Ask Rick Perry about failed Formula 1 racing investment in U.S.
MONDAY, 19 SEPTEMBER 2011 13:50
BY EVAN WEINER
THE BUSINESS AND POLITICS OF SPORTS
There is a question that "news presenters" who somehow get the plum assignment of moderating a GOP Presidential nomination debate should ask Governor Rick Perry of Texas. But given the absolute lack of imagination and scant information that the presenters and their researchers have or the lack of diligence in fact finding, it is unlikely that Governor Perry will be asked the following.
"Governor Perry, why are you, with your state having colossal financial problems (an estimated $27 billion hole), investing $250 million into a Formula-1 car racetrack in Austin, Texas in an effort to help Billy Joe "Red" McCombs re-introduce the car race to American audiences when F-1 racing is a proven failure in the U.S.?"
It is hard to believe that Brian Williams, Wolf Blitzer, Bret Baier or any other presenter would actually ask a narrow policy question in a national debate (These presenters take their jobs somewhat seriously. In 1992 ABC presenter Carole Simpson complained about the debate format in the Bush-Clinton-Perot gabfest which allowed normal citizens to ask questions troubled her as the electorate is filled with unqualified people. Ironically the electorate depends on Simpson and others to inform them. Simpson’s complaint did not reflect well on her and her colleagues’ professional acumen).
But there should be at least a mention of the quarter of a billion dollar subsidy and an inspection of the Texas-F1 contract as to how much money will Bernie Ecclestone and F1 keep from a television contract, how much of the ticket sales will go to Bernie Ecclestone and F1 and how much goes back to Texas as well as concession and how much rent Texas taxpayers can expect to see in the deal. Will there be a corporate sponsor slapping a name on the racetrack marquee and will investors/taxpayers get any of that money?
Will the Perry/Texas investment yield a dividend for Texas taxpayers or just put money in McCombs and F1's pocket?
Allegedly private money is going to pay the estimated $180 million required to build a permanent 120,000 seat F1 facility for Full Throttle Productions, McCombs company and Ecclestone, the commercial rights holder of F1. If the facility is being funded by private funds, why has Perry green lighted an annual $25 million payment to help out F1 and Full Throttle? Do the math; the state will spend a quarter of a billion dollars for 40 full time jobs. The race organizers contend the track will be a winner for Austin with the creation of 1,500 construction jobs, and 1,200 people will work the race on a per diem basis annually for maybe four or five days.
The race backers claim the track will be used 250 days a year. The key word in all of this is "claim".
The race people contend the race will have $300 million worth of economic impact but offer no proof behind the rationale of their claim. Sports organizers offer make large boasts of large economic impact, but New York State Comptroller Thomas DiNapoli said last year no one has ever really done a study to show the real economic impact of sports events in a community.
Austin taxpayers are kicking in $13 million for infrastructure and could be on the hook for an additional $4 million annually in subsidies for ten years. In this day and age, private money to build sports venues is rare and there are examples of private money sports arena failures in Minneapolis in 1994 and Columbus, Ohio in 2011.
Government support is an absolute necessity for sports in the United States. No project can be successful without cash handouts or tax incentives like PILOTS and TIFS. Will Ecclestone/McCombs pay property taxes to Austin? Is there a hidden taxbreak?
National Basketball Association and National Hockey League teams pay zero property taxes across the United States.
If Formula One is such a good investment, why is government dollars needed? Perry who is the hero of those who want sharp government cuts has created a government F1 racing program.
There seems to be something hypocritical about Perry’s stance that is at odds with his dogma. Perry’s recent political ideological book seems to be at odds with his political stances.
When completed, the Austin track will give F1 the circuit's first a permanent track in the United States in decades. Long Beach, California, Las Vegas, Detroit, Dallas and Phoenix have had street races which were fails. The F1 series inside the Indianapolis held eight races at the Brickyard.
F-1 racing has never been held in the New York area although there was a plan to hold a race in the early 1980s was never materialized. Now the mayors of Weehawken and West New York want to stage an F-1 race on the streets of those New Jersey municipalities in 2013. F-1 racing has been a financial disaster in the United States and the racing loop has not held an event in America since 2007. Formula One races were held at the Indianapolis Motor Speedway between 2000 and 2007.
F1 does well globally but the United States has been a challenge.
The Austin November 18, 2012 date seems odd in that the University Texas football season is still in swing and Austin is the home of the University of Texas. Football is king in Texas and McCombs is a huge financial supporter of University of Texas sports but he has apparently agreed that F-1 and football can co-exist for one week in November. The race will also have competition from the National Football League, specifically the Dallas Cowboys and the Houston Texans.
But Governor Perry has cushioned the blow of possible financial losses by making sure the state taxpayers are subsidizing the racing event if things don’t work out for McCombs.
McCombs has partnered with Tavo Hellmund to bring F-1 racing to Austin with Perry's blessing. Hellmund has a long history of being a race participant and racing promoter.
F-1 racing is different from NASCAR and Indy Car Racing according to the racing association's website.
"Formula One, also known as Formula 1 or F1, and currently officially referred to as the FIA Formula One World Championship, is the highest class of single-seater auto racing sanctioned by the Fédération Internationale de l'Automobile (FIA). The "formula" in the name refers to a set of rules to which all participants' cars must comply.
"The F1 season consists of a series of races, known as Grand Prix, held on purpose-built circuits, and public roads. The results of each race are combined to determine two annual World Championships, one for the drivers and one for the constructors, with racing drivers, constructor teams, track officials, organizers and circuits required to be holders of valid Super Licenses, the highest class racing license issued by the FIA.
“Formula One cars race at high speeds, up to 360 km/hour (220 mph) with engines revving up to a formula imposed limit of 18,000 rpm. The cars are capable of pulling in excess of 5 g on some corners. The performance of the cars is highly dependent on electronics (although traction control and driving aids have been banned since 2008), aerodynamics, suspension, and tires. The formula has seen many evolutions and changes through the history of the sport."
Perry has signed off on the quarter of a billion dollar package to subsidize an annual race starting in 2012 and ending in 2021. McCombs, who was a co-founder of the now bankrupt Clear Channel Communications empire (and right wing talk radio shows with a liberal show sprinkled in for balance), led the charge to get the race and racetrack built in the Texas state capital. McCombs has a long sports history including a onetime stake in the NBA's San Antonio Spurs and the NFL's Minnesota Vikings.
McCombs failed to get a new stadium built in the Twin-Cities and sold the Vikings to New Jersey resident Zygi Wilf for a reported $600 million in 2005. Wilf is battling with Minnesota lawmakers in his effort to get a new football facility built in the Twin-Cities.
During the spring when Texas and Formula 1 deal was concluded, Perry trumpeted the deal and his words are still etched into the F-1 website.
Texas Governor Rick Perry conveyed his enthusiasm for the project, explaining Texas' relatively strong economy continues to draw both national and international attention and I commend Comptroller Combs for her work in bringing this exciting event to the Lone Star State.
The presenters should ask Perry about the commitment in what is a documented money losing venture, after all if F-1 racing in the U.S. was a good deal, there would be elected officials jumping through hoops to build a permanent facility for the event.
No one really in the United States pushed for F1 races until Austin came around. The New Jersey plan doesn't call for permanent structures.
When the agreement was executed, Perry was dealing with a record budget deficit and discussing the possibility of slashing services and jettison teachers. Why would any elected official even think of spending taxpayers’ dollars on an unpopular form of entertainment when staring at a record budget shortfall?
The presenters who moderate the debates ought to do a better job in getting ready for the debates. But for the most part, they are as woeful as the candidates (see Gwen Ifill in the 2008 Vice Presidential debates performance as a moderator. Ifill lost control of the debate asking Sarah Palin a question), maybe worse. So some free advice for the next presenter, ask Rick Perry about his commitment to Billy Joe McCombs, because a fiscal conservative like Perry needs to explain the Texas investment in a proven loser in the United States, F1 racing.
Evan Weiner, the winner of the United States Sports Academy's 2010 Ronald Reagan Media Award, is an author, radio-TV commentator and speaker on "The Politics of Sports Business." His book, "The Business and Politics of Sports, Second Edition" is available at bickley.com, Barnes and Noble or Amazon Kindle.