• Formula Money

Grand ambition

By Christian Sylt and Caroline Reid
July 21, 2010
Tavo Hellmund recently visited Silverstone for the British Grand Prix © Sutton Images

Formula One has moved into four new countries over the past five years and although reception was mixed on the announcement that they would be added to the calendar, few attracted scepticism of the race ever taking place. That all changed last year when Donington Ventures Limited (DVL), the company which had the contract to promote the 2010 British Grand Prix, failed in its bid to secure enough finance to host the race. DVL had never promoted an F1 race before and to host the sport it needed to make significant changes to Donington which would be funded by an unnamed private investor. Nearly two years on, history seemed to be repeating itself.

In May Formula One Management (FOM) announced that Full Throttle Productions, a company which has never promoted an F1 race before, had been given a 10-year contract to host the United States Grand Prix in the Texan city of Austin from 2012. Full Throttle's backers weren't disclosed and, seemingly worse still, groundwork on the circuit had not yet even begun. It is hardly surprising that criticism came thick and fast but it may well have been premature.

Full Throttle's founder is a former Formula Ford and Formula Three driver called Tavo Hellmund and although his situation may seem to be similar to DVL's on the face of it, looking deeper it couldn't be more different. F1's boss Bernie Ecclestone says with a smile that he has known Hellmund "since before he was born." It is almost not an exaggeration since his father, Gustavo Hellmund-Rosas, was president of Mexico's Grand Prix organising committee when the race was held in the late 1980s.

Hellmund junior was inducted into the world of motorsport at an early age when he became a gopher at Ecclestone's Brabham F1 team. "I did that so I had an inside track on how F1 worked and what Bernie was doing back then to grow it into what it is today," says Hellmund. He speaks in a rapid fire burst akin to that of Jim Carrey and even slightly resembles the Canadian actor. Crucially, he says "I have known Bernie for almost 40 years." It didn't take long for this to pay off in his career.

Whilst working his way up racing's ranks Hellmund followed in his father's footsteps and began promoting events. In the early 1990s the untimely death of one of his friends at the hands of a drunk driver led Hellmund to found a campaign called 'safe and sober' which involved motor racing drivers attending schools to educate pupils about wearing a seat belt and not drinking and driving. "A kid who is 17 years old doesn't listen to their teacher but they will listen to someone who they think is cool," says Hellmund.

With the support of General Motors the campaign became so successful that Hellmund "ended up doing 350 presentations at 400 high schools in the southwest of the US." It grew into a year-round after-school programme and Hellmund says he was commended by the then-president Bush for it. This led to him arranging festivals and concerts drawing 70,000-strong crowds.

In 2004 Full Throttle branched into its first race with the promotion in Austin of the 'Texas Race Fest', a lower-tier NASCAR race which became a sell-out due to it being bundled with a race from the USAC Midget Car series which has spawned such renowned drivers as Mario Andretti, Jeff Gordon and Tony Stewart. F1 was out of Hellmund's reach as the sport was then in the middle of a turbulent eight years racing at Indianapolis. But two years after the 2005 US Grand Prix when only six cars raced due to risk of tyre failure, Indianapolis finally severed its ties with F1 and this was the catalyst for Hellmund's bid.

"We started talking hard about Austin about two weeks after they publicly announced that they weren't going back to Indianapolis," says Hellmund. Over the past five years F1's viewing figures surged to 520m and brought the sport under the radar of emerging nations such as Abu Dhabi, Singapore and South Korea. Their governments are prepared to foot F1's hosting fees to use the exposure through the sport to drive tourism and this has fuelled a bidding war which has driven the average race hosting fee to $31.2m. Indianapolis was not prepared to pay this and it gave Hellmund a foot in the door.

Ecclestone says that the biggest difference between Donington and Austin is that "the government is supporting it." Hellmund has managed to do something that not only Donington but even F1's current home in the UK of Silverstone has failed to pull off.

The ballpark for the circuit construction is not much less than $ 250m

In 2004 the government in Texas passed a bill to make available a fund to attract major events, such as the Superbowl, World Cup and Olympics to the state. Hellmund noticed that although it wasn't an applicable event, F1 was the only global motorsport which would fit into this category. Hellmund says that he met with his local senator two and a half years ago and applied for F1 to be included. He got what he wanted and this made available up to $25m for every year of Hellmund's contract.

Hellmund stresses that the state money comes from "increased sales tax revenue generated by the event. Not only is it motel and hotel, it's retail, rental, alcohol and everything." He adds that unlike bids for events like the Olympics and World Cup, "the government didn't spend a penny in three years of bidding for the F1 rights and they are not going to spend a penny on building the circuit."

The $25m will cover the fee which Full Throttle pays to FOM in the first year but it will soon fall short. Written into F1 race hosting contracts is a clause which increases the amount paid by 10% annually. By the tenth year of its F1 contract it is expected that Full Throttle will be paying around $58m which would leave a shortfall of $33m after the Texas state has paid its contribution. Then comes building the venue and Hellmund says "the ballpark for the circuit construction is not much less than $250m." Accordingly, it is no surprise that FOM wanted to see the colour of Hellmund's money and he adds that "they don't care whether it comes from your crazy aunt or a government."

Hellmund says he "understands the curiosity [in the identity of his backers] because of the whole deal with Donington." However, he doesn't help his cause by adding that "it's nobody's business what my funding is." All he will say at the moment is that "our investment group is world class and are either billionaires or groups that are very solid in the sports arena. One has been involved in motorsport before." Contrary to reports that his money may come from Mexico, and in particular, from the country's wealthiest man, Carlos Slim HelĂș, Hellmund says that his backers are all American. "They are either people I have known over the last 10 years or further back," he adds.

Perhaps the biggest endorsement is that Hellmund says "Bernie knows my investors and he doesn't have any problem with them." After the debacle of Donington it would be hard to imagine Ecclestone putting his faith in a project which lacked finance again. The conspiracy theorists may claim that he is using Texas to spread the word about F1 in the US and to raise the price with New Jersey which he admits he is looking at as the site of a second race in the country. However, Hellmund is confident that even New Jersey cannot match his offering.

Tavo Hellmund has known Bernie Ecclestone for almost 40 years © Sutton Images

He says that "when you look at the history of Grand Prix racing in America, all the way back to the one year they were at Sebring in the 1950s, the only time they were at a permanent facility was at Watkins Glen from 1960 to 1980." Due to lack of space, a race in New Jersey would most probably be some form of a street circuit which would lack this permanence. He adds that in the vicinity of Austin are the headquarters of multiple F1 sponsors including AMD, Dell and HP and with Houston and Dallas under 200 miles away it has a catchment area of 22m people.

Teasingly, he also promises that downtown Austin and the international airport are within 10 miles of the circuit which "is east and a little bit north [of the city]." Despite the 700 acre plot being under his control for the past four months Hellmund has not announced its specific location and all the land was deliberately not bought in his name to maintain secrecy. The reason for this is that he has been looking at buying further plots on the perimeter and once the location becomes public the price will rise. He explains, "the owner of one little piece down the road caught wind and instead of wanting $20,000 an acre he wants $70,000."

Hellmund adds that the precise location will be made public over the next two weeks and "we already have some of the permits in place." Circuit designer Hermann Tilke has confirmed that the track will be ready on time and, as a former driver, Hellmund knows precisely what it needs to give fans a good show.

"We are focussed on fan amenities meaning access and the fact that their seat should be able to see more than one corner. There will also be elevation changes along the circuit and it will be more than three miles long." He adds "one of the things we have done is we have taken four or five corners we are fond of from other circuits and used them as a pattern for certain sections of our track. There is a corner from Turkey, a couple from Silverstone and one from Hockenheim."

Hellmund says he has a "long and detailed plan" to get the US audience reacquainted with F1. "One of the things we are going to do is have grand prix parties starting early next year in parks with big screens, music and a show car programme across the United States." It will put his promotional experience to the test and with the attention of an entire nation at stake, the reward could be the biggest in F1.