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Idiots Miami Herald 'reports' below. Failed to note that
solar panel production would have been Also, failed to ask
the Justice dept. if it would investigate |
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Winston
Cup hurts Homestead Loss
of millions to speedway operator depriving city in danger of bankruptcy BY KARL ROSS The Winston Cup did not
come cheaply to Homestead. To attract the coveted
NASCAR series to the Homestead-Miami Speedway, elected officials made
concessions to the track's private operators in 1997 that cost the city
tens of millions of dollars. It's money the city could
use as it struggles to overcome a financial crisis that may end in a state
financial takeover, even bankruptcy. Mayor Roscoe Warren this
month announced layoffs after a briefing by a special task force of
auditors. The city is going broke,
auditors told town officials. Instead of fueling the
city's recovery, the forsaken speedway revenues -- an estimated $55
million to $70 million over the life of the current operating agreement,
which expires in 2032 -- will remain in the hands of the track's private
operator. The operator is a
subsidiary of Daytona Beach-based International Speedway Corp., a publicly
traded company with reported revenues last year of $440 million. ``When do we stop
subsidizing a private industry?'' asked Homestead Councilman Eddie
Berrones, chairman of the city's finance committee. ``We sold our soul for
that Winston Cup.'' Combining lost revenues
with new liabilities, the cost of hosting the Winston Cup for Homestead
could reach $100 million. The city: Reduced rent payments by
$19.8 million. Eliminated a
revenue-sharing clause that could have yielded $50 million or more in
income. Wrote off as
uncollectible a cash advance of more than $8 million from the city for
track improvements. Will begin paying
property taxes on the speedway next year, taking on a liability that over
the years could surpass $20 million -- the result of a recent state
Supreme Court ruling in a Sebring case that allowed counties to tax motor
sports facilities. Under the initial lease
agreement in 1995, the speedway's private operator -- not the city --
would have assumed that liability. The city later agreed to
pick up the tax liability when its legal advisor, Michael Watkins, assured
the City Council in 1997 that in his opinion, Miami-Dade County ``would be
unsuccessful'' should it try to put the speedway on the county's tax
rolls. The court ruling has
proved him wrong. Homestead's tax bill next
year will be $690,000. OPERATOR'S STANCE The speedway's operators
-- a company controlled by the first family of U.S. auto racing, the
Frances -- say they are not to blame for the city's unfolding fiscal
crisis. ``We're more of a white
knight than a white elephant,'' said Curtis Gray, president of
Homestead-Miami Speedway, the ISC operating subsidiary. Gray said the speedway
pumps $200 million a year into the local economy, three times the amount
generated by the Marlins-Indians World Series in 1997. The inaugural Winston Cup
in November 1999, he said, was a catalyst for development, with the
opening of a Wal-Mart and Home Depot in nearby Florida City. What's more, Gray said
the speedway does business with 116 South Miami-Dade firms, paying out $15
million for goods and services over the past four years. `A HUGE BUSINESS' ``It's a huge business,''
he said. ``I don't know what else we could do for the city or for South
Dade.'' Expectations for the $60
million speedway have always been high. In the aftermath of
Hurricane Andrew in 1992, it was pitched as an economic savior after the
closure of the city's Air Force base. The city provided much of
the upfront financing and expected to share in the profits. The city anted up $29
million of the initial financing for the speedway, $20 million through a
bond issue and, later, another $8.9 million transferred to operators from
its electric utility reserves. Miami-Dade contributed
$31 million, mostly from a tax on tourist lodgings. The state kicked in a $1
million grant toward construction. The original track
operator was Miami Motorsports, a joint venture led by Ralph Sánchez,
founder of the Miami Grand Prix, and sports mogul H. Wayne Huizenga, owner
of the Miami Dolphins. Under the lease with
Miami Motorsports, the city was entitled to 10 percent of gross revenues
in excess of $15 million. The city was also to
receive yearly rent payments of just under $2.2 million through 2032. WINSTON CUP CRISIS Less than two years after
the speedway was up and running, Sánchez notified city officials that
efforts to secure a Winston Cup date -- viewed as essential to the
speedway's long-term profitability -- had stalled. He said the only way to
land the series was for the city to approve a sale of his group's
operating rights to ISC, which could rely on the France family's clout. On April 7, 1997, the
Homestead City Council met to discuss the terms of the transfer to ISC,
most of which diminished the city's financial stake in the speedway. By the time the council
approved the deal, the revenue-sharing clause was wiped out and the rent
payments, from 2016 to 2032, were slashed by more than 50 percent to $1
million. The latter concession
amounts to $19.8 million over the life of the lease. TRICKY TO CALCULATE The loss of the
revenue-sharing money is trickier to calculate because, in another lease
change, a requirement for the operator to submit annual audited revenue
statements to the city was deleted. Still, Sánchez, long a
mainstay of South Florida auto racing circles, estimates the addition of
the Winston Cup doubled the speedway's total revenues to between $25
million and $30 million a year. ISC declined to make
public its exact earnings but did not dispute Sánchez's estimate. RELUCTANCE TO PUSH Gray, the speedway's
president, said most of the speedway's profits are reinvested in the
facility. He said investments have
topped $50 million to date. If Sánchez's numbers are
accurate, then Homestead forfeited potential income amounting to between
$34 million and $51 million since the staging of the first Winston Cup. On a yearly basis, the
city would have reaped between $1 million and $1.5 million. Not only did the city
forsake future speedway revenues, it also tabled a demand for a slice of
the profits from the sale of the operating rights to be collected by Sánchez
and Huizenga's joint venture group -- a reported $32 million. Homestead's city manager
at the time, John Asmar, wanted a payout of $8 million to offset the cash
advance made for the track improvements. City Council members were
reluctant to push too hard, because Sánchez said the speedway would have
``no opportunity whatsoever'' to host a Winston Cup race if it did not
accept the terms laid out by ISC. Councilman Nicholas
Sincore finally made a motion to accede to the terms without a payout to
the city. But he admitted he had
mixed emotions. ``The way I vote, I'm
going to be damned if I vote and damned if I don't vote,'' Sincore said. City leaders were
troubled by reported losses at the track and Sánchez's dire assessment of
the tracks's future without a Winston Cup race. ``If we fail, you fail,''
he said. ``If we fail, you have another white elephant out there.'' Steve Shiver, then a
Homestead councilman, now Miami-Dade County manager, seconded Sincore's
motion but had a more upbeat message for his colleagues. ``I think that after we
walk away this evening, we'll be able to walk away proud of our staff and
ourselves for being able to put together such a complex deal,'' Shiver
said. Sánchez, who now says he
regrets dealing away rights to the speedway, has been stung by criticism
from the sale but does not deny he profited. ``Did we make a profit?
Absolutely,'' he said. ``That's what we were in business for.'' SWORN TO SECRECY Sánchez said the payout
to his partnership was not as lucrative as reported but could not give an
exact figure because of a confidentiality agreement. Another source familiar
with the deal said the number was closer to $28 million. The amount was divided
among Sánchez, Huizenga and two minority partners. Sánchez admits, however,
that the amount of the payout from ISC was contingent on exacting
concessions from the city. ISC Vice President John
Graham confirmed this was the case. He said the company was
unwilling to meet the asking price from Sánchez's group unless he
persuaded the city to strike the revenue-sharing clause from the lease
agreement. ``We were not party to
any of the discussion with the city,'' Graham added. Huizenga declined to
comment. At the end of the council
meeting, former Homestead Mayor Tad DeMilly commended Asmar for being so
``hard-nosed'' but expressed satisfaction with the Winston Cup deal. Asmar now says: ``It was
a business decision for me and a policy decision for them. But I felt they
could have leveraged their assets better and gotten more revenue
resources, which is what the city needed then and needs today.'' |