Baltimore, MD - The Inaugural Baltimore Grand Prix came into Baltimore's Inner Harbor on Labor Day Weekend to much fanfare. Everyone from race fans, city officials, organizers, and media were excited to have this “Festival of Speed.” with IndyCar and the American LeMans series in town for 3 days. However, nothing is fast enough to escape taxes or debt.
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Documents obtained by the Baltimore Sun show Baltimore Racing Development (BRD), the private company that owns and organized the Baltimore Grand Prix, owes approximately $12.4 million in debt. Just under $2 million of that debt is tax that must be paid to Baltimore city. The tax payments are past due, and $3 million that is owed to vendors has also gone unpaid by BRD. On top of that the company owes millions more in contractual payments to different firms and entities.
It has been known that BRD has been having financial difficulties. The true extent to the financial mess the company is in has only become recently known.
Stephanie Rawlings-Blake, Baltimore city's Mayor, has laid down the gauntlet. She has said BRD has until the end of this month to hand over its books to the city, and if they cannot pay its taxes to Baltimore by December 31st, then the 5-year contract the company has to put on the Grand Prix will be nullified.
Jay Davidson, , BRD's former CEO, was quite happy with himself and the BRD after the Grand Prix had concluded. He exclaimed what a success the race was. He may not be that enthusiastic now.
Peter Franchot, Maryland's Comptroller, has had to place a lien against Jay Davidson and his wife, Elizabeth, for $570,000 in unpaid taxes. This includes the personal belongs of the couple.
Even with a large amount of debt, there still might be some hope for the Baltimore Grand Prix to come back next year. Felix J. Dawson who is former Goldman Sach executive and Constellation Energy executive has made an offer. Wilkes Lane Capitol, Dawson's investment firm, is willing to give BRD $3.3 million in cash, in exchange for a 58 percent stake in the company.
Dawson believes the amount of sponsorship could be increased for the next race. The total asset value of the race is around $600,000, which includes tire and concrete barriers that needed to be put up along the track. By his analysis the company brought in $8 million from the race from advertising, sponsorship, tickets sales, food, and hospitality.
This could prove to be a lifeline to save the company from financial collapse, but would only cover a portion of the debt owed. It is still unclear how the arrangement and Mr. Dawson would be able to turn BRD's finances around.
According to a report compiled by Forward Analytics, a research firm, and Visit Baltimore, the quasi-private/public tourism arm of Baltimore, the city benefited greatly from the race. Bringing in a total business impact of just under $47 million and a direct spending impact of $27 million.
However, this was far short of the lofty numbers that were estimated by city officials and BRD. They estimated it could bring in $75-$100 million dollars into Baltimore. It obviously fell short of that goal.
It is unfortunate and organizers could not make this event happen more smoothly. Lots of racing fans, and local media were extremely happy to have the race in Baltimore. “This venue is nicer than Long Beach.” said Peter, a lawyer from Albuquerque I spoke with. Peter is a huge IndyCar and LeMans race fan and goes to many races all around the country. Long Beach is considered the crown jewel on the IndyCar street race circuit and he thought Baltimore's setup of having so many hotels right near the track was a “Perfect storm!” With over 160,000 spectators that attended the Baltimore Grand Prix over Labor Day weekend, many felt the same way.
It seems Baltimore will most likely not be on the race schedule for next year. In this economy you cannot out maneuver debt.
Please contact Adam Yamada-Hanff – adamsautoadvice@gmail.com – for comments, questions, or topics. You can also follow him on Twitter @AdamsAutoAdvice
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