COTA Austin - construction and infrastructure

[hairy_scotsman]

The law allows for advance payments at the discretion of the Comptroller.

Well, I'm going by Combs' letter itself, which states...

Let me state clearly: We have not paid out any money for the Formula 1 event. The only dollars that can be spent on the United States Grand Prix are tax revenues attributable to the successful running of a race. The state of Texas will not be paying any funds in advance of the event. Further, as is the case with all METF events, each application will be reviewed and analyzed for its likely economic impact and only after the race occurs would any funds be disbursed.

...and that's how it works, only originally she was going to pay out the advance payment of $25M based on estimated returns from the race. She has the discretion to do so. Note that later she said "Texas will not be paying any funds in advance of the event". She didn't say "does not pay" or "any event". She was just rescinding the advance payment.

By the way, that interview is very interesting, reading it now with hindsight.

She talks about the discretion allowed by the statute, and she talks about not having heard anything from Epstein for months, which goes right with what I hear from other officials who COTA should be dealing with right now but apparently are not.

[WhiteBlue]

I'm not following that. I'm sure that E&C both wrote checks at the start of the partnership. I'm guessing that Tavo's asset was the F1 rights, and if so, I don't know why he refused to turn it over. You'd think that would have been done the day the partnership was formed. The rest of the project was to be financed.

What it seems like to me is that Tavo convinced them to allow him to maintain ownership of the rights until certain conditions were met. That's all fair, smart even, but if that's true then what I don't understand is why Tavo ever considered himself a partner when it seems the marriage was never consummated. And that's why I don't think his suit has legs. I think they didn't force him out because he was never really in to begin with. His partnership and job were dependent upon assigning the rights, and it was his refusal to do so that allowed them to go around his flank. That is, it was the conditions he placed on the assignment that scuppered the deal every bit as much as it was R&C's failure to meet those conditions. Maybe I'm reading it wrong, but to me it seems like the most he'd be entitled to is liquidated damages.

The partnership according to Hellmund who had disclosed his business plan and the idea of the business required Epstein & Co to raise $190m by 31. March 2011. Only after that sum was in the bank and several other conditions were met Hellmund was supposed to enter his assets into the company.

Epstein never provided the money while Hellmund was in control of the job at COTA. Only when Hellmund agreed to be bought out - in September - did he assert that the money was available. It shows he never had any intention to fulfil his side of the bargain. All he wanted was disclosure of the business idea and then grab it for himself. It is a particularly vicious way of ripping of a start up IMO. It may be standard business practise in the USA to do so but to me it is fraud and stealing.

As I said before, Hellmund had no means of putting this right after he fell in the hands of this raider. His fault was not to investigate carefully with whom he was going into business.

[hairy_scotsman]

And where does it say that there is 250 MUSD for the taking thanks to Hellmund?

It doesn't. It's an explanation of the METF and how it works with COTA.

The info is all out there. It's well-documented:

Hellmund says he "stayed in touch with Bernie because we had known each other since I was a kid and he knew what I was doing as far as events and promotion." He adds that "we started talking hard about Austin about two weeks after they publicly announced that they weren't going back to Indianapolis." It took Hellmund three years of lobbying, not just with Ecclestone but also with officials in Texas, to seal the deal.

In 2004 the government in Texas passed a bill to make available a fund to attract major events, such as the Superbowl, World Cup and Olympics. Hellmund noticed that although it wasn't on the state's list, F1 was the only global motorsport which would fit into this category. Hellmund met with his local senator and applied for F1 to be included. He got what he wanted and, after meetings and a council vote, $25m of funding was made available every year to cover the F1 race sanction fee.

http://en.espnf1.com/f1/motorsport/story/64620.html

[munudeges]

And where does it say that there is 250 MUSD for the taking thanks to Hellmund?

There might be funding on offer, but I am struggling to understand how Hellmund was responsible for or tied to that funding.

[hairy_scotsman]

And where does it say that there is 250 MUSD for the taking thanks to Hellmund?

There might be funding on offer, but I am struggling to understand how Hellmund was responsible for or tied to that funding.

Ummm....it wasn't possible (F1 was not listed as an eligible event) until Hellmund lobbied the legislature to have F1 added to the list of eligible events.

This cannot be that difficult to comprehend.

[Pup]

I said it was obvious because you make a bunch of assumptions about the company contract which are all contrary to the facts reported in the petition. So I suggest you read the document or at least the synopsis that was provided by HS.

OK, so I read your post and don't see where you disagree with me. Tavo placed conditions on the assignment of the F1 rights and those conditions weren't met. How do our positions differ?

My question is if his partnership was contingent upon Tavo eventually assigning those rights. The petition doesn't give us an answer, but it does give us a clue in that it states that his salary didn't begin until those rights were transferred. (He phrases it as until the funding was in place, but since the rights transfer was contingent upon the funding, I think it's fair to assume that his job was contingent upon him throwing the rights into the pot.)

Now, WB, if you know of something in the petition that contradicts this, then please point it out - I may have just missed it. But do try be polite about it.

[WhiteBlue]

And where does it say that there is 250 MUSD for the taking thanks to Hellmund?

There might be funding on offer, but I am struggling to understand how Hellmund was responsible for or tied to that funding.

Again, it is all in the document for you to read. The METF scheme had never been used for international motor sport events although they would qualify under the original conditions of the scheme. There was simply nobody there who thought about making it work. In order to qualify for the scheme FOM and the fund adminitrators would have to be convinced of the opportunity that was inherent in the Austin scheme. It was Hellmund who made this work and got all sides to agree to contracts that secured a payment of $250m over the time of ten years. That was a quite unique achievement compared to other potential promoters of USGPs who failed primarily because they were never able to find such major sponsorship. I just mention the Indianapolis Motor Speedway which would almost certainly have retained the USGP after 2008 if they had had access to such a sum of money.

[Pup]

By the way, that interview is very interesting, reading it now with hindsight.

Which interview is this? I do sort of remember but not really...

[WhiteBlue]

I said it was obvious because you make a bunch of assumptions about the company contract which are all contrary to the facts reported in the petition. So I suggest you read the document or at least the synopsis that was provided by HS.

OK, so I read your post and don't see where you disagree with me. Tavo placed conditions on the assignment of the F1 rights and those conditions weren't met. How do our positions differ?

My question is if his partnership was contingent upon Tavo eventually assigning those rights. The petition doesn't give us an answer, but it does give us a clue in that it states that his salary didn't begin until those rights were transferred. (He phrases it as until the funding was in place, but since the rights transfer was contingent upon the funding, I think it's fair to assume that his job was contingent upon him throwing the rights into the pot.)

You were stipulating in your earlier post that Tavo should have signed over his assets (the F1 contracts and the connected METF agreements) in spring and you wrote that Epstein wrote a check for the money at the same time. That was all in contradiction of the reported conditions of the company contract according to the petition.

Epstein/McComb were not only to insert their securities (land) and some capital into the company which they apparently did but they were also supposed to raise money by way of debt to furnish the company with working capital for the construction of the circuit in a timely fashion. This raising of funds obviously was supposed to be done on the strength of the combined assets of the company: the business idea, the business plan, the securities, the agreed state sponsorship and the prowess of the joint owners in the business of motor racing.

While Hellmund was busy doing his part of the deal finalizing the design, the traffic and environmental schemes with the Tilke company Epstein failed to provide the borrowed money to pay for the necessary activities. Major due dates were missed because money wasn't available in time. Tilke could not be paid according to his contract and the up front cost of $4m for the METF scheme was not available endangering the agreements with the comptroller. Also FOM was not being payd as contracted and the letter of credit was not provided to FOM that had demonstrated the financial requirements to be in place. This was all Epsteins failure to execute his duties under the contract as Tavo claimed.

I have no disagreement with you. I simply ask you to inform yourself before you make a judgement on the issue as you did in your previous post.

[xpensive]

And where does it say that there is 250 MUSD for the taking thanks to Hellmund?

There might be funding on offer, but I am struggling to understand how Hellmund was responsible for or tied to that funding.

So, Hellmunds big achievement was to make METF adding "interational motorsport events" to their scheme, where the 250 MUSD is actually 25 MUSD per annum for ten years. I guess that means a billion over 40 years then, now that's some contribution!

[Pup]

You were stipulating in your earlier post that Tavo should have signed over his assets (the F1 contracts and the connected METF agreements) in spring and you wrote that Epstein wrote a check for the money at the same time. That was all in contradiction of the reported conditions of the company contract according to the petition.

I think you're misreading my post. What I mean by E&C writing checks is that they assuredly both put some of their own money into the project at the start, money which formed the basis for the partnership. Tavo's basis was likely the F1 rights.

About Tavo, what I'm saying is that while he wasn't required by the agreement to turn over the F1 rights immediately, perhaps doing so would have been in both his and the project's best interest. Not that it wasn't the smart move in the beginning, but later it seems like it would have been better to go ahead and assign the rights. I think he got some bad advice at some point and as a result thought that he needed to keep the F1 rights to defend his own against untrustworthy partners. But ironically, it was the fact that he didn't assign those rights early that enabled E&C to cut him out of the deal.

I'm not arguing right or wrong, just that he didn't act pragmatically. Of course, you could argue that Tavo would have been screwed either way - but there's no way to argue either side of that with anything other than opinion.

[Pup]

I guess that means a billion over 40 years then, now that's some contribution!

Contingent on the whimsy of the Texas Comptroller.

[WhiteBlue]

And where does it say that there is 250 MUSD for the taking thanks to Hellmund?

There might be funding on offer, but I am struggling to understand how Hellmund was responsible for or tied to that funding.

So, Hellmunds big achievement was to make METF adding "interational motorsport events" to their scheme, where the 250 MUSD is actually 25 MUSD per annum for ten years. I guess that means a billion over 40 years then, now that's some contribution!

You can try to reduce the significance but the fact remains that even discounted to current date cash value Tavo generate an asset worth some $160m. It would be substantial for the success of the business as I have pointed out above by comparison to the Indianapolis situation.

[Pup]

Regardless of how one values the METF money, it was never an asset.

An accomplishment? OK, sure.

But not an asset - it is not, and was never, contingent on Tavo's involvement in the project.

Tavo's sole asset was the F1 rights.

And his cuddly demeanor.

[bhall]

Regardless of how one values the METF money, it was never an asset.

It's never even been paid, and there's no guarantee that it will. For the sake of this conversation, it's a bit like talking about the Tooth Fairy.