Grand Prix Americas Makes 74000 Payment To City
Written by Susan Stabley on February 12, 2004
By Susan Stabley
The owners of the canceled Grand Prix Americas downtown auto race made a payment this week against a $1.77 million debt to the City of Miami’s sports authority.
The Miami Sports and Exhibition Authority was ready Monday to send a letter to Championship Auto Racing Teams demanding payment of the full amount of the loan plus fees. But a check for $74,000 arrived from the company that afternoon, said Ferey Kian, the authority’s director of finance.
The payment – an installment on a $2 million loan made in 2002 to Grand Prix promoter Raceworks – was due Jan. 31.
Raceworks was acquired by Championship Auto Racing Teams, which recently sent subsidiary company CART Inc. into bankruptcy protection and canceled its schedule of US races, including the Miami Grand Prix, which was run downtown in the past two years.
The city received guarantees from Championship Auto Racing Teams and former Raceworks owners Willy A. Bermello, a Miami architect and developer, and Peter Yanowitch, a Miami attorney, to secure the loan. Mr. Bermello’s guarantee is limited to 33.3 % and Mr. Yanowitch’s 63.7 %, according to the sports authority and the city attorney’s office.
CART’s filing for Chapter 11 bankruptcy reorganization doesn’t necessarily mean the company has defaulted on its loan, said City Attorney Alex Vilarello.
But Mr. Kian said the sports authority may push for a payment for the $1.7 million balance of the loan.
Championship Auto Racing Teams owes other money to the city and Bayfront Park Management Trust as part of its revocable license agreement. After each race, Championship Auto Racing Teams is obligated to pay the city and the trust $50,000 each and a $1 surcharge for each ticket sold. Local officials say they still do not know how many tickets were sold for race in September, and officials at Championship Auto Racing Teams could not be reached. The use fee was due Oct. 28 and the ticket fee should have been paid by Nov. 28, according to the city.
After a plea from the race’s local organizer, Grand Prix President Chuck Martinez, to the Miami City Commission in September, officials cut the use fee to $30,000. That amount has not been paid, according to Mr. Kian.
Another $279,552 is owed to the Miami Parking Authority’s Department of Off-Street Parking, according to the city attorney’s office.
The park trust sent a letter to Championship Auto Racing Teams on Jan. 7 demanding payment, said Executive Director Timothy Schmand. Race organizers never finished cleaning up after the three-day event and left $6,000 in damage – such as broken railings and cracked pavement, he said. He said promoters also owe the trust $13,000 for preparations.
Missing a payment to the city constitutes default of the loan, according to the city attorney’s office, as does the owner’s failure to submit financial statements. The city also has the right to declare default if stockholders’ equity in Championship Auto Racing Teams falls to less than $75 million, according to the city attorney’s office.
The sale of Raceworks also may have triggered the sports authority’s right to accelerate loan payments, Mr. Kian said. He said the sale means Championship Auto Racing Teams owes a change-of-control fee – 7.5% of net sales – to the authority.
Mr. Kian said, "They have been tap-dancing around that issue."