USA Grand Prix Austin (part deux)

[Beached]

While I'm loathe to admit it, it's hard to place much blame on Bernie here. He and FOM weren't paid, even after several extensions and guidance on how to remedy issues. Tavo is claiming today that COTA was responsible for paying FOM, but in a recent interview Combs claims she hasn't talked to any principles from COTA in months. She says she deals with the promoters of events, like Tavo, and not the investors building the facilities. Taking both at their word, COTA is responsible to ensuring FOM is paid yet had no substantive contact with the state agency responsible for distributing those funds. Something isn't adding up here with the stories.

Here's the letter Combs sent to Bernie back in May, which makes no mention of the timing stipulation or need for filing an application she has been hyping this week:

May 10 2010
Formula One World Championship Limited
Attn: Mr Ecclestone

Dear Sirs,
In response to the requirements for the race promotion contract for the Formula 1 United States Grand Prix in Texas, I hereby certify the following:

With the understanding that the first full Formula 1 Grand Prix will be held in Texas in 2012, full funding for the entire sanction for 2012 will be paid to Formula One World Championship Limited (‘FOWC’) no later than July 31st, 2011.

In subsequent years, two through ten, of the race promotion contract, i.e. 2013 through 2021, we will be sending $25m to FOWC by the end of July 31st of each year preceding the actual race.
We look forward with great enthusiasm to this event and a successful mutually beneficial relationship for many years to come.

Sincerely
Susan Combs
Texas Comptroller of Public Accounts

[Marbot]

"We have been excited for and working towards a 2012 USGP race and now understand that Mr Ecclestone is interested in moving the Austin race to 2013," he said."

"This project needs to meet its obligations to Formula 1," Hellmund was quoted as saying by the Statesman newspaper. "I'm hoping we can get this back on the road."

http://www.autosport.com/news/report.php/id/96303

Mr Ecclestone will move the race to 2013 if someone signs his contract.

[Bononi]

That's just sad.

[Spritle]

What really stinks for Austin is if the NJ race happens in 2013, it will surely steal some of the US Formula 1 thunder, especially if the championships are wrapped up by November like they are this year.

[Marbot]

Originally Posted by Spritle

What really stinks for Austin is if the NJ race happens in 2013, it will surely steal some of the US Formula 1 thunder, especially if the championships are wrapped up by November like they are this year.

Indeed. And no doubt that will be at the forefront of any thoughts about signing on the dotted line for the right to host an Austin GP which will already have had its thunder stolen. The more likely it looks like the NJ F1 GP race is going ahead, the less likely the Austin F1 GP race will go ahead. But someone has got to put pen to paper at some point.

[JeremySmith]

It will happen, too much money has been spent so far for the project to fail..

[BobHWS]

Originally Posted by JeremySmith

It will happen, too much money has been spent so far for the project to fail..

In management accounting, the money spent so far on track construction is called a "sunk cost" (i.e., it has already been spent and can never be recovered). Such sunk costs are again, in the lexicon of management accounting, "irrelevant" when making a decision about whether to invest further in a project.

If a project promises to be unprofitable (and no project looks more unprofitable right now than COTA), then the fact that $40M has been wasted on it so far should have no importance when considering whether to bail out of the project. Epstein, McComb and the other people who have put up the $40M used so far must understand this analysis. If they don't, then they are even bigger fools than I thought they were when I first learned that some rich cowboys were putting up money for a project that has been doomed from the start.

[BobHWS]

State Comptroller Susan Combs makes her position as clear as can be. The fat lady has sung.

Comptroller joins list of Austin F1 skeptics
By Laylan Copelin | Thursday, November 17, 2011, 01:06 PM
statesman.com

With time running out on Austin’s Formula One race, one of the race’s early chief proponents has joined the crowd of skeptics.

Texas Comptroller Susan Combs said this morning that there is too much uncertainty for the state to advance the project $25 million even if Texas investors and Formula One boss Bernie Ecclestone patched up their problems this week...

Here are Combs’ comments from an interview this morning:

Austin American-Statesman: Are we going to have a race or not?

Combs: I have no idea.

AAS: Really? I was reading today where they were saying 2013.

Combs: I don’t know because it’s up to the investors.

AAS: Right. I figured you were keeping up with them.

Combs: I have no idea what they’re doing. I don’t have to know until an application comes in.

AAS: I understand that. I thought maybe you were talking to (Texas investor) Red McCombs or (promoter) Tavo Hellmund or some of them.

Combs: It’s really not a Tavo problem. It’s really an investor problem.

AAS: When you say investor, whom do you mean?

Combs: That’s really, I think, Mr. (Bobby) Epstein. I think Mr. Epstein is the lead investor. I don’t think it’s Red. I think it’s Mr. Epstein. You might want to chat with him.

AAS: When you say an investor problem, in the sense of what way?

Combs: I don’t know. All I read is the press. I read over some time back; I have not talked to Mr. Epstein. I read they were having some kind of slowdown. I read in the paper just recently some other stuff. Again, I’m busy here doing lots of stuff.

This is routine for us. We get all these requests in, and until we have something to look at, we don’t have any reason to ask questions. We just don’t. We wait. I hope it happens, but it’s something I can’t control.

AAS: So you really haven’t talked to them?

Combs: We don’t ever. This is routine.

AAS: Well, I know, but you and Tavo had met a lot when this thing was first being started.

Combs: That’s the promotion side. You’re now switching to the construction side. That’s a different universe. And I really haven’t, I haven’t talked to those guys. I don’t know what they’re doing.

AAS: Are we talking weeks or months?

Combs: Months. Mr. Epstein, I haven’t seen Mr. Epstein, I can’t think when.

AAS: So he’s the key, he’s the guy we need to talk to?

Combs: He’s the guy. He’s the lead investor, I’m told.

AAS: Can you save it?

Combs: The state has no role in saving something like this. Our role is, if we get an application in, we take a look at it. But this is their job.

Look, Houston could apply for this. Dallas could apply for this. We don’t get in there and try to save a particular project. That’s not appropriate for the state to do that.

AAS: If they came to you with an application and said, ‘Look, we’ve patched everything up. Everything is hunky-dory.’ I know you said you wouldn’t advance money…

Combs: We will not.

AAS: Still? If they came to you in two weeks…

Combs: I think there’s enough. Look, the statute is discretionary. The statute says, that I have to be very comfortable; and I have to, of course, first and foremost, protect the taxpayer interest.

We don’t know yet the effect of New Jersey. I haven’t had time. We don’t have an application. We therefore wouldn’t even start the process of looking at that. I don’t know where they are on construction. I read what you do.

I don’t know where the investors are. I don’t know those things. Given that level of complexity and that level of uncertainty, I think it would be imprudent.

As I stated, we will not send money in advance. If it ever happens, we will then be able to disburse money after the fact, depending on the analysis.

AAS: So you don’t have any insider knowledge that the race is off until 2013?

Combs: I literally do not know.

AAS: Because we’re relying on what Eccelstone is telling the European press.

Combs: I haven’t talked to him. I have no idea.

AAS: How big a loss is this going to be for Austin if this deal falls apart?

Combs: Well, it’s not a loss at this point. Nothing has happened. I’m sorry for the construction guys who were, obviously, hopeful. We’re all hopeful this will happen. But, again, some things don’t come to fruition. And people have, hindsight’s 20-20, and take a look back at some point. I don’t have a crystal ball, at this point, to say anything.

AAS: I was thinking more along the lines — not just the jobs — but also the economic development.

Combs: It hasn’t happened. We’d love for it to happen, but it hasn’t happened.

AAS: So what are the lessons learned?

Combs: The state creates an environment. But then it’s up to the investors to make it come to fruition. We say, ‘Come talk to us when you’ve got your ducks in a row.’” There’s no lesson for the state. I think the lessons are for the investors.

AAS: And that would be?

Combs: Mr. Epstein and the guys. I don’t know what’s going on behind that door. I have no idea.

AAS: If another project comes along, are you off the idea that we should ever advance the money as opposed to just wait for the event and reimburse?

Combs: Every single one has to be analyzed independently. Again, I can’t hypothesize. I guess my concern is, unless you can be sure that’s there an absolute guarantee that the taxpayer will not be harmed, you shouldn’t ever advance the money.

AAS: The law requires (applicants) to put up a performance bond…

Combs: My role is to protect the taxpayer. If I can’t be assured, or whoever looks at this, that you are going to protect the taxpayer, you have no business doing this. I would argue that Solyndra is a fabulous example of the federal administration advancing a bunch of money and not having had guarantees.

AAS: So if (the circuit organizers) came to you at this late date with a performance bond, that’s not good enough?

Combs: Because New Jersey came in. And that was something else. And again, the construction, I don’t know whether they can get it done on time. I think there is now some date uncertainties. Again, I would not feel it would be prudent for this office, if you showed up this afternoon to do it.

So we will not be disbursing money in advance.

By the way, it’s not a problem for them, I don’t think. That’s not a sticking point for them. I don’t think the state has any part to play in whatever their controversies are, which I don’t know what they are. I really don’t.

AAS: You don’t care to know?

Combs: It’s not appropriate for us to know. This is a private enterprise activity. I treat them all the same. You show up when you’ve got your ducks in a row. We take a look at it.

[JHamilton]

Well I was skeptical this would be completed, but it didn't go down like I expected... It's a shame as I am not interested in going to NJ. Hopefully the V8s can find somewhere to race.

[thebear]

"El Exijenté" has SPOKEN.

[JeremySmith]

I am glad you are having so much fun...

[Mekola]

But it's clear that the NJ project weakened the effort put in the COTA Austin track...

[JeremySmith]

I think Susan Combs became nervous..

So there is a little blame if you will to spread around..

Tavo Hellmund and co need to honour the terms of their contract with FOM..

Bernie you need to keep your mouth shut about other GP's especially if you told Austin that it was going to host The only US Grand Prix, and forget about going down in history as the English version of Napoleon, you are not it!

Susan your letter to FOM differs from your present stance..

To all you other jump on the bandwagon naysayors there will be a Grand Prix in Austin and it will blow your socks off...

[bjohnsonsmith]

Originally Posted by JeremySmith

I think Susan Combs became nervous..

So there is a little blame if you will to spread around..

Tavo Hellmund and co need to honour the terms of their contract with FOM..

Bernie you need to keep your mouth shut about other GP's especially if you told Austin that it was going to host The only US Grand Prix, and forget about going down in history as the English version of Napoleon, you are not it!

Susan your letter to FOM differs from your present stance..

To all you other jump on the bandwagon naysayors there will be a Grand Prix in Austin and it will blow your socks off...

As I see it, Combs sounds just like Bernie, not giving anything away and pointing the finger at everyone else; Donington revisited, almost.

[JeremySmith]

Well in fairness Susan Combs has very little to do with the process as she has many other things that take up her time..

[bjohnsonsmith]

Originally Posted by JeremySmith

Well in fairness Susan Combs has very little to do with the process as she has many other things that take up her time..

That was made clear in the interview but the obfuscation is so Bernie.

[Spritle]

If this Austin thing doesn't happen at all, (I'm inclined to believe it will survive this mess); the taxpayers of Texas should be glad they have someone like Ms Combs looking out for their hard earned money.

The biggest of tragedy of all would have been no F1, no jobs, no track AND squandered tax dollars. The folks in Jersey should pay CLOSE attention despite their claims that "no taxpayer dollars will be used" which is never the case BTW.

Austin 2012 I really doubt, but I expect we will see a 2013 race in Austin. I have a feeling it will be worked out.

[Marbot]

Only one way forward.

http://www.pitpass.com/45272-Austin-...ne-way-forward

[JeremySmith]

Yes I think that is a good piece and makes sense, I read it at pitpass yesterday..

[Marbot]

Originally Posted by JeremySmith

Yes I think that is a good piece and makes sense, I read it at pitpass yesterday..

It would of course mean that the F1 race would have to be a financial success in its first year in order to stand any chance of getting government funds thereafter. But, at the very least, you'll have a race circuit.

[JeremySmith]

Very true, but I believe it would be a success as I think that fans if given the choice would prefer to attend races on purpose built race tracks compared to street races..

Not to say that New Jersey won't do well...

[Marbot]

Now all it needs is someone to dig just a little bit deeper into their pockets.

[JeremySmith]

I am sure they will make the right choice and do that..

Tavo has a racers heart and I think he is a very sincere chap..

If I had the choice between Circuit De Catalunya or Valencia for the Spanish Grand Prix, I know which one I would choose...

[Purist]

Yep, Motorland Aragon, or forget Spain, and go to Portimao.

Really, I don't consider Catalunya to have much of anything over Valencia, as Valencia actually has some long, flat-out stretches and high-speed bends. Also, I don't care for the re-work at the end of the back stretch at Catalunya, and especially that bloody chicane they added before the final corner. Both Spanish circuits suck, in relative terms, in the realm of actual racing.

The biggest problem for New Jersey is that I don't see where you put the grandstands. I mea, New Jersey has flat-out runs as long as the back stretch at Austin. It has several high-speed bends/kinks. NJ even has more elevation change than Austin does, and that's really saying something since Austin is not flat, and New Jersey is a street circuit.

[Marbot]

Neither Barcelona nor either of the Valencia circuits inspire much in the way of passion. Jerez is probably a better bet, and that's not exactly stellar. There are others, but probably not up to FIA standard.

Singapore is a decent street circuit, but with some rather obvious compromises.

I understand that the NJ circuit will be reasonably fast, and free of unnecessary chicanes.