(by Julie Scharper baltimoresun.com 10-27-10)
The organizers of the Baltimore Grand Prix race failed to make an $800,000 bond payment this month for a $1.9 million project to convert Camden Yards parking lots into a pit lane for race cars because, in part, of the group's limited cash flow.
The Maryland Stadium Authority has agreed to a new payment plan under which the racing group will pay $150,000 next week, with an additional $750,000 coming in two installments before the end of the year.
Mike Frenz, the authority's executive director, said the racing group asked for more time because it has "a variety of cash-flow needs."
"If they had attended only to ours, that's a lot of cash to tie up in an inefficient way," he said. The authority was amenable to the new payment plan because construction was delayed due to a change in the design for the pit area, he said.
Austin Crossley, a spokesman for the Baltimore Racing Development group, said the staggered payments free up cash for other costs.
"We are a startup business, and it is beneficial to put off these expenses as long as we reasonably can," he said.
The performance bond funds were to be deposited in an escrow account to guarantee payment for the extensive project — which includes uprooting trees and removing fences, curbs and light fixtures to clear an area for refueling, tire changes and repairs during the three-day racing festival scheduled for next Labor Day weekend.
The racing group has not secured a title sponsor for the inaugural festival and has not begun to sell tickets.
Event promoter Jay Davidson has said that tickets are to go on sale next month and that the group is close to completing negotiations with a corporate sponsor that would pay "in the low seven figures."
On Wednesday, Davidson announced that the group had completed sponsorship deals with five hotels near the race route.
Crossley said that the lack of a title sponsor and ticket revenue did not cause the group to miss the Oct. 1 deadline for the bond payment.
"The fact that we haven't announced a sponsor yet is not why we didn't make that payment," Crossley said. The racing group had not expected to receive a cash infusion from a title sponsor until November, he said.
Kaliope Parthemos, deputy mayor for economic development and a member of the stadium authority's board of directors, said that she was "confident it's going to be a successful race."
"It's the first time for them and the first time for the city to have an event like this," said Parthemos. "We anticipated a learning curve."
The city has pledged $7.75 million for roadwork in preparation for the race, including moving curbs and medians, and laying new concrete and asphalt. P. Flanigan & Sons was awarded a $4.2 million contract to work on the two-mile course.
The city's public works department has embarked on $750,000 project to replace and strengthen pipes under the course in an effort to prevent a water main break.
Work on the stadium, which is slated to begin early next month, will involve converting two parking lots along Conway Street into a pit area. The project involves installing stretches of concrete that the cars need for servicing; if tire changes were made on asphalt, jacks and other equipment could sink into the surface.
Many permanent structures — including a metal fence encircling the lot and a traffic circle — will be removed and replaced with objects that can be wheeled away when the race is under way, according Eric Johnson, project manager for the stadium authority.
Initial plans called for the pit area to be located on the west side of the stadium, near Russell Street, but a revised race route moved the pit to the east side, in front of the Babe Ruth Birthplace and Sports Legends Museums.
Race organizers have agreed to pay back the construction costs, and 12 percent interest, over five years, said Frenz, the stadium authority's executive director.
If the racing group is unable to pay the $900,000 by the end of the year, the stadium authority would "have to reconsider, up to and including stopping construction," he said. But he said authority officials had thoroughly reviewed the group's financial statements and were assured that the payments would be made.
"We're the ones putting up this money for the state, and it's our intention to get that money back," Frenz said.