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Is the US GP on track to transfer promoter rights?

NEWS STORY
05/10/2011

Last week reports in Austin began to emerge saying that the future of the US Grand Prix, which is due to return to the Formula One calendar in 2012 after a five-year hiatus, may be in jeopardy. The reports claimed that the race may be at risk as a result of a change of its promoter and a major slowdown since June in work at the 1,000-acre site just outside Austin, the capital of Texas. As ever with these kind of rumours, there is some truth to the story but also some elements which aren't spot on.

The first point to explain is the difference between a race promoter and a circuit because although they can be owned by one and the same entity, often they are not. The promoter arranges the Grand Prix and its name is on the contract with the F1 Group which grants it the licence to host the race. In contrast, the circuit is simply the track and related facilities such as the media centre and pit complex. At many races, such as the British and Monaco Grands Prix, the promoter and the circuit are both owned by the same entity. However, this doesn't have to be the case and Austin fits into both categories.

The promoter is currently Full Throttle Productions, an Austin-based company owned and run by former F3 driver Tavo Hellmund. Full Throttle has hosted a wide range of events, from NASCAR races to football matches, and in May last year it was announced as being the promoter of the US Grand Prix in Austin which will take place for ten years from 2012.

Hellmund is also the founding partner in Circuit of the Americas which, according to media reports, is the company that owns the track that is being built. Other partners in Circuit of the Americas are reportedly Texan private equity firm Prophet Capital, run by Bobby Epstein, and McCombs Partners, the investment vehicle of Texan Red McCombs. The crucial point here is that the US Grand Prix promoter and the circuit are run by different businesses with different owners, with the exception that Hellmund is central on both companies and without question the key ingredient.

According to the recent reports, on Monday last week Hellmund called Susan Combs, who, as Texas' Comptroller is in charge of its finances, to ask whether a change in management or promoters would affect the circuit's eligibility for money from the state's Major Events Trust Fund. This is particularly important since it is the circuit's eligibility under this fund which enables the state to pay the $25m annual race hosting fee to the F1 Group. If a change in the promoter led to it becoming ineligible for this money it would destroy the business plan for the race since an unexpected $25m would suddenly need to be found every year.

On Tuesday last week, Combs reportedly sent a letter to the F1 Group's chief executive Bernie Ecclestone to confirm that a change in management or promoters would not affect the circuit's eligibility for the money. It is also understood that Combs revealed in the letter that Full Throttle is still the promoter of the race as it has not yet transferred its promotion contract to Circuit of the Americas. There is no doubt that this will happen and, far from being something which could jeopardise the future of the race, it is in fact a formality. Indeed, it is incredibly surprising that it has not happened months ago.

Reportedly Prophet Capital and McCombs are to provide all the capital (around $250m) needed to build the Circuit of the Americas and, prior to construction, Hellmund has arranged what no motorsport facility in the world has ever lined up: $25m annually in state funding and race contracts with F1 and MotoGP - the two most significant global motorsports series. Hellmund's input has made the project the envy of other race promoters and the transfer from Full Throttle to Circuit of the Americas is a key element of its business model.

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