Swiss investment bank UBS has been appointed by the organisers of the planned New York Grand Prix in a bid to secure $100m (£65.7m) of funding to enable the race to go ahead in 2014.
The 3.2-mile track is on public roads in Port Imperial, New Jersey. It snakes alongside the Hudson river and would give the race a spectacular backdrop of Manhattan’s historic skyline.
The plans are close to the heart of Formula One’s chief executive Bernie Ecclestone, as he has been trying to hold a grand prix in the New York area since the 1980s. There have been numerous false starts, most recently in 2011 when New Jersey governor Chris Christie announced with great fanfare that the race, known as the Grand Prix of America, would take place in June 2013.
In August last year, Mr Ecclestone tore up the contract for the race when payment deadlines were missed. However, in May he signed a new 15-year agreement after the organisers agreed to hire Chris Pook, one of his close confidants and former chief executive of F1’s American rival IndyCar. Mr Pook is working alongside Leo Hindery junior, who is the promoter of the race and managing partner of private equity fund InterMedia Partners.
In 2011, Mr Hindery provided an initial $10.3m investment in the race organising company Port Imperial Racing Associates (PIRA) and, since then, it has obtained an additional $10.1m loan. It will require a further $100m to get off the grid, according to an investment memorandum released by UBS in early June. It adds that “incoming investors may choose to leverage current team’s expertise or could acquire 100pc of PIRA”.
F1 circuits typically cost over $250m to build, but using public roads avoids this expense. The downside is that there is no asset for investment to be secured on. Mr Hindery has confirmed that no public funds will be invested in the race.
The UBS memorandum states that the funding is required to complete the engineering work and build the Club of America VIP hospitality area, where guests will get a close-up view.
UBS forecasts that corporate hospitality tickets will cost $4,255 each and, along with general admission, will generate 80pc of revenues. It adds that the average ticket price is expected to be around £358 ($563) compared to £288 at the British Grand Prix which took place yesterday.
The organisers expect a total crowd of 240,000 over three days, slightly less than the 265,499 spectators who attended the inaugural United States Grand Prix in Texas last year.
UBS is the investment bank of choice for companies connected to F1 because it is an official partner of the sport. It was one of the first banks which signed up to be a bookrunner for the flotation of F1, due in the next 12 months.
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.