Austin's F1 GP faces financial hit after local government dispute

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

Austin's F1 GP faces financial hit after local government dispute

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."

shares
comments
Video: The Mercedes mystery in 2019 Formula 1 testing

Previous article

Video: The Mercedes mystery in 2019 Formula 1 testing

Next article

Lewis Hamilton: Unfair to expect Charles Leclerc F1 title bid

Lewis Hamilton: Unfair to expect Charles Leclerc F1 title bid
Load comments

About this article

Series Formula 1
Author Adam Cooper
How a harshly ejected Red Bull star has been hooked by racing again Plus

How a harshly ejected Red Bull star has been hooked by racing again

Driver-turned-DJ Jaime Alguersuari lost his love for motorsport when he was booted out of Formula 1 just as he was starting to polish his rough edges. Having drifted from category to category then turned his back on racing altogether in 2015, he’s come full circle and is planning a return in karts for fun

Why Mercedes isn't confident it's really ahead of Red Bull at Imola Plus

Why Mercedes isn't confident it's really ahead of Red Bull at Imola

While Mercedes struck back against Red Bull by topping the times at Imola on Friday ahead of the Emilia Romagna Grand Prix, the overall picture remains incredibly close. Despite having a possible edge this weekend, the reigning Formula 1 world champion squad is not taking anything for granted...

What Mercedes must do to keep its F1 title challenge on track Plus

What Mercedes must do to keep its F1 title challenge on track

Mercedes may find itself leading the drivers' and constructors' standings after Lewis Hamilton's victory in the Bahrain Grand Prix, but it is well-aware that it came against the odds, with Red Bull clearly ahead on pace. Here's what the Brackley team must do to avoid its crown slipping

Formula 1
Apr 16, 2021
Why Tsunoda can become Japan’s greatest F1 talent Plus

Why Tsunoda can become Japan’s greatest F1 talent

While Japan's fever for motor racing is well-documented, the country has yet to produce a Formula 1 superstar – but that could be about to change, says BEN EDWARDS

Formula 1
Apr 15, 2021
Why the demise of F1's hypocritical spending habit is cause for celebration Plus

Why the demise of F1's hypocritical spending habit is cause for celebration

For too long, F1's richest teams have justified being able to spend as much as they want because that's the way they've always conducted their business. STUART CODLING says that's no reason not to kick a bad habit

Formula 1
Apr 14, 2021
The double whammy that is defining Vettel’s F1 fate Plus

The double whammy that is defining Vettel’s F1 fate

It's been a tough start to Sebastian Vettel's Aston Martin F1 career, with a lack of pre-season testing mileage followed by an incident-packed Bahrain GP. But two key underlying factors mean a turnaround is not guaranteed

Formula 1
Apr 14, 2021
The diva that stole a march on F1’s wide-bodied opposition Plus

The diva that stole a march on F1’s wide-bodied opposition

In 2017 new F1 technical regulations were supposed to add drama - and peg Mercedes back. STUART CODLING looks at the car which, while troubled, set the stage for the wide-bodied Formula 1 era

Formula 1
Apr 13, 2021
The themes to watch in F1’s Imola return Plus

The themes to watch in F1’s Imola return

Three weeks is a long time in Formula 1, but in the reshaped start to the 2021 season the teams head to Imola to pick things up after the frenetic Bahrain opener. Here's what to look out for and the developments to follow at the Emilia Romagna Grand Prix

Formula 1
Apr 13, 2021