Looks like we can put the cowboy boots back in the closet.I never cared much
for a race in Texas from the get go.Make Bernie a offer he can't refuse and
mosey on back to Indy
To a mayfly with an adult lifespan of about a day, likely one year seems like a long time. But in the world of Formula One, it's an eye blink. And that's how far away we are from the scheduled debut of the United States Grand Prix next November at the under-construction Circuit of the Americas track near Austin, Texas.
At least one F1 journalist insists that the controversy surrounding the track, and the race, is just a “tempest in a teapot” ginned up by a bored and looking-for-publicity Bernie Ecclestone, and sold to a bunch of naive, gullible journalists--like me, I'm guessing.
Well, it isn't. It's real. There might not be an F1 race in Texas in 2012, and there might not be a track for the series to race on.
To understand the situation, let's look at the key players, which won't take long, since there are only two: Tavo Hellmund, a former race-car driver, a racing promoter and the founder of Full Throttle Productions. The other is Bobby Epstein, whose core business is Prophet Capital Management Fund, which he trademarked in 1997.
Epstein is believed to be using his personal wealth and his financial connections as the primary source of funds for the construction of the track and ancillary facilities, with a budget of about $300 million.
Hellmund, whose relationship with F1 honcho Ecclestone dates back 40 years, traceable to the F1 races that Hellmund's father promoted in Mexico, secured the 10-year contract for Grands Prix in Austin beginning in November 2012, and MotoGP and Australian V8 Supercar races beginning in 2013, through his company, Full Throttle Productions.
This is a good place to note that interview requests for this column were sent to Hellmund and Epstein through Jeff Hahn, whose agency handles public relations for Circuit of the Americas. Neither responded by deadline.
There are, of course, other players but they may be comparatively minor, most notably Red McCombs, founder of the Red McCombs Automotive Group, a cofounder of Clear Channel Communications, a former owner of the San Antonio Spurs, Denver Nuggets and the Minnesota Vikings. The colorful McCombs, 84, once told Ford's then-chairman Lee Iacocca that he would change his name legally to “Red Mustang” if Iacocca would give him a larger allotment of the red-hot 1965 models. Iacocca did, and so did McCombs.
McCombs is an investor in Circuit of the Americas, but of the $300 million budget, McCombs's contribution is believed to be less than 10 percent.
There is also Circuit of the Americas president Steve Sexton, hired after he parted ways with Churchill Downs Entertainment, a newly formed division of the horse-racing track that hosts the Kentucky Derby. Sexton was president of Churchill Downs Entertainment, which hosted HullabaLOU, a music festival in July 2010 that lost $5 million. The loss was largely the result of circumstances beyond his control but Sexton was the fall guy, and the entertainment division was dissolved. Sexton is well-spoken and well-regarded but he has no experience in motorsports.
Earlier in the life of the Circuit of the Americas, Hellmund was the most visible participant, but after a press conference last April announcing the MotoGP deal, Hellmund became less and less available. Epstein has always stayed behind the scenes, but now he has disappeared from the “team” listing of six executives on the track's Web site, though he is a founding partner, just like McCombs and Hellmund, whose biographies remain online.
So those are the players. Here is the “tempest” so far: After the initial legal issues, neighborhood complaints and governmental roadblocks that invariably precede the construction of a racetrack--reference the history of the Texas Motorplex, Texas Motor Speedway and even the sad, checkered tale of Texas World Speedway if you want proof that these things happen even in the can-do Lone Star State--the first solid indication of trouble was the stop-start-stop construction of the 3.4-mile road course over the summer.
The second solid indication was a request made two months ago by Hellmund to the state comptroller. One of the unique aspects of the deal is that the State of Texas agreed to advance the Circuit of the Americas some $25 million per year from a dedicated trust fund designed to help host major annual events in the state. The Super Bowl, for instance, was a recipient of trust fund money, which is repaid from tax on the largely tourist-related business the state gets from the major event. The $25 million covers the annual sanctioning fee that Ecclestone is charging for the race.
In September, Hellmund asked the comptroller, who administers the fund, if things would change if the race had a different promoter. It would not necessarily change, the comptroller said.
The between-the-lines indication here is that Hellmund might have been looking for a way out, either assigning the F1 race deal he acquired through Full Throttle to Epstein or canceling the deal, with Epstein presumably requesting a new deal from Ecclestone. Either way, likely Hellmund would get some sort of buyout since he did all the heavy lifting on the racing end, using his contacts to secure the deals and initiate construction of the track.
Tacit confirmation of this comes from sources in Europe who say there was a meeting in Ecclestone's office in an attempt to iron everything out during the week before last month's inaugural Grand Prix of India. In attendance were Ecclestone, Epstein and Hellmund, and probably Sexton and a phalanx of attorneys. It was this meeting, unreported until now, upon which Ecclestone based his casual comments to the media at the race in India and this weekend in Abu Dhabi, that the holdup in Austin is an internal conflict within its management group.
By all accounts the meeting did not go well. Sources in Europe and the United States suggest that Epstein was offered a new contract but he has not signed it, presumably because he doesn't like the terms. Ecclestone hasn't been paid, and the state of Texas hasn't disbursed the $25 million from the trust fund. The rules say it can't until after Nov. 18, less than one year before the scheduled event. Even so, online inquires suggest that all of the applications, paperwork and meetings required to apply for the money have not been completed.
On Saturday, at the Grand Prix of Abu Dhabi, two weeks after Ecclestone made his internal-conflict statements in India, he had even harsher words about the Austin situation, telling the media that, “I wouldn't want to put my money down that it will happen.”
According to Reuters, this is how Ecclestone explained it: “What's happened is you've got a guy that owns the land and started building, and there's the guy that owns the company and has got a contract with us. And they forgot to talk to each other. The truth of the matter is maybe the people that have put the money down are perhaps a bit p*ssed off that he's getting some publicity and they are not and are saying, ‘We've got our money on the line, you haven't got any money on the line.' They are trying to get it together. I've said, ‘You guys have got to fall in love. Get married.'”
So far, no wedding date has been announced between Hellmund and Epstein, and time might be running out.
Both Sexton and Hellmund fired off prepared statements in response to Ecclestone's comments. Sexton essentially said that he has no idea what Ecclestone is talking about and that everything is fine.
Hellmund said, “It is now the responsibility of the Circuit of the Americas to make this project happen before Mr. Ecclestone's patience runs out.”
Which, reportedly, is a real concern. It is also notable that even though Hellmund is still listed as a founding partner of Circuit of the Americas, his above statement suggests he has apparently separated himself, at least in spirit, from the organization.
In a nutshell, Hellmund and Full Throttle have the contract for the F1 race, and Epstein wants it. Why he wants it, we can only guess: He doesn't trust Hellmund, or he needs the contract in his name to raise money. Maybe both or neither--since no one is talking beyond prepared statements, we may eventually find out only if this goes to court. And if that happens, it's a guarantee that Ecclestone's patience will run out. In addition, it's likely that the state would back away from offering up the $25 million if there is additional controversy attached. After all, Texas Gov. Rick Perry has enough problems in his bid to become president of the United States, doesn't he?
However, any suggestion that since Ecclestone now has a race scheduled in New Jersey--just across the river from Manhattan, for 10 years beginning in 2013--that he no longer needs Austin is incorrect. The New Jersey race has been percolating for years, all during the Austin negotiations, and the plan has always been to have two races in the United States, one in June, scheduled next to the Montreal race, and one late in the season.
Ecclestone would like to have two races, but let's face it: Despite all of the comments that F1 needs the States more than the United States needs F1, Ecclestone and F1 are doing just fine, and there are venues all over the world that want the product. The $25 million sanctioning fee for Austin is less than Ecclestone usually charges--India is paying something like $35 million--so by placing races in the United States, Ecclestone is arguably leaving money on the table regarding his fees, as he could place the races elsewhere for more money.
Many believe that Ecclestone gave his old friend Hellmund a deal because of their history--a conjecture vilified by those who insist that Ecclestone never gives anyone a break--but if it is true, it could be why Epstein didn't like the deal he was offered. The sanctioning fee might have been higher or required more of an upfront guarantee.
Regardless, the bottom line is that the deal needs to be done by the first week of December, when there is the final, no-turning-back meeting to set the 2012 F1 schedule. Could the Austin race be moved to 2013? It's possible, but not without penalties, and who would pay them?
Of course, Epstein and Hellmund could still fall in love and get married, as Ecclestone suggests. But there seems to me more of a chance of a mayfly celebrating its one-year birthday.
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