Dorna Statement On CotA vs Schwantz: Austin MotoGP Contract Currently Held By The Circuit

After news emerged at the end of last week that Kevin Schwantz is suing the Circuit of the Americas (COTA), the track in Austin, Texas where the third US GP is to be held in 2013, attention turned to the details of just who held the contract to organize the event. In their lawsuit, Schwantz' company 3FourTexasMGP alleged that the COTA had attempted to defraud him out of the rights to organize the race, something which the circuit denied in a press statement, with COTA claiming that Schwantz had never held a contract to organize the event.

In a statement issued by Dorna, the Spanish rights holders to the MotoGP series clarified the current legal situation between the various parties. The statement shows that both Schwantz and COTA are right: Dorna states that it signed a contract with both COTA and Schwantz' company 3FourTexasMGP for the event, with Schwantz being granted the rights to organize the race, subject to being able to show he had come to an agreement with the circuit. However, when asked by Dorna to provide the proof that he held a contract with COTA which would allow him to organize the MotoGP race there, Schwantz was unable to, and the contract was then passed to the Circuit of the Americas. COTA currently holds the rights to organize the event.

From Dorna's statement, it appears that there is no direct threat to the race to be held in Austin, Texas, from 2013 onwards, but that does not mean that legal proceedings do not have a chance of success. The suit will concentrate on what went on between 3FourTexasMGP and COTA, and whether Schwantz' failure to supply Dorna with a contract was down to Schwantz or COTA.

Below is the official statement issued by Dorna this morning:


Dorna statement regarding 3four Texas MGP LLC and COTA

In response to 1993 500cc world champion Kevin Schwantz and his company 3four Texas MGP LLC filing a lawsuit against the new Circuit of the Americas (COTA), Dorna Sports S.L., a third party in the matter, wishes to release the following statement.

Dorna Sports S.L. entered into a Promoters Contract with 3four Texas MGP LLC in connection with the organization of a FIM MotoGP™ Grand Prix at The Circuit of the Americas, Austin, Texas, on February 11th 2011 to be effective from the 2013 season. Dorna understood that 3four Texas MGP LLC had an agreement with COTA to run the event.

On the first days of June 2012, Dorna required 3four Texas MGP LLC to provide satisfactory evidence before June 28th about the company having obtained all the necessary rights, licenses and permits related with the availability of the Circuit of the Americas.

This is a standard procedure when the Promoter is not the owner of the Circuit.

3four Texas MGP LLC was not able to provide such evidence to Dorna (apparently no agreement had ever been entered into between 3four Texas MGP LLC and COTA, the owner of the circuit) within the term granted for such purposes, and therefore Dorna had no other alternative than to terminate the February 11th 2011 Promoters Contract due to such Event of Default. The termination was effective from July 2nd 2012.

As Dorna Sports S.L. and the FIM are interested in a FIM MotoGP Grand Prix in Texas, COTA was then offered the opportunity to become the Promoter of such an event through the signing of a Promoters Agreement. Conversations continue at this moment.

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Comments

Sounds to me like DORNA may have found a better deal with COTA. Maybe some conspiracy between DORNA and COTA to try and cut Schwantz out of the deal all together. I wouldn't put it passed DORNA to do some underhanded stuff like this.

Well, thats the hard world of politics and business. No sentiments there, Kevin, even though you deserve it. Doing it on just a handshake is long gone.

It's hardly a reach to suppose that COTA never did negotiate in good faith with KS, and never had any intention of reaching an agreement with 3four. I've no idea how illegal that sort of behavior, in this context, really is, but it seems extraordinarily bad long-term business practice by the owners of an expensive public venue that presumably needs the help of promoters to organize future events.

To say nothing of pissing off many thousands of #34 fans world wide, many of which will think long and hard about buying a ticket from these jackals.

sorry to drag Rossi into this, but isn't 34 one of 46's heroes?! inspirations? in fact, aren't quite a number of Motogp racers 34 fans?

i may be as naive as a newborn but can't some of the current racers perhaps 'muscle' the organizers into being better behaved?

i've never understood how 34 seems to be only a shade or two more welcome in the paddock than Emperor Massimo?!

Dorna REALLY IS f**king up Motogp beyond repair & ALL during the reign/era of 46.

makes me want to become Amish! ;)

I have to think that COTA has more to blame than Dorna here. Sure Dorna could have stuck up more for Schwantz and held out until COTA signed an agreement with him, but at the end of the day Schwantz is suing the circuit, not Dorna.

Dorna's only priority is to get a race there in 2013, that's it. If Schwantz is a casualty, that's sad, but it's not on Dorna.

They, after all, DID sign a contract with Schwantz, and followed through with it to the letter.

So 34 never had a signed agreement in hand with COTA? Oops. Seems silly. Then again, my knowledge of promoting large scale events is non-existent. I am definitely a big fan of 34 and am sorry to see him lose out. At the same time, I am glad to see the event start taking shape, I have family in Austin, it's a wonderful town, well as long as you're not there between May and October.

I'm pretty sure he had signed,sealed and irrevocable contract in hand with a battery of attorneys around him when he was racing GP for Suzuki back then.
Maybe he was smarter when he was younger. I guess the 3fourTexasMGP monicker did not sit well with the powers that be either.
One thing for sure,he ain't Bernie Ecclestone. What was he craving ? A name change to 'circuit 34' future hence ? Most are delighted to have a corner or straightaway named after them,as he does.

Nobody has mentioned Tavo Hellmund. He was the initial promoter for the F1 race (the main reason for the track being built) and a friend of Schwantz's. He's been pushed out in a shift of power from Tavo, friend of F1 owner BE, to Epstein/McCombs, the money guys. Hellmund recently had his lawsuit against COTA settled but is still out although he likely got a payout. I'd think that most of Kevin's dealings involved Tavo and since Tavo has been pushed out any contracts that involved his company (Full Throttle Productions LP) as a promoter for COTA are likely no longer valid.

Its a shame and I hope all parties can figure it out as the track is a perfect place to host the Schwantz School.

Chris
http://moto2-usa.blogspot.com/

Shame but seeing that DORNA did state that an agreement was existent while Kevin also being within contract with COTA, the courts will see that Kevin was innocent of the delays caused within COTA disagreement with Hellmund. I think Kevin gets a payout since it was not his doing that the DORNA contract expired, it being just a hand shake and all, court does recolonize that as a binding agreement.

So the chain of negociation went something like this, maybe:

Dorna Schwantz Hellmund COTA

But then Hellmund and COTA had their falling out, and it became:

Dorna Schwantz COTA

But then COTA figured they could keep more money by cutting
Schwantz out of the deal. All they had to do was stall him until
28 June, when his contract with Dorna expired.

Dorna Schwantz COTA

After 28 June, Dorna terminated its agreement with Schwantz,
and the only parties left were:

Dorna COTA

At one point Hellmund was representing COTA and negociating with Schwantz.
Did Hellmund have an agreement that was binding between Schwantz and COTA?

  • If no, Schwantz doesn't seem to have a case.
  • If yes, COTA would seem to have broken that agreement.
    • This would give Schwantz a case for contract damages.
    • But monetary compensation is not what he wants.
    • He wants to organize the event.
      • That might be why he's suing for fraud instead of breach of contract.
      • I don't remember all of the remedies for fraud, but I'm thinking it's going to be pretty tough for Schwantz to force himself back into the deal - especially if Dorna don't back him.

I'm also thinking, like some others, that I'm not going to attend any events at COTA.

I think that a lot of people here have let their imagination and desire to dump on Dorna make them post lame crap. If Schwantz (whose school I attended and I am a long time fan) did NOT have a written agreement with COTA and instead had a verbal understanding with his friend Tavo, then he is going to be left holding the short end of the stick. The court will rule against him, I can guarantee you. COTA is the legal entity that owns and operates the track, Tavo was NOT part of the ownership group thus he had no legal standing to enter into arrangements or contracts on behalf of the track. Period. Nothing more to add.

...that a contract can't be legally binding if it is verbal rather than written. I assure you this is not the case. Depending on the circumstances, a verbal contract can be legally binding indeed. That said, I'd be surprised if Schwantz could win a suit like this (without knowing all the details one can't be sure), but a significant out-of-court settlement is likely.

Seems to me DORNA honored KS to the end. They simply did not want to be involved in a dispute between KS and COTA. The Dorna bashing on here lately is not well deserved.

Kicking them for what would appear to be a conflict between COTA and Schwantz is ludicrous.
Frankly, based on some of the half-arsed attempts Kevin has been involved in through the years since he retired, I wonder who is really at fault, if anyone.
How many times have we heard rumours that KS was going to start a new GP team, or take over an existing one, and it all comes to nought. He's a likeable enough bloke, as I understand, and a GP legend, but that doesn't automatically make him a canny businessman in the big league where they play for keeps.

In the end, it will play out in the courts or boardrooms where settlements are done and non-disclosure agreements signed. And then we'll have more of a picture of who was actually screwing who.