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Texas finance chief confirms New Jersey race threatens Austin event
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Texas finance chief confirms New Jersey race threatens Austin event
Posted By: James Allen  |  15 Nov 2011   |  9:10 pm GMT  |  120 comments

There is a lot going on behind the scenes in Austin, Texas at the moment with threats from all sides that the 2012 Grand Prix might not take place.

And this afternoon Susan Combs, who controls the finances for the State of Texas, has confirmed that the recent announcement of a rival race in New Jersey for 2013 is a “concern” and said that the first $25 million the state had earmarked for the project will no longer be available before the first event has taken place.

This is significant, because the deal agreed with Combs was that she would disburse $25 million a year for 10 years, of money raised from taxes on hotels, drinks and restaurants from out of town visitors to the event. Today she said that the first tranche of this money will be payable only after the first event has taken place, if indeed it does.

“When the United States Grand Prix was formally announced, it was the only Formula 1 race scheduled in the U.S. During the past 18 months, organizers have taken many steps to bring high-profile motor racing to Central Texas, including the development of the Circuit of the Americas, and the announcement of the global MotoGP and V8 Supercar race series starting in 2013, ” said Combs’ 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.”

Only a year from its inaugural race, the project is caught up in a dispute between Tavo Hellmund, the promoter who holds the original contract for the race and a group called Circuit of the Americas, which is building the venue outside Austin. Hellmund is stepping back out of the project and there seem to be problems agreeing the terms of that. In turn, CoA want a direct contract with Ecclestone.

Bernie Ecclestone spoke about this a few times over the weekend, saying that he is waiting for the Circuit of the Americas people to send him back the contract and that the ball is in their court. It is not clear whether the terms and fees due are the same or higher than those in the original deal.

Ecclestone says that the first payment of the sanctioning fee for the race is already due and that if things do not progress, he will call the race off in December, presumably via the FIA World Motor Sport Council meeting.

Today the CoA group confirmed that construction work had been halted at the site pending resolution of the contract dispute. The longer this goes on, the harder it will be to hit the circuit delivery deadline if the dispute is resolved.

Eccleston responded by saying that the deadline for the race taking place in 2012 had passed and it would not be able to take place until 2013.

Ecclestone and Hellmund have been friends for many years and after Combs confirmed recently that the State’s $25 million would be paid regardless of who managed the race, Hellmund’s position was weakened. It could be that this is a tactic to improve his exit position or it could be more serious than that.

Either way the State government is keen to be seen to be ultra careful with Texas tax payers’ money and the intervention of Combs today adds a further blow to the project.

Local observers on the website of the Austin Statesman newspaper question whether it was ever the sport’s intention to race in Austin and that it was a tactic to get the prize they really wanted, which was the New Jersey race with the Manhattan skyline as a backdrop.

The JA on F1 2011 limited edition collectors’ review of the year “Vettel steals the show” is now ready to pre-order. A large format 240 page paperback, it comes out on December 12th, costs £9-99 plus postage and can be sent anywhere in the world. All copies bought through this site are personally signed by James Allen.

To order your copy, click HERE

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1

To be honest to all commenter, i dont like to chime in BUT i will say some facts and gossips.

I remember that when bernie was in the USA 2010, he chose AUSTIN,Texas as the ONLY host for F1 because he was interviewed after a month of checking those bidding for F1 race track – he concluded that Austin is the best place for F1 as it is in the middle of USA and its very promising city.

After that, the news spread like wildfire and people knows that AUSTIN F1 will be the only F1 race track in the USA for 10 years (in the contract).

But after the hiatus about the money and those backers from New Jersey/NY still didnt stop in courting bernie even they been beat already by Austin, there was change of heart and Bernie gave the go signal to NewJersey race for 2013-thats absurd because when they did the checking of competing places, they categorically say that Austin was the winner and bested even the likes of california city to have the track for F1.

Im from New Jersey and just migrated to Austin,Texas and i can say that Austin is way cleaner, neat, and organize than any city in east coast. The track that they are constructing now is awesome because of location, design and how wide the gradndstand is.

I hope that F1 should told them in the 1st place that they are looking for 2 race tracks, because Texas taught that after the selection process – Bernie will not look again for the other one.

He just gave in to the NJ/NY backers even they lost in the selection competition last 2010. Maybe they gave him money he cant easily turn down. But he should protect the winner if the selection they made and clarify to them (Texas) that hes still looking for another one…

Theres a lot of news and blogs that it was a fearce competiton to what city or location will be selected and the wineber is Austin.

I followed the saga and i was voting in my mind to have it in NY/NJ but they lost to Austin – i said to myself and to my wife, we will fly to texas just for the F1.

Late last year, my wife got a great job in Austin and we moved and i love the place than any city in eastcoast…

So F1 should gave Austin the shot first before they look for another one again…

2

I live 2 states away from New Jersey in Maryland, don’t get me wrong I’d love to go to Austin, but I cant afford it, there are no direct flights from here to Austin and the cost of going there is about the same as if I wanted to go to Europe and see a GP there. Sure New Jersey is kind of a slum state but it IS next to new york, and I think people on the east coast will be a lot more receptive to a F1 race, rather than Americans in Texas and its surrounding states. Honestly there’s a bigger market for F1 on the east coast, and people are WAY more likely to travel to New Jersey, than Texas.

3

Another USF1 debacle is upon us

5

Big shame. The writing is always on the wall when Bernie starts using the press to highlight issues in contractual proceedings.

Great updates James.

6

Much as this no doubt bolsters Bernie’s hardball reputation as a businessman, it’s not exactly going to endear Formula One to the American public playing fast-and-loose like this. You would think they would remember what happened last time they treated the fans like mugs – 2005, I seem to recall – and how a long-term deal with Indianapolis became a fair bit shorter. It’ll be interesting to see if this has a knock-on effect with New Jersey as well – if a contract is deemed this expendable, they may question whether the outlay is worth it. It’s a dangerous game to be playing considering F1 arguably needs the USA more than the USA needs F1…

7

Between the tire farce at Indy, the failed USF1 project and now this… its no wonder F1 cannot get a foothold in the U.S. Somehow it shoots itself in the foot at every opportunity.

I dont see all the hate towards Bernie, I dont care for the guy either, but this is ultimately a business pure and simple, pay up or go home. Sad truth.

8

I live on the East Coast and New Jersey is only a few hours drive away from me and I’d STILL go to Austin over Jersey ANYDAY! New Jersey/NYC hotels are ridiculously priced and Jersey itself is the pits. Besides, I dislike street courses and from what I’ve seen of the Austin track, it looked far more interesting than anything they could assemble in Jersey.

9

If the teams really were as desperate as they say to have an American race then I’m fairly sure FOTA could loan CoA the cash.

10

I’m sure they would love too, however, I doubt this would happen for two reasons: the Resource Restriction Agreement and the Concorde Agreement.

11

Well, since we don’t know what’s in the Concorde Agreement I don’t think we can put that down as a stopper.

As to the RRA? If all the teams agreed on an equitable way to provide the $25M then it could be made to happen.

Will it happen? Almost certainly not. Could it happen? Of course.

12

Texas is in the middle of US,a great industrial hub and even in these hard times, it has plenty of wealth and jobs that attracts a lot of immigrants. NJ being in the east coast and being a part of tri-state region ( NY,NJ and CT),it’ll attract plenty of international crowd along with Americans.

Why should TX chicken out just because there is another race in US? It is the 3rd largest country in the world, and even with downturn,one needs to add the GDP of next 4 largest economies to match US GDP! Like Martin Whitmarsh said, F1 needs US more than US needs F1, and we need to have atleast 2 races there/season. US is not Turkey or China or Korea which has no real racing culture or auto heritage.

If one thinks US has no interest in F1, they need to realize MotoGP has been holding 2 races in US for years now and both are absolute cracking sell outs! If MotoGP can establish itself in US without giving a 100 reasons, why cant F1?

13

James — keep up the good work, thanks for all you do. Please note the new email address for your system — apologies for using this approach, but didn’t know how to do it otherwise, or couldn’t figure it out.

14

Bernie got what he wanted most, a race in NYC or close enough to see the skyline. The US F1 fans don’t like being played for chumps, you guys did it to us at Indy and now using Austin as bait to get the “NYC” race. The price for the “NYC” race weekend is going to be as high a NYC skyscraper, count me out.

15

why did not this susan specify in the original contract a claus saying there is no other gp in the united states?

16

James,

“Government ULTRA CAREFUL WITH TAXPAYERS MONEY!”

That a strange concept for this side of the pond. Can you please explain??

17

Tax rates are a huge deal to American voters and one the key differences between the two main parties. Look at Herman Cane a man with no record in politics but his 9-9-9 tax plan is enough for his parties supporters to over look the fact a) it’s an unworkable plan b) he is nuts.

Texas is a Republican strong hold and their ideology is that everyone should look after themselves and not the state similar to Thatcherism. Just mention unemployed benefits and single mothers and watch them foam at the mouth at the idea of there hard earned tax money being given the so called underclasses.

Republicans believe the state is to big and local government should rule and it leads to local people having quite a big say in how local taxes are spent. Town hall meetings are quite popular and I attended one when I was in Ohio earlier this year and it was a real eye opener which if it had not been so appalling it would have been funny. I learned whilst in Europe we call it the haves and have nots, In America it’s called the haves and wanters.

I can understand given the new race in NYC, the lack of interest in F1 in American, the drop off rate of new circuits in F1 that local people would object to their money being spent on a race circuit. They have a voice and are not afraid to share it on the issue of tax.

18

Seems to me if I was Texas, I would be worried about the effects of a New Jersey race on advertisers. If I could only advertise at one race, I’d choose the one with a 18.9 population and is a media center vs the one with a 1.7 million. But as a New Yorker, I’d go to Montreal instead of Texas, if New Jersey doesn’t happen. It’s 1/4 the distance and the accents are more understandable in la belle province.

Historically most F1 races in the US have drawn well, Phoenix being an exception. But Bernie insists on getting a huge cut of the money so they fall by the wayside and go looking for NASCAR or CART/IndyCar which treats them better.

19

Everyone knows that when shaking hands after making a deal with Bernie you have always had to check how many fingers you have left afterwards – and make sure you get your expensive pen back !

Everybody knew that Bernie had been talking about a New York race for some years so the situation was easily predictable.

It’s clear that the people who negotiated with Bernie for the Austin race have only themselves to blame :

If I had been negotiating the deal for the Austin race I would have asked for a clause in the contract guaranteeing that our race would be the only one in the USA – at least for a five year period to give the race a chance to establish itself.

If I had failed to get agreement on that, I would have wanted the hosting fees cut dramatically if another race took place in the US in the same year.

There was so much money of the organiser’s money at stake that, had Bernie refused to agree to one of these clause, I would not have gone ahead.

This all seems so obvious and I’m not even a lawyer !

20

I’m looking forward to driving down to Texas to see a race. I have no interest in flying to the east coast to see a race, especially in Jersey. There is no competition between the two races for me.

21

LOL what happens in Deliverance country stays in Deliverance country! Although I will give you that as a native New Yorker and massive F1 fan, an F1 race in Jersey, as opposed to the City, is a bitter pill to swallow.

22

Much prefer a properly designed purpose built circuit than a street circuit including Monaco. Fancy backdrops are OK, but we and more importantly Bernie Ecclestone should not lose sight of what makes for good racing rather than simply chasing the dollars with a Manhattan skyline. Bernie up to his usual tricks no doubt, but he should remember he needs all the friends he can get to re-establish F1 in the states, and he could end up

being told to take F1 elsewhere which would be a pity. Personally I think the states could easily stand two circuits of quite different character.

23

I’m grateful for the comments above by Damien and Douglas.

I fear that we might end up losing BOTH/ALL U.S. F1 possibilities. If Texas is going to chicken out like this worrying about NJ competition, then NJ might also quit later on down the line, on the grounds that “Texas F1 didn’t work, so ours might not either”!

I agree too we are not really in an economic climate ready to (pay for) starting up F1 in USA: I live in California and wouldn’t be willing to travel to any US F1 circuit just now!

And to be fair to Bernie, he is still just a businessman and (a) it’s not really fair to blame him for allowing this Texas problem to happen, and (b) it’s unreasonable to expect him to help in any way: he’ll ‘back’ whoever is prepared to pay the agreed fees, but if they want to back out, you can’t expect him to (financially?) do more.

This is all America’s Business-Peoples’ problem, not Bernie’s.

24

I was looking forward to a 2013 season where I could drive from Delaware/Philly area on up to Montreal, on down to NJ/NY, sit on my computer to watch some BBC streams, then hop on a plane to Houston (to grab my British uncle) for another mini roadtrip towards Austin, and finally fly back home for a family reunion.

Hopefully that dream will come true but if it doesn’t, at least the North American Continent still has the Canada GP.

Lam

25

I mean, I would then have LOTS to be thankful for come the Thanksgiving family reunion, right??

Lam

26

It’s the same with every new race now: Constant scandal, problems, drama.

Why?

And, really, why bother? What F1 race that is run on a circuit built in the past decade specifically for F1 has been a smashing success? Malaysia’s a great track and beautiful venue but I’ve been there for the race and not many Malaysians joined me. The same problem blights China, Korea and Turkey. Abu Dhabi and Bahrain are perverse salutes to excess rather than successes. India is perhaps going to work out, thankfully. The street circuits of Singapore and Valencia are interchangeably banal (on TV) but for fact one is held at night. None of these new races are really the success the money invested would require them to be, either.

The greed of this sport’s overlord appears to be pushing all of these tracks to be built on tight deadlines with massive investment required to pay his crazy fees, all for the spectre of hosting a race for a short period, as Turkey has discovered.

I was in Montreal this year and stood in mud, laughed at the pit tower (so blandly 1980s) and generally felt like I was at a good ol’ fashioned race track. And 100,000 or so fans felt the same way too.

I think Bernie’s demands are creating all of these problems.

27

James,

I agree with your argument that one very important aspect of a tracks success is how well it attracts investors and sponsors for F1. The sport needs these amazing looking venues to wow sponsors and convince them to enter the sport. But when it really comes down to it, the only reason the majority of sponsors and companies are in F1 is for marketing. Some may be passionate about racing, but most companies are in F1 because they want the exposure it provides. The newer tracks like Valencia, Bahrain, abu dhabi may be business successes, but the quality of racing they provide pales in comparison to the great tracks like spa, montreal, etc. These new extravagant tracks are designed with sponsors in mind, not the fans. They lack substance in my opinion. For this reason, these tracks have been labeled failures by many fans. Putting sponsors needs over the desires of fans when choosing new venues could be the start of a vicious circle. If the track is poorly designed, it won’t be popular with fans, and if fans don’t like the track, they are less likely to attend. If the fans don’t like a track and aren’t willing to pay ridiculous prices to attend, then why would sponsors want to continue paying the massive sums of money to advertize there?

My point is that the fans are the life blood of any sport. When a sport starts putting sponsors before the fans themselves, they are asking for trouble. Sponsors provide the money that makes the sport work, but without fans to advertize to, the sponsors will also start to disappear. It is in everyone’s best interest to have the quality of the track design and of the quality of the racing to be one of the top priorities when designing or choosing new venues,

This argument is a generalization and my opinion is that of a racing purist. Although purists are a minority of the viewership, and therefore purists opinions are not a priority for FOM, the purists makeup the core fanbase that will always be there, and has always been there supporting the sport since its inception. Ferrari has a ‘greater say’ in the running of the sport due to its commitment to the sport and how long they have been involved. Don’t the purist fans deserve a ‘greater say’ due to our long term commitments to the sport?

Great reporting as always James.

28

That’s a bit harsh. Bahrain is a good track (without that added loop in the middle) that has problems that are nothing to do with racing, Abu Dhabi and Singapore have established themselves, alongside Monaco as the three races all the top execs come to from sponsors and manufacturers etc. They are very successful races, even if the action on track isn’ top notch. India will soon join that list.

I agree about Korea and Turkey, where the local buy in has been poor and Malaysia has done okay as a circuit, but lacked crowds. We’ll see if Team Lotus/Caterham F1 team progress helps that.

29

I agree & even go further to say that without some of these races (like Singapore, Abu Dhabi, etc) which help to fill Bernie’s pocket with more cash, some more of the other better circuits in Europe may be terminated. At least with enough dollars from these less exciting circuits Bernie is willing to retain some others. F1 is not just a sport its complex business.

30

I meant I agree with James.

31

Yes but the action on the track is ultimately what makes F1 appealing to watch over a season, and the number of TV viewers dwarfs the number of people who get to admire the new facilities at the track. Without the TV viewers those execs would stop coming to Singapore and Abu Dhabi. I read somewhere (maybe on here) that there is talk of the return of a French grand prix which would alternate with Spa. When tracks like Spa and Montreal are being pushed off the calendar because the schedule is full of endless bland Tilke tracks, then the sport is losing what’s left of its soul. I agree with Tim.

32

I am sick of hearing these kind of comments from people working in F1.

From a fan perspective a race is NOT a success if track action is rubbish. Nothing else really matters.

I don’t care how nice the press centre is, or how big Bernie’s office is, or how flash the hospitality areas are or how pretty the lights on the hotel are. If the racing is rubbish then the race is rubbish and the circuit is rubbish and it has failed.

Stick the teams in a field under awning at a circuit that produces great racing year in year out over the dull excesses of Singabore, Dullencia or Abu Dhabi any day.

33

Monaco is a bit of a quirk to be fair – it’s had a history of providing a demanding challenge to drivers and entertaining races (up until the aero-dominated era at any rate). New tracks don’t have that provenence, which means they have to stand or fall based on the spectacle they produce. You’re right in that businesses need to buy into the product via its facilities, and the opportunities they provide, but at the same time no business is going to want to be associated with a boring sports event. Speed and noise only go so far, and it it fails to deliver on excitement then it won’t impress their customers and won’t generate business for them, which considering how much they fork out for hospitality is what really counts.

34

James, you make an excellent point about business involvement in your reply.

Thinking about it a little, I would venture a guess that it’s a big part of the reason F1 has never really caught on in the U.S. One race a year in the U.S. simply isn’t enough to entice U.S. businesses to invest.

The U.S. is a very saturated sports market. There are four major sports leagues. Baseball has 162 games, Basketball and Hockey with 82 games each, and Football with 16(?). NASCAR has what, 30 or so races a year? That’s not even counting college sports which attract a ton of advertising. Where is the incentive to invest in a niche like F1? I would guess it’s just not that enticing for U.S. corporate sponsors.

35

You miss my point. I’m not talking about facilities here.

I’m saying that a race will only succeed if the businesses in the country buy in (as Koreans and Turks have not but Indians have) and equally important if sponsors and companies involved in the sport are able to use F1 to grow their businesses in that country/region (Abu Dhabi/Singapore/USA)

The discussion about whether a track is any good for racing is very important, but completely separate.

As for you point that “If the racing is rubbish then the race is rubbish and the circuit is rubbish and it has failed.” That is obviously not true.

Monaco has survived pretty well since the 1930s – until recently has been the most important race of the year – without being a track on which you can overtake..

36

Are we really measuring ‘success’ by ‘number of corporate executives in attendance’?

If so, this sport is already finished.

37

No, everything has its place. Without the sponsors and manufacturers you’d be watching Indycar level racing or GP2. It’s the scale of F1 that makes it what it is.

That requires investment. Although I’m a great believer that costs need to be controlled.

38

As much as i will miss the V8’s the introduction of the 1.6L Turbo has attracted Ford & Chevrolet for 2014. I wonder if the US races fall apart whether they will still have interest.

39

Both GPs will be a failure anyway.

40

Why? What do you know that the rest of us and the organizers/promoters don’t? I believe TX and NJ will be Americas finest hour in motorsports.

41

Not to Bernie – he’ll still get paid megga millions. It’s no skin off his nose if they flop eventually; it’s all a game to him at this stage of his life.

42

Maybe this was the 3rd cut Rick Perry could not remember?

43

You’re too good!

44

It seems telling to me that Tavo Hellmund is trying to get out. You’d think if everything was rosy he’d hang around for the completion bonuses etc. Apparently he’s trying to use this as a stepping stone to work with Bernie on other events, but jumping ship on this one is not a great way to build a reputation.

45

Texas being mostly in the middle of the country is close enough for most people to make the drive. That’s my reasoning for planning to make the Texas event, and miss out on New Jersey. Grass root type fans can and will pay to drive with a friends across country to see a race. Paying for plane tickets, and hotels makes the New Jersey event out of reach for many fans like myself living on the west coast. Hopefully the event goes through.

46

How is Texas mostly in the middle of the country? Typical Lone Star thinking! Texas is closer to California than to New York by about 2000 miles!

47

Austin to New York: 1521 miles

Austin to Los Angeles: 1242 miles

48

You got me there, my compliments! I will say this Texas “feels” about 2000 light years from New York…LOL! Its a big state and this is a big country, hence 2 GPs, one in TX, one in NJ…no problem. I’m going to both AND Montreal!

49

The distance between Austin and New York is around 1700 miles. The following grand prix are held within 1700 miles of each other:

Japan, Korea, China.

Malaysia, Singapore.

India, Bahrain, Abu Dhabi.

Great Britain, Belgium, Germany, Hungary, Italy, Monaco, Valencia, Spain.

Canada, New Jersey.

Only Turkey (1900 miles from GB), Australia and Brazil are more outliers than Austin and New Jersey.

So the proximity argument is disingenuous.

50

The problem with the NY race is that Montreal is only 6 hours driving away…which is nothing over here. The catchment pool for Montreal will certainly be diluted by a NY race.

It makes more sense to have a race further south, in my mind. There are a ton of gear heads down there.

51

I live midway between NJ and Montreal (Saratoga Springs, NY). It would take only five hours by car to attend both events, and by a jet plane only 45 minutes. How do we explain F1’s success in Europe where the time differentials are even far smaller than this? Additionally, you are talking about the NYC metro area where the population in the tri-state area is 24 million??????

52

I don’t understand how Instanbul is more of an outlier. It’s about 650 miles from Budapest.

53

Yes, but the USA is a very connected up country thanks to the jet plane

54

True, but Canada is equally well connected to it by that standard, so following that line of thought you wouldn’t bother with a race in the USA at all. If the USA can host two viable MotoGP races, to say nothing of two championships like NASCAR and IndyCar, within its borders, then two F1 races shouldn’t be a problem. There’s also the different catchment areas to factor in as well – many who would go to the New Jersey race would not go to Austin and vice versa.

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