The future of the United States Grand Prix is under threat after the Texas state government elected to slash the funding it provides to the Circuit of the Americas.
The Austin circuit was purposebuilt for the return of Formula 1 to the United States in 2012, with guarantees it would be paid an annual government subsidy to reflect the income that the event generated for the region. Originally, it had a guaranteed $250 million funding commitment from the state government for its first 10 years of operation, which effectively served to cover the sanctioning fee paid to Formula One Management.
Having had three years with payments of $25 million per turn, this year’s event will only be funded to the tune of $19.5 million. This bad news comes on top of the major losses caused by bad weather at this year’s Grand Prix, which contributed to dramatically reduced concession and merchandise sales.
This year’s event “lost millions”, according to quotes attributed to COTA Chairman Bobby Epstein. “[It was] a financially devastating weekend for the company.”
The original funding model was one developed under the former state government led by previous state governor (and short-lived Republican Party presidential candidate) Rick Perry, with administration provided by the office of Comptroller Susan Combs. Both worked closely with Bernie Ecclestone and the event’s founder, Tavo Hellmund, when the circuit was first being developed.
At the beginning of September, however, the Comptroller responsibilities were transferred to the new government led by Greg Abbott (who was sworn in some nine months earlier). An audit conducted by Texas State Auditor John Keel determined that a different calculation formula was more appropriate, determining that the event was actually worth 20% less to the state than had originally been calculated.
This is a major blow for the venue, which will now have to seek additional income streams to offset the loss in its subsidy income.
The funding news came shortly after confirmation that the COTA board took the rather unexpected step of sacking its CEO, Jason Dial, who has been in the role for just two years.
“After careful consideration, the Circuit of the Americas (COTA) board of directors has decided to part ways with CEO Jason Dial,” the board confirmed via a statement.
“We appreciate Jason’s hard work in his two years at COTA, but it’s time to move in a different direction.”
Image via Red Bull Racing