Backers of the track outside of Austin, Texas where the United States Grand Prix is set to be held beginning in 2012 hope for nearly $50 million in annual revenues, according to documents the state has had to release.
A request for state records made by the local Austin paper earlier this month turned up the figures.
There’s some fairly eye-opening bits. While the $46.5 million the promoters hope to earn sounds not so bad, right away you have to lop off about $26 million, which is the expected debt payment on the $200 million needed to finance construction of the track.
Here’s a few more details from the Austin American-Statesman:
In the two years leading up to last month’s announcement that local auto racing promoter Tavo Hellmund was bringing Formula One to Austin, Hellmund met with state Comptroller Susan Combs more than 20 times, according to documents released Friday in response to an American-Statesman open records request.
For each of the next nine years, according to an April 2010 agreement signed by Perry, Combs and Hellmund, $25 million for the fee will come out of the Texas Major Events Trust Fund, which will use money generated in sales and other taxes by the previous year’s race.
Local governments, such as the City of Austin, will also be eligible to request money from the trust fund to reimburse them for costs associated with hosting the race, such as security, fences and portable bathrooms.
The documents released Friday reveal some of the big-dollar projections that attracted state officials to the prospect of hosting the race. According to estimates produced through or on behalf of the comptroller’s office, an F1 race would attract 120,000 people for the weekend-long event, about 65 percent of whom would travel from out of state.
In the memo … estimated that F1 fans, racers and support staffers would spend $244 million while in the area, generating about $17 million in direct tax revenue for the state. Robert Wood, director of local government assistance and economic development for the comptroller, said his preliminary calculation of the total tax windfall from a Formula One race is about $29 million annually.
The documents from Combs’ office also reveal rough estimates of F1 revenue and expenses, prepared by the comptroller’s staff. Sales of F1 race tickets would generate about $24.5 million annually for the promoters, with “other racing events,” nonracing events and naming rights bringing the total to about $46.5 million. The largest anticipated expense: the $26 million annual debt payment on the estimated $200 million cost of building the facility.
First off, kudos to the Austin American-Statesman for keeping on this story, which just judging from the numbers you see here is clearly a huge one for that area. It also looks like the paper’s request for the F1-related documents turned into a big of a brouhaha in Texas. A few other papers and some watchdog groups jumped on the state’s lack of openness on the issue.
That’s right, folks. Formula 1 is becoming a tool for open-government advocates and other watchdogs. That seems like strange bedfellows to me.
But let’s look at these numbers. It surprises me that the Statesman doesn’t make more out of the fact — as I read it — that the public won’t just be on the hook to cover Bernie Ecclestone’s fee for the first year, but for nine years running. Am I misreading that or is Bernie about to pocket more than $200 million of Texas taxpayers’ dollars?
If so, that piece to this story is sure to come around again. Watch for a fight on that front.
My other focus is on the promoters’ bottom-line. While this doesn’t have all the details, they seem to have about $20 million per year — with I’m sure other expenses not yet mentioned. I wonder how quickly that money will disappear for unexpected repairs to the track, not hitting their targeted nonracing revenue projections and any other bumps in the road.
On the positive front for F1 fans, it does seem like the basic profits and losses are tabulated, and we all know that having government money available to pay Bernie is key. That seems to be in place. Does anyone see any red flags?
The other big question is whether Herman Tilke can build a track for $200 million.