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December 9, 2011

Prediction: Grand Prix will be rescued, revived

Baltimore Racing Development is a startup company. Almost all startups lose money in their first years. Well-run, startups, however, make sure their cash will last until that day. The Baltimore Grand Prix didn't -- by a long shot, as this weeks stories by Luke Broadwater show. The operation is $12 million in debt, much of it past due. It lost millions on this year's race. And it has little cash on hand.

But the turnout for the race seems to have been encouraging enough to generate some interest. Would-be investor Felix Dawson would seem to have the wherewithal and the contacts to turn the thing around. He worked at Constellation Energy and Goldman Sachs, and perhaps he has the Rolodex to find a sponsor to underwrite next year's race.

That doesn't necessarily mean all the debts will get paid off. I don't have any inside information, but this wouldn't be the first insolvent but promising business venture to sort itself out through a Chapter 11 proceeding. Another question, as The Sun's editorial board raises today, is whether or not the city will have to invest more in the local Grand Prix. The editorial board says: Don't do it. But I wouldn't rule that out, either.

Posted by Jay Hancock at 10:17 AM | | Comments (3)
        

Comments

I hope the event continues; mainly because the alterations done to the roads, sidewalks and landscaped areas were so drastic that it would be awful to let this be a one-time deal. Otherwise all of the extra time stuck in traffic during construction would be for naught.

I hope they cancel the event and never have it again. The months and months of traffic problems that caused me while commuting to work are not worth the headache of a race. The massive cutting down of trees just so some grandstands have better views of the race track, the fact that those trees are now in portable planters (saw them in the harbor the other day), is just a shame. The city calls it progress, I think even though this company 'lost' money it lined someones pockets full of cash. After all, no one at Constellation Energy or Goldman Sachs actually loses money.

I would be fine with them running the race again if there is a full, 100% open investigation into BRD's finances and how they managed to get into all this debt despite having every advantage, including all those ticket sales mentioned and millions of state and local subsidies. Those running the company should face jail time in the likely event they committed fraud.

That will never happen though because they bought the right to run this race with campaign donations and as a result they will be protected from criminal and civil liability. I don't think anyone in Baltimore should be asked to sacrifice one more cent, one more minute of their time, or one more tree just to line the pockets of these people. They got what they wanted and so did the people running the city. Let's cut our losses on move on.

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About Jay Hancock
Jay Hancock has been a financial columnist for The Baltimore Sun since 2001. He has also been The Baltimore Sun's diplomatic correspondent in Washington and its chief economics writer. Before moving to Baltimore in 1994 he worked for The Virginian-Pilot of Norfolk and The Daily Press of Newport News.

His columns appear Tuesdays and Sundays.
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