Texas choice: A rich London guy or teachers
Subsidizing a rich man’s sport while laying off teachers?
Is this in the public’s interest?
Texas, which may balance its budget by firing thousands of teachers, plans to commit $25 million in state funds to Formula One auto racing each year for a decade.
Four years after motorsports’ most popular series left the U.S., Texas investors including Clear Channel Communications Inc. co-founder B.J. “Red” McCombs are building a 3.4-mile (5.5-kilometer) track to bring the event to Austin.
Comptroller Susan Combs has agreed to pay $25 million for races through 2022, a subsidy questioned by critics and lawmakers as the state cuts costs to close an estimated $15 billion two-year deficit.
Basically the $25 million fee is paid by the state of Texas to Bernie Ecclestone, the impresario of Formula One, who lives in London.
Wikipedia gives the revenue and profit numbers for Ecclestone’s Formula One.
Formula One Administration Ltd. or FOA holds the commercial rights to Formula One. These rights are granted to FOA by the FIA under the terms of the Concorde Agreement and are managed by Formula One Management.
In its annual accounts filed with Companies House, FOA reported turnover of $750 million and pre-tax profits of $447 million (up from $215m in 2003 and $127m in 2002).
I attended the first Asian Formula One race held in Kuala Lumpur in 1999. I worked for a British investment bank and we chartered several 747′s to fly in fund managers and other clients from all over Asia to attend the race. These are rich people events which happen once a year and provide venues for corporate largess to clients.
The Austin F1 promoters have projected 120,000 race attendees will spend $2,000 each for local revenues of $240,000,000. Maybe.
But the $25 million payment to Ecclestone is not predicted on any metric. It’s a payment without any strings.
Your $15 billion budget deficit is not going to be plugged by sending $25 million checks to rich men in London every year.
More on the story:
American Statesman: Texas comptroller had big role in plan to bring F1