That is simply not the reality. One of the biggest publicly subsidized F1 races is Australia. They have been a precedent for other democratic countries. The main argument pro public subsidies in the past was the economic benefit brought to the city of Melbourne and the state of Victoria. In the early years of the subsidy that was a valid argument IMO. But the Australian GP's deficit has grown in an uncontrolled way. This happened partly due to the lack of a dedicated facility which necessitates expensive annual rebuilds of the track, the grandstands and the safety fencing. The other reason is the annual increase rate of the race fee which is driven by the monopoly structure of F1. I mention Australia to show what I think is appropriate and what is not.xpensive wrote:To my humble mind, any event, be that F1 or NBA, should pay their own bils.
I think that a deal like the METF is properly justified by the economic stimulation it provides. Why should economic stimulation not be applied to the entertainment business but always to high tech and other businesses? If the amount of seed money generates a sustainable growth with jobs and secondary stimulation of other businesses why not? Particularly if you are not actually spending any money because the scheme is self financing, as in Austin.
The tax payer in Texas will not loose any money whichever way it goes. If the race gets established it will generate some business which will be taxed. Only those taxes which will be generated by the race itself are promised to be paid back to the promoters. I think that is a fair deal. The promoters have all the risk. If the economic impact is only $180m CotA will get only $11.7m after the race is run and the taxes of $11.7m are in the bank.
It is a sensible mechanism which generates no risk at all to the Texas tax payers, which is the opposite situation as faced by the Australian tax payers of Victoria. The Victorians keep paying for an uncontrolled deficit and not for the economic benefit of the race. The Texans will know exactly how long CotA will receive the taxes that are collected from the business they create. It is a contractually agreed period which is probably for five or seven years. Details are not published yet. The Victorians can expect the deficit to grow year by year and there is no end in sight. When the first F1 contract runs out - probably in 2017 - Austin will have a first class facility with an on going economic impact. The impact will continue even if they stop holding an F1 GP there. By then the economic impact of the F1 race may go back to zero but the facility will still be generating economic impact of perhaps $200m a year with other races, cultural and corporate events. Those estimated additional $13m taxes per annum will be sustainable and are the reward for the state of Texas for running the METF scheme.
I hope that we are much clearer now what is a proper and beneficial economic incentive and what is unwise and potentially corrupt deficit financing by public money. The former is entirely correct IMO. The later obviously should be avoided. For me the F1 race in Austin will be paying it's own bill.
