The future of the US Grand Prix has been cast into doubt after the Texas state government slashed the subsidy to the Circuit of the Americas by $5.5 million.
COTA, the tenth American venue to host a Formula 1 race, was receiving $25 million every year from Texas' Major Events Trust Fund for boosting tourism and bringing economic prosperity to the region.
The aforementioned amount was decided by previous state governor Rick Perry and Comptroller Susan Comb. However, in September, the control of the fund was transferred to Texas’ new governor Greg Abbott.
Abbott’s office has used a different formula to calculate the benefits from a grand prix in the region, concluding that the race is worth roughly 20% less than what was previously estimated.
The fall in state subsidy will come as a severe blow for the race organisers, who are heavily dependent on financial support from the government.
"To use a technical term, I think we're screwed," COTA chairman Bobby Epstein told the American-Statesman. "It hit us cold. No one could foresee this coming. But the big question now is, 'Is the race coming back?'"
Formula 1 supremo Bernie Ecclestone has an answer to that question, which may appear to be cynical, but, in fact, gives a fair view of the prevalent situation.
"If it's changed, it's going to be difficult to continue the race in Austin," he said.
Last month, Epstein labelled the 2015 edition of the race as ‘financial devastating’ for the organisers, with persistent rain putting a big dent in their bank balance.
"We lost millions on concessions," Epstein told the same paper after the race. "And we suffered from some fans having such a bad experience they won't be back, though I hope we can change their mind."
The dark clouds over the future of the US Grand Prix underlines two major problems for Formula 1. The sport has failed to establish a foothold in America, despite the success of the latest event in Austin. Secondly, it brings to light the high hosting fee charged by FOM, which makes it hard for promoters to break even.
by Rachit Thukral