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As evidenced by the more than 10,000 people in downtown Dallas who watched Martin “Checo” Perez take a casual lap, and wave at fans last weekend, Formula One racing is one of the most internationally popular, and profitable, brands in sports.
As evidenced by the more than $250 million that Texans have essentially handed Formula One, one of the reasons F1 is so profitable is because of its model that exploits governments.
On Sunday, the U.S. Grand Prix raced at the Circuit of the Americas in Austin for the 10th consecutive year, which will conclude the original 10-year contract with the track that opened in 2012.
F1’s future in Texas depends on Gov. Greg Abbott, and his willingness to spend another $25 million to keep the event.
It would be a shock if he did not after what transpired this weekend at COTA.
At least according to COTA, the three day weekend of F1 events and the race on Sunday featured a total of nearly 400,000 spectators.
A bill has been filed to his office for another round of funds from the Texas Major Events Reimbursement Program (MERP).
There are a number of other sports entities in Texas looking for MERP help beyond COTA and F1 — the NHRA, the Professional Bull Riders World Finals, the Women’s PGA Championship, PGA Championship, Senior PGA Championship, and the Ryder Cup.
The concept is Texas spends Texans’ money to attract events, which result in tourism dollars.
Sometimes it works.
Of all the sports deals in Texas that have ever been made, none look as shady as the one created by former Texas comptroller Susan Combs and approved by her boss, former Texas Gov. Rick Perry.
In the case of the F1 race in Austin, this has never appeared to be worth $25 million a year for Texans.
The contract with F1 and COTA has the feel of a back-door deal between buddies to land a fun toy, and yet this is the first time Gov. Greg could justify the money for F1.
For the first time ever in America, there may finally be enough of an audience to make an F1 race worth the investment.
May is the key word.
Neither COTA nor the office of Gov. Abbott responded to an interview request. The lack of transparency about this subject is consistent on a subject that elected officials have tried to keep at a whisper since its inception.
Good to be back in Austin. This place holds a special place in my heart pic.twitter.com/qOb0B31UYE
— Lewis Hamilton (@LewisHamilton) October 21, 2021
Formula One staying in Texas
When F1 recently announced its 2022 schedule, it featured 23 dates, including Austin and a new race in Miami.
Four of the 2022 sites include asterisks denoting “subject to contract.” One of those four asterisks is Austin.
F1 only returns to Texas is if Texans keep paying.
When this project was pitched more than 10 years ago, lobbyists and state officials told people F1 only gets the money if Austin is the only F1 U.S. date. Read the fine print and the contract states that F1 only gets the money as long as there are no other F1 races in contiguous states.
Texas and COTA made the deal with former F1 president Bernie Ecclestone, who sold his majority interest to American-based Liberty Media in 2016.
Although the brand is under different ownership, and it’s made attracting the American audience a priority, it follows some of the practices that made Ecclestone wealthy.
F1’s relationship with its host cities and states are designed like their courses: One way streets. If you don’t like it, F1 will take their cars and race somewhere else.
F1 is renowned for announcing dates only to drop them with minimal warning.
An American market for Formula One
As evidenced by F1’s 2022 schedule, which is the biggest in its history, cities and states are lining up to host the likes of Checo Perez, Lewis Hamilton, Max Verstappen, Daniel Ricciardo and the other popular names on the circuit.
While F1’s popularity is global, the U.S. market has historically remained mostly indifferent. American race fans are often more partial to NASCAR, Indy Car and drag racing.
As NASCAR and Indy Car both struggle to attract fans, however, people within motor sports believe that Americans are ready to buy F1.
Thanks to social media, and the popularity of the Netflix show Drive to Survive, F1 is finding a U.S. audience.
On Oct. 16, Red Bull had driver Sergio “Checo” Perez of Mexico appear in Dallas before well over 10,000 fans. He drove one of his team’s older cars on a closed course, performed a spin out, signed some autographs and chatted with some members of the media.
“We have a great sport and it’s great to see the sport is taking in other countries, especially a country like the U.S.,” Perez told me.
Las Vegas is on the list of potential future F1 races, because a car race on The Strip is undeniably appealing.
According to people with Indy Car, the Indianapolis Motor Speedway wants F1 to return despite its horrendous exit from that famed racing destination in 2007.
Four U.S. F1 races on the same calendar feels like a reach.
“I don’t see any reason why it can’t happen,” Perez said. “The popularity and interest in the sport, you can just see it. I don’t know if it will happen in my time, but I’d be happy to see more races coming into America.”
The 2021 U.S. Grand Prix is sold out. It should be noted that the COTA has also reduced the number of permanent seats.
Equally, it should also be noted that COTA will benefit from having multiple seasons of Drive to Survive series. The show has become one of the best marketing tools any sport has used in recent memory.
“I think definitely Drive to Survive has helped the sport, there is no doubt,” Perez said. “It’s really important, and it’s just nice to see Formula 1 is so big now in the U.S. that probably five years ago it wasn’t as big.”
Abbott will seek a third term next November, and questionable expenses will be scrutinized by opposing political candidates as well as the electorate.
According to publicly available documents, Texas has paid well over $250 million to COTA. (The governor’s office approves the $25 million a year to COTA, which passes the funds along to F1.)
According to the study done by Abbott’s office, there is no way to accurately determine if local and state businesses generate enough revenue to cover that $25 million investment.
COTA says it does.
We will never know, and ultimately if Formula One is to return to Texas it’s up to Gov. Greg during an election year.
Considering what happened this weekend, expect F1 to come back to Texas.