Law suit involving Austin GP promoters

The circuit of the America’s (COTA) which will host its first Formula One race Nov. 16-18, is seeking a temporary restraining order against the track’s former founding partner, Tavo Hellmund.

The circuit is asking that Hellmund be prevented from divulging any of the circuit’s trade secrets, destroying or altering any records in his possession or using any of the circuit’s trademarks. Organizers are also seeking damages, court and attorney fees.

The history of this dispute is symptomatic of F1 and big money. Unsurprisingly Mr. Ecclestone is embroiled in the matter which at its heart is based upon a deal being done, falling into question, being undone and a new one being redone cutting out a party who had become surplus to requirements.

Hellmund, a native of Austin, Texas, competed in the British Formula 3 Championships in 1995 and 1996, winning races the K&N Pro Series West and SCCA sanctioned events, including the Winston West race in 2001. In July 2010, Tavo Hellmund announced he had signed a deal with F1 in April to return the United States Grand Prix to the F1 schedule in 2012 and build a circuit in Austin, Texas.

In an interview with Adam Cooper, Bernie Ecclestone was asked about F1 returning to the USA and about Tavo Hellmund who he had personally identified as the best man for the job to make it happen.

Q: Is it fair to say that Tavo’s dad brought F1 back to Mexico in 1988?

E: I think together, we did, yes!

Q: And you’ve been friends ever since?

E: Yes, we’ve kept in touch. And with Tavo, I’ve known him since he was born.

Q: What is it about Tavo that convinces you that he can get the job done?

E: Well I trust him.

Q: Even in Texas finding $200m to build a circuit isn’t easy…

E: He’s done it, otherwise he wouldn’t embark on it.

Q: And a permanent track is the way to go?

E: This sort of facility [Istanbul]. It’s going to look good.

Q: It’s a better bet that a street race?

E: Yes sure, I think we’ve got enough street races now.

Hellmund’s of course needed investors, as it was clear from the outset that public money would be but a small contribution to the finance required to build the track and pay the F1 annual fees. The money man Tavo recruited were Red McCombs and Bobby Epstein and the plan was to agree a 10 year contract with F1 for them to see a return on their investment.

McCombs, a car dealer by trade, was listed by Forbes as the 913th richest man in the world in 2012, worth $1.4bn. He is not without controversy having attempted to build an entire ski resort but finding opposition from the United States Forrest Service for its environmental incompatibility.

Unperturbed, McCombs then moved on to a project to develop a 200km square Casino resort on Lake Powell. This was unanimously rejected as environmentally incompatible by all local authority bodies. F1 is clearly not an environmental wolf in sheep’s clothing and so in collaboration with someone who understands the sport, he agreed to finance the COTA project.

During the final week of November 2011 the deal to hold an F1 race was suddenly in doubt (cf NY this year), and on the 28th . In a Q&A with Autoweek on the 28th November Ecclestone was asked, “Is it fair to say that you wouldn’t have given them the deal in the first place without that $25 million promised by the state that is now apparently off the table?”

Mr. E replied, “It’s not just the $25 million, that’s a small part of it, it’s the whole package. Everybody else seems to be happy and comply. I think the problem is a simple one, they never had the money. It’s simple”. (Autoweek)

The rest of this interview is fascinating and covers as well the events around that time as anything else I’ve read or heard, so here it is.

Q: Tavo Hellmund, who put the deal together originally, told you he had the state money, and you got a letter from Texas comptroller Susan Combs promising you the state would pay.

E: We don’t have to deal with [expletive]. . . We deal with the promoter and that was Tavo, and it’s up to him to respect the contract. He didn’t, couldn’t, and we terminated the contract.

Q: Was it purely that money wasn’t paid, or did he fail to do other things?

E: Yeah, lots of things. I’ve spent more time with these people and these races in the States than [I’ve had to spend with] anybody else [to make a Grand Prix happen]. India’s come and gone, and other places have come and gone, and we’re still messing around.

Q: Normally, you are dealing with governments, but while they can be a pain, they do get the job done, don’t they?

E: Absolutely. I expect people to do what they say they’re going to do, which is what I do.

Q: Were you disappointed with Hellmund? Obviously he wouldn’t have made it through the door if you didn’t know him already.

E: I was disappointed insofar as he had what he thought were partners that could finance the business and wouldn’t let him down. Really, they let him down, and they’re trying to steal from him, get him out of [the project] and do the whole thing themselves.

Q: Was he a bit out of his depth?

E: He was a bit out of his depth in relying on and trusting people.

Q: Personally, you don’t have a problem with him now?

E: With him, not at all, not in any shape or form.

Q: Bobby Epstein, who appears to be heading up the Circuit of the Americas project at this point, is saying that when you canceled Tavo’s contract, the one you offered Epstein and COTA was different. Is that right?

E: Correct. Different insofar as their deal with Tavo, knowing that they were going to be the people bankrolling him, and knowing what happened to them, we don’t feel that they are reliable as they should be.

Q: So you want the guarantees that you’re talking about?

E: They have a contract, which if they want to sign it, they’re OK, and if they don’t, it’s OK as well.

Q: They put out a release on Thanksgiving saying they sent a revised contract to you. It’s not normally your style to sign contracts people send back to you, is it?

E: They’re not in a position to do that. Well they are, and they have, but we are not interested.

Q: If the U.S. GP doesn’t happen, will you juggle other races around?

E: It’s probably a bit late now. This is what these people don’t understand. They’re sitting there on their own, thinking about their race, buying something that they can’t afford, thinking the world is going to change for them. Which it isn’t.

As with most of Ecclestone’s dealings there are casualties strewn along the way, he had cancelled the contract with Hellmund. Yet there is an interesting side of Bernie revealed in this interview. He leaves us in no doubt as to his opinion of what was going on. Hellmund had a contract to bring F1 back to the USA and the people he’d approached to finance this were ‘trying to steal from him – get him out and do the whole thing themselves’.

Ecclestone is further irritated with the money men, and is offering them either a contract costing them more than Hellmund or most likely with a much bigger cash deposit up front adding, “we don’t feel that they are reliable as they should be”. Before we get too carried away, the reality of this distrust was to sign the new deal direct with McCombs and associates a week later on December 7th. Apparently, they we went  from they “never had the money” to satisfying the financial scrutiny of an FOM audit for a 10 year contract with a supporting business plan to substantiate it. All in a mere 7 days. Mmm.

Sentiment and family connections have always taken second place with Ecclestone when doing a deal, and reading between the lines I’m not sure he thought McCombs and Epstein would actually deliver the circuit – but if previous form was followed – he had no less than $20m up front from the people he openly disliked. That eases the pain I suppose.

The current law suit, and the request for a restraining order, is a result of an email sent by Hellmund 2 weeks ago to many of the circuit’s subscribers whom he had dealings. The email allegedly included a video with the urging, “Must See – Circuit of The Americas History Video!,” that included clips of Hellmund at several press conferences and interviews. The circuit claims subscribers feared that the circuit was violating the law and the terms on its website.

Casey Dobson, an attorney for Hellmund, said his client “is not, has not and will not” use any of the circuit’s proprietary information and would be happy to sign an agreement to that effect (Statesmen, Austin).

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One response to “Law suit involving Austin GP promoters

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