Texas Billionaires Wrangle Over Austin Formula One Race
Austin, Texas, is less than six months from hosting a Formula One race after a fight between investors including billionaire Red McCombs and Tavo Hellmund, a promoter and former driver, almost stopped the first U.S. Grand Prix in five years.
The dispute over the $300 million project in the Texas capital, which is known for high-tech companies and live music, as well as wet weather from December to March delayed builders at least three weeks. That left construction crews working extra shifts to ready the venue, with capacity for 120,000 fans, in time for the Nov. 18 start.
“We definitely took it right to the edge,” said Robert Epstein, 47, chairman of Circuit of the Americas LLC, the Austin partnership building the track for the world’s richest motorsport. “We’re past what I hope is the hard part.’ ’
Six hundred workers are hurrying to meet a mid-August track-inspection deadline and to erect stands and other buildings for what supporters say will be a “fabulous” event. Promoters say it will pump $297 million into the local economy.
Work stopped in November as circuit partners including McCombs, the 84-year-old co-founder of Clear Channel Communications Inc. from San Antonio, wrangled over the race contract with Bernie Ecclestone, the sport’s billionaire chief executive officer.
Hellmund had won the deal in 2010 from Ecclestone, a longtime family friend. Epstein, McCombs and other investors joined Hellmund to build the track and promote the race he had been working on for years.
“It’s my baby,” Hellmund, 46, said in an interview. “Every single thing that’s in place -- the content, the design, the name of the track -- I did years ago.”
The partnership broke apart last year.
By August, “It was clear that one of us had to go,” Hellmund said.
A settlement agreement to buy out Hellmund was scuttled last year. In March, Hellmund sued the other partners, contending in legal documents that they “executed an improper and unlawful takeover of the very project he conceived and very well may have it careening toward a wall.”
The track partners countered that Hellmund didn’t cooperate to help complete development funding, according to documents filed in state court in Austin.
Epstein said he met Hellmund about three years earlier, when the promoter was courting investors.
“There were a lot of people who had been pitched,” Epstein said during an interview in the Austin office of Prophet Capital Management Ltd., a mortgage-bond fund he runs. “I was the only one who embraced the idea.”
McCombs signed on in 2010. A former owner of professional sports teams such as the National Basketball Association’s San Antonio Spurs, his assets include auto dealerships and real estate.
“I spent a lot of time looking at the numbers to prove out that people with a reasonable amount of disposable income would come to Austin” for a Grand Prix, Epstein said.
Even if the dispute remains unresolved, promoters say the million-dollar race cars will roar off the starting line on schedule at the site 14 miles (23 kilometers) southeast of downtown Austin. Asphalt is being spread on the 20-turn, 3.4- mile track and tickets go on sale June 10, with three-day passes for as much as from $499 for unreserved grandstand seats.
Pleased With Progress
Ecclestone is “happy” with progress there, he said by telephone.
The race is projected to draw 120,000 fans, with fewer coming to watch practice runs. Promoters expect some attendees to arrive from Latin America. Sergio Perez, a Mexican driver for Sauber, said last year that group may include many of his fans.
Declining attendance marked the end of U.S. Formula One races at the Indianapolis Motor Speedway in 2007. The last time the circuit came to Texas, in 1984, a street course in Dallas broke up as air temperatures rose above 100 degrees Fahrenheit (38 degrees Celsius).
The Austin track developers say it is the first in the U.S. built for Formula One, with asphalt custom-mixed for the local climate and spread above 9 feet of gravel and fill required to provide a stable course for cars that reach speeds of as much as 220 miles an hour.
The circuit generates $4.4 billion in annual revenue worldwide, including media rights, sponsorships and spending by team owners, according to Caroline Reid, co-author of Formula Money, an annual report on the business of the sport. The report projects revenue to top $2 billion this year for Ecclestone’s company, which plans an initial public offering of shares. The 2011 season’s 20 races attracted 3.4 million spectators and 515 million television viewers, she said by e-mail.
Fans who pay as much as $5,000 for personal-seat licenses, which give them rights to tickets that also have to be purchased, can lay claim to finish-line viewing spots at the Austin track. Twenty-two 40-foot video screens will line the course.
Austin hoteliers and real-estate rental agencies are already fielding inquiries about accommodations for the November weekend, according to company representatives. Most of the downtown Four Seasons Hotel’s 291 rooms are taken, at $699 to $5,000 a night, and agents are working through a waiting list, said Kerri Holden, a spokeswoman.
Cousins Andy and Anne Fish are organizing race-weekend events that include a private shopping session at Austin’s Neiman Marcus store for 20 people, at $325 each. The store will close early to accommodate the spree. The Fish cousins also plan a concert starring Willie Nelson, for $190 to $275 a seat, and an excursion to a ranch to learn barrel-racing and steer-roping, for a $675 a person.
“There’s going to be a race,” said Andy Fish, a car collector, Formula One fan and president of a legislative services company. “It’s going to be fabulous.”
To contact the reporter on this story: Kathy Warbelow in Austin at email@example.com
To contact the editor responsible for this story: Stephen Merelman at firstname.lastname@example.org
Bloomberg moderates all comments. Comments that are abusive or off-topic will not be posted to the site. Excessively long comments may be moderated as well. Bloomberg cannot facilitate requests to remove comments or explain individual moderation decisions.