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Entire state behind the Houston Grand Prix
Champ Car/ALMS doubleheader

 January 10, 2006

Houston GP track

After today's vote whereby the San Jose City Council voted to put up $4.1 million to help the San Jose Grand Prix offset high startup costs because they recognize the economic benefit to the city, we thought you should see how clever Texas was to make the Houston Grand Prix a reality.

The entire state of Texas is getting behind the effort (now successful) to bring a major motorsports event back to Texas.

As it was explained to us, the Senate Bill below was originally drafted with wording to try and bring the Olympic Games to Texas. When that was unsuccessful, they re-worked it to bring the race to Houston.

It provides for an incremental increase in the allotment of tax funds to the organizer of the event to help offset costs. The restaurants, hotels, rental cars, etc., are the ones who really reap the economic benefits of the event.

Senate Bill 150
Effective September 1, 2005

Motor Sports Racing Trust Fund
The Motor Sports Racing Trust Fund is intended to attract and support motor sports racing events, such as races by the Automobile Competition Committee of the United States (the U.S. affiliate of the Federation Internationale de l'Automobile), the Champ Car organization, and the American Le Mans Series. The program is funded from the incremental increase in state and local revenue from sales, motor vehicle, hotel, mixed beverage, and alcohol excise taxes attributed to hosting the racing event, as estimated by the Comptroller.

A preamble to Senate Bill 150 (written before the bill was passed)
Grand Prix racing eyes Texas comeback
Taking it to the Streets

In the 1980s and 1990s, Texas motor sports fans in Houston, Dallas and San Antonio enjoyed a string of professional races on their city streets. Colorful cars raced at speeds of up to 180 mph through temporary street circuits as fans watched from hotel room balconies and grandstands.

Local economies heard the cars' thunder. The San Antonio Grand Prix ran every year from 1987-90 and brought a total of $55 million to the area, said Craig Taylor, executive director of the San Antonio Grand Prix. The Texaco/Havoline Grand Prix of Houston ran from 1998 to 2001 and had an estimated annual economic impact of $30 million.

The races fizzled out, however, because they were too expensive to produce, said Taylor. For the average street race, organizers install about 6,000 tons of concrete blocks to line a 1.6-mile track, and pedestrian walkways and fences to keep out debris. Advertising and promotions can run production costs for a street race up to $5 million.

A bill by Sen. Jeff Wentworth, Senate Bill (S.B.) 150, aims to make street races, or "temporary urban motor sports venues" as the industry calls them, financially feasible for host cities and promoters, said Taylor.

"By helping the promoters with the substantial costs of constructing a temporary urban motor sports venue, S.B. 150 will make it possible for major cities throughout the state to attract these world-class sporting events," Taylor said.

A tourism trust
If signed by the governor, S.B. 150 would amend the state law that supports events such as the Super Bowl, Major League Baseball All-Star games and other major sporting events to include the Automobile Competition Committee of the United States. The bill provides financing for costs involved in bidding for and conducting motor sports racing events in the state.

The bill would set up a Motor Sports Racing Trust Fund, which the Texas Comptroller of Public Accounts would oversee. A city or county hosting a street race would deposit into the trust fund any incremental increase in revenue it receives from sales and use, hotels, motor vehicle sales and rentals, and mixed beverage and liquor taxes attributable to the racing event, said Melissa Guthrie, financial analyst for the Comptroller's office. The state would match local deposits to the trust fund and help reimburse the costs for hosting racing events.

"We're putting up a lot of money to put the race on, but if we can see some revenue come back from those entities that benefit, it becomes more plausible," said Taylor.

Three Super Bowls
While San Antonio benefited from millions of dollars spent by race spectators on hotels, restaurants and parking, promoters bore the majority of the cost of producing the race and lost $3 million over four years, said Curtis Gunn, former chairman of the board of the San Antonio Grand Prix.

"Without a huge subsidy from the city or somebody, you can't run a street race," Gunn said.

Racing organizers point to successful annual street races in St. Petersburg, Fla., and Long Beach, Calif., as models of how local governments and race promoters can work together. The Toyota Grand Prix of Long Beach, which ran in April, generates $20 million to $30 million annually for the local economy.

Tim Mayer, chief operating officer of the International Motor Sports Association (IMSA), said Long Beach invests in policing and public services supporting the race and has benefited enormously as a result.

"The mayor has said that it's the equivalent of having three Super Bowls in your city annually," Mayer said.

The perfect storm
Two auto racing sanctioning organizations that hosted races in Texas say they want to come back. IMSA, based in Braselton, Ga., hosted races in San Antonio and Dallas, and Mayer said Texas is "the perfect storm" for such events.

"Texas has great weather at times of the year when other parts of the country are snowbound," Mayer said. "It has a very attractive demographic for companies involved in motor sports, and it's an ethnically diverse state, which is also attractive."

Indianapolis-based Champ Car organized Houston's Grand Prix. Joe Chrnelich, Champ Car's executive vice president, said Texas' demographics, fans knowledgeable about street racing and corporate base make it attractive.

Chrnelich said it's absolutely crucial for host cities to participate to make a street race a success.

"The only way a street race event like ours works is when the city gets together with our series and our promoter and says 'this is good for all of us and let's make this a success,'" he said.

Postcard setting
Street races may be expensive, but host cities say they're worth it. Cities generally sign agreements to hold races for a minimum of five years. Each race can generate millions of dollars for the area.

"They're revenue generators for the state, the city and the county and they're not unlike a Super Bowl or a Major League Baseball All-Star game," said Jordy Tollett, president and CEO of the Greater Houston Convention and Visitors Bureau.

Each year it ran, Houston's Grand Prix drew 50,000 people who plunked down an average of $750 apiece and generated more than $30 million, Tollett said.

"We'd kill to be able to set up some sort of ability for these things to go on and on ad infinitum," Tollett said.

Street races also bring a city international media attention, Taylor said. Television cameras capture cars zooming through downtown streets against the backdrop of a city's skyline.

"In the case of San Antonio, the track passed over the Riverwalk and you see the Alamo," Taylor said. "The entire telecast is a great big picture postcard of the downtown area."

Tollett agrees.

"It's two to three hours of international television coverage that says 'Brought to you from Houston, Texas,'" said Tollett. "That's advertising dollars."

That coverage makes Dallas want to host a street race again, said Tara Green, director of sports marketing for the Dallas Convention and Visitors Bureau.

"I would absolutely love to see those kinds of races come back because of the media attention they attract," Green said.

Fiesta on wheels
When a street race comes to town, it's not just about cars. Concerts, parties and lifestyle expos accompany the race, Taylor said. In the April 2005 Long Beach race, celebrities including singer Meat Loaf and actors Frankie Muniz and Patrick Dempsey got behind the wheel for the Toyota Pro/Celebrity Race.

"You really get a carnival atmosphere," said Taylor. "In San Antonio, (the race) was dubbed 'Fiesta on Wheels.'"

Taylor said he ran into little opposition when he coordinated the San Antonio Grand Prix. He said one city council member voiced concerns about traffic and thought the race might disrupt local businesses along the route. But he said organizers never heard any complaints from businesses.

"If you solicit feedback from businesses and the community at the outset, which we always do, you won't run into problems," Taylor said.

S.B. 150 applies to Texas counties with populations of more than 1 million. Bexar, Dallas, Harris and Tarrant counties meet the requirements. At a March 21 meeting of the Senate Subcommittee for Emerging Technologies and Economic Development, Sen. Eddie Lucio Jr. said he wanted S.B. 150 expanded to apply to fast-growing counties like Hidalgo and Cameron, but the bill was not amended.

Cristal De Los Santos, director of tourism for the Edinburg Chamber of Commerce, said the area would welcome street races.

"We have a lot of racing fans in Hidalgo County," she said. "I know if we could get a race, it would get a lot of visitors from the Valley."

Speed takes time
Mayer said IMSA has had discussions with officials in Houston and San Antonio, and Chrnelich said Champ Car is talking with Houston, Dallas and San Antonio representatives about coming back to Texas.

Even if S.B. 150 becomes law, it could be awhile before racing returns to Texas streets.

"These events typically take three years to gestate," said Mayer. "There's an old saying in motor sports, 'Speed costs money. How fast do you want to go?' We'd love to have them tomorrow, but it's just not the way the economics work."

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