Texas state paying $25m for 2012 F1 race

Bernie Ecclestone is charging $25m (?é?ú17m / ?óÔÇÜ?Ľ20.29m) for the first United States Grand Prix in 2012

Local newspaper the Austin American-Statesman claims the local government is putting forward the money for the race. The money comes from a pot used to fund major sporting events such as the Super Bowl.

The race promoters intend to pay future race-hosting fees using the funds raised from previous events. Assuming Ecclestone’s typical annual ‘escalator’ for race hosting fees of 7%, that would mean they need to raise $26.75m from this year’s race to pay for next year’s.

Construction of the track, estimated to cost $250m, will not be paid for from public funds.

At present every race on the F1 calendar is supported by government money in some way, apart from the British Grand Prix.

Read more: F1 to race in Texas, USA in 2012

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33 comments on Texas state paying $25m for 2012 F1 race

  1. Steezy said on 3rd June 2010, 11:49

    Why does Bernie charge so much, is it purely personal greed and the pursuit of profit. I heard that the Americans are actually getting quite a good deal compared to other tracks.

  2. laptopracer said on 3rd June 2010, 11:50

    one of these days ppl r gonna stand against the 7% increase for every race and the high cost of jst hostin the race and i dont wanna be around to see wat happens to f1 then!!

    • Christopher said on 4th June 2010, 22:08

      Another Middle-Eastern country will step in and create another massively government-funded Yas Island?

  3. Robert McKay said on 3rd June 2010, 11:57

    It is pure greed and it is pursuit of profit, no doubt there.

    I think it is ridiculous that so much government money is involved in such a cash-rich sport.

    But if the demand is there, if new circuits come along and say they are willing to pay the money, then the market rate is set…

    • Prisoner Monkeys said on 4th June 2010, 9:31

      Actually, it’s demand that causes such high prices. Bernie controls the calendar, but there’s only so many races that the calendar can hold. It’s a finite resource, and basic econmics dictates that when the supply is controlled, the demand will be pushed upwards. Bernie’s exponential pricing – that extra 7% per year – is no doubt a check against circuits signing up but being unable to pay in subsequent years.

      And it’s not like all the money goes straight into Bernie’s numbered Swiss bank account – he injects it back into the sport.

  4. Blake Merriam (Pengo) said on 3rd June 2010, 12:02

    I understand why public funds aren’t used in the US (Political, basically) but I don’t agree with it. Unemployment in Texas is 8.2%, thats one out of every 12 people. A $250 million project is going to create a lot of jobs. Plus the revenue Austin gets from visitors to the city.

    • Rob R. said on 3rd June 2010, 12:38

      8.2% unemployment is actually fairly low by current US standards if you didn’t notice.

    • bosyber said on 3rd June 2010, 15:27

      I think that if you have $250 million lying around as a state, maybe there are better ways to spend it on jobs (like many small business start up loans maybe?) with a longer term effect than just building a race track (plus occasional races). Esp. if Austin is indeed something of a “Texas Silicon Valley” as descriptions from locals seem to indicate.

      $25 from a cache specifically for events is much more reasonable.

      • DamionShadows said on 3rd June 2010, 22:50

        They only have to pay $25 million, not the whole $250 million, but I understand what you’re saying.

  5. SoLiD said on 3rd June 2010, 12:18

    They do charge big bucks to hold a race. And that the price has to go up every year is a strange thing imo.
    Altough I must admit that a GP does bring in big bucks for the complete economy! Not just what the race it self brings in. Something many people (the not so race lovers) tend to forget :)

  6. People always complain about the extravagant fees Ecclestone charges for circuits to hold an F1 race, but it isn’t that long ago that the circuits used to hold F1 teams to ransom in a similar manner. The idea nowadays is that the huge profile of F1 will bring other, paying series to the circuit. Doesn’t always work that way, of course….

    • Mark Hitchcock said on 3rd June 2010, 12:26

      Turkey being the prime example of it not working. Not in the long run at least.

      The big benefit of the GP for Austin will be the boost to the city’s economy more than anything.

  7. disjunto said on 3rd June 2010, 12:41

    I’ve never understood why the track needs to pay so F1 has somewhere to race. Surely it would make more sense for the track to be paid for hosting it

    • DGR-F1 said on 3rd June 2010, 13:13

      I assume it has something to do with using the FOM name and logos, as well as Bernie bringing all the teams along, and having FIA official timing etc, to ensure it is part of the official ‘Championship’.
      Or it could be a complete scam, of course….. :-)

  8. PJA said on 3rd June 2010, 13:10

    I am not familiar with the American motorsport scene, from what I understand NASCAR is the most popular series and that only races on ovals. My question is, is there enough demand in Austin for a non oval circuit so that it is used throughout the year.

    I agree that Governments shouldn’t fund Grand Prix.

    We have to remember that Ecclestone also takes the track side advertising revenue from all races except Monaco so the circuits only income from a GP is ticket sales which have to cover the fees charged.

    In an ideal world I would like the fees charged to be at a level whereby if the ticket prices are set at a reasonable level for the local population and the attendance is something like 80% of capacity then the circuit owners should at least be able to break even without any government subsidy.

    It won’t happen as long as CVC need all the money they can get just to service the loans they took out to buy FOM.

    • timdoug said on 3rd June 2010, 21:25

      They don’t need Austinians to attend, in fact they want people to come for the weekend and blow a ton of money in the city.
      Sales Tax, Rental Car Tax, Hotel Tax, Event Tax.
      They got 100,000 people for Indy on the bad years. I don’t think attendance will be a problem. The Indy race had unique issues. I live in Omaha and already thinking about going down.

      • Jason said on 4th June 2010, 19:28

        I live in Omaha as well and am chomping at the bit for F1 to come back. If they keep ticket prices at or just slightly above what they were at Indy, I’ll jump on them in a heartbeat.

  9. HounslowBusGarage said on 3rd June 2010, 13:28

    Let’s look at that in a bit more detail.
    $25 m for the race to Bernie.
    Ignoring the cost of building the track, the staffing, promotion and running the race, and assuming that the earnings for the track consist of gate receipts, parking charges, concession rents (as far as I know).
    Now let’s pretend that 200,000 people attend the race weekend (and that a three day pass holder equals three visits in total). If we then said that the circuit is able to raise $1 million from the concession rentals, the overall sum is ($25,000,000 – $1,000,000)/200,000 which is $120 per visitor per day to cover Bernie’s charge alone.
    I must have the arithmetic wrong somewhere.
    How much does it cost to attend a NASCAR race?
    And does NASCAR get paid by the circuit or do they pay the circuit?

    • Keith Collantine (@keithcollantine) said on 3rd June 2010, 13:49

      Don’t the France family which own NASCAR also own many of the tracks?

    • SeminoleAJ said on 3rd June 2010, 14:24

      Yes, the France family (International Speedway Corporation) does on a few circuits (13) but eight belong to Speedway Motorsport Group. As far as I know, there is SOME form of rights fee system, but its not public knowledge like in F1.

      I go to one of the races a year and a ticket for just Sunday is US$ 90 so it’s not cheap. For the most part, the local and state governments don’t help build the tracks, they just help with logistics of getting people in and out and regulate the after-market ticket sales.

      NASCAR does race on two road circuits a season and I could see a third being added for Texas. Right now road racing is at Sears Point (Calif.) and Watkins Glen (NY).

  10. Magnificent Geoffrey said on 3rd June 2010, 13:46

    I, for one, am looking forward to the inevitable time when Bernie Ecclestone arrives in Austin and is ambushed by Glenn Beck and a group of angry Tea-Partiers who will all complain about having to pay for a bunch of Europeans and their socialist liberal elitist sport to visit their country.

    • SeminoleAJ said on 3rd June 2010, 15:11

      According to the interpretation of my political beliefs (the less government is involved the better) I’d agree. However, my love for F1 outweighs those criticisms. Plus, since I don’t live in Texas…I don’t have a dog in that fight.

      Additionally, a lot of the tea party people won’t have as much of a problem because it’s the local governments rather than the “imperial federal government” running the show on this one.

      • Rob R. said on 3rd June 2010, 15:25

        Yes you’re right on that second point. I’d concur with you on the first point if I was an American!

        Also, I think Glenn Beck would love to live in a country where $25 million of “waste” is enough to raise an eyebrow. It’s the price of a hot dog compared to the national US debt!

  11. Stephen_P83 said on 3rd June 2010, 16:27

    I live in Austin and I’ll gladly donate my tax dollars to have a Grand Prix in my back yard for the next ten years. It’s not like I’m paying anything extra for this anyway. Texas doesn’t have a state income tax. The sales tax for purchases in the state is 8.5%, so that is where the money is coming from. If the state had an income tax and decided to raise it slightly or something like that, maybe I’d be a little upset. As it stands though, I’m one pretty excited guy to have a race coming here. I can’t wait to see the construction and start posting some pictures of the progress!

  12. Bartholomew said on 3rd June 2010, 17:20

    Bernie will cost more money to the American taxpayer than General Motors.

  13. f1yankee said on 3rd June 2010, 18:09

    here is a $60 million high school stadium:
    http://highschool.rivals.com/content.asp?CID=1074494

    by the way, in texas schools, the teaching of evolution is discouraged.

    • Bartholomew said on 4th June 2010, 1:10

      They haven´t seen evolution in Texas until they see Bernie, Uncle Max, Flava and Lou all together doing buziness

  14. Joey-Poey said on 3rd June 2010, 18:25

    It continues to baffle me how they worry about rising costs, then charge this amount just to host the race. Hypocrisy much?

  15. wasiF1 said on 4th June 2010, 9:02

    It’s a shame that he charges so much money for hosting a GP, this is one of the reason why we don’t see spectators in many races as the ticket prices are very high. But the good thing is that the government is helping this out which can boost F1 popularity in USA as there are some F1 fans there.

    Another thing what does Bernie do with this money??

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