McCombs brings savvy, cash to Austin F1 effort
Billionaire revealed as a lead investor in track project; design 75% done
The Fabulous Thunderbirds’ classic “Tuff Enough” had just finished blaring over the sound system in a ballroom at the AT&T Executive Education and Conference Center on the University of Texas campus when Red McCombs was introduced as the key investor in the effort to bring Formula One racing and the U.S. Grand Prix to Austin by 2012.
The billionaire San Antonio businessman has been an owner of the San Antonio Spurs and Minnesota Vikings sports franchises and is one of UT’s biggest benefactors. The announcement that he is helping bankroll the F1 venture lent more credence to promoter Tavo Hellmund’s ambitious venture and drew several UT officials, including men’s athletic director DeLoss Dodds.
Dodds, who stood at the back of the crowded room, called McCombs “one of the giants of the Texas business world. … We have seen the results of his business acumen and innovative thinking, so we would have to believe any venture in which he is involved holds great promise.”
Since the project was announced in late May, it has met with some skepticism locally and around the racing world. The track is slated to be built on about 900 acres of undeveloped land near Elroy in southeastern Travis County.
Joe Gieselman, executive manager
‘Remember, you’re talking about doing this in Texas. We have a reputation as a state and a people.’
Red MccoMbs, investor in Austin’s Formula One enterprise
of Travis County Transportation and Natural Resources, said Tuesday that it normally takes at least six months for a complex development such as this one to undergo city and county review. Gieselman said the county’s review would involve roads, traffic, drainage, flood plain issues and on-site wastewater, if any.
Because the site is likely to connect to a state highway, FM 812, the Texas Department of Transportation also will have a role in the review. Gieselman said that the area’s two-lane rural roads would be inadequate to serve a 200,000person event and that the developer would probably have to enhance the road system.
Those are some of the elements that put the project on a tight schedule for a 2012 race. McCombs, however, said, “I wouldn’t even have made an announcement if I wasn’t very optimistic that this will be completed and done.”
McCombs said that shortly before the news conference, he talked on the phone with F1 boss Bernie Ecclestone and reassured him that things would be done on time.
“Remember, you’re talking about doing this in Texas,” McCombs said. “We have a reputation as a state and a people.”
Hellmund’s association with McCombs goes back a long way. Hellmund said when he started his racing career 21 years ago, his first sponsor was a dealership owned by McCombs. Although McCombs has been in the car business since 1950, “I had no idea of the scope of Formula One,” he said.
Formula One is the most popular form of racing worldwide — and the most expensive. The TV audience for a race can top 500 million, and building a circuit can run upward of $200 million. State Comptroller Susan Combs said Tuesday that state funds would not be used to build the track; that would be handled by the private investors. The state has committed $25 million a year in tax revenue to the enterprise.
Combs said, “Red is a guy that does well because he’s smart and does his research.”
UT’s prestigious business school bears McCombs’ name, and he was also a fundraiser for the AT&T center.
In addition to McCombs Partners, the other lead investor is Prophet Capital Management, an Austin-based private investment company, whose managing partner is Bobby Epstein, an owner of Wandering Creek. At 647 acres, Wandering Creek is the largest of the parcels being assembled for the track site.
Other investors include Kevin Schwantz, the 1993 500cc world champion motorcycle racer, who is a longtime friend of Hellmund’s.
Hellmund said McCombs and Epstein had been talking for at least six months about the project, but it was just two months ago that he and Prophet decided that McCombs “would be the best strategic partner/investor to add to a project of this magnitude in the state of Texas.”
Both McCombs and Hellmund said the Grand Prix site — which McCombs would like to call Speed City — would be much more than a racetrack and could be used for research and development by UT, Texas A&M University and other schools. However, no specifics of such a collaboration were revealed.
Hellmund said the design for the track is about 75 percent complete, and “we’re moving forward as if it’s the site.” Other tracts, however, are still being explored.
“There have been several really interesting alternative locations presented to us over the last two months,” Hellmund said. “Not only are they interesting, but they come with enticing incentives. We’d be foolish as businesspeople not to take a close look at the other options.”
McCombs said the investment group still needs to raise capital. “We still have many challenges. We have to wade through them and get to the finish line.”
Although Austin has the U.S. Grand Prix, other cities apparently haven’t given up hope of landing an F1 race.
“There are three very, very serious and separate projects,” Ron Dennis, the head of Formula One’s McLaren Automotive, told reporters Saturday at a NASCAR race at Indianapolis. Last week, Monticello Motor Club President Ari Straus said that the upscale New York driving club was still in negotiations with Formula One. A group in New Jersey is also attempting to attract a race.
Similar to the Johnny Cash song “I’ve Been Everywhere,” which played before the briefing, Formula One has been all over the U.S., including Sebring, Fla.; Riverside and Long Beach, Calif.; Watkins Glen, N.Y.; Las Vegas, Detroit, Dallas and Phoenix.
The U.S. Grand Prix was held from 2000 to 2007 at the Indianapolis Motor Speedway, with the Formula One circuit incorporating the track used for the Indianapolis 500, an IndyCar race.
“That would be like us trying to place baseball at DKR (Memorial Stadium),” Hellmund said. Hellmund said that when the U.S. Grand Prix was held on a circuit specifically designed for Formula One racing — as Austin’s would be — it was successful.
Combs has said the financial impact of the Grand Prix race for Texas would be $300 million annually. McCombs was asked what he thought the financial impact would be on him.
“I think it will be immense,” he joked.
San Antonio businessman Red McCombs, right, said Tuesday that he’s optimistic about the success of Austin’s Formula One track. Promoter Tavo Hellmund, left, who landed the deal to bring the U.S. Grand Prix race to Austin, and McCombs spoke to a full house at the AT&T Executive Education and Conference Center.
Looking over some plans before Tuesday’s briefing are, from left, Texas Comptroller Susan Combs, former motorcycle racer Kevin Schwantz and Christian Epp of track design company Tilke GmbH.
Red McCombs, 82, owns an automotive group and has investments in a variety of industries – now including F racing.