COTA Austin - construction and infrastructure

[hairy_scotsman]

He signed over 3/4 of his baby to these guys in return for them doing something they ended up not doing...and somehow he's the bad guy?

I think they are doing enough and have done enough.

One needs to understand that raising money for a venture such as F1 is not easy. You must have visited a site like Statesmen blog to understand the negativity that F1 is bringing. This is the same sceptism investors have about F1. Red himself has said that the track is not going to make tat much money and it is more about owning something unique.

With this background, the last thing I would want from a guy sitting on his butt (coz he got the contract for the main show and holing the cards) is to be asking me on an daily basis "show me the money". I will be cheesed if someone does that to me, and if he starts to talk some contract to me, I will be all the more cheesed. Tevo should have been the company player and supported the compay tooth and nail rather and crying to bernie that he got screwed. He got screwed for a reason, and the the reason, being out of place.

So on the one hand you say Tavo has no leg to stand on because he didn't live up to the rights contract because he didn't get the sanctioning fee paid by the investors on time, and that was his responsibility (even though the investors later admitted they had the money to pay Ecclestone on time)...and then on the other hand you say it's ok, because fundraising is hard, that the investors failed to meet and ignored outright many deadlines and clauses in the contract that they themselves agreed to?

That's what Epstein is known for. Fundraising. That and making the money grow. Supposed to be some kind of guru. He gets a pass because F1 is somehow hard to raise money for?

From what I can tell, Tavo didn't start asking where the money was until the lack of money was endangering the project. What's unreasonable about that?

...and if they had the money like they claimed they did, then why did they withhold payment? How can that be pinned on Hellmund?

I have a feeling these guys weren't Hellmund's first choice as investors at all, but circumstances forced him to settle for them.

Serious question: Have you read the petition?

ETA: I know all about the naysayers on the Statesman comments sections. They are a very vocal, very small minority who often use multiple handles to make their numbers appear greater than they are. I know because I've been on there setting the record straight in opposition to them since day 1 of this thing. They practically live at City Hall and oppose everything under the sun...all 10 of them. When we were down there with COTA speaking in favor of the endorsement, we called them CAVE...Citizens Against Virtually Everything. We outnumbered them 3-1 when we didn't try at all, and 15-1 when we made even the slightest effort.

Also, if you knew anything about Hellmund at all, you'd know he isn't the lazy, sit-around type. Far from it. The guy is as high-energy as they come,and he has supported the company tooth and nail, even after he was set aside and stopped getting paychecks and was stiffed at two buyout closings.

[WhiteBlue]

I think Hellmund was just very unlucky that his search for the right piece of real estate brought him across the path of Epstein, who had a failed housing project and needed a way out of the mess of nearly worthless assets. The F1 project provided that opportunity to him.

Hellmund assumed that he was dealing with an honest man. I think that he was grossly mistaken. Both men likely realized that their collective assets would leverage each other.

The F1 project needed only 30% of the land that was available but it would multiply the valuation of the residual 70% which would now be sold or leased to industrial purposes and not to a stone cold housing market. This would be the leverage for Epstein to raise debt.

Hellmund had this incredible scheme which would give him $250m METF money if he found an investor who would finance the track and facilities.

So both had leveraging schemes but crucially Epstein also had real securities that could be used for debt generation because he already controlled the rights of the other Wandering Creek investors.

When they set down to write a company contract Hellmund probably assumed that each of the two guys would look after their own specialized business opportunities. Hellmund the racing business and Epstein the non racing activities which would use the 70% of the land not dedicated to F1.

As it turns out that wasn't Epstein's intention at all. His actions show that he simply wanted to get control of Hellmunds assets to use the leveraging effect just for himself. The way he did it is well documented and needs no more comments.

If Hellmund ever made a mistake in this sorry episode it was the decision to do business with Epstein at all. I do not see a way out of the mess that would have prevented this to end in legal action.

Sad story. I think that Hellmund deserved better and I hope the legal action will at least award him damages to compensate him for the work he did for Austin and the F1 fans.

In the meantime it looks like he found other opportunities for his talent. There is speculation that he could be working for Ecclestone in the future.

[FW17]

He signed over 3/4 of his baby to these guys in return for them doing something they ended up not doing...and somehow he's the bad guy?

I think they are doing enough and have done enough.

One needs to understand that raising money for a venture such as F1 is not easy. You must have visited a site like Statesmen blog to understand the negativity that F1 is bringing. This is the same sceptism investors have about F1. Red himself has said that the track is not going to make tat much money and it is more about owning something unique.

With this background, the last thing I would want from a guy sitting on his butt (coz he got the contract for the main show and holing the cards) is to be asking me on an daily basis "show me the money". I will be cheesed if someone does that to me, and if he starts to talk some contract to me, I will be all the more cheesed. Tevo should have been the company player and supported the compay tooth and nail rather and crying to bernie that he got screwed. He got screwed for a reason, and the the reason, being out of place.

So on the one hand you say Tavo has no leg to stand on because he didn't live up to the rights contract because he didn't get the sanctioning fee paid by the investors on time, and that was his responsibility (even though the investors later admitted they had the money to pay Ecclestone on time)...and then on the other hand you say it's ok, because fundraising is hard, that the investors failed to meet and ignored outright many deadlines and clauses in the contract that they themselves agreed to?

That's what Epstein is known for. Fundraising. That and making the money grow. Supposed to be some kind of guru. He gets a pass because F1 is somehow hard to raise money for?

From what I can tell, Tavo didn't start asking where the money was until the lack of money was endangering the project. What's unreasonable about that?

...and if they had the money like they claimed they did, then why did they withhold payment? How can that be pinned on Hellmund?

I have a feeling these guys weren't Hellmund's first choice as investors at all, but circumstances forced him to settle for them.

Serious question: Have you read the petition?

ETA: I know all about the naysayers on the Statesman comments sections. They are a very vocal, very small minority who often use multiple handles to make their numbers appear greater than they are. I know because I've been on there setting the record straight in opposition to them since day 1 of this thing. They practically live at City Hall and oppose everything under the sun...all 10 of them. When we were down there with COTA speaking in favor of the endorsement, we called them CAVE...Citizens Against Virtually Everything. We outnumbered them 3-1 when we didn't try at all, and 15-1 when we made even the slightest effort.

Also, if you knew anything about Hellmund at all, you'd know he isn't the lazy, sit-around type. Far from it. The guy is as high-energy as they come,and he has supported the company tooth and nail, even after he was set aside and stopped getting paychecks and was stiffed at two buyout closings.

HS

I have read the petition, the whole version.

Was wondering why the terms where framed "not to use F1 contract for leverage", what was TH trying to protect.

Formed a wrong partnership? TH and BE must have worked together for some time before the company was formed, as the track was done on that piece of land that BE owned.

TH was totally dependent on BE for the money to safe guard his interest, else he would have paid $4 million after austin city council approved it.

Was the $4 million expenditure envisaged? no, so why should COTA pay?

How did a $23 million contract become $29 milion pay from the state? METF was to pay for the F1 contact and not for security services, event charges that cost the city.

I am not saying Booby is good, tevo is bad etc. All i am saying is let us wait for the other side of the story to come out, rather than the one sided arguement that the guy who thought of F1 is good, the guy who build the track is bad.

[Hail22]

The key issue is, will this stop the project due to the fear of subcontractors being paid due a possibility of an excuse saying that funding will be cut short due to legal costs etc?

Will be interesting to read as I'm sure members of the CVC will be eagerly watching this whole matter to see if the Grand Prix/circuit will be affected by this...

[Pup]

It just seems to me that had Tavo assigned the rights when they asked, then they would have gotten the funding earlier, gotten the events money from the state*, paid off Bernie, and Tavo would be getting his half-million per year salary plus 25% of the profits of the operation.

Judging from the tone of the petition, Tavo saw himself as the project's nanny - the company narc - and no one likes that guy. Look, there's a general rule about business/life that says that whenever there are three people in a room, there's politics involved. And when you're dealing with two guys as powerful as those, you just don't want to be the one guy in the room that nobody likes.

I'm not saying that Tavo wasn't in the right, just that it looks to me like he was playing a losing hand and that his attorney should have advised him better. Rightly or wrongly, imo, holding the F1 rights hostage was his undoing.

And maybe at the end he did get screwed. Maybe they looked at the situation and suddenly realized that the better move was to let Tavo's contract expire and negotiate a new one. Maybe they figured that even if the GP cost them more, they'd be Better off paying Bernie than Tavo. And maybe they did - you have to wonder why Bernie would go along with it if he was aware of what they were doing, and I'd sure bet he was.

And I'd still like to know who was behind Tavo's offer to buy out CoTA. I still think Bernie is the most likely suspect.

But hey, we've only heard one side, and only part of it at that, so if I'm proven wrong, I'll be happy to admit it. But since his strategy ended him up with nothing but the promise of a law suit, it's hard to argue that he'd have been worse off had he just played ball.


*Maybe - I'm still not sure that Combs knew what she was doing. It sounds to me like she legally had no right to promise they could get the money prior to the event.

[Pup]

As for the 25% ownership being paltry - no, that's pretty much standard, if not a sweet deal.

To cite a current example, Zuckerberg only owns 28% of Facebook and people have called him a master of negotiation for being able to retain that much power. You might not like it, but in this world, capital is king. And you might also note that it's venture capital that runs F1, and a substantial number of it's teams.

[xpensive]

Can someone enlighten me as to what Tavo Hellmunds contribution was (apart from having the idea of building a Formula One track in Austin and a dad who did business with MrE in the 80s), which awarded him with 25% of the business?

[Pup]

Well, Tavo knew Bernie, but I think his main contribution was in getting the events money from the state, as that was the key to getting Bernie on board. Bernie likes government money.

Of course the flip side of that is that the money wasn't real.

But if you read the petition, he cites remarkable things like hiring Tilke to design the track as part of his 'contributions'.

[xpensive]

Finding the phone number to Tilke must have been a challenge of course, but he also claims to have been working on this race for no less than 20 years, doing what xactly?

[Pup]

Posting on forums about how cool a USGP would be, of course.

I do think he put some work into lobbying to get F1 included on the list of acceptable uses for the events fund money. I don't know what was involved, but it at least had to have taken a few trips downtown.

[hairy_scotsman]

As for the 25% ownership being paltry - no, that's pretty much standard, if not a sweet deal.

To cite a current example, Zuckerberg only owns 28% of Facebook and people have called him a master of negotiation for being able to retain that much power. You might not like it, but in this world, capital is king. And you might also note that it's venture capital that runs F1, and a substantial number of it's teams.

So then it's fairly "standard" as you say. That's my point. I make no claim that 25% is a bad deal for Hellmund. Some are some making claims like Hellmund was "getting all the upside". How is that? Apparently Epstein & McCombs had no problem with Hellmund having 25% either, and they agreed to it in writing. Now they won't honor it.

You can say Hellmund isn't playing with his own money, but then, from what I hear neither are Epstein & McCombs, relying instead on raising money from outside investors.

So, if everyone is raising money, who among the 3 raised to most?

Hellmund did.

[hairy_scotsman]

Finding the phone number to Tilke must have been a challenge of course, but he also claims to have been working on this race for no less than 20 years, doing what xactly?

That's not the claim. He's been actively working on it for 7-8 years.

[hairy_scotsman]

Well, Tavo knew Bernie, but I think his main contribution was in getting the events money from the state, as that was the key to getting Bernie on board. Bernie likes government money.

Of course the flip side of that is that the money wasn't real.

But if you read the petition, he cites remarkable things like hiring Tilke to design the track as part of his 'contributions'.

How's that?

COTA is still in in line to get the same METF funding that F1 would not be eligible for were it not for Hellmund's efforts. They just screwed themselves out of the advance payment. That doesn't change the fact that Hellmund brought $25M x 10 years + the F1 race rights guaranteed for 10 years + MotoGP for 10 years + Supercars for 5 years.

Nobody else has ever put F1 & MotoGP on the same track in the same year. That was going to happen in 2013, because of Hellmund.

[FW17]

Nobody else has ever put F1 & MotoGP on the same track in the same year. That was going to happen in 2013, because of Hellmund.

Silverstone did, and why do you think it is a towering achievement?

So, if everyone is raising money, who among the 3 raised to most?

Hellmund did.

What?

[hairy_scotsman]

Oh, and speaking of the MotoGP rights, this article confirms what I thought. COTA has not secured the MotoGP race rights. I hope they do so soon!

http://www.sportrider.com/news/146_1203 ... index.html

Tavo Hellmund, the racing promoter credited with envisioning and then creating the framework for the Austin F1 race through his contacts within the racing industry—including F1 supremo Bernie Ecclestone—has filed suit against his former financial partners in the Austin venture...

...his longstanding motorsports contacts that enabled him to land a contract for a Formula One race in the Austin area (in addition to MotoGP and Australian V8 Supercars races in 2013), was pulled out from under him via “an improper and unlawful takeover” by McCombs/Epstein “withholding…promised funding.” The suit states that Hellmund offered McCombs and Epstein 75 percent of the venture in exchange for financial backing, but when they failed to pay Ecclestone the required $23 million fee for the original F1 race contract in September of last year, that contract Hellmund negotiated was cancelled (this theoretically put McCombs and Epstein in the driver’s seat for a new contract that wouldn’t include Hellmund…but it ended up resulting in a protracted stalemate with Ecclestone, who is a longtime friend of Hellmund’s, that was only saved at the last second).

...the significance of this brouhaha in Texas is that Hellmund still holds the MotoGP contract that was announced with much fanfare back in April 2011. Thus with this latest move, unless he signs it over to COTA or someone else in much more favor with current COTA management, the chances of the 2013 debut of MotoGP in Austin are pretty darn slim.