City to Baltimore Grand Prix: Pay Up
A city official told Baltimore Racing Development to either reorganize or sell itself, citing about $1.5 million in unpaid bills to the city.
“The Grand Prix generated $47 million in economic impact for Baltimore and proved valuable in terms of positive media exposure and civic pride. However, Baltimore Racing Development (BRD) has not honored the terms of its contract with the City,” read a statement attributed to Kaliope Parthemos, the deputy mayor for economic and neighborhood development, released by Mayor Stephanie Rawlings-Blake’s office. “BRD must immediately restructure and recapitalize or sell itself to investors in order to make the event profitable in the future.”
The release says that BRD owes the city as follows:
City Services – The City is requesting $750,000 in City reimbursement costs. The fee cap in the contract is set at $500,000 for year one. The City is requesting an additional $250,000, because services that were to be provided by BRD in the Event Management Plan were not provided by BRD to the extent planned for and required.
Admissions and Amusement Tax – According to a review of BRD ticket sales information, the City is owed $487,971 in Admissions & Amusement taxes. BRD has begun conversations with the Maryland Comptroller’s Office, which is responsible for collecting the tax on behalf of local jurisdictions to ensure the tax is paid properly and in full. BRD has requested a payment plan, consistent with state law, which would include penalties and interest. No tax abatements will be made.
Race Event Fee – The Mayor’s Office of Economic and Neighborhood Development received a check for $250,000 on September 4, 2011, but held it with the understanding BRD needed to restructure its cash reserves. BRD failed to address this issue and, to date, payment has not been made.
Parking Authority – BRD owes Parking Authority of Baltimore City $50,862 for parking at City-owned facilities during the Grand Prix.
A mayoral spokesman did not immediately return City Paper’s call.
BRD has faced financial problems almost from its inception, and currently faces four lawsuits from vendors, investors, and company founder Steven Wehner.
Although the event was touted as a grand success, with more in attendance than planners have hoped, the economic impact fell short of projections. Dennis Coates, a University of Maryland economist who studies big sporting events, put the full impact at about $25 million in a working paper several weeks ago (pdf link). A study done for Visit Baltimore said the impact was double that. The original projections touted by BRD said fans would bring $70 million to the region.
The Indy Racing League has put Baltimore on its 2012 schedule. It suffered a tragedy last month when Dan Wheldon, a two-time former Indy 500 winner, died after crashing his car during a race at the Las Vegas Motor Speedway.