Who Is To Blame For Brasília?

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Many times lately, it has seemed as if the Verizon IndyCar Series couldn’t get out of its own way. There have been delayed and broken promises, bungled sponsor relationships and head-scratching personnel moves. All the while, the series ends up with one black-eye after another – many of which are completely justified.

Last Thursday afternoon, the public perception was that the series had stumbled again by being completely blind-sided with the news that the season-opening race in Brasília had been cancelled. I was surprised and was not surprised at the same time, if that makes any sense. Had it happened four months ago, I would not have been surprised. This close to the event did catch me off guard. Surprised or not, our society dictates that there must always be someone to point the finger of blame towards. That’s just the way it is.

IndyCar CEO Mark Miles is an easy target. Most of today’s fans voice their displeasure over anything IndyCar-related in the direction of Miles. I have piled on Mark Miles a lot lately myself, and would never pass up an opportunity to justify my bashing. But from what I’m understanding – Miles and the board of Hulman & Company are completely innocent in regards to this Brazilian fiasco.

Many have read an excellent article by longtime IndyCar writer Bruce Martin that documents some of what happened to cause the local government to suddenly cancel the event just five weeks before it was to be held. Some speculated that the improvements for the facility were running way behind schedule. That was not the case. They were on a tight schedule, but all indications were that the construction would be completed in time to host the event.

Others assumed that Mark Miles had rubbed some Brazilian officials the wrong way and could not or would not do the necessary damage control. That’s certainly not out of the question, but that was not the case here.

Martin sums up why the race was cancelled with one simple sentence in his article: “On Thursday, the government pulled its funding because of a budget shortfall for the entire government.”

That explains why the race was cancelled, but it stops short of explaining the bigger question – How did this happen? I did some digging of my own and enlisted the help of some that are more up to speed on Brazilian politics than I am to get those answers.

The article explains that there was a shortfall because Brasília was not receiving expected funding from the Brazilian national government. It goes a little deeper than that.

Brasília is a relatively new city, founded in 1960 for the sole purpose of moving the nation’s capital from Rio de Janeiro to a more centrally located area of the country. It sits in an area known as the Federal District. Brasília is unique in that it is considered an administrative division rather than a legal municipality like other Brazilian cities. Until the eighties, the governor of the Federal District was appointed by the Federal Government of Brazil. In 1988, Brasília attained the right to elect its own governor.

Former Governor Agnelo Queiroz is the one who signed the deal with Mark Miles and IndyCar to host the race at the Autódromo Internacional Nelson Piquet. Major improvements and modifications were to be completed on the antiquated circuit that opened in 1977 and was shuttered in 2012; before IndyCar could host a race there. Queiroz agreed to the changes and reportedly committed almost US$100 million to the project. According to VEJA, which is a hard-hitting Brazilian version of Time Magazine, costs inexplicably jumped to US$312 million for projects not in the initial budget – such as VIP suites, heliports, etc. There are unsubstantiated rumors that there were kickbacks to BAND, IndyCar’s TV partner who also happened to be the event promoter.

A funny thing happened on the way to the season-opener, however. Queiroz lost his bid for re-election last fall and was out of office by December 31. It has been reported that his successor, Rodrigo Rollemberg, was not a fan of the upcoming event and did his best to snuff it out. I can’t speak to his passion, or lack thereof, for the March 8th race, but I can tell you that he had no choice.

It seems that shortly after Queiroz left office, he also left the country. He wasn’t the only thing of his administration to disappear. It seems that most of the coffers of Brasília disappeared about that same time. Coincidence? It doesn’t seem likely.

Estimates vary on how much is missing, but suffice it to say that it is at least millions of US dollars. Rumor has it that Queiroz was living in Miami, but he has reportedly returned to Brazil. As for the money that mysteriously disappeared around the same time that Queiroz did – that is anyone’s guess.

This whole story sounds like a bad movie plot from the eighties, except that the consequences left behind are real. Public employees cannot be paid. In the meantime, teachers, police and firefighters wait on their payroll checks that are either delayed or still owed. The entire region is in financial crisis.

Keep in mind, the entire country is hurting financially. There was a huge public investment in last year’s World Cup, which had some of its main matches played in a newly renovated (to the tune of $900 million) facility in Brasília. Don’t forget that Brazil will also be hosting the Summer Olympics in August of 2016. We already know the financial burden of staging the Olympics.

With public employees not being paid, there was no way that the local government of Brasília could justify the staging of an IndyCar race. The public perception would be outrageous – even though a great deal of the money had already been spent. As much as I hate it for IndyCar and that our long offseason just got three weeks longer – I can’t blame the local government of Brasília.

Based on this information and what Bruce Martin and others have reported – this was a mess that was not of IndyCar’s making. There were many external factors completely out of IndyCar’s control. Unfortunately, the series found out the same way and time that you and I did – from a news release by the race promoter in Brazil.

Some have wondered if IndyCar even has a PR department and how they couldn’t get in front of this story. The answer is yes, they have a PR department; but they cannot dictate how and when a race promoter in another country decides to go public with such information.

But, there are lessons to be learned here – lots of lessons. IndyCar officials have long been smitten with the idea of foreign governments seemingly willing to write huge checks to have the series travel large distances to put on a race in their country. This is now twice in less than three years that IndyCar has been the victim of a change in government officials.

The 2012 IndyCar schedule featured a race in Qingdao, China that was officially axed a little more than two months ahead of its August 19 date. CEO Randy Bernard came on board after negotiations were underway, but he closed the deal on a handshake and got no money up front – a move that sealed his fate of being fired just a few months later. Current CEO Mark Miles indicated that IndyCar was financially covered with the cancellation of the race in Brasília. What that means I’m not sure, but it sounds like they got most of their money up front.

But this latest cancellation begs the question; does IndyCar really need to be hitching their wagons to foreign governments for the sake of a potentially big payday? The race at São Paulo fell apart after 2013, now Brasília has fallen through as well. The China race failed to materialize due to another change in elected officials. The new mayor of Qingdao was much more interested in staging a beer festival than an IndyCar race. Since there was no money invested on the front-end, he didn’t think twice about reneging on the handshake deal.

I don’t pretend to know a thing about international law, but I wonder how enforceable some of these overseas contracts are. It seems to me that IndyCar may be wise to try and grow its brand in North America and focus its energies on economies that are more like ours, rather than going to countries where the IndyCar sponsors have little or no presence.

If contracts can be broken after an election of new officials, IndyCar may be wise to rethink its model. College athletic recruits base their decisions on whether a coach is in trouble of losing his job at a particular school. If the coach’s status appears shaky, the recruit tends to go elsewhere where the coach is on more solid footing. Perhaps IndyCar needs to do a better vetting process on the futures of the individual they are cutting deals with.

So while I consider IndyCar to be without blame in this latest race cancellation, they need to learn from this. Potential paydays sound great to fans and board members, but when the word “potential” is used, that means there is a chance it won’t happen. The last two potential paydays have backfired on IndyCar. They may want to take a long look before committing to Dubai for next season.

George Phillips

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18 Responses to “Who Is To Blame For Brasília?”

  1. Not to pile on but, with the violent crime and homicide rate there, why anyone would want to stage any event in Brazil including most especially the Olympics is difficult to understand. Just for comparison sake, the homicide rate here in the US is 4.7 per 100,000 people, in Brazil it is 25.2 per 100,000 people. These are United Nations Office On Drugs And Crime figures from 2012.
    Personally, had I been a team member I would be relieved at the fact I now would not be going…

  2. Dubai is another place, given its geographical location that poses as a risky venue for an IndyCar race,given the current state of world affairs. Its sounds to me like the series is pretty damn lucky they got paid (whatever that means) and why would IndyCar given its fragile financial footing want to risk foreign countries/governments not living up to their end of the deal and forgoing paying contractual sanctioning fees? It seems like its mostly political and that is about the last thing IndyCar needs to be doing, investing economically in precarious foreign governments especially now. We don’t even know it IndyCar will even be around in 2 years from now.

  3. I’ll be interested to see how the Indycar brass responds to this latest disappointment. Will they be successful in finding another opening day race at this late date? How will this affect aerokit testing?

    • Early this morning, Indycar released a YouTube video with the official 2015 schedule, and St. Pete is the season opener…no Goiania, no CotA. Not surprising as Goiania lacks an FIA Grade 2 license and opening with Pirelli WC at CotA would have required a redo of their established schedule for their event.

  4. As you point out in detail the problems in Brazil were beyond the control of IndyCar. The fact remains that the series is grossly mismanaged. This is a direct result of the inherent internal conflict that exists where the owner of the prime asset is also controlling the series. Every decision is made on the basis of its effect on the Indy 500 and its profitability. The rest of the series is considered secondary and expendable. This will never work. Series ownership and management must be separated from the ownership and management of IMS if the series and IMS are going to suceed.

  5. We have talked about this before with the street races which are basically paid for by local/state governments. Its a high risk thing in this country as well as overseas. With our own governments owing 20 trillion plus (federal, state, local), quite a few of these street courses are going to be going away. We have already seen a few.

    The business model is not working period. Just more proof out of Brazil.

  6. I can’t see a fault for IndyCar here, except maybe going back to Brazil given the economic and other difficulties pointed out above. Sounds like they learned from China to at least get some money up front. Hope so. I have to wonder if races that include large public cash are a dying breed everywhere. I’ve seen the economic projections of ROI, but I find it hard to believe taxpayers are willing to make that “investment.” I know I wouldn’t be happy if my city fathers dumped a couple million into a street race give the other funding challenges we have going on around here. Now, if a Chevy or whoever wants to come in and drop a few million to fund the race, that’s another thing entirely. Not against street races, as long as they are privately funded deals.

  7. Those darn Tea Party folks are everywhere now!

    If there was (is) some up front money, IndyCar should take it to Road America and race beyond Labor Day. (Gasp!)

    This is one of the better summations of this matter that I have read George. I didn’t know you could read Portuguese. Maybe IndyCar should take Bernie’s “How to fleece foreign governments” course.

  8. billytheskink Says:

    The number of times American open-wheel racing has been burned by non-North American governments and sponsors is remarkable. Can we fault Miles and Indycar for ignoring recent history and for not doing due diligence and dealing with shady politicians and officials?

    I think we can, after all, you eventually have to move from “fool me once” to “fool me twice”. Even so, the amount of blame Indycar deserves here is miniscule compared to that earned by the shady aspects of Brazil’s political machine. If this is a black mark on Miles’ administration, to me it is not a big one.

    More than anything, though, I feel terrible for Brazil’s Indycar fans.

  9. Indycar went from talking about having an entire Winter Series to having no international races outside of Toronto. I’m not a big fan of Indycar international racing, but I was pretty shocked to see both planned races die. It’s unfortunate because Indycar really needs some more races, and we’re only adding a single new one, which replaces Houston. The 2012 schedule sucked due to the SMI issue. 2013 was a rebuilding year. 2014 was a rebuilding year. 2015 and 2016???

  10. I remember when Izod was sponsor, the contract specified that there should be a certain number of races or there would be some sort of penalty. Wonder if that’s in Verizon’s deal?

    If they can’t add a race at the beginning of the season, then I’d like to see them add one at the end.

    Watching Superbowl, I noticed Verizon was sponsoring the NBC telecast. Curious about how much that cost them, compared to the 5 million cash/5 million in activation Indycar contract.

    And one more thing about the phone company, I have Verizon and still have the INDYCAR 14 app on there. Wonder when it will be updated to INDYCAR 15?

  11. Bernie Ecclestone doesn’t have these problems.

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