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Ecclestone gives Austin some breathing space

NEWS STORY
18/11/2015

Following a shortfall in its state subsidy, Bernie Ecclestone is allowing COTA to pay race hosting fees late.

The shortfall is due to changes to the way in which the benefits of hosting the race in Austin are calculated, this in turn following control of such matters coming under the jurisdiction of Governor Greg Abbott’s office, the original deal having been agreed by (then) Governor Rick Perry and state Comptroller Susan Combs.

In 2012, 2103 and 2014, the state paid $25m, but this year, just weeks before the race was to be held it was announced that the subsidy would drop to $19.5m, leading to Circuit of the Americas Chairman Bobby Epstein to famously admit "we're screwed".

Meanwhile, of course, as is the norm, the race hosting fees increase by 10% each year.

Keen to keep Austin, and thereby the United States on the calendar, Ecclestone has done the same as he did with Silverstone, allowing organisers to pay the fees in arrears.

"We said they can pay late this year," he told the Austin American-Statesman. "They get money from the state, and the money from the state is late, so that’s why they are late."

Nonetheless, this doesn't entirely satisfy Epstein who insists the state has gone back on its original deal.

"It’s OK paying after the race, but if they don’t give you enough to pay the sanction fee, you still can’t do it," he said.

"The person who dealt with this in the first place is no longer there," said Ecclestone. "The governor is no longer there. So they have got new people, but they should pay what was agreed.

"I think we will get the funding back on track again," he added.

With New Jersey effectively dead and buried, at least as we knew it, Ecclestone is keen to see more than one race in the US and recently hinted that he's eyeing a venue in California.

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1. Posted by mickl, 19/11/2015 16:03

"sumpnz- it's the usual F1 story of riches to rags in how to make a little bit of money, start with lots and end up with a little.

Bernie's only done it to give himself a bit more time so he can court the next dictator/murderer's personal track to replace Austin with."

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2. Posted by sumpnz, 18/11/2015 19:47

"Whether Austin gets their funding restored will depend on the terms of the contract.

Best as I can figure the subsidy was apparently always predicated on a certain amount of economic impact within TX. It generated less impact than assumed, and apparently per the existing terms of the contract, the subsidy was thereby reduced. This shouldn’t have been such a shock to the promoters if that is the case.

Besides, any business case for a private venture that relies on government subsidy should always take into account the risk of the political environment changing and their project no longer being favored. Whether that is because something else is seen as more important, or because subsidies overall fall out of favor doesn’t matter.

At the end of the day, if COTA can’t survive one bad year (crappy weather reducing revenue, plus a reduction in subsidy that probably should have been foreseen) then they had a crappy business plan and a complete lack of appreciation of the risks they were taking."

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3. Posted by edllorca, 18/11/2015 16:07

"'Can't afford' doesn't mean 'can't afford now' it means 'can't afford ever'. I fear that this is the begining of the end for USGP at Austin. I guess Bernie already knew before they did which is why has has already been shopping for another group of fools in the US to stage the next USGP."

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4. Posted by You Started It!!, 18/11/2015 12:10

"If you do business with Bernie, you burn!"

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