Circuit of the Americas Development Updates

[Jdawgboy]

I'm guessing that they must be working on facilities for the X Games.

[turn1]

Cool pic. Thanks! I had heard a lot of X Games work was going on in the Arena/Grand Plaza area, but you can't see any in that photo.

[turn1]

Also, it's funny that COTA used the former X Games date to beg out of the V8 Supercars weekend when it's doubtful they ever really had any intention of holding it during that date at all. Seems like they don;t really want V8SC...or more precisely, seems like they don't want anything other than F1 & MotoGP. Sucks for all those PSL-holders.

[lzppjb]

Originally Posted by turn1

Also, it's funny that COTA used the former X Games date to beg out of the V8 Supercars weekend when it's doubtful they ever really had any intention of holding it during that date at all. Seems like they don;t really want V8SC...or more precisely, seems like they don't want anything other than F1 & MotoGP. Sucks for all those PSL-holders.

That pisses me off. We should have MORE races, not fewer. Even if it's a small turnout, it makes more money than sitting there empty.

[hookem]

Originally Posted by lzppjb

That pisses me off. We should have MORE races, not fewer. Even if it's a small turnout, it makes more money than sitting there empty.

I'm not sure about that. It loses less money if it is sitting empty vs. fully staffed and paying the fees & promotion for a big-time race but with a miniscule paying audience.

It's a chicken-egg thing though. Money has to be spent to generate an audience before money can be made from them.

I think this might be a result of COTA adopting the model of eliminating the promoter in racing events. As a result, they (or the racing series) are on the hook for promotion and profitability of the event -- something that is outside of their area of expertise, and shouldn't be in their job description anyway. Whereas with the promoter model, COTA would just get a cut of ticket sales and concessions -- like they do with concerts -- and let the experts fill the seats and make sure the event will be a success.

I'm guessing they are realizing that error by now. However, I'm not sure you'd find a racing promoter willing to take on the task of introducing V8 Supercars to the USA, or even take on something like the WEC event. But it's possible a savvy and well connected racing promoter would be able to couple these events with something that already has an audience and produce an event that would fill the seats... But COTA can't do it on their own.

Now NASCAR or Indy, they could probably work with COTA's existing cut-out-the middleman model. But that's about it as far as racing goes.

[turn1]

Originally Posted by hookem

I'm not sure about that. It loses less money if it is sitting empty vs. fully staffed and paying the fees & promotion for a big-time race but with a miniscule paying audience.

It's a chicken-egg thing though. Money has to be spent to generate an audience before money can be made from them.

I think this might be a result of COTA adopting the model of eliminating the promoter in racing events. As a result, they (or the racing series) are on the hook for promotion and profitability of the event -- something that is outside of their area of expertise, and shouldn't be in their job description anyway. Whereas with the promoter model, COTA would just get a cut of ticket sales and concessions -- like they do with concerts -- and let the experts fill the seats and make sure the event will be a success.

So they shouldn't have cut out Hellmund & Schwantz? Yeah, I'd have to agree with that.

I'm guessing they are realizing that error by now. However, I'm not sure you'd find a racing promoter willing to take on the task of introducing V8 Supercars to the USA, or even take on something like the WEC event. But it's possible a savvy and well connected racing promoter would be able to couple these events with something that already has an audience and produce an event that would fill the seats... But COTA can't do it on their own.

Well, they surely haven't been very good at promotion thus far, but they don't really seem to care to promote anyway. They had an experienced race promoter in the original partnership group, the very guy who did bring V8SC & F1 to COTA & the U.S. , but they chose to force him out. Now it seems like they have no interest in V8SC either (&maybe WEC/TUSC)...likely because they need to actually promote to make any money. Here's the thing though. Reading the signs and listening to what people are saying, they may just be out of money.

Now NASCAR or Indy, they could probably work with COTA's existing cut-out-the middleman model. But that's about it as far as racing goes.

So now after all those, um, optimistic promises to potential PSL buyers, they're down to 3 real race weekends this year, and that's IF the WEC/TUSC event happens. It doesn't seem at all set in stone. It sucks for all the PSL-holders taking it in the shorts. Can't say I'm surprised though.

[hookem]

Originally Posted by turn1

So they shouldn't have cut out Hellmund & Schwantz? Yeah, I'd have to agree with that.

Right, I would agree with that. Although F1 and MotoGP are about the only two series where they could have actually cut out the promoter and not suffered that much. I wonder how different the V8 Supercars debut would have been if it had been Tavo promoting it, although I thought that was a COTA-State of Texas-V8Supercars deal from the start (in retrospect, a bad idea).

Reading the signs and listening to what people are saying, they may just be out of money.

Well, they've got RedFest, X Games, and MotoGP coming up in pretty quick succession to try to make some money. Plus the concert lineups. I guess we'll find out soon enough if they can earn any money on them, or if they are too tapped to even manage those.

So now after all those, um, optimistic promises to potential PSL buyers, they're down to 3 real race weekends this year, and that's IF the WEC/TUSC event happens. It doesn't seem at all set in stone. It sucks for all the PSL-holders taking it in the shorts. Can't say I'm surprised though.

Yup.

[turn1]

Originally Posted by hookem

F1 and MotoGP are about the only two series where they could have actually cut out the promoter and not suffered that much. I wonder how different the V8 Supercars debut would have been if it had been Tavo promoting it, although I thought that was a COTA-State of Texas-V8Supercars deal from the start (in retrospect, a bad idea).

Hellmund brought V8SC. If you remember back to the announcement, it was Cochrane and Hellmund on stage with Perry & Combs, and Cochrane gushing to Speed saying the main reason he brought V8SC to Austin was Hellmund's enthusiasm, etc. Yep, V8SC could have used Hellmund's promotion, or any local promotion at all for that matter.

I would disagree that F1 & MotoGP didn't miss Hellmund & Schwantz though. Their (rather dubious , imho) numbers were actually fairly lackluster considering pent-up demand for F1 and comparing them to past U.S. MotoGP & F1 events. And imagine the difference that could have been made to the Moto crowd had Schwantz been the face of it with Hellmund running the promotion...rather than fans & marshals boycotting the race due to Schwantz being banned from the first running of the GP he brought to his home.

Well, they've got RedFest, X Games, and MotoGP coming up in pretty quick succession to try to make some money. Plus the concert lineups. I guess we'll find out soon enough if they can earn any money on them, or if they are too tapped to even manage those.

Yeah, and they'll tap the METF again and again for those events. The thing is, though, that (we've been told) they used X Games ESPN money to get through the USGP, and now they seem to be using USGP money to get through the X Games. They still have to pay MotoGP and F1 for this year's sanctioning fees, and they've been cutting and cutting and cutting resources, maintenance, and personnel at the track...down to two employees on site at last notice.

[hookem]

Originally Posted by turn1

Yeah, and they'll tap the METF again and again for those events. The thing is, though, that (we've been told) they used X Games ESPN money to get through the USGP, and now they seem to be using USGP money to get through the X Games. They still have to pay MotoGP and F1 for this year's sanctioning fees, and they've been cutting and cutting and cutting resources, maintenance, and personnel at the track...down to two employees on site at last notice.

What is this "X Games money"? If there is a sanctioning fee, isn't it usually paid to the entity providing the content? Why would ESPN be paying COTA any money in advance? If anything, it would be the other way around. Now, I do recall some (relatively) small amount that the city or state paid to COTA for their X-Games bid. I think it was between $100K-200K. But that wouldn't even be a drop in the bucket to cover anything related to the USGP.

As for the other stuff, if they are using USGP money to get through to the X Games, that would actually sound like a healthy business model. Using revenue from previous events to pay for the next one.

What would be an unhealthy model would be if they ran the past 3 events prior to the USGP on credit -- either by borrowing money, or by deferring payments -- then used the USGP money to pay off those past debts, leaving nothing for the upcoming ones. Perhaps that is what you meant, and I'd suspect it's closer to what is actually going on.

[turn1]

Originally Posted by hookem

What is this "X Games money"? If there is a sanctioning fee, isn't it usually paid to the entity providing the content? Why would ESPN be paying COTA any money in advance? If anything, it would be the other way around.

We were told it was for construction, promotion, securing the site/date for the event, etc. Though it's doubtful they ever really intended to use that old date but instead were just looking for a way out of their contract with V8 Supercars, so they created a "conflict". Then later we were told that ESPN execs came to COTA a month or so after the USGP and were not happy that COTA was "way behind" on construction...and it looks like they've still done nothing of significance.

As for the other stuff, if they are using USGP money to get through to the X Games, that would actually sound like a healthy business model. Using revenue from previous events to pay for the next one.

If you're talking about a venue that's making a lot of money and is not in debt up to its eyeballs, then maybe so. But this is akin to robbing Peter to pay Paul. What it boils down to is that they're behind. If they had to use the XG money to put on the USGP show, then they had little/no money to begin with. Then that leaves them using F1 METF money to put on XG and MotoGP before even paying the 2014 MotoGP & F1 sanctioning fees, which are huge. All of this and we're still not talking about even paying the interest on 9-figures of high-interest debt principal...or paying vendors (practically everything is outsourced there, you know), taxes, etc. And on top of all this we've heard that the place will be up for sale within a year, which fits with everything they've been doing all along.

It's like a delivery driver using advances from his boss to pay the car payment on the delivery vehicle, a month late. Now he owes the boss, has another payment coming up in a few days, and is making plans to sell the car because it costs too much. He's upside-down on it to begin with. Not a perfect analogy, but you get the idea. Everything we hear they're doing sounds like cost-cutting and moving money around just desperately trying to stay afloat. Most of us have done things like this in our personal financial lives at some point or another. It's never a good idea and it usually means you're having a very tough time making ends meet, or you're not quite making them meet.

[East7thStreet]

Originally Posted by turn1

We were told it was for construction, promotion, securing the site/date for the event, etc. Though it's doubtful they ever really intended to use that old date but instead were just looking for a way out of their contract with V8 Supercars, so they created a "conflict". Then later we were told that ESPN execs came to COTA a month or so after the USGP and were not happy that COTA was "way behind" on construction...and it looks like they've still done nothing of significance.





If you're talking about a venue that's making a lot of money and is not in debt up to its eyeballs, then maybe so. But this is akin to robbing Peter to pay Paul. What it boils down to is that they're behind. If they used the XG money to put on the USGP show, then they had little/no money to begin with. Then that leaves them using F1 METF money to put on XG and MotoGP before even paying those sanctioning fees, which are huge. All of this and we're still not talking about making the huge debt payments or even paying the interest on 9-figures of high-interest debt principal...or paying vendors (practically everything is outsourced there, you know), etc. And on top of all this we've heard that the place will be up for sale within a year, which fits with everything they've been doing all along.

It's like a delivery driver using advances from his boss to pay to pay the car payment on the delivery vehicle, a month late. Now he owes the boss, has another payment coming up in a few days, and is making plans to sell the car because it costs too much. Not a perfect analogy, but you get the idea. Everything we hear they're doing sounds like cost-cutting and moving money around just desperately trying to stay afloat.

Is there any actual proof or evidence of this? Or is this just a "theory"?

[turn1]

Originally Posted by East7thStreet

Is there any actual proof or evidence of this? Or is this just a "theory"?

Sorry. No proof, and some of it could be wrong. Wouldn't really call it a theory so much as just observation & putting the pieces together. I don't mean to state any outcome as fact, but there are facts that enter into it, like METF figures, etc. We just see how the track has done things & we hear a lot of things from people behind the scenes that almost always come true. We put it all together and we're usually pretty close. Not claiming any kind of brilliance in figuring this stuff out though. We would love to be wrong. We're just normal guys who have followed this closely.

[turn1]

Originally Posted by turn1

Circuit of the Americas receives $29 million in state funds for Formula 1

http://www.statesman.com/news/news/l...-in-sta/nc84z/

Sorry, it's behind the Statesman's paywall, but you get the idea...

FWIW, we heard some time back that the comptroller paid COTA these funds weeks ago, shortly after the USGP. Don't know why it's just now going public.

Originally Posted by turn1

The Comptroller has approved another $1.9M subsidy for this April's MotoGP race.

http://www.statesman.com/weblogs/for...on-trust-fund/

Oh, and they're asking for $1.9M for the X Games, too.

Holy crap, I was thinking about it a bit more, and COTA has now received subsidies from the METF for 2 USGPs, 1 Moto GP race, 1 V8SC, 1 ALMS race, & 1 WEC race. They applied for & got paid for WEC & ALMS separately even though the events were held concurrently on the same racing weekend.

Vance posted this graphic yesterday of a Texas Ahead breakdown of METF and ETF funds pending or already paid to Circuit of The Americas.

[turn1]

Austin WEC race planned for 4:30-10:30PM running...with nighttime practice sessions:

http://www.statesman.com/weblogs/for...ionship-race-/

[Jdawgboy]

This is another classic but sad story of the struggle between the people who pursue their dreams and the harsh consequence when teaming up with the people that have the money to make them a reality.

These are not the same kind of people at all. It's like mixing water with oil. The investors only care about one thing and that is how they can line their pockets with more money. They don't have the same desire that the people who envision a quality product that will serve it's intended purpose to its fullest extent.

Hellmond and Swartz wanted a RACING VENUE that would host not just the world's top races, but races of all types year around. A venue that everyone can go to enjoy and experience.

The billionaire investors always have their own agenda. If they decide to invest in someone else's idea, you can bet it's not to help that person make his vision fully come to fruition. They see an opportunity for themselves and what they can gain from putting their money into the project.

The reality is if Hellmond didn't ask these guys to invest, we wouldn't even be having this conversation. So it comes down to which is the greater evil? Was it worth it in the end now that the Circuit of The Americas is built? I think so... Could the current situation with the circuit be better? Oh hell yes. Can the situation be worse off than what it is now? It certainly can.

It's sad that the Billionaires have little concern for its intended use. It's great that they want it to be a sporting venue for all types of events, even the promoters wanted that, but to build a world class racing circuit and then push it aside as if it's only a side component that gets rarely used is just plain idiotic.

[hookem]

^^ Well put, Jdawgboy.

[ILUVSAT]

Originally Posted by Jdawgboy

This is another classic but sad story of the struggle between the people who pursue their dreams and the harsh consequence when teaming up with the people that have the money to make them a reality.

If you cannot pull something off yourself, you will obviously need capital from somewhere else!

Originally Posted by Jdawgboy

...investors always have their own agenda. If they decide to invest in someone else's idea, you can bet it's not to help that person make his vision fully come to fruition. They see an opportunity for themselves and what they can gain from putting their money into the project.

Yes, that is obvious! I don't fault any capital investor in trying to make a buck! Hell, when I invest in projects I must believe that the ones behind the plan have the ability to bring to fruition the vision of said plan. This is the model in which our economy works.

Originally Posted by Jdawgboy

...It's sad that the Billionaires have little concern for its intended use. It's great that they want it to be a sporting venue for all types of events, even the promoters wanted that, but to build a world class racing circuit and then push it aside as if it's only a side component that gets rarely used is just plain idiotic.

B.S.!!! Should those who invested capital in a project see their return dwindle below an acceptable level; hell, yes, they would step in and make changes to insure their investment becomes profitable! If they make a profit, more than likely, the project is profitable. You would do the same...if you were a savvy investor!


Finally...I would be blaming the current management of COTA rather than its investors! And the clock is ticking on their time as current managers...many may end up sacked by the end of 2014.

[electricron]

I knew the moment they announced building the amphitheater area that they weren't building it exclusively for racing.
All race tracks try to book other non racing events. Racing events require sponsors to finance the purse, (or in F1 case finance the sanctioning fee).

Apparently the State of Texas has become the major sponsor for many COTA racing events. That subsidy only comes with major international events, which F1 and Moto GP qualify. Maybe V8 Supercars should as well, but I'm not so sure ALMS and WEC should? One would think 80 to 90 thousand people entering the gates on raceday should qualify an event as a major event, at least outdraw UT football on a Saturday afternoon. Never-the-less, there's little money to be made from lesser racing events without international standing because there's no State money coming to finance the purse. I'm not sure COTA could ever turn a profit without those State funds. That may be the reason COTA frowns on other amateur, enthusiasts racing dates.

They really need to get the Indy Cars and NASCAR to race at the track, both of which can attract sponsors and TV money to provide a generous purse.

[turn1]

Originally Posted by ILUVSAT

many may end up sacked by the end of 2014.

They've already lost/fired some key upper-level staff.

[Jdawgboy]

Originally Posted by ILUVSAT

If you cannot pull something off yourself, you will obviously need capital from somewhere else!



Yes, that is obvious! I don't fault any capital investor in trying to make a buck! Hell, when I invest in projects I must believe that the ones behind the plan have the ability to bring to fruition the vision of said plan. This is the model in which our economy works.



B.S.!!! Should those who invested capital in a project see their return dwindle below an acceptable level; hell, yes, they would step in and make changes to insure their investment becomes profitable! If they make a profit, more than likely, the project is profitable. You would do the same...if you were a savvy investor!


Finally...I would be blaming the current management of COTA rather than its investors! And the clock is ticking on their time as current managers...many may end up sacked by the end of 2014.

Then the lesson to the story is if you want your vision done the way you want, then make sure your rich enough to do it on your own.

That's why I said it's like mixing water and oil. I'm not stupid how the system works.

Also you can't fully blame the management, that's ridiculous. They can't even do their job without the billionaire investors telling them what they want them to do. These guys are experts at running large sporting venues but their hands are tied at COTA. Why do you think so many have left?. I say let them do the job they were hired to do and the investors keep their nose out of it.