F1: Austin Citizens File Suit Over $25m Payment

Formula 1

F1: Austin Citizens File Suit Over $25m Payment

A lawsuit filed by three Austin citizens could disrupt preparations for the US GP...

Adam Cooper | http://www.speedtv.com | Posted June 22, 2011 Balen (BEL)

Austin Formula One CEO Bruce Knox (Left) and construction official Buddy Reed (Right) look over plans at the F1 site in Austin, Texas. (Photo: Mike Hembree, SPEED.com)

A lawsuit filed by three Austin citizens who oppose the use of state funding could disrupt preparations for the US GP.

One of the plaintiffs is a teacher, Ewa Siwak, who lost her job in a recent round of spending cutbacks.

A key element of the financial plans for the race is that the sanctioning fee owed to Bernie Ecclestone is due to be taken care of by a $25m grant of public money from the Texas state’s Major Event Trust Fund.

The suit claims that it seeks to prevent “the unlawful plunder of public funds for promoters of a Formula One race at a time when the State of Texas claims it cannot afford to adequately fund essential services, such as its public education system.”

The $25m annual payment was guaranteed to Bernie Ecclestone by Texas State Comptroller Susan Combs in a letter of May 10 last year.

In the letter she assured him that the $25m fee for the 2012 race would be paid to Formula One World Championship Limited by July 31 2011, and that a similar amount would be paid for the remaining nine years of the contract, always before the end of July of the previous year.

The legal suit has been filed against Combs, in essence on the basis that the processes related to the Major Event Trust Fund were not correctly followed, and that she was not authorized to guarantee the payment to Ecclestone.
Among the key points cited by the plaintiffs are that there was no “highly competitive selection process” for the event.

They say that “offering public funds after the site selection has been made is an illegal gift for private purpose.”

It’s also claimed that the incremental increase in state and local tax income derived from the F1 event – and which justifies the use of the METF funding – has not been properly calculated.

Adam Cooper notched up his 26th season as a racing journalist in 2010. He has written about F1 for SPEED.com since 2005. Follow him on Twitter.