The beleaguered organizers of the Baltimore Grand Prix are facing more than $12 million in debt and have less than $100,000 in cash on hand, according to internal documents obtained by The Baltimore Sun.
More than $5 million of the debt — including taxes owed to Baltimore and payments to vendors — is past due, the documents show.
The full extent of the company's dire financial status is laid bare in confidential documents in which former Goldman Sachs and Constellation Energy executive Felix J. Dawson proposes assuming leadership of Baltimore Racing Development Inc., the company that ran the Grand Prix. His firm had reviewed the racing company's books, according to the proposal.
Dawson's investment firm, Wilkes Lane Capital, would give Baltimore Racing Development $3.3 million and control 58 percent of the company under his proposal.
"I'm afraid it's the only option," said investor Sean Conley of Martha's Vineyard, who has sued the race company over an unpaid debt. "Felix Dawson was generous. It was so mismanaged they'll be lucky to have him."
The documents were provided to The Baltimore Sun by a source familiar with the negotiations, and details were confirmed by an investor briefed on their contents. The documents show the company's total debt is more than three times higher than amounts that had been gleaned from court records and other claims.
Baltimore Racing Development officials declined to comment for this article; Dawson could not be reached.
Ryan O'Doherty, the spokesman for Baltimore Mayor Stephanie Rawlings-Blake, said the group has until the end of the month to turn over an audit of its books to the city. If the company does not pay its taxes to the city by Dec. 31, Rawlings-Blake has threatened to sever the company's five-year contract.
"They need to pay the taxpayers back," O'Doherty said.
The Baltimore Grand Prix, which featured IndyCar drivers racing on streets around the Inner Harbor, drew 160,000 spectators downtown on Labor Day weekend, generated national television coverage and thrilled racing fans who embraced the event. Rawlings-Blake and other city officials initially hailed it as a success, but revelations about the racing company's troubling finances have caused the mayor to chastise its officials and call for its restructuring.
Maryland Comptroller Peter Franchot has placed a lien against company officials, including the personal belongings of former Chief Executive Officer Jay Davidson and his wife, Elizabeth, over $570,000 in unpaid taxes.
"He was CEO when these activities were taking place," Joseph Shapiro, a spokesman for Franchot, said of Davidson. "We're collecting monies that are rightfully owed the city and state."
Dawson's proposal says his team spent 10 days assessing the racing company's finances and found the Grand Prix to be "fiscally insolvent."
According to the documents, Baltimore Racing Development owes $3.1 million to vendors, $2.5 million to the Maryland Stadium Authority, $1.9 million to Baltimore and $1.7 million in contractual payments to different firms. The race's assets are valued at $600,000, which includes concrete barriers and hundreds of tires needed for race day.
"Restructuring now is better than later," Dawson's proposal states. "BRD's ability to restructure and continue operating is deteriorating with time."
According to Dawson's analysis, Baltimore Racing Development brought in about $8 million from the race — from ticket sales, food and hospitality sales and advertising and sponsorships. Dawson believes the amount of sponsorships can be increased, according to the proposal.
In several years leading up to the event, the company spent $18 million on expenses directly related to running the inaugural race, the proposal says. Among those were $380,000 in advertising, $350,000 in salaries and $280,000 in security expenses in the past year.
Conley said the details of the company's finances reveal a series of poorly negotiated deals in which Baltimore Racing Development paid more for services than it should have. He described the company as "leaderless" with a team of five managers making decisions independent of each other.
"These guys, they were wealthy and successful in other areas but those skills did not translate to running a major event," he said. "It's a mess. Each had his own issues and agendas. There's no one person watching over the entire process."
But documents also show the Grand Prix can be a financial success if run properly, Conley said.
Dawson's proposal calls for cutting race expenses by 50 percent, spending less on lobbying and legal firms and giving out no management salaries.
Under Dawson's proposal, Baltimore Racing Development would partner with his company, Wilkes Lane Capital and Dillon Racing, a firm that offered to run operations on race day.
He estimates that next year's race could bring in $9 million and cost $7.6 million — yielding a profit.
These are the outstanding liabilities of Baltimore Racing Development, according to documents prepared for the company:
Outstanding accounts payable $3.1 million
Maryland Stadium Authority 2.5 million
Baltimore City 1.9 million
State eco. development agencies .6 million
M&T Bank .6 million
Loans from members .8 million
Contractual payments 1.7 million
Litigation claims 1.2 million
Total $12.4 million