COTA Austin - construction and infrastructure

[hairy_scotsman]

Every report on construction costs I've seen in the last several months has it at between $300-350M.

BTW, WilliamsF1...Interesting new avatar you have there. I know the guy who created it...err adapted it, from these famous Texas War flags:

[hairy_scotsman]

Getting pretty heavy on horse-racing & hockey execs. Motorsport types? Not so much.

Austin Formula One track hires former Churchill VP Sweazy:

http://www.bizjournals.com/louisville/n ... isville%29

[FW17]

You know what that looks like?

[WhiteBlue]

You know what that looks like?

I'd say like one of the items handed back to Jakes Blues when he is released from prison in the movie "Blues Brothers".

[hairy_scotsman]

Wow...

"State of the States" (and Circuit of the Americas)...Thompson Phillips pulls no punches here:

http://www.pitpass.com/45716-State-of-the-States

[WhiteBlue]

Here are some of the high points...

The big picture is that this whole project is probably in as big a trouble now as it was last fall...

Most die hard race fans and Formula 1 fans I know, the core audience who have been deprived of any real on track excitement since the death of the USGP at Indy, are probably not going to attend the inaugural USGP at Austin this year...

7 months from the race, there is zero information on tickets for Austin..

For $1000 you could have been first in line to buy a ticket for the next 15 years. Of course you still have to pay for the ticket. That would equate to paying $10 outside a nightclub to wait in line to pay a $50 cover charge to be let into a club where you would have to pay an additional $100 to see the band and buy drinks. There is no information on general admission, temporary grandstands or whether camping or RVs will be allowed...

There have also been no infrastructure improvements yet in the area between the highway and the track. Dire predictions of 10 hour traffic jams that were put forth by naysayers and antagonists of the project now look as though they may be closer to the mark than anyone is willing to admit to...

Clearly Epstein knows nothing tangible about Formula 1. His assumption that he could have dictated the terms of a Formula One contract to Ecclestone are outright laughable. That is why he needed Tavo Hellmund. Money, arrogance and ignorance are not traits best used in dealing with Bernie. Loyalty isn't a trait usually attributed to him, but Bernie played a bit of hardball with Epstein and let him know that when it comes to high finance, Epstein is small time. Bernie's wallet is lined with the cash of those who thought they'd get the best of him.

I would hate to see xpensive once again taking the 1st price for the biggest crystal ball. I have no idea why the American friends are so innovative when it comes to screwing up every opportunity of bringing F1 to their place.

[Richard]

At least this project is OK on engineering, its the politics that's messing it up.

Somebody is pouring a lot of cash into the construction but seemingly unworried by the ongoing politics.

You can imagine a near finished track, the promoter goes bust due to politics and poor sales, then a phoenix promoter emerges from the chaos to buy the bankrupt track for a song and put on the race. "Pre pack administration" springs to mind.

Who owns the land? Are the buildings & facilities owned by someone else (ie they lease the land)? Who is bank rolling the construction? Who gains if the promoter goes bust?

[xpensive]

...
I would hate to see xpensive once again taking the 1st price for the biggest crystal ball. I have no idea why the American friends are so innovative when it comes to screwing up every opportunity of bringing F1 to their place.

My bottomless modesty prevents me from making any further comments on the subject. At least for now.

[WhiteBlue]

You can imagine a near finished track, the promoter goes bust due to politics and poor sales, then a phoenix promoter emerges from the chaos to buy the bankrupt track for a song and put on the race. "Pre pack administration" springs to mind.

Who owns the land? Are the buildings & facilities owned by someone else (ie they lease the land)? Who is bank rolling the construction? Who gains if the promoter goes bust?

If you assume that COTA goes bust the land will be taken by the banks as surely the land was used to secure the debt of $90m. Anything on it will go with the land and it will be crucial how close to finish the project will be at the time, if it happens.

If construction proceeds at the current rate the circuit and the vital facilities could be 95% finished when the money runs out. In this scenario there would probably be time for someone to step in, finish the project and run the race in order to recoup some of the race fee by tickets sold.

If they go bust at 75% completion I would expect more complicated things to happen. The inspection time line may be missed and the first race as well.

In that case Bernie or one of his friends may use the opportunity to take the thing over and buy it cheap from the banks to run a race in 2013. One must not forget that Bernie is under contract with the teams to bring F1 back to the US. His New Jersey project may be in equally deep problems although we do not hear much about it.

Most marketing experts say that any second US GP will profit from increased awareness by not being the only one in the market. New Jersy and Austin could both suffer if one ends on the rocks and that could ultimately cause Bernie to wade in on it.

[Pup]

I don't know - that seems like a typical Pitpass feature to me; i.e., no more substance than a spell checked forum post.

So, he's upset about the PSLs. Well, just because you don't like an idea doesn't mean that it will fail. I've no idea if the scheme will be a huge success or a miserable failure, but what I do know is that none of the people who are commenting on it have any clue either. They've done no market research. Who's to say that CotA can't fill the available seats solely with Texans? Who's to say that they wouldn't make more money filling half the seats with PSL buyers vs all the seats with one-off ticket sales? Perhaps they're smart enough to spot the decline in ticket sales from the Indy USGP and know that they need to capitalize on initial interest.

The crux of this argument seems to be that CotA are wrong because they're doing things differently than other tracks. Well, that's not really much of an argument in my book. Sure, they could fail. Or, maybe they could succeed. Maybe hiring from the same pool of race nuts as every other track and doing everything just the way it's always done would make this track every bit as profitable as those others; i.e., not very. I think that one of the few things that most every F1 fan can agree on is that the tracks don't have an easy time making money in Bernie's world. When is the last time we saw a privately funded race even attempted?

So let's face it, regardless of what CotA does with ticket sales, they face a long, uphill march to profitability for this race. Most people assume that the race will be a loss leader for them anyway. So, they're thinking out of the box. Frankly, I applaud them for taking their own path. If they wind up face down in the mud doing so, that's their business. But I'm not betting on their failure.

[xpensive]

...
So, he's upset about the PSLs. Well, just because you don't like an idea doesn't mean that it will fail. I've no idea if the scheme will be a huge success or a miserable failure, but what I do know is that none of the people who are commenting on it have any clue either. They've done no market research. Who's to say that CotA can't fill the available seats solely with Texans? Who's to say that they wouldn't make more money filling half the seats with PSL buyers vs all the seats with one-off ticket sales? Perhaps they're smart enough to spot the decline in ticket sales from the Indy USGP and know that they need to capitalize on initial interest.
...

And who's to say there's no Santa just because nobody seen him?

[Pup]

There's no Santa?

[strad]

they face a long, uphill march to profitability for this race

That's part of the U.S.s problem with F1...It will NEVER be profitable.
Others invest government money to attract tourists to the country but in America the stakeholders want to show a profit.

[Richard]

Silverstone has no government funding, but has the advantage of decades of evolution that would cost a fortune to build from scratch.

[WhiteBlue]

Silverstone has no government funding, but has the advantage of decades of evolution that would cost a fortune to build from scratch.

Silverstone also has a bloody expensive contract with a huge rate of cost increase that may cause it to go bust any time. If the current Button/Hamilton mania breaks you will see the bad news coming from the UK.

Bernie managed to bankrupt even the richest race venues with the longest history by his extortion schemes. Nürburgring for instance was doing quite well until they felt the need to earn additional money by building a scheme park on top of the historic Nordschleife circuit and the current GP track in order to earn the money for the F1 deficit. The thing was a scam from the beginning and is a bottomless pit for tax money of the state of Rhineland-Palatinate. Only now RP got a green party government and they will cut their losses rather shutting down the GP than putting in any more money.

Hockenheimring was doing fine until Bernie forced them to invest umpties millions to shorten the previous high speed ring in order to make it more TV friendly. The state Baden-Württemberg is one of the richest in Germany, but they are running out of money to pay the interest on the construction debt and the GP fee deficit. Germany has five or six drivers in F1 but it can still not support an annual race. We are probably going to see the GP split with another country.

And all of this is only done in order to have the banks make 50% of the turnover in profit. I wish the FiA as the owner of Formula1 would do something about these exploitation and extortion policies.