What is the true value of the Circuit of the Americas?
Public controversies never seem to leave the Circuit of the Americas: the circuit's leaders are now at odds with tax authorities over the valuation of their circuit.
Last month, it was the public subsidy that the circuit receives for hosting the F1 Grand Prix that was once again the subject of controversy.
The local newspaper Austin American Statesman has revealed a new dispute between the circuit and the authorities. The latter value the entire circuit at $271 million, resulting in a tax bill of $7.1 million. However, the circuit’s executives believe their property is worth no more than $100 million. The difference is significant since this valuation would result in a tax bill of “only” $2.8 million.
Bobby Epstein, the circuit president, stated: « Many people think we are F1. We are just an entertainment destination. Those who make money are those who create the entertainment, including F1, and those working in Austin’s restaurants and hotels. We cannot afford these kinds of tax bills. If it pushes us to incur losses, it is possible that the property, without the race contracts, will be put up for sale. »
In order to add weight to its argument, the circuit commissioned a study from the New York-based firm Greyhill Advisors to show the economic impact the circuit has on the Austin region.
These figures are enormous since in its 2014 fiscal year, which includes the 2013 F1 Grand Prix, they reached almost 900 million dollars. This astronomical sum is divided into two categories: the events themselves, which had an impact of 730 million dollars, and the operation of the circuit, which generated 166 million dollars.
To calculate these amounts, the firm used the number of visitors attending the different events offered by the circuit and their associated spending. It turns out that F1 is the biggest event of the year for COTA since it alone, with nearly 436,000 visitor-days, represents the equivalent of the X Games, the MotoGP race, and the WEC race combined.
But the gap widens even more when comparing the economic impact generated by these different events. The F1 generates more than 500 million dollars, while the other three events only bring in 161 million dollars to the region. Without F1, the circuit would therefore be worth much less since it would be able to generate much less revenue for the region.
This raises the question of the circuit’s sustainability in the long term. Indeed, in 2015, the Austin circuit will have to face competition from Mexico, which will return to the F1 calendar. While the circuit is currently pleased to attract many visitors from outside the state of Texas, a significant proportion come from Mexico, where F1 is more popular. It remains to be seen whether this audience will be willing to attend two races per season, especially if they are scheduled one or two weeks apart…
With the participation of www.Racingbusiness.fr
