The organizers of the first Baltimore Grand Prix — which ran up millions in debts to vendors and taxpayers — have begun paying their back taxes, an attorney for the closed business said Thursday.
Steven D. Silverman, who represents Baltimore Racing Development, said company managers have entered into an agreement with the Maryland comptroller's office that will result in all of the nearly $600,000 in back taxes being paid.
The company owes $567,594 to Baltimore in admissions and amusement taxes, and $23,838 in sales and use taxes to Maryland, according to state officials. The comptroller's office filed a lien in Baltimore Circuit Court on any property that the company owns.
Silverman said BRD managers are paying the owed taxes out of their own pockets.
"The directors of Baltimore Racing Development understand they have a moral duty to ensure that all taxes are paid," Silverman said. He blamed "outsiders" for an "unexpected deficit" that left them without the funds to cover taxes.
"The directors of the LLC have used personal funds to ensure that these taxes are paid in full," he said.
Two months before the start of last year's inaugural Baltimore Grand Prix, the race organizers, desperate for cash, entered into a $1.1 million loan they said was necessary to save the event. The two-month loan allowed the lender, Virginia-based Thermopylae Sciences & Technology, to collect more than $500,000 in interest and other charges. That drained funds needed to pay city taxes, BRD officials have said. The company has declined to comment on the loan.
Sources close to the race's finances said BRD managers are expecting a payment from an insurance company stemming from the theft of siding used for race-day barriers.
Baltimore Racing Development ran the Grand Prix last year and attracted 160,000 spectators to downtown Baltimore for the Labor Day weekend event. But after the group failed to pay vendors and taxes, Mayor Stephanie Rawlings-Blake'd administration canceled its contract.
A new group, called Race On, is organizing this year's event. Race On is headed by local businessman J.P. Grant, who is CEO of Grant Capital Management and a supporter of Rawlings-Blake, and construction contractor Greg O'Neill. Their company has hired racing champion Michael Andretti's sports marketing group to organize the event.
In an interview this week, Andretti said his group was identifying BRD's mistakes. He said his team has found "95 percent of the skeletons" in the race's closet.
"We've been able to cut this thing a ton without really cutting anything," Andretti said. "There was so much waste that was going on. ... Everybody had their hand out. Everybody was getting paid for doing nothing. Everybody was a consultant. There was no money left. They blew it all. Wasted it all."
Former officials of BRD either did not respond or declined to comment for this article.
Race On is the third group to head Baltimore's Grand Prix. After city officials canceled the contract with Baltimore Racing Development, they handed control of the event to Downforce Racing in February. But that group dissolved without making progress.
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