How Austin's F1 Track Stands to Benefit From the 'Fiscal Cliff' Bill (Update)
Update: Here’s more details on the tax break the Circuit of the Americas may be able to capitalize on: It’s called accelerated depreciation, and gives COTA a fast, seven-year write off on the value of their investment, which may have been as much as $400 million.
COTA officials says they’re pleased to have the tax break, but say they did not lobby for it. “We did monitor the issue as it moved forward, but were not directly involved in pursuing the extension itself," says spokesperson Ali Putnam.
Michael Cramer runs the Texas Program in Sports and Media at UT. He says it’s important to understand how this tax break is funded. “Effectively what’s happening is the federal government, and you and me, are helping to pay for that track," he says, "and there’s the rub."
Cramer believes that COTA’s Formula 1 race brings big benefits to Austin, and to Texas, and adds that the $29 million payment to COTA from Texas’ special events trust fund was probably a good investment. (That money comes from related sales taxes collected during the event in November.) But Cramer’s not sure about more public money going to the track.
“Should it happen?” he asks. “Probably the federal government shouldn’t be subsidizing these things."
Cramer, who once co-owned the Texas Rangers baseball team and served as team president, says that almost every industry in America gets some sort of special tax break. Circuit of the Americas says it doesn’t know just how much this tax break will save the track on its federal taxes.
Original post (11:15 a.m.): The brawl over, and eventual passage of, the so-called fiscal cliff bill reverberated across the county. But here’s one provision in Congress’ action that has specific resonance for Central Texas: extension of the “NASCAR loophole” providing public benefit to racetrack builders. And it looks like Austin’s Formula 1-hosting racetrack, the Circuit of the Americas [COTA], stands to benefit.
The Washington Post highlights the “10 weirdest” measures in Congress’ stopgap measure to keep the country from falling off the fiscal cliff and into sequester. One of the provisions is an extension of tax breaks for track builders.
The Post says:
“The so-called NASCAR loophole, in place since 2004, allows anyone who builds a racetrack to receive a small tax benefit through accelerated depreciation. This tax break cost roughly $43 million the past two years and will get extended for another year. “
COTA CFO Dan Allen tells KUT News he anticipates the measure will be a benefit to the track. While NASCAR serves as American shorthand for auto racing, the provision specifically applies to racetracks that opened in 2012, like COTA. Allen says COTA did not lobby for the provision, but had been monitoring the debate.
Estimates say the tax break is worth some $78 million to the motorsports industry, according to the U.S. Congress' Joint Committee on Taxation. It’s not clear how much of that would go to Circuit of the Americas.