F1’s history in the USA

Austin is the 10th American city to host F1 since the first U.S. Grand Prix in Sebring, Florida, in 1959. Watkins Glen, New York, hosted a Grand Prix from 1961-80 and other F1 races have been held in Long Beach, Las Vegas, Detroit, Dallas, Phoenix and other cities on street courses.

Yet while these venues have thrown up some amazing pieces of F1 history, for one reason or another they have not really been optimum for holding an F1 weekend for one reason or another. Watkins Glen was probably the closest to what F1 needed as its US home, but despite improvements the circuit became unable to safely handle the increasingly faster cars of the late 70s.

There were a number of horrendous and fatal accidents (such as those that claimed the lives of Helmut Koinigg and Francois Cevert) and increasingly rowdy segments of the crowd began to tarnish its image. Finally, in May, 1981 several months after Alan Jones had won the 1980 race the International Auto Sports Federation removed the race from its schedule because the track had failed to pay its $800,000 debt to the teams.

A Grand return

The U.S. Grand Prix made its grand return after a five-year absence on Sunday at the $4-450 million Circuit of the Americas, a track built expressly for F1 on rolling scrub land just a few miles southeast of downtown Austin.

“This is what was needed,” said Mario Andretti, the Formula One champion in 1978. “Now we can compete with the rest of the world and some of those new venues that have gone up in the last few years in the Middle East and Asia. That’s the ingredient that was missing here in the United States.”

And so at last F1 chooses to settle in Austin, Texas. From afar, the US grand Prix in Austin was an amazing success. The track looks fantastic, wide with plenty of room for overtaking and the undulations followed by the low swooping hospital gave a unique view of F1 cars in action. We had twists and turns with the disastrous qualifying from Ferrari followed by the clever use of the rules to launch Alonso into 4th by the end of turn 1.

An unqualified sucess

The recent Red Bull domination (I know Kimi won in Abu Dhabi but Vettel’s car was dominant) was ended with a front of the field battle that continued lap after lap until finally with the engine turned up to breaking point Lewis did what he does best and pulled off a late move to steal the lead.

There were over 60,000 fans at Friday practice, over 80,000 there for Saturday qualifying and nearly 120,000 attended the race day – giving an amazing total of around 265,000 bodies in attendance during the weekend.

The podium ceremony was unique in my time watching F1 – I wasn’t a fan of the fold down cardboard flags but I was delighted to see F1 break with a tradition of some 62 years and around 850 races by providing Stetson hats for the first 3 drivers to wear during their presentation and celebration..

The F1 people I know have all rated this as one of, if not, the best F1 event of the year. The praise of Austin as a destination to visit has also been effervescent. thejudge13 has published people’s pictures tweeted to me and I’ve felt very jealous because I’ve never been to Austin and I now want to make the pilgrimage.

COTA’s founding father

In thejudge13 article “Law suit involving Austin GP promoters” I outline the source of the inspiration and conception of COTA, someone called Tavo Hellmund – son of Gustav a life long friend of Mr. Ecclestone. Hellmund persuaded a sceptical Bernie to agree to giving him a contract to bring F1 to Austin, Texas. Tavo had even sketched out ideas of corners and a circuit layout.

He was awarded the contract, but when he went looking for funding he found himself being ousted by a Texas billionaire egomaniac Red McCombs. Hellmuind was unable to deliver the cash for the commissioning payment to Ecclestone before the deadline written into his contract and lost the contract. Less than a week later, McCombs had a contract with Ecclestone and COTA was back on track.

Yet Bernie in a Q&A not long after this had some interesting things to say. He was asked about Hellmunds failure to deliver.

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.

Ecclestone was then asked,

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 [and what they did to Tavo], we don’t feel that they are reliable as they should be.

I always assumed that the difference in the contract was something to do with how much more McCombs and Epstein would have to pay – or at best the increase in the up front amount, yet now I wonder whether it wasn’t something quite different.

Why COTA

The reason Ecclestone and Tavo’s father go back so far is that they both worked on a project to get F1 racing in Mexico in 1988 and of course Tavo was well aware of this. The name for the facility in Austin was for a reason not merely the ‘Circuit of America’ as many would expect, but the ‘Curcuit of THE Americas’ – plural.

Hellmund knew that to be a success his American home of F1 would need to reach out beyond the borders of the USA. The track is located less than 200 miles from the Mexican border and less than 750m as the crow flies from Mexico City and Guadqalajara – both short flights. We were told a number of times by European journalists that some 40% of tickets had been bought by Mexican F1 fans for COTA’s inaugural event, this would account for nearly 110,000 of the total weekend headcount of 265,000.

Besides the huge Mexican support, COTA had visitors from over 50 different countries too, as Austin was the fly away destination of choice for most Europeans who would make this their choice from the many distant F1 locations on offer in 2012.

There will certainly be a challenge for COTA in 2013 to maintain the attendance as all the evidence since the turn of the millennium is that new F1 venues have amazing turnouts in their inaugural year and lose around 1/3rd of the crowd for the second and even maybe the 3rd year.

State subsidy essential?

thejudge13 did report over the weekend that a number of F1 people were reporting hotels unoccupied. I even checked on Saturday on Booking.com and expedia.com to see if hotels were available, and there was a pretty good selection there. “The economic studies said every hotel would be completely filled all the way down to San Antonio,” a 90-minute drive from Austin, said Danielle Crespo, who runs two websites that link Formula One visitors to lodging. “That isn’t the case.”

Fewer fans came to Austin from Europe and Canda than hoteliers expected, and they booked three nights instead of the projected five or six, said Randy McCaslin, a vice president of PKF Consulting who tracks the Texas hotel market from Houston

The promises made by Ecclestone’s marketing team to new F1 locations are clearly understood. It predicted the race would generate a little more than $293 million in direct expenditures for the area and an overall economic impact of $483 million. It also projected the race would produce $26.4 million in new tax revenue for the state and $6 million for the city of Austin. Tax gains for other local entities were not included.

It will no doubt take some time for the accountants to do the sums. In the meantime the Austin-Statesman reports either boom or bust for the local businesses. Those within the festival designated area downtown that was a pedestrian only area appear to have done well. Other’s dependent on local shoppers have reported a 25% fall when compared to last year’s weekend before thanksgiving.

There are many in the US who believe F1 will fail to gain traction again. However, there are others who are genuinely concerned over COTA’s business plan. “The staying power of the Austin race is its ability to maintain state funding,” said Christian Sylt, editor of the Formula Money report, published in London. “We can’t say for sure the organizers will receive the state’s funding over time, because it is dependent on the event’s economic impact.”

Apparently the subsidies for the Austin race, backed by Governor Rick Perry and Comptroller Susan Combs, will depend partly on the effect the see on sales tax receipts from the area during the event. If COTA were not to be eligible for the subsidy, then clearly there are those who believe it will struggle to see out the 10 year contract to host an F1 race.

Clouds on the horizon

Whilst the weekend was a universally accepted fabulous success and could not have been better scripted had a Hollywood writer with a penchant for happy endings had devised the screenplay. May I say before I continue, I love spending time in the USA. My only bad experience was being chased for an hour up the highway from New Orleans to Houston by a red neck who wanted to shoot me I think for cutting into his lane. But hey I’m still here.

Yet there were shadows that appeared on the beautiful Texan sunlit horizon. Mists rolling in that I fear bode ill for Austin Texas and its relationship with new-found love, Formula 1. Certain matters made me wonder what’s around the corner for COTA as I we look amongst the tea leaves that began making some sense.

Thanks to thejudge13 readers we get all kinds of local information to share with everyone. One reader told us these weekend there were many bill boards with messages like this one, ” “World class racing in Austin, Texas. Thank you Tavo Hellmund”.

Ecclestone is known to frequently take out billboard ad’s around the venues of the world – and these messages are most definitely from him. Ecclestone however, is also definitely not known for giving encouragement and support to anyone who fails in F1 – and being unable to see the project through to completion, Tavo did fail.

Franchise Principles

When you buy a Franchise, you automatically get a protected area or region where the Franchiser promises not to open or allow another franchise operation that would be in direct competition to the one you’ve just acquired. Of course F1 is not a franchise, but this kind of commercial arrangement is normative with such contracts. Austin does not have this protection.

On an additional webcast to the scheduled TV I saw following the qualifying session the son of Mexican billionaire Carlos Slim was sat with Herman Tilke. Further, thejudge13 readers report Tavo Hellmund was also in the party.

We today have confirmation from the Austin Statesman that Tavo is working on another project, bringing Formula One back to Mexico, much the way his father did in the 1980s. Not surprisingly, the promoter in him is optimistic. “The sky is the limit,” Hellmund said of a Formula One race in Mexico. “It could potentially break every Grand Prix attendance record.”

He envisions a race day crowd as big as 250,000, and he thinks arrangements can be made to get a Mexico location on the 2014 Formula One calendar. Getting on the Formula One racing circuit isn’t easy because there are always cities competing to be chosen and there are big financial hurdles to clear.

Mexico City and Guadalajara are both a mere 750m from Austin – some 90 mins on a commercial flight.

Reaping and Sowing

In the deep south, the ‘Good Book’ is still widely revered. Therein is a little phrase that states, “for whatever a man sows, that he will also reap”. What’s in the tea leaves?

Ecclestone unusually showing public sympathy  – for Tavo Hellmund and stating McCombs and Epstein have stolen from him. The ‘Curcuit of the America’s” whose very DNA and name includes Mexico has a last minute contract change with no regional protection from cross border competition. This cross border competition could wipe out 30% of COTA’s constituents and the subsequent lack of economic benefit in Austin would stall any state subsidy. McCombs and Epstein could be left with a huge loss making event every year a la Korea.

Sowing and reaping eh? Why did McCombs and Epstein steal COTA from Tavo? What did they sow and what will they reap?

 

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