Austin, Texas Hands Formula One Racing $250 Million in Taxpayer Money

Austin, Texas Hands Formula One Racing $250 Million in Taxpayer Money
August 12, 2010

Julie Drenner

Julie Drenner is R Street’s Texas director and a co-founder of the institute. She... (read full bio)

Formula One racing promoter and Austin, Texas resident Tavo Hellmund has announced the international Grand Prix race will be coming to the Texas state capitol in 2012 on a track to be built on approximately 900 acres in southeast Travis County, a few miles from the local airport.

Critics point out the public has had no involvement in bringing the Grand Prix project to the city and object to $250 million in taxpayer funding over 10 years. The quarter-billion dollar pledge comes as Austin officials are proposing tax increases for the city budget and Texas officials have imposed 10 percent cuts in spending in all state agencies.

The track would be the first one built specifically for the Grand Prix. City and state leaders see the development of the 900 acres for Formula One racing as an opportunity to elevate Austin’s presence to the international stage. Hellmund has told reporters Austin is a perfect fit for the technologically advanced sport of Formula One racing.

Austinite Leads Opposition
Austinite Stefan Wray has started a Facebook group called “Concerned About Formula One (F1) Racing Coming to Austin” that has more than 200 members, and he is using the AustinPost.org Web site to post articles that call the project into question.

“The unwillingness on the part of Texas government leaders, such as Governor Rick Perry, Comptroller Susan Combs, and State Senator Kirk Watson, to reveal details of their dealings with Mr. Hellmund exemplifies the lack of transparency with Austin’s Formula One plan,” Wray wrote in a July 27 post. He added, “We, the people of Austin, have had zero input in any of the decisions surrounding this Formula One racetrack deal. This is wrong. For a project of this magnitude dependent on such a large amount of public money, there should be a public process.”

Statesman-American reporter Eric Dexheimer has also raised questions about the secrecy behind the choice of the site location and taxpayer funding and noted news organizations have been stonewalled in attempts to learn details.

“Each party has invoked one or more exceptions to the Texas Public Information Act as a way to delay or prevent the release of some documents,” Dexheimer noted in a Statesman-American column. He added, “As a result, nearly a month after the announcement that F1 racing was coming to Austin—thanks in part to a $25 million per year government incentive plan to be handed to a heretofore little-known race promoter named Tavo Hellmund—the public still knows little. Big questions remain about everything from the identity and financial and organizational capability of the local parties involved, to the location of the proposed track and what might be expected of local governments.”

No U.S. Racing Team
One irony is that the United States has no Formula One racing team. In June the Formula One organization banned the only Formula One racing team in the United States from all competitions. The ban was punishment for the team missing the 2010 Formula One World Championship. The U.S. racing team’s assets were broken up and sold at auction.

Formula One racing’s chief executive, the British billionaire Bernie Ecclestone, not only enacted the ban against America’s only racing team. Opponents of the Austin Formula One racing proposal have found more ammunition to use against him in a February 15, 2008 interview with Britain’s Daily Mail newspaper in which he said, “I hate democracy as a political system. It stops you from getting things done.”

Sen. Kirk Watson (D-Austin) sponsored SB 1515, which became law in 2009 and expanded the Texas Major Events Trust Fund to include big sporting events such as Formula One racing. Under the program, the Texas Comptroller allocates tax revenue increases that result from a major event and returns a percentage of those gains to the state government to compensate for the added expenses of hosting an event.

Julie Drenner (jdrenner@heartland.org) is director of The Heartland Institute’s Center on Finance, Insurance, and Real Estate in Austin, Texas.

Julie Drenner

Julie Drenner is R Street’s Texas director and a co-founder of the institute. She... (read full bio)