Grand Prix Promoter Offers To Pay Most Of Debt To City
Written by Susan Stabley on April 8, 2004
By Susan Stabley
The owner of Miami’s now-defunct Grand Prix Americas race wants to pay $1.5 million to settle its remaining $1.7 million debt on a loan, according to the city’s sports authority.
Miami Sports and Exhibition Authority executive director Jim Jenkins said he will present the offer April 27 to the group’s board.
Championship Auto Racing Teams made its most recent $74,000 payment in February to the sports authority against $2 million loaned in 2002 to Grand Prix promoter Raceworks, which used the money to pay for course infrastructure for its first downtown street race.
Raceworks later was acquired by Championship Auto Racing Teams, which sent subsidiary company CART Inc. into bankruptcy protection. Open Wheel Racing Series then bought CART’s schedule but did not take over the Miami contest or the event’s debts to city agencies.
CART settled to pay 40 cents for every dollar owed to the Miami Parking Authority, or $110,820 on a nearly $280,000 debt, according to a spokesman for the authority. That payment was received March 9.
Payments remain outstanding to the Bayfront Park Management Trust, said Timothy Schmand, that group’s executive director. A deal – agreed to by the trust and to be considered today (4/8) by city commissioners – would allow CART a similar settlement as it reached with the parking authority.
If accepted by the city, the payment would be $25,125 for a $62,811 debt.
CART, the auto racing group, was obligated to pay the city and the trust $50,000 each and $1 for each ticket sold after each race. The racing group also owes the city more than $12,800 for preparations and damages from the race, which ran through Bayfront Park and on Biscayne Boulevard.
The $50,000 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, city officials cut the use fee to $30,000.
CART has not paid the ticket surcharge for September’s race, said Mr. Schmand. According to records from the trust, 10,554 tickets were sold, Mr. Schmand said, adding that the number of sales still needs to be confirmed.
The first race, in October 2002, resulted in a $5.5 million loss, and Raceworks gave away nearly as many tickets as were sold. A city audit found that 14,526 tickets were sold and 12,174 were given for free.
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 from the city’s sports authority. Mr. Bermello’s guarantee is limited to 33.3 % and Mr. Yanowitch’s to 63.7 %, according to the sports authority and the city attorney’s office. Money was loaned by the city to Grand Prix Americas at 1.5% above the prime rate, according to the authority.
According to the sports authority, a change-of-control fee of 7.5% of net sales should have been paid after CART acquired Raceworks in March 2003. CART bought the race and its revocable license agreement with the city allowing the street race through 2017 for $1.2 million including $473,000 of cash and a promissory note of $722,000.