Prix organizers still awaiting loan for roadwork
City of Miami agency in charge of promoting and underwriting sports events postponed
a decision on lending $3.2 million to organizers of a downtown street race.
the promoter of the Grand Prix of the Americas said they could wait for a later
meeting, tentatively scheduled for Friday or Monday. Architect and developer
Willy Bermello, a principal in the venture, said the group hopes to get a city
permit Friday to start $1.1 million worth of required road repairs.
have the money to do that," he said Tuesday.
a Jan. 18 deadline, the group is applying to the Miami Sports & Exhibition Authority
for a $3.2 million loan. Part of it would buy safety barricades and continue
road improvements around Bayfront Park and Biscayne Boulevard where the race
would take place.
Le Mans race is scheduled for April 5-7.
board members canceled a meeting on the loan planned earlier this week because
they had not received enough information to determine the collateral that is
needed from the organizer, said Ferey Kian, the authority's director of finance.
And both parties still have to agree on the interest rate, he said.
the promoter is negotiating some of the authority's conditions, such as having
access to event revenues, ticket sales and getting first-lien rights over Raceworks'
property to guarantee the loan tentatively at 4.3%.
think we agreed to the prime rate," he said. "The same rate that commercial
banks are asking for."
Bermello said he and his partner would not mind offering personal guarantees
to back the debt.
Raceworks had welcomed a proposed $3.2 million loan program that called for
a higher interest rate and a 15% revenue share with the authority. In return,
the promoter was asked to guarantee part of the loan.
that proposal, it was more of an investment, which implies more risk,"
he said. "But the authority just wants to be a lender."
board members rejected the plan three weeks ago because they wanted the loan
board's position is they don't want to make any money out of the loan,"
Mr. Kian said. "They just want to make sure they won't lose any of it.
They are taking a conservative approach."
the proposed $3.2 million credit, about $1.2 million would be paid for with
money from the county's convention development tax. The county transfers about
$900,000 annually in the tax to the authority to help run the Miami Arena and
would have to OK using those funds for the race, Mr. Kian said. The rest of
the money would come from the authority's reserve.
Kian said the delay in reaching an agreement was due in part to the holidays
and people involved in the negotiations taking time off. But also, he said,
it was because Raceworks' principals seemed reluctant to submit information
such as personal financial statements, cash-flow projections and sponsorship
agreements. He said those would be needed to help the authority come up with
a loan-collateral plan.
know that anything they submit to us will become public records," Mr. Kian
another setback for the event, a Miami-Dade judge ruled Friday that Homestead
Miami Speedway had legal grounds to sue the City of Miami for having granted
Raceworks a license to hold the race on public land without the usual bidding
suit, now pending, also challenges the city for reportedly not having held its
negotiations with Raceworks in the open.
Luis Lopez with the law firm of Steel Hector & Davis, which represents the speedway
and the City of Homestead, said the trial could start in a month. If the city
is found to have acted in error, it could have to withdraw the 25-year license
it gave to Raceworks to hold the event, Mr. Lopez said.
Kian said the authority is closely following the legal battle.
is another factor to take into consideration," he said.
the license-revocation threat looming on the horizon, Mr. Kian said, the sports
authority would have to be very careful how it would disperse the loan if it
said the authority would not give the $3.2 million at once. Raceworks would
have to submit invoices of expenses incurred for the race and then the authority
would release that amount, Mr. Kian said.