F1 has always had a powerful divisive effect, and the prospect of the sport returning to the United States at an all-new facility close to the Texan capital Austin is no exception to the rule, with differing views on the money being spent on the project.

While economist Angelos Angelou claimed, via the American-Statesman, that the local area would reap the rewards of investing in the bid to bring F1 back to the USA, local contributor Bill Aleshire took the opposite standpoint, insisting that the state has other financial priorities, and should not be stumping up $25m of public funding to get the event up and running ahead of a proposed 2012 calendar spot.

Angelou believes that the region needs to 'speculate to accumulate', insisting that the initial investment in the Circuit of the Americas could lead to $500m income for the Austin area. The $25m grant given to the USGP project comes from Texas' Major Events Trust Fund, money put aside to attract important sporting and cultural occasions to the state, and has previously been used to bring the Super Bowl to Dallas, as well as major basketball and baseball events.

The decision to help fund the return of F1 to the US, however, comes at a time when the country is still attempting to recover from economic downturn and, locally, when teachers are being laid off in the Austin area. Angelou, however, believes that the two cannot be balanced against each other.

"The comparison presents a false choice and is economically irrational," he wrote, "Let's begin by understanding that the Major Events Trust Fund is a fiscally neutral mechanism. The fund was created by the Texas Legislature in 2003 to help attract large, well-attended events such as the Super Bowl, the NCAA Final Four basketball championships, the NBA All-Star Game and now F1 racing.

"Under the legislation, the Major Events Trust Fund can provide $25 million toward hosting the F1 event. None of these funds are used to build the venue itself, and the entire amount is reimbursed to the state once additional taxes generated from auto rentals, hotel stays, restaurant sales, alcoholic beverage sales and the sale of a variety of support services are realised. By my own firm's conservative estimates, more than $30m in additional sales tax will be generated by the F1 event alone.

"Overall, the comptroller's preliminary economic impact study completed in 2010 suggests accrued benefits to the Texas economy of just under $300m from the F1 race event. My own calculations peg the actual economic impact at well over $500m when one considers benefits derived from the construction of the facilities and additional revenue generated from other events to be hosted year-round at this venue."

Angelou goes on to support his argument by pointing to a Financial Times article from 2008, which reported that $275m invested in F1 races by governments around the world brought in $1.52bn - a 533 per cent rate of return per race.

The development of Circuit of the Americas facility is being funded by around $300m of private investment, without any government incentives being offered to the developers, and has provided employment for more than 1300 people as construction gets underway. Angelou also points out that 'several hundred permanent positions will be created at the venue once it is fully operational', with 'several thousand more' being employed over major race weekends.

"F1 is the premier motorsport event in the world, [and] Texas, and specifically Austin, is lucky to recruit such a globally renowned event," he opined, "It will provide considerable momentum for more sporting events to be hosted here, and research and development opportunities for our colleges and universities. The publicity created will put Texas on an international stage."

Aleshire, meanwhile, attempts to turn Angelou's argument on itself, believing that 'the more we hear about what a financially lucrative business F1 is, the more taxpayers should object to using tax dollars to support it'.

"F1 relies on magical math," he claimed in his own written response, "F1 claims there will be increases in some consumption tax revenue (sales, alcohol, hotel, etc.) if it comes here. Thus, by kicking that revenue back to it, it says this is really 'free' to the taxpayers. The error in such thinking is that every profitable business has the same effect without such tax kickbacks. It's unfair and utter nonsense to give these chosen few businesses back the taxes they generate, leaving the rest of the taxpayers to actually fund the government."

While claiming to admire Angelou as an economist, Aleshire, a lawyer and former county court judge, insists that the 'expert' has used misguided figures to support his argument.

"If he's referring to the flawed projections used by the state comptroller to offer up the first of ten $25 million instalment payments to F1, he should look closer," Aleshire claims, "For example, the comptroller's estimate of the increase in hotel tax was based on the number of visitors F1 would attract, and estimated an equal number of hotel rooms would be rented. They assumed single occupancy of each room when only multiple occupancy is realistic. The comptroller estimated a whopping $250 in alcohol sales for every visitor, but didn't offset that with the jail costs for DWIs.

"'Encouraging' tax projection? Yes, but it's flawed and exaggerated. F1 might be everything its promoters and political apologists suggest it will be. If Austin is a great market for F1, then private enterprise will work just fine without largesse from the public treasury. Private businesses and the wealthiest among us must learn to pay their fair share and stop riding on the bent backs of hard-working taxpayers."

The latest effort to take F1 to the American people has been met with generally positive reaction, with the Circuit of the Americas being hailed as potentially the best new addition to the calendar since Turkey, after Hermann Tilke unveiled a layout that used the natural topography to provide an undulating switchback of a circuit. A raft of amenities and multi-purpose facilities have been included in the ambitious plans, and the circuit has already succeeded in attracting MotoGP, which currently runs at Laguna Seca and Indianapolis, to its list of future events. The facility is scheduled to open in June 2012.



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