be done (Since I assume State and/or Federal funds were also used for the construction of the Track) would be to have a complete financial audit concerning the use of the State/Federal funds.

 

That's the first thing that has to change if F1 is to continue. At least in 'emerging' venues, where fan base needs to be developed. And even more considering the state of the world's economy. Ecclestone already made enough money in his life.
As for COTA, they need a realistic tax assessment indeed. And they should have secured car & motorcycle schools before they even opened. If they thought F1 was a done deal AND a money maker forever, somebody made a grave assumption. And the lack of organization didn't help either. And neither the Mexican GP. Tough times ahead.

 

Surely the track wasn't built to host just one race a year?

Don't they have other championships visiting Ausin as part of their calendar? NASCAR, IRL, GT, IMSA, etc... ? Don't they have some bike racing at Austin?

Also, apart from testing, most permanent tracks I know also have club meetings, one make series, local championships, track days, promotion days, a racing school, a riding school to boost their income.

They don't all make money immediatly, but with the right management, it's possible to break even at least.

 

The $25 millions Ecclestone collects from COTA don't go to his pocket!

They go to the fund that pay for the organisation of the GP, and a large part of the money goes back to the teams at the end of the year.

So, if Ecclestone collects less, the teams will get less too.

 

Peanuts. It might actually cost them more just in maintenance for these activities. It's the paying public that brings in the money.

It's too bad that most of the USA racing money goes into Nascar alone.

 

No, all private funds......for the Track.

Now, there have been roads, infrastructure, lots of things like that, but you'll find our tax dollars are often used in that manner, as "stimulus" for development.

I look at some of those boarded up farmhouses, and think "We should open a Bar!!"

They play 'the Books' pretty close to the vest, out there.
That fact alone tells me there's interesting reading!!!

 

Red McCombs son is a prominent name on the "salaried" employees..

CFO, IIRC...

Lots of people have come and gone, since opening day, but that one seems pretty fixed...

 

Kevin Schwantz was standing right next to Tavo......

It's been a long road back, to get him behind the track.
We saw him in east Austin, watching the first MotoGP on TV like the rest of us!

Actually we had gone too the track, he did not (in those years).
He reached a confidential settlement (for his work in the design development) and now does call color commnetary for MotoGP.

He, like Tavo, originally had the contract (as promoter) for the annual MotoGP event...

 

Interesting to know that it was all private funds.... and I concur that the reading of the "books" would be an interesting one.

 

It seems the "Game might be rigged"......

 

It all disappears into rentals, and turkey legs!!!

 

Given that the numbers of visitors at COTA are in decline it is beyond my comprehension for why the hotel managers are still block reserving all rooms so they can't be booked. Indy did the same thing but after a few years gave up on this most idiotic practice.

I refuse buying packages and I don't want to go to a place where I can't even make a hotel reservation.

Montreal it is again for me next year.

 

Why doesn't COTA try to host a road-course NASCAR event, like the Glenn?

 

One chatter stayed in Seguin, which IMO was too far, (east of San Antonio) you can book along the river in New Bransfels, and be back to COTA in 30- 45 minutes drive. They have never heard of F1....

Bastrop has the Lost Pines resort, but IIRC Mercedeas and ferrari teams stay there, or did, one year.

If you look adjacent to the track itself there are TONS of locals just leasing out their yards, like at Indy.
This year that would have been a long walk in the mud without a shuttle.