Updated: Combs Taps the Brakes on Formula 1 Racing

Updated: Construction of the Formula 1 track in Travis County has been indefinitely suspended because of a dispute between the race organizer and the owners of the property, according to the owners (and first reported in the Austin American-Statesman). That announcement came shortly after Comptroller Susan Combs announced the state won't funnel any money into the project until racing is underway. The owners of the track say they'll resume construction as soon as they have a deal for a race there.

They issued this statement:

Organizers of Circuit of The Americas, a premier motor sports racing and entertainment venue being developed in Austin, Texas, are suspending further construction of the project until a contract assuring the Formula 1 United States Grand Prix will be held at Circuit of The Americas in 2012 is complete. The race contract between Formula One and Circuit of The Americas has not been conveyed to Circuit of The Americas per a previously agreed upon timetable.

While construction at Circuit of The Americas has progressed as scheduled with over 300 workers at the construction site daily, all work will suspend immediately. The delivery of the Formula One Grand Prix race contract will allow construction operations to resume.

“We have spent tremendous resources preparing for the Formula One and MotoGP™ Championship races, but the failure to deliver race contracts gives us great concern,” said Bobby Epstein, founding partner of Circuit of The Americas. “We believe the United States is vital for the future of Formula One and its teams and sponsors. Given the purpose-built Tilke design, creating a unique fan experience and iconic challenge for drivers, we hope that Texas will not be left behind. More than 100,000 fans have expressed an interest in purchasing tickets for Formula One alone.”

“It is in the best interest of all parties to reach a timely resolution,” said Red McCombs, chairman of McCombs Enterprises and founding partner of Circuit of The Americas. “Local businesses, fans and the State of Texas are counting on us.”

The state won't spend any economic development money on Formula 1 races in Texas in advance of those races, Comptroller Susan Combs announced this morning.

Combs, who's been way out in front promoting Formula 1 racing as an economic draw for Austin and Central Texas, says she's concerned about plans to hold races in New Jersey, because more events in other states could diminish the economic advantages of holding races in Texas. And she said, via written statement, that the state will do more economic analysis before it spends any money on the races.

The Legislature already authorized spending $25 million annually for up to 10 years to subsidize Formula 1 in Texas. None of that has been spent, according to Combs, and none will be spent in advance of a race. Promoters are building a track between Austin and Bastrop and hope to hold races starting next year.

The United States Grand Prix could be held in Texas a year from now, and then in New Jersey in 2013. But Formula 1 officials expressed doubt last week about whether the Texas race will take place.

Combs' announcement means the state won't spend taxpayer money on the track here until that's sorted out. How her position will affect plans for the track isn't clear. But it could get her out of a political mess; opponents have been critical of her willingness to invest state money in the private venture in a period of tight budgets and a down economy.

Here's her full statement:

It’s no secret that I’ve supported Texas hosting a Formula 1 race since 2008. I believe a well-organized event of this magnitude can be a tremendous benefit to Texas if done right. Investors, businesses and event organizers want to come to Texas because we’ve developed an economic climate that is attractive, our state is a great location for events, and we’ve got space and potential to grow.

A tool for recruiting large events to the state is the Major Events Trust Fund (METF), which was created by the Texas Legislature in 2003. In the past two years, eligible METF recipients have included the NFL Super Bowl XLV, the NBA All-Star Game and the NCAA Men’s and Women’s Final Four tournaments. The support provided by the METF comes from sales, hotel, beverage and other tax revenue generated by out-of-state visitors who attend the event.

When the United States Grand Prix was formally announced, it was the only Formula 1 race scheduled in the U.S. During the past 18 months, organizers have taken many steps to bring high-profile motor racing to Central Texas, including the development of the Circuit of the Americas, and the announcement of the global MotoGP and V8 Supercar race series starting in 2013.

The recent announcement of an annual Formula 1 race in New Jersey is a concern, as additional races have the potential to reduce the number of attendees to a Texas race, thereby decreasing the economic impact.  Additionally, the reports of a slowdown in construction at the Circuit of the Americas, and recently publicized disagreements between the race rights-holder and the circuit developers have prompted speculation about whether the Austin race will even occur. The ongoing controversies are a concern and we will continue to monitor them. 

“Let me state clearly: We have not paid out any money for the Formula 1 event. The only dollars that can be spent on the United States Grand Prix are tax revenues attributable to the successful running of a race.  The state of Texas will not be paying any funds in advance of the event. Further, as is the case with all METF events, each application will be reviewed and analyzed for its likely economic impact and only after the race occurs would any funds be disbursed.

If an METF application is submitted, it will be thoroughly vetted and economic impact data scrutinized based on the actual circumstances for that event. Ultimately, I am responsible for protecting the interests of Texas taxpayers, first and foremost. I will not allow taxpayer dollars to be placed at risk. My position on that has not changed.