Austin's F1 GP faces financial hit after local government dispute
|By Adam Cooper||Thursday, February 21st 2019, 08:19 GMT|
Austin faces a financial hit after the Texas state government refused to release the funds that it has paid the venue every year for Formula 1's United States Grand Prix.
The business model for the Circuit of the Americas and its biggest race is built on the annual payment from the Major Events Trust Fund that has always covered the sanction fee paid to F1 - which in effect makes the Grand Prix a "free" event.
The money is paid months after the race, in response to complaints from Texas residents in 2011, because it has to be shown to have derived from tax income received from the extra influx of visitors generated by the event.
The track has received payments of over $20m each year since 2012, and was expecting to receive $25.8m for the 2018 race.
But the state has rejected COTA's formal application for its 2018 payment on a legal technicality, claiming that it did not submit a human trafficking prevention plan prior to the deadline of September 19th, a month before the race.
This requirement is related to a clampdown by the Texas authorities on prostitution.
A spokesman for Texas Governor Greg Abbott told the Statesman newspaper: "In this case, the law is clear that if a human trafficking prevention plan is not submitted 30 days prior to an event, a reimbursement from the Major Events Fund cannot be issued.
"The State of Texas and COTA have a productive partnership that has had a tremendous economic impact on the city of Austin and the state as a whole, and our office is already working with COTA on next year's race."
COTA executive vice president Rick Abbott responded to the development by issuing a statement via Twitter saying that a plan had already been implemented for MotoGP.
"The anti-trafficking plan was on file for other events throughout the year, so it is not a question of implementation," he said.
"In April of 2018, the Circuit of the Americas operations team developed a human trafficking plan to be included in the Emergency Action Plan (EAP) for the 2018 MotoGP Grand Prix of the Americas.
"That plan stayed in place throughout the entire 2018 race season."
Abbott remains optimistic that a solution can be found.
"As the reimbursement for the 2017 USGP was not paid until 10 months after the event, we remain hopeful the 2018 issues can be resolved."
The state's suggestion that it is "already working with COTA" is promising for 2019 payments, if the paperwork is in order.
But the loss of 2018 funding is still a critical blow.
The funding deal was originally negotiated by circuit founder Tavo Hellmund with the state comptroller Susan Combs, and it was a crucial step in convincing ex-F1 supremo Bernie Ecclestone that a race in Austin was viable.
In May 2010 Combs wrote a letter to Ecclestone that said: "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."