Auto Race Producers To Seek More Investors 15 Million Loan From Miami
Written by Paola Iuspa on June 27, 2002
By Paola Iuspa
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Promoters of an October auto race in downtown Miami are still looking for co-investors and on Monday will ask the Miami Sports & Exhibition Authority for a $1.5 million loan.
Raceworks, owned by architect and developer Willy Bermello, attorney Peter Yanowitch and racing legend Emerson Fitipaldi, has plans to stage the first Grand Prix of the Americas here Oct. 4-6. Still, the group is trying to raise funds for marketing and staff and to help build a course starting in Bayfront Park, continuing south on Biscayne Boulevard and circling back to the park.
In an effort to raise capital, the group expects to sell up to 60% of Racework’s controlling interest to Championship Auto Racing Teams, or CART, said Lucia Dougherty with the law firm of Greenberg Traurig representing the promoter.
Raceworks is looking for investors to buy controlling interests in the event, Ms. Dougherty said Tuesday.
"They are selling shares," she said.
Event organizers last week asked Miami commissioners to amend the city-issued revocable license to reflect CART and a Delaware-base limited partnership as new partners. But the city administration Monday said the change was unnecessary until an ownership transfer took place.
Raceworks has the same owners it did when the license was granted, said Assistant City Manager Frank Rollason. Mr. Bermello owns 33.33%, Mr. Yanowitch 63.67% and Mr. Fitipaldi 3%.
While still not a partner, CART – which owns, operates and markets the CARTFedEx Championship Series – is committed to participating in the three-day event, she said. The American Le Mans will also take part in the Grand Prix.
The race falls under the purview of the city’s Sports & Exhibition Authority, which reports to the Miami City Commission. The group, with some city commissioners sitting on its board, is in charge of marketing, funding or underwriting sports and community events.
Ferey Kian, the authority’s director of finance, said the group’s proposed loan to Raceworks consists of lending Miami Arena-generated funds to pay for road improvements. The five-year loan would have an interest of 150 points above Wall Street’s prime rate. The $1.5 million would not be disbursed at once but in chunks, as reimbursements to incurred expenses, he said.
If Raceworks sells part of its ownership, the authority would get 7.5% from sales proceeds, Mr. Kian said. The borrower would also be subject to relocation fees.
If the event is moved out of Miami in its second year, Raceworks would pay $1 million. If it leaves the following year, it would pay $750,000. Fees will keep on decreasing until year five, he said.
Mr. Kian said Homestead-Miami Speedway executives are also inquiring about applying for a similar loan for another street race in downtown Miami.
Jorge Luis Lopez with the law firm Steel Hector & Davis said he is watching closely how the city and authority proceed. His firm represents the speedway, which sued the city over its agreement with Raceworks, forcing the city to sign a revocable license with the promoters rather than a lease.
"To say that nothing has changed," he said, when CART is about to get on board is misleading.
Another speedway complaint about the city’s negotiations for the race is pending.