Understanding the Collapse of the U.S. Grand Prix in Austin.
To the eternal question “where does Formula One Racing belong in America?”
The answer is “New York”.
Not Austin, Texas, and not Weehawken, New Jersey.
If one agrees with this conclusion, the next logical question becomes
“Where in New York can the U.S. Grand Prix be hosted?”
That answer is “Jones Beach”.
It is the only logical solution in the area other than at Watkins Glenn or a dramatic New York City street race, which unfortunately to date, has proven untenable.
Disruption, logistics and security issues are some of the factors prohibiting a Manhattan race.
In addition, the sanction fee would never be paid by either New York City or New York State.
Furthermore, even if a street race could to be held in Manhattan, it would still be an inferior solution to that of a temporary venue by the sea at the expansive Jones Beach State Park.
The U.S. Grand Prix at Jones Beach (USGPJB) is based on the premise that both Formula One and Jones Beach State Park have mutual needs. Although each cannot resolve its own independently, each holds the solution to the other’s problem.
Only Jones Beach, New York, offers Formula One Racing a vast demographic base market which it has been seeking for so long.
There are 20 million people living within driving distance of Jones Beach. It is also connected by a web of public transportation resulting in “effortless accessibility” from anywhere within the greater “New York Tri-State Area”.
Conversely, Formula One Racing offers New York its global, three-day event which can resolve the monetary crisis of Jones Beach State Park.
Resurrecting the historic U.S. Grand Prix at Jones Beach and returning an ample portion of the proceeds of this annual event will return the park to its former grandeur.
The joining of Jones Beach and Formula One will not only make history as a functional and mutually beneficial Public-Private Partnership, but it will provide the much needed solution for both.
However, before this or any other plan is realized, substantial obstacles (as we are painfully seeing, again) exist to the sport’s entering the American market.
Formula One in its current form, with its current business and hosting model, is not at all compatible with New York State or, indeed, the country.
Formula One has always insisted on operating on its own terms, while hesitating to adapt to this country and rarely listening to opinions from this side of the ocean. The results are obvious: F1 has not raced here since 2007.
In the latest chapter since the sport’s departure from America in 2007, it was announced that Formula One struck a deal to establish the historic U.S. Grand Prix in the rural town of Elroy, located on the outskirts of Austin, Texas.
The plan was to build from scratch the first ever “purpose built’ Formula One racetrack in the country, costing $300 million dollars.
Furthermore, the race promoter Full Throttle Productions, headed by the event founder Mr. Tavo Hellmond, managed to convince the State Comptroller, Ms. Susan Combs, to pay the annual $25 million dollar sanction fee to Formula One Management (FOM) for 10 years with public money from a state “Major Events Trust Fund (METF)”.
Thus, the Circuit of the Americas (COTA) was born.
On the eve of the Austin City Council vote on whether to approve the funds, Mr. Dutch Mendel from AUTOWEEK magazine wrote an article, “An Open Letter to the Austin, Texas City Council and the citizens of that fair city”, bluntly warning against it. Austin’s best option, according to him, was to "run away.”
Yet, after the Austin City Council surprisingly voted 5-2 in favor of paying $250 million dollars in a 10-year deal, on June 29, 2011, Formula One Management accomplished the impossible - twice!
First, it actually found investors to spend $300 million dollars to build an exclusive racetrack in a remote location for a motorsport which does not exist in this country. Second, it managed to ultimately persuade the government of Texas to fund this private venture with public money.
FOM, the teams, constructors and even F100 obtained everything they have ever wished for: after 50 years, a custom-built home base in the United States.
Therefore, it wasn't possible to ruin this perfect, once-in-a-lifetime opportunity to finally anchor F1 Racing in America once and for all.
Before Circuit of the Americas (COTA) is even built, Formula One Management (FOM) has established another F1 race on the east coast called the “Grand Prix of America”, in Weehawken, New Jersey, located on the Hudson River directly across from Manhattan. Effectively, Austin was sold down the river.
Dutch Mandel was right.
Mr. Tavo Hellmond, the founder of the U.S. Grand Prix at Austin and COTA, actually offered his congratulations to Mr. Leo Hindery Jr., the founder of the “Grand Prix of America” in New Jersey, following the announcement of the New Jersey race.
This is somewhat perplexing, considering that Mr. Hellmond just lost the priceless, exclusive rights to Formula One in America. If he did not have them, then one must ask why he allowed this project to proceed with public money.
Meanwhile, Mr. Hindery has been quoted on a New York Times blog as writing, “I won’t bet on Austin making it.” Yet, his comment should not spark much debate, since it is the truth.
Also, New Jersey Governor Mr. Chris Christy wasted no time announcing that the “Weehawken Grand Prix” won’t be costing his state taxpayers a dime. This is good news for the taxpayers of New Jersey, and an embarrassment for those in Texas.
An F1 race in the shadow of Manhattan is very exciting at first glance. However, the prospect of 24 deafening F1 cars accelerating down a narrow urban/residential street of Weehawken at 200 mph, less than 20 feet away from the front door of peoples’ homes, is simply reckless and rude.
In all likelihood this race will not take place due to these reasons. Weehawken is not Monaco, and in America 700-horsepower racecars do not blast down residential streets.
If racing F1 cars through a residential neighborhood is not strange enough, the New Jersey race received a clever name change to “Grand Prix of America” in order to create a disconnect from the historically titled “U.S. Grand Prix” race in Austin. Does changing the name mean this is not another Formula One race?
This ruse was needed since the Major Events Trust Fund (METF) logically stipulates, as pointed out by Mr. Bill Aleshire, a local attorney and opponent of the Austin race subsidy, that an event being funded by the METF should be the only event in the calendar year, and presumably, the only event in the country.
Therefore, Formula One Management should automatically be disqualified from receiving the $25 million dollars simply based on the announcement of a second race in New Jersey.
Such a disqualification would collapse the agreement between Full Throttle Productions and Formula One Management, which is based on funds from the METF.
However, on October 24, 2011, the day the New Jersey race was announced, the American-Statesman released an article entitle:
“Comptroller: Second U.S. F1 race would not affect Austin race’s state funding”.
Amazingly the Spokesperson for Texas Comptroller Susan Combs stated:
“The New Jersey race has no bearing on the Austin race”.
She continued saying, “The rules regarding the fund (as mentioned above) would apply if a similar event were held in Texas, but not if it were being staged in another state or region”.
This erroneously suggests the possibility that Formula One would ever have two races in same state, which it would not.
Yet, on November 15, 2011, The Circuit of the Americas (COTA) announced it had officially stopped construction at the site in Elroy. On the same day Texas State Comptroller Susan Combs released this 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.” Clearly a New Jersey race supplanting the Austin race does have a bearing after all.
“The state will not be paying any funds in advance of the event”, said Combs, and “the ongoing controversies are a concern and we will continue to monitor them.”
Incredibly, Ms. Comb’s entire statement, which contradicts her previous statements and actions, fails to address the heart of the matter:
Is FOM disqualified from any METF funds due to the announcement of the New Jersey race?
The uncomfortable reality of this situation for the city of Austin and its citizens hinges on whether Full Throttle Productions and the Texas State Comptroller’s Office willfully entered into an agreement with FOM, committing public money to fund this private venture while knowing full well that Formula One Management retained the right to establish another venue elsewhere in America.
If they knew, they willfully continued the Austin Grand Prix project with public money, leading to this debacle. If they did not know, which is virtually impossible within an agreement of this magnitude, then they have acted negligently and have no excuse for failing and embarrassing the city of Austin.
Statements made by all parties thus far are a smokescreen to deflect criticism and inquiry.
On November 17, 2011, Mr. Tavo Hellmond stated:
“The reason is as a project, we have failed many times over to fulfill our financial obligations to Formula One. It literally is that simple.”
To suggest that this project failed because Full Throttle Productions hasn’t paid FOM, or that Tavo Hellmond, Bobby Epstein and Red McCombs “haven’t been talking to each other “, “can’t agree amongst themselves”, and “are in breach of contract”, is preposterous.
Formula One Management’s establishing a second venue is the main reason for its demise.
METF protocol dictates that approved funds cannot be released more than one year before the event.
Therefore, funds, for a November 18, 2012 event, cannot be released before November 18, 2011.
All parties knew and understood this detail when the race date was officially changed, approved, and added to the 2012 race calendar.
The Austin Grand Prix project collapsed on November 15, 2011. So how could it be that Mr. Hellmond failed many times over to fulfill financial obligations to Formula One?”
METF funds were originally approved June 29, 2011 based on the event date of June17, 2012. However the date was moved to November 18, 2012 due to concerns of excessively hot weather in the month of June.
METF protocol further dictates that due to the date change a new Major Events Trust Fund application must be filed with the state by Full Throttle Productions on or slightly before November 18, 2011 threshold.
It was made perfectly clear by the state comptroller’s office that barring changes or discrepancies both the new application and funds, would be reapproved, thus allowing the $25 million dollars to be paid to Formula One Management, shortly after November 18, 2011 as planned.
The new METF application was never filed by Full Throttle. This was confirmed by Comptroller Susan Combs in her November 15, 2011 statement: “If an METF application is submitted……”. “ if ”.
The announcement of “The Grand Prix of America” in Weehawken, NJ, precedes by 25 days the mandatory one-year threshold, of November 18, 2011 for event funding and filing of a new METF application.
Austin was deceptively presented as the exclusive home of Formula One in America. Therefore, a race simultaneously planned in New Jersey or anywhere else, which precedes the Austin race, replaces the Austin race.
It was fully understood that Formula One Management never relinquished its right to establish another race.
Thus, the Circuit of the Americas (COTA) has died.
Yet, out of ashes rises the possibility that the investors behind COTA, content to be second, may negotiate their own agreement directly with Formula One Management. If a new hosting agreement does not include the state Major Events Trust Fund, then why was this not first agreed to? It would have certainly spared Austin the embarrassment, and prolonging this fiasco will only make matters worse for the city.
F1 has squandered another opportunity to establish this racing series in America.
Astonishingly, each time Formula One tries to reestablish itself in America, it makes the same mistakes which caused it to leave in the first place. These are:
- A unfair hosting agreement
- An avalanche of bad press
- A mismatched market sector and demographics.
The expression “You need to walk before you can run” is fitting. Establishing Formula One in America is a marathon, and not a sprint. Thus, talk of a second race in America has proven wildly premature and damaging. There may be unforeseen consequences to the sport from its role in this debacle.
In the meantime, it is difficult to see why Formula One Management cannot discover a more enlightened and prudent way of dealing with the United States, other than making the state of Texas look foolish on the world stage and then blaming the investors and promoter.
Encouraging this private venture to be funded by Texas (which is non-representative of the sport), was a big mistake. This is especially true when another venue in residential Weehawken, New Jersey, was simultaneously being planned.
As a result, Texas, Austin, Elroy, and all of the fans have been sold-out both from within (by Full Throttle Productions, State Comptroller’s Office) and from with-out (by Formula One Management, FOM).
The City of Austin did not deserve this.
U.S. Grand Prix at Jones Beach
Thanking you for your continued patience
the full site will be available shortly.
- Wednesday December 7, 2011
Ahead of the World Motor Sport Council meeting in New Deli, India on 11/7/2011 Pitpass.com reported that “relative funding has been transferred to the Formula One World Championship Company” by the investors of COTA, Circuit of the Americas.
With the sanction fee being paid privately, and not by the Texas Major Events Trust Fund, the U.S. Grand Prix at Austin was confirmed by the council to take place on November 18, 2012.
© United States Grand Prix at Jones Beach / U.S. Grand Prix at Jones Beach / USGPJB / Copyright