Comptroller: Grand Prix organizers owe $570K in taxes, penalties
Posted: 5:27 pm Mon, November 21, 2011
Daily Record Business Writer
Maryland is seeking nearly $570,000 in unpaid taxes and penalties from the organizers of the inaugural Baltimore Grand Prix, according to the state’s top tax collector.
Contractors have filed lawsuits seeking payment from BRD. The city administration, in addition to demanding its bills be paid, has pushed the company to restructure and get its finances in order.
“We will not stand for people who will try to cheat the system or don’t pay on time,” Joe Shapiro, spokesman for state Comptroller Peter Franchot, said Monday.
The lien filed by Franchot’s office includes $487,971 in unpaid taxes and another $79,623.19 in interest and late penalties.
Of that, $543,756.13 would go to the city for admissions and amusement taxes. The balance — $23,838.06 in unpaid sales tax — would go to the state.
“This is money that is owed to taxpayers, is owed to the city of Baltimore and in these tight budget times, could certainly be put to good use,” Shapiro said.
City officials vowed this month to cut ties with BRD unless the company pays its bills by the end of the year and finds a sustainable path forward.
BRD owes $750,000 to reimburse for unspecified city services, a $250,000 event fee and $50,862 for parking at city-owned facilities during the race weekend, according to a Nov. 7 statement from Deputy Mayor Kaliope Parthemos.
Organizers “must also work to repay any debts to vendors and present a restructured company and management team, or the city will terminate its contract with BRD,” Parthemos said.
Racing company officials did not respond to requests for comment Monday. Jay Davidson, the former CEO, stepped down after the race and BRD has been searching for a replacement.
Robert C. Brennan, executive director of the Maryland Economic Development Corp., said BRD has made “meaningful management changes,” but declined to elaborate.
BRD sought an additional $1.5 million from investors in the weeks after the race, according to Securities and Exchange Commission records.
The company said $200,000 of the offering would go toward salaries. It also estimated that its revenues were in the range of $5 million to $25 million.
BRD also took loans from state agencies to get the race up and running. It borrowed $2 million from the Maryland Stadium Authority and $500,000 from MEDCO.
A spokeswoman said stadium authority Executive Director Michael J. Frenz was not available to discuss the loan.
Brennan said MEDCO will work with BRD on its payments.
The company made an interest payment in September or October, Brennan said, but has not yet made a dent in the principal.
“The first year comes with a lot of growing pains and a learning curve. There’s a lot of work to be done,” Brennan said. “If I have another interest payment due, I’m going to defer it to allow these guys to get their hands around this and make it work.”
The race weekend, held Sept. 2-4, attracted 160,000 attendees.
According to a study commissioned by Visit Baltimore, the event was responsible for $27.6 million in direct spending and $46.9 million in combined direct and indirect spending.