State: Red Bull-sponsored race series owes $76K
Detroit — State officials are threatening to take legal action against a Red Bull-sponsored rallycross series if the organization doesn’t pay a nearly $76,000 fee for a July 2015 event it hosted on Belle Isle.
The Department of Natural Resources, which manages the state park, said it has made numerous attempts to collect the user fee since the Red Bull Global Rallycross race series. The user fee, officials say, is supposed to fund park improvements, such as bathroom upgrades and sidewalk repairs.
But Global Rallycross organizers say they refuse to the pay the fee and allege the state caused them to lose hundreds of thousands of dollars in ticket sales during the two-day event when they didn’t close the island to those without admission.
Now the matter has been turned over to the Michigan Attorney General’s Office, which said it will explore “other options, including litigation, to collect the amounts due.”
Colin Dyne, CEO of Global Rallycross, said he initially agreed to pay a $25,000 user fee for the park. That changed when the state threatened to cancel the event because it was being held on the same weekend as a 5K/10K run hosted by the Minority Organ Tissue Transplant Education Program.
Dyne said he was forced by the state to make concessions to keep his event including an increased user fee of $100,000, a requirement to purchase tables, chairs, a stage and other equipment for the 5K/10K and pay for MOTTEP to have a commercial on NBC, which also broadcast the Global Rallycross events.
An application for state land use signed by Global Rallycross founder Chip Pankow shows the user fee was $75,943.
Dyne said he spent an additional $60,000 providing equipment and deploying his staff to setup for MOTTEP’s 5K/10K and another $30,000 on NBC commercials for it. Dyne said he also had to help map out a new route for the MOTTEP 5K/10K so his race series wouldn’t interfere.
Ron Olson, chief of parks and recreation for the DNR, argues the state never forced Global Rallycross to make any specific provisions for MOTTEP.
The state asked that Global Rallycross work out an agreement with MOTTEP and a family that was hosting a wedding on Belle Isle to accommodate their needs, Olson said. Both events were scheduled prior to Global Rallycross seeking an event permit, he said.
“The requirement was to make it right with those folks, so they weren’t harmed by the disruption of this (Global Rallycross) event,” Olson said. “The mere fact that they were occupying such a large area, we wanted to make sure the event itself was contributing to the betterment of the park.”
Remonia Chapman, program director for MOTTEP, said her organization came to a mutual agreement with Red Bull Global Rallycross on all the provisions. The 5K/10K was moved from the Belle Isle Casino to a pavilion and went on without issues, Chapman said.
“Everything they did for us was very amenable,” Chapman said. “Fortunately, it did work out.”
The average daily turn out for Global Rallycross races is between 7,000-10,000, Dyne said.
Dyne claims he held up his end of the deal, but the state failed to close the park during his races as promised, allowing some 3,000 people to attend each day without paying the $50 admission.
“My ticket sales were dismal,” Dyne said. “This is not how people do business. You (Michigan) do not deserve the balance of your money.”
According to its permit for state land use, Global Rallycross was not permitted “exclusive use of any department lands or facilities.”
“There shall be no interference with, nor any attempt made, to discourage or forbid the full and free use of the permitted lands and facilities by other people,” the permit read.
Scott Pratt, chief of southern field operations for the DNR, said Red Bull Global Rallycross once gave the impression it was planning to pay the outstanding fee.
Pratt said the organization agreed to multiple payment deadlines but failed to meet them.
Eventually, all communication from the organization stopped without explanation, Pratt said.
“We were given a few dates here and there for them to pay, and then they had some things going on with their internal budgeting,” Pratt said. “We have been very accommodating, and it’s time to step up and figure out why the payment hasn’t been made.”
Schuette’s office sent a letter to Red Bull Global Rallycross in November demanding it pay the $75,943 fee by Dec. 27, 2017.
Megan Hawthorne, a spokeswoman for Schuette, said Global Rallycross has not responded to the letter.
Pratt said Belle Isle user fees are routinely collected up front, but there were other events going on around the same time as the rallycross series and payment “kind of slipped by us.”
“This one kind of caught us off-guard,” Pratt said. “We do take this seriously in making sure from this point forward it will not happen again.”
The 2015 event marked the first time the Global Rallycross race visited Detroit. The event’s website called Detroit a “crucial stop on the tour” because the city is home to several automobile manufacturers and automotive press outlets.
The race car series features vehicles that can “produce 600 horsepower and can accelerate from 0-60 miles per hour in 1.9 seconds, but are also built to withstand 70-foot jumps and contact with other vehicles,” the website says. Red Bull is the title sponsor for the series, which travels to at least eight cities each year.
About 400 workers from Global Rallycross were assigned that weekend for the races, he said.
“We bring millions of dollars of income into the city,” Dyne said. “We came in to spend money there. We put them on big NBC. Big NBC is not something that everybody gets for races. We just didn’t get treated right.”
Initial plans for the event were met with opposition from some Detroit residents who complained Belle Isle was becoming more racetrack than park. The state worked out an agreement with Red Bull Global Rallycross where the race would operate on a shortened timeline of two days: July 25 and July 26, 2015.
Detroit isn’t the only city that’s had a hard time getting Red Bull Global Rallycross to pay fees. The organization reportedly took seven months to pay a $20,000 fee for a Global Rallycross event held in Ottawa, Canada, last year.
Dyne would not specifically say why Global Rallycross did not pay sooner.
“.... Of course, there are facts behind everything in a business environment when we spend millions of dollars with hundreds of vendors,” Dyne said in an email. “I am sure GM, Ford in your city have similar issues that arise every day.”
Michele Hodges, president of the Belle Isle Conservancy, said the park depends on financial support from corporate partners such as Red Bull Global Rallycross. Those user fees from companies help keep the Belle Isle Aquarium free and open to the public, she said.
“Without these high quality public/private partnerships, we are unable to achieve success so if one commits but doesn’t fulfill a transaction, we are compromised sometimes dramatically, particularly if a large commitment is at stake,” Hodges said.