[tchanson]

Originally Posted by tchanson

Attendance figures are largely irrelevant to Bernie, other than the TV optics. He and his overlords at CVC get their contractually guaranteed fee regardless of whether anyone shows up or not. If 10 people show up in Austin it would look bad, but CVC wouldn't lose a cent. (see Bahrain, China, Korea et al...)

Attendance is also of secondary importance to COTA organizers. They could never come close to even paying the race fee based on the gate alone, which is their only major revenue stream.

The modern F1 business model is basically a scheme of bilking local governments for the annual race fee. (with +10% annual ladder increases for the contract term) It virtually requires government funding (either directly or through considerable tax incentives) to make any sense for an organizer. COTA is no exception.

The sole reason the US race is viable is the annual $25M+ (last year) payment to COTA from the Texas Major Events Trust Fund. The minute that annual payment from the METF is not renewed, the F1 race will cease to be held there. The most important person on the podium at Austin last year was not Lewis or Finger Boy, but Susan Combs, the state comptroller who largely directs those funds.


Tim

And so it begins.




U.S. Grand Prix F1 race in Austin in jeopardy after state reduces funding

Circuit of the Americas chairman Bobby Epstein did not hold back his disappointment and fear for the future for the U.S. Grand Prix in Austin, Texas, after government officials in Texas confirmed significant cuts to funding to the race.

On Tuesday, the American-Statesman in Austin reported that the state is cutting payments to COTA by more than 20 percent. And those contributions have been significant -- $25 million in 2012, 2013 and 2014. This year's payment is expected to be about $19.5 million.

"To use a technical term, I think we're screwed," Epstein said.

The stage appears to be set for a legal battle between COTA and the state over the unexpected reduction in funding.

"An entire facility was constructed based on that deal," COTA spokesman Dave Shaw said. "If the calculation changes now, that's effectively changed the terms of the deal."

The news is the latest in a series of jolts for COTA surrounding this year's race. Bad weather contributed in an attendance figure much below that of the facility's 2012 F1 debut. Then, last week, the first F1 race in more than two decades in Mexico -- considered competition by many to the race in Texas -- was a glowing success.

The money that the state gives to COTA is tied to economic impact of the race to the Texas economy. State officials said that the state is using a different formula to calculate that figure this year, and that resulted in the smaller amount of funding being extended to the track.

"It hit us cold," said Epstein of the latest news. "No one could foresee this coming."

AuotWeek