Sports Authority Oks Loan For Grand Prix Race Downtown
Written by Paola Iuspa on January 24, 2002
By Paola Iuspa
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The Miami Sports & Exhibition Authority approved a letter of intent calling for the city agency to lend $3.2 million to producers of the Grand Prix of the Americas race to be staged in downtown Miami.
The authority and event producer Raceworks, lead by architect and developer Willy Bermello and attorney Peter Yanowitch as principals, have until Feb. 15 to close the deal, according to a city document.
Raceworks, he said, still must produce a letter of commitment from a bank granting $500,000 in credit toward staging the event in case the organizers do not raise $2 million projected in sponsorships and ticket sales. The funds are needed for marketing, road improvements and seating.
The race is scheduled for April 5-7. The course would go from Biscayne Boulevard south of Bayside Marketplace to the Dupont Plaza building on Biscayne Boulevard Way, then back to the boulevard, entering Bayfront Park’s waterfront road.
In part, the loan to organizers would pay for drainage upgrades, landscaping, concrete barriers, fencing and pedestrian bridges near Bayside Marketplace and Bayfront Park.
The interest rate is equal to the Wall Street Journal’s prime rate, plus 150 basis points and the loan must be backed by the principals – two main obstacles that made authority members reject an original request for the loan a month ago.
Although the sports authority is in charge of promoting sports events, its board agreed not to use the county’s convention development tax to back the loan until after consulting with the city attorney. The authority, landlord of the Miami Arena, gets about $900,000 annually in convention development taxes from the county to help pay for arena operations.
James Jenkins, the authority’s executive director and CEO, said the loan would be given in increments of no less than $50,000 after Raceworks proves they are spending the money as intended. The debt, to be paid off in five years, would also be secured with a first priority lien to be placed on Raceworks’ properties such as equipment, construction documents, licensing agreements, concrete barriers and security deposits.
At closing, the borrowers would also have to make a deposit to the authority of $400,000. That money, to be kept in escrow, would secure repayment of the loan during the first two years, according to the letter. Although the actual loan is for $2.8 million, repayment with interest is $3.2 million, said Ferey Kian, authority director of finance.
If the promoter transfers the rights to hold the race in Miami to another group, the authority would be entitled to 10% of the sale proceeds. If the race were relocated in Florida before the loan is paid off, promoters would be responsible for any outstanding principal and interest.