Racing teams tax break: A non-starter

Tuesday, Oct. 4, 2005 | 8:27 a.m.

A bill introduced in the Nevada Legislature four years ago granting tax exemptions for professional auto racing teams and sanctioning bodies was supposed to bring about a "Field of Dreams" scenario: Pass it and they will come.

The bill, eventually signed into law by Gov. Kenny Guinn, was designed to help diversify the state's economy, but has failed to generate the influx of either racing teams or sanctioning bodies that proponents had anticipated. The law will expire at the end of this year.

When the bill was introduced, one major open-wheel racing series (Championship Auto Racing Teams) and a handful of National Hot Rod Association teams expressed interest in moving to Southern Nevada. Joe Heitzler, then president and chief executive of CART, testified before the Assembly Taxation Committee and all but guaranteed he would move that series' headquarters from Michigan to Las Vegas if the bill became law.

Heitzler was out as CART's chief less than a year later and his successor, Chris Pook, moved the series' offices to Indianapolis, where the majority of its teams' race shops are.

CART went bankrupt in 2003 and now operates as the Champ Car World Series, which raced at Las Vegas Motor Speedway last weekend.

NHRA owner/driver John Force also testified before the same committee and said he would consider moving his three-car operation from California to Las Vegas because the cost of doing business in the Golden State was "killing me."

Force's racing teams still are based in Southern California and last year he opened a 40,000-square-foot shop outside of Indianapolis to complement his primary shop in Yorba Linda, Calif.

Orleans Racing, which fields trucks in the NASCAR Craftsman Truck Series for drivers Brendan Gaughan and Steve Park, remains the most high-profile professional racing team based in Southern Nevada. It is estimated the team, owned by Michael Gaughan, will lose $100,000 in tax breaks when the law expires Dec. 31.

Somer Hollingsworth, Nevada Development Authority president and chief executive, said the law still is a good idea but conceded the timing may not have been right.

"I think at the time (the bill) was written, there was a lot of action within that (racing) industry and ... there was a lot of good rhetoric and verbiage going on back and forth," Hollingsworth said. "Then just a lot of things happened -- you had the problems with CART and so forth."

At the same time, Indiana, which has a similar tax break for racing teams, began offering additional tax incentives on real estate used for race shops. Several NHRA teams passed on Nevada and moved to or built satellite race shops in Indiana. That location makes more sense than Nevada because nearly two-thirds of the NHRA races are held in the Midwest and East.

"These race teams are like sheep," one industry insider said. "Wherever one team settles down, the rest will follow."

Although the Nevada tax exemption is set to expire at the end of this year, Hollingsworth said he would revisit the issue when the Legislature reconvenes in 2007 because of renewed interest by Champ Car teams.

"What happened at this (Champ Car) race last weekend, we ran into some of the guys -- who I'll leave nameless -- and what they said was, 'We were in Michigan and we didn't like it. We've now been in Indianapolis and it isn't happening there for us,' " Hollingsworth said. 'They said for six months it's a great place to live and for six months it's a nightmare and so they're looking at Vegas (again).

"Hopefully, by the next legislative session, we'll be able to go forward and bring a bunch of companies with us, and they'll sit down and testify. I don't want to go up and get another bill in place if I really don't think I've got some stuff in the fire."