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Clouds gather over New Jersey Grand Prix

NEWS STORY
21/05/2012

It is now seven months since the pomp and circumstance that was the announcement about the Grand Prix of America in New Jersey which is due to join the Formula One calendar in 2013. Just last month F1's boss Bernie Ecclestone said he was unsure whether the race will take place next year as planned. Pitpass' business editor Christian Sylt now hears further evidence that all is not well between Ecclestone and the New Jersey camp. Details of the contractual situation between the two parties are likely to come into the public domain soon and, surprise surprise, it is understood that money is at the heart of the current concerns.

New Jersey is in quite a unique situation and we aren't talking about the attributes of its track or its location overlooking the New York skyline. Pretty much all new races which have been added to F1's calendar in recent years have revealed the source of their funding when they were announced or relatively soon after but the promoters of the New Jersey race have kept quiet about this and are remaining tight lipped. All that has been indicated is that the race will not be funded with public money. However, no names or details of investors have been given.

This doesn't mean that there is no backing behind the race but rather that there are still question marks over where it is coming from. This is simply exacerbated by the continued doubt over whether the race will actually join the calendar next year.

One senior sports marketing expert said "I have not heard anything more about the NY race which I think is indicative. If it was going well I would expect to read lots about it in the US sports business press." It remains to be seen whether the preparation for the race is or isn't going well. Following Ecclestone's scepticism about it being ready for next year, race spokesman, Stephen Sigmund said "the race is on, as scheduled, for 2013."

The marketing expert adds that there is one reason why the lack of knowledge about the funding may not be so significant. "The only point I can make is that the promoter has very substantial private funds," he says. The executive chairman of the race is American businessman Leo Hindery who alone is believed to be worth over $150m and is an accomplished former racer having won his class at Le Mans in a Porsche GT3. Hindery is also managing partner of InterMedia Partners, a New York-based media industry private equity fund. Until 2004, he was chairman and chief executive of The YES Network, the largest regional sports network in the US which he founded in 2001 as the television home of the New York Yankees baseball team.

Nevertheless, the marketing expert adds that Hindery "is very unlikely to have entered into the venture with the intention to spend his own money." It keeps us guessing as to where the money behind the race is really coming from. In contrast, there are no such questions about the US Grand Prix which will steal a march on New Jersey and will join F1's calendar in November this year after a five year absence.

The funding behind the purpose-built Circuit of the Americas in Austin, the capital of Texas, was revealed just a couple of months after it was announced in May 2010 that the US Grand Prix will be coming to the track. Austin-based private equity boss Bobby Epstein and Texan billionaire Red McCombs are backing the circuit amongst other investors. Earlier this year, public filings in the US showed that funding for the circuit had reached nearly $200m and, after that, it was announced that tequila tycoon John Paul DeJoria had also become an investor.

In a country which is famous for its love-affair with litigation it is little surprise that a lawsuit has been filed in connection with Circuit of the Americas as Tavo Hellmund, once the face of the project, is suing Epstein and McCombs over, amongst other things, an unfulfilled buyout agreement.

The lawsuit is essentially an internal dispute and is dwarfed by the litigation which the previous US Grand Prix attracted. From 2000 until 2007 the US Grand Prix ran at the Indianapolis Motor Speedway and its fate was sealed by one race. The F1 industry tends to have a short memory and the worst offenders can often be the sports reporters. Last month's Bahrain Grand Prix was widely reported to be the most controversial race in F1's history but, in fact, the 2005 US Grand Prix has a good claim to that title.

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