Formula One: Texas Subsidy Style

Crossposted from The Stars Hollow Gazette

Some of you might get the impression that I’m a big fan of Formula One racing.  Nothing could be further from the truth.  My dad, Richard, is hugely into all motor sports, even the Turn Left red neck bumper car travesty of twisted chunks of flaming metal.  By comparison Formula One has dignity.

But not much.

Ecclestone is a corporate whore who hired the son of a Nazi that likes his sex with 5 or 6 workers dressed in jackboots.  He’s probably just as responsible for the repression of the Bahrain Democracy movement as the Emir so he wouldn’t have nasty icky protesters spoiling his circus.  Under his direction driving is pay to play, a seat goes for over a million in sponsorships and without it you watch from the stands no matter how good you are.

In short an example of Galtian Greed that makes selfish George Steinbrenner seem all warm and fuzzy by comparison.  At least George wanted to win.

Which is why it’s no surprise to read stories like this-

Texas Taxpayers Finance Formula One Auto Races as Schools Dismiss Teachers

By Darrell Preston and Aaron Kuriloff, Bloomberg News

May 11, 2011 12:43 PM ET

As many as 100,000 teachers in Texas may be fired because of spending cuts to cope with the state’s budget crisis, according to Moak Casey & Associates, an Austin-based education consultant. For $25 million a year, the state could pay more than 500 teachers an average salary of $48,000.

…

If the financing works as projected, the decision will use $250 million in state tax revenue for the races over 10 years.

“With places struggling, spending that much money on an essentially one-off event is tough to do,” said Michael Cramer, a former president of baseball’s Texas Rangers and hockey’s Dallas Stars who runs the sports and media program at the University of Texas at Austin. “It’s a very high cost of entry.”

Texas, like other states cutting budgets for schools, nursing homes and basic services, uses economic-development spending to bring in jobs and seed growth. That often involves giving up tax revenue generated by a project to pay part of the cost. New Jersey is providing $200 million of tax-increment financing to help develop the American Dream in the Meadowlands, which will be the biggest mall in the U.S. when it opens.

“I’m not sure of the wisdom of using tax dollars to fund a racetrack,” said Siwak, the Austin teacher. “They’re giving so much tax dollars away I don’t think they could make it up with the racetrack.”

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The state’s $25 million is being paid to London-based Formula One Management Ltd. to hold the race in Austin, Sexton said. Formula One, owned by London-based CVC Capital Partners Ltd., a private-equity firm, is run by Bernie Ecclestone, the chief executive officer of the series.

“It’s going to Mr. Ecclestone and Formula One to get them to bring the event here,” Sexton said.

Paying such a fee goes beyond the intended use of the state fund, which was set up to support bringing annual events to Texas by rebating increased taxes they generate to cover costs including security and traffic control, said Richard Viktorin, an accountant with Audits in the Public Interest. The Austin- based group opposes government support for the races.

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“It’s off-balance-sheet financing for a rich man’s sport,” Viktorin said. Combs is “supposed to be a fiscal officer for the state. She’s not controlling that fund.”

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Austin and the state are unlikely to recover their investment directly, Cipolloni said. However, the race will expose the city to a wide audience of tourists and executives that could help recruit companies and create jobs, he said.

“They won’t collect tax money equal to the $25 million” from the state, Cipolloni said. “It’s just a way to get exposure for the city.”

As State Faces Deep Cuts, Texas Commits $250 Million Of Taxpayer Money To Auto Racing

By Marie Diamond, Think Progress

May 12th, 2011 at 3:45 pm

The motorsport franchise left the U.S. four years ago because of low attendance, but the effort to bring it back – and base it in Texas – has been spearheaded by B.J. “Red” McCombs, the co-founder of conservative media conglomerate Clear Channel Communications. Despite being consistently ranked as one of Forbes 400 richest Americans – with a net worth last estimated at $1.4 billion – McCombs has gotten state Comptroller Susan Combs to agree to build a racing track in Austin at taxpayer expense. Austin’s city government may also invest an additional $4 million a year in tax revenue to facilitate the plan.

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Corporate backers of the plan and their GOP allies insist that F-1 racing will pump money and jobs into the Texas economy. But sporting experts say the state is betting taxpayer money on an uncertain investment. Michael Cramer, a former president of the Texas Rangers and Dallas Stars, told Bloomberg, “With places struggling, spending that much money on an essentially one-off event is tough to do.”

F-1 races have tried and failed to gain traction in the U.S. in different cities since since the 1970s. Even Bernie Ecclestone, the CEO of the F-1 series admitted that, “No one wanted to hold it,” until the Austin promoters stepped in.