The Courtship of Susan and Bernie
Major trust issues
Texas loves its business subsidies. But rarely has any public cash for a private concern caused as much controversy as the Formula One application for the Major Events Trust Fund.
The METF was originally set up to help local jurisdictions cover the excess costs of hosting a major event, but the money flow is a little convoluted. Say a county hosts a major event. They have to cover all kinds of additional costs – policing, public safety, road closures, and so on – that they'd not normally have. However, in the aftermath of such an event, the state collects a lot of extra sales tax money from all the visitors. Under the METF, the state reimburses the local governing body from that additional cash.
Over the years, tens of millions of dollars have gone out of the METF, starting with $8.7 million to Houston for 2004's Superbowl XXXVIII. Most recently, Arlington got $98,277 to cover costs from June's soccer match between Mexico and Brazil. However, the Circuit of the Americas application was different. Before a race can happen, motor circuits pay a multimillion-dollar "hosting fee" to F1, and COTA struck a deal with the Comptroller's Office that the state would cover the cost of its $25 million fee. This meant the cash would come first (out of the state's share of the sales tax), and it would go to the event, not the host city.
The deal was for the next 10 years, so, depending on how you looked at it, COTA was either getting the same $25 million over and over again, just recycled through the METF, or COTA was getting a $250 million handout from the state, in installments. Alternatively, the state was either doing what it needed to secure a major international sporting event, or Comptroller Susan Combs was handing F1 boss Bernie Ecclestone a quarter of a billion dollars.
The idea of such a subsidy caused outrage, especially as the state faced multibillion-dollar budget cuts, particularly to education and health care. Even Austin Sen. Kirk Watson, who originally proposed adding F1 to the list of METF-eligible events, in the end voted against adding the necessary cash to the fund. Land Commissioner Jerry Patterson – who now faces Combs in the 2014 lieutenant governor race – asked Attorney General Greg Abbott to opine on whether the comptroller broke the rules. Abbott (who is rumored to be running for higher office himself, potentially governor) demurred and issued a noncommittal opinion that merely stated there was a process to be followed – not whether Combs broke it or not. Combs and the Circuit both backed down, and now there will be a regular application – to be considered and calculated after the race, not before.
But did COTA ever need the money in the first place? COTA played a game of brinksmanship, constantly claiming that without the METF cash to pay the hosting fee, the race would not happen. However, there's a race this weekend without it, management has guaranteed F1 its hosting fee for the next decade – and there's no state payment thus far.