Baltimore City Proposes New Motorsports Agreement
Proposed contract allows Race On and Andretti Sports Marketing to conduct IndyCar and American Le Mans street-racing in downtown Baltimore on Labor Day weekend 2012.
Today, Mayor Stephanie Rawlings-Blake announced the details of a proposed 5-year agreement with Race On, LLC, a company contracted with Andretti Sports Marketing, who will run all commercial and operational aspects of the Grand Prix of Baltimore on Labor Day weekend 2012. Following a public review period, the final contract will be presented to the Board of Estimates on May 16, 2012 for a vote.
The Race On and Andretti Sports Marketing team bring well-known local business leadership, coupled with one of the most respected names in auto racing. As part of Race On’s proposal, Andretti Sports Marketing, led by racing legend Michael Andretti, will provide a “turn-key” solution to run the Grand Prix of Baltimore, including sponsorships, public relations, marketing, hospitality, ticket sales, track build, grandstand layout, and logistics.
The new Race On agreement guarantees payment for cost sharing City services, regardless of the number of tickets sold and safeguards admissions and amusement tax revenue in an escrow lock box. The City has terminated its agreement with Downforce Racing, which failed to meet City-imposed benchmarks contained in the previous motorsports agreement.
“The Grand Prix was a great event for Baltimore that boosted our local economy and showcased our city on the international stage,” Mayor Rawlings-Blake said. “This has been a difficult process, but Race On and Andretti Sports Marketing have what it takes to move forward and make this world-class sporting event successful for Baltimore.”
Race On, LLC, a minority-owned Maryland company is led by J.P. Grant of Grant Capital Management and Greg O’Neill of BMW Construction Specialists, Inc. Race On, LLC and Andretti Sports Marketing have the full support and approval of both the IndyCar and American Lemans Series to successfully promote and execute the Grand Prix of Baltimore.
“We have assembled a great, world-class team that will ensure the Grand Prix of Baltimore is a success,” said J.P. Grant. “I grew up in Baltimore. This event is great for the city I love and will become a new tradition Baltimoreans can be proud of for years to come.”
“Our company has a history of resurrecting races in cities such as Toronto, Milwaukee and St. Petersburg, Fla., so we are confident we can do the same for the Grand Prix of Baltimore," said Michael Andretti, CEO of Andretti Sports Marketing. "By combining our decades of motorsports expertise with the substantial backing of local investors and community support, we believe the Grand Prix of Baltimore can become one of the most prominent sporting events on the Eastern Seaboard. We're thrilled to be working with Race On, J.P. Grant, Greg O'Neill and the city of Baltimore.”
Full details about the Grand Prix of Baltimore will be announced after the final approval of the contracts by the Board of Estimates on May 16.
About Andretti Sports Marketing: Andretti Sports Marketing, LLC. is based in Indianapolis with regional offices in Toronto, New York and Fort Lauderdale, Andretti Sports Marketing, LLC manages turn-key marketing solutions for its professional sports marketing clients. Led by racing legend Michael Andretti, Andretti Sports Marketing collaborates with MDC Partners’ agencies within the sports marketing industry to provide a seamless North American activation footprint. For more information on Andretti Sports Marketing, visit http://www.andrettisportsmarketing.com.
Race On, LCC key contract provisions:
- Contract Term—The agreement provides that the race will be conducted annually for an initial five-year term, beginning in September 2012 and concluding in September 2016. The agreement may be extended for an additional five-year period.
- Amusement Tax Lock Box—Each ticket sold will include a 10% admission and amusement tax, which will be collected at the point of sale and placed into a lock box escrow account held by a City-appointed trustee.
- City Services/Racing Event Fee—Race On, LLC will pay a flat $350,000 fee, due 30 days prior to the Racing Event Period. For 2012, the Racing Event Fee will be paid by Race On, LLC upon Board of Estimates approval. The fee increases by $25,000 each year through the end of the 5-year agreement.
- Community Impact Fee—Included in the Racing Event Fee, $50,000 will be provided on an annual basis to the impacted communities for neighborhood cleaning and greening efforts.
- City Revenue Sharing—The City will receive ten percent of any distributed cash in excess of a base return of $1 Million for each year of the 5 year agreement.
- Audit Rights—The City may review Race On’s independently audited records at any time, to the extent necessary to ensure compliance with the agreement.
- MBE Participation—Race On must comply with all City laws regarding contracting with minority- and women-owned businesses to make best efforts to reach goals set by the City. In addition, Race On will use commercially reasonable efforts to award at least 25% of the contracts under its control to Baltimore-based and qualified business enterprises. Race On must also comply with the Mayor’s Employ Baltimore Executive Order by using reasonable efforts to hire at least 35% of its local labor force for the Race and Racing Events from qualified individual residents of Baltimore City.
- Event Management—Race On, LLC will prepare an Event Management Plan for City approval, consisting, at minimum, of the following components: Event Improvements Plan, Safety and Security Plan, Traffic and Parking Management Plan, and Event Impact Plan.
The 2011 Baltimore Grand Prix generated an economic impact of $47 million, according to an independent study by Pittsburgh-based Forward Analytics, an economic consulting firm. Last year, the City received over $1 million in hotel taxes, parking taxes, community mitigation funds, and fees. The State of Maryland generated over $2 million in sales tax from the Grand Prix. In addition, the City was showcased to an estimated 2.7 million US viewers and an international audience comprised of 75 different countries. Races were televised on notable networks, including ABC and the NBC Sports Network (formerly Versus).
Under the terms of the new agreement, and based on the City tax revenue collected from hotels and parking facilities during last year’s event, the City expects to generate up to $1.7 million in direct revenue. As part of the new agreement, $50,000 will be provided to impacted communities for community impact funds.
Local Economic Impact:
- The 2011 Baltimore Grand Prix had a direct economic impact on the City of Baltimore business volume of $27.62 million and a further $19.33 million in indirect impact. The total business volume impact of the 2011 Grand Prix was $46.95 million, according to an independent economic analysis
- The 2011 Baltimore Grand Prix attracted an estimated 160,000 attendees. The racing event attracted local residents, as well as national and international visitors. Nearly 75,000 spectators traveled from outside of the Baltimore Metropolitan Area to attend the Grand Prix. And 41% of spectators visited from outside of the state of Maryland.
- Grand Prix spectators spent $7.12 million at local hotels. Hotel expenditures generated an estimated $533,733 in tax revenues for the City of Baltimore. An additional $426,986 in tax revenues was gained by the State of Maryland.
- The State of Maryland received an estimated $2.08 million in sales tax revenues from the direct economic activity of Grand Prix spectators, vendors, and event organizers.
- For the majority of spectators (76.5%), the Baltimore Grand Prix was their first Grand Prix event attended. Eighty-nine percent of survey respondents had a very positive or positive overall experience at the 2011 race, and 88% said they were very likely or likely to attend this year’s Baltimore Grand Prix.
Public Review and Comment:
The final contract will be presented to the Board of Estimates on May 16, 2012 for a vote, following a six-day open and transparent public review period.
- Proposed contract between the City and Race On, LLC is attached.
Mayor Rawlings-Blake welcomes citizen input on the proposed agreement. Comments should be sent to email@example.com
with “Grand Prix Contract” in the subject line.
Visit our Website @ www.baltimorecity.gov