Ahead of Baltimore Grand Prix, Pit Row Is Filling With Lawsuits
As reported by The Times on Aug. 18, potholes and other undesirable obstacles are being paved over for the Baltimore Grand Prix, which will be held on city streets here over Labor Day weekend. Yet two recent lawsuits have called into question whether the promoters that persuaded IndyCar and the American Le Mans Series to stage races here can actually foot the bill.
The lawsuits also highlight how, in the name of expanding interest in their sports, racing organizations are often willing to entrust their brands to untested promoters.
Behind the Baltimore suit is Steven Wehner, the local entrepreneur who spearheaded the grand prix initiative and who charged earlier this month that the promoter, Baltimore Racing Development — known as B.R.D. — defaulted on scheduled payments to buy his 10.2 percent share of the organization. Mr. Wehner is seeking a lump-sum payment of $750,000, including interest and lawyers’ fees.
Mr. Wehner’s own fortunes have swung like a tachometer’s needle. He served jail time on drug charges, then ran a business that paid for a harbor view home on Martha’s Vineyard, before ultimately landing in the basement of his mother’s suburban Baltimore house. It was from there that through homework and hustle he persuaded city and racing authorities to bring a high-end competition to the city.
Sean Conley, a second shareholder who also owns 10.2 percent in the company, charged in a suit on Aug. 16 that B.R.D. defaulted on the buyout of a 5.2 percent share and claimed that he was due $409,000 including interest and lawyers’ fees. He would retain 5 percent ownership in the company after the buyout.
The suits ask for a judgment on the contract, which would force B.R.D. to pay without a trial.
“If B.R.D. doesn’t file a meritorious defense, such as ‘I’ve already paid,’ the court will enter a judgment in favor of the plaintiff,” said Jim Astrachan, a Baltimore lawyer not involved with the case, when called by Wheels for comment.
“That’s probably not going to happen here,” he said. “It will be presented for a trial.”
David Shapiro, the lawyer for Mr. Wehner and Mr. Conley, filed a request on Aug. 24 in which he asked a judge to freeze an escrow account containing funds from advance ticket sales until the suits were sorted out. The judge denied the claim on Monday.
“My concern is that there still be money available once the race has concluded,” Mr. Shapiro said in a telephone interview before the judge’s decision on Monday. The request was filed, he said, to ensure a payout for Mr. Wehner and Mr. Conley irrespective of how much money B.R.D. made or lost during the weekend.
“I am certain the creditors’ requests will exceed the proceeds that come in from advance ticket sales or the 80 sponsors, and whatever revenue is coming in from other sources,” he said.
Jay Davidson, the president of B.R.D., said in a telephone interview that his company was prepared to offer ”a strong defense.”
He added that with 80 percent of grandstand seats sold, B.R.D. expected to be able to make up any shortfall in its estimated $10 million in obligations with help from its partners.
“We have always anticipated that we wouldn’t make a profit in the first year,” he said. “What you try to do in Years 1 and 2 with large equipment front costs is build event equity. And I think we will.”
Questions about B.R.D.’s financial health arose last October, when the promoter failed to make a $800,000 bond payment to the Maryland Stadium Authority as part of a $1.9 million project to build pit lanes. At the time, Michael J. Frenz, the executive director of the authority, attributed the failure to cash-flow problems. The deal was restructured and a representative for the authority said in a telephone interview that B.R.D. was current with payments.
Terry Angstadt, president of the commercial division of IndyCar, said in a telephone interview that his organization was paid a fee to bring a race to a city, but determining the success of an event was largely the responsibility of the promoters, who are expected to secure permits, bring in sponsors and sell tickets. The results, historically, have been uneven.
“I liken this to hiring new people,” Mr. Angstadt said. “You can have the greatest résumé and the greatest interview, but until you have been side by side for 30 days, it’s a crapshoot.”
One recent cautionary tale was the Milwaukee 225 IndyCar race on June 19. “We had a very tough one this year in Milwaukee,” Mr. Angstadt said. “We raced, but it wasn’t terribly successful.”
Other races have also struggled. A grand prix in San Jose, Calif., foundered in 2007 and another in Toronto has struggled to fill bleachers. Races in Detroit and Denver have been dropped, revived and dropped again.
“There are a number,” Mr. Angstadt conceded. “But more make money, or they wouldn’t do it year after year.” NY Times