On Friday Baltimore Mayor Stephanie Rawlings-Blake announced that the city’s five-year contract with Baltimore Racing Development LLC had been canceled, imperiling the 2012 and future Baltimore Grands Prix.
BRD owes the City of Baltimore nearly $1.5 million for the 2011 event, and reportedly owes another $12 million to investors. The city also spent $7.75 million in state and federal highway funds and additional funds lent by the Maryland Stadium Authority, according to BaltimoreBrew.com.
After repeated warnings from the city BRD was not able to reorganize or find finds to meet its debts, leading to Baltimore cancelling the deal.
“It is with great disappointment that we announce the termination of the City’s agreement with Baltimore Racing Development,” said Mayor Rawlings-Blake in a statement on the city’s website.
“Like many Baltimoreans, I hoped that BRD would restructure, recapitalize and begin to pay taxes and debts by the December 31 deadline. BRD’s corporate officers and managers have failed to take the appropriate steps to put the company on a sustainable path forward.”
Despite BRD’s financial failure, the mayor seemed hopeful that a new company could be found to operate the event: “The Grand Prix generated $47 million in economic impact and proved valuable in terms of positive media exposure and civic pride for Baltimore’s residents.
“The event, if conducted responsibly, has significant economic value to potential investors and the City this year and in future years.”
Mayor Rawlings-Blake has been a strong supporter of the Labor Day event, which remains on the schedules of both the American Le Mans Series and IndyCar.
Deputy Mayor for Economic and Neighborhood Development, Ms. Kaliope Parthemos told the Baltimore Sun, “This event had a great economic impact on the city, and it was an event the citizens of Baltimore were excited about. It should continue.”
Deputy Mayor Parthenos indicated that the city was already talking with two or three groups which wanted a chance to take over the event.
Baltimore city Delegate Curt Anderson told FOX News, “This is something we just have to work our way through, because I think in the long run—over the next 10, 15, 20 years—this will becomes a big as the Preakness or any of the Ravens games.”
Good Event, Bad Management
The inaugural Baltimore Grand Prix was judged a huge success by the city, race fans, and the racing organizations which competed there on Labor Day weekend in 2011.
The event attracted some 160,000 fans over a three-day period, and generated a lot of good press about the city of Baltimore.
Not long after the event, troubles started brewing: the firm which erected the bleachers complained it had not been paid and would sue. Other lawsuits soon followed, and even former BRD officers started suing the company for back wages.
In November, Deputy Mayor Parthemos issued a statement warning BRD: Baltimore Racing Development (BRD) has not honored the terms of its contract with the City. “BRD must immediately restructure and recapitalize or sell itself to investors in order to make the event profitable in the future.
“BRD must also work immediately to pay debts owed to the City and taxes owed to the City and State by December 31, 2011, aggressively work to repay any debts to vendors, and present a restructured company and management team, or the City will terminate its contract with BRD.”
The city also spent On Dec. 7, the Baltimore Sun reported that BRD owed more than $12 million and had less than $100,000 in the bank.
According to the city BRD owes $700,000 for city services, $487,971 in admissions & amusement taxes, $50,862 in parking fees, and a $250,000 event fee, totaling $1,488,833.
