August 16, 2011 | By Justin Fenton, The Baltimore Sun
The founder of the Baltimore Grand Prix has filed a $750,000 claim against the current organizers of the event, joining another early investor who claims he has yet to be paid.
Steven C. Wehner says Baltimore Racing Development LLC, the company that he created in his mother’s Rodgers Forge basement five years ago, failed to make payments totaling $575,000 owed to him over five years in exchange for his 10.2 percent stake in the company. Wehner is also seeking attorney’s fees and interest.
“After months and months and months and months of trying to negotiate with BRD in good faith, I was unable to get them to honor the terms of the contract,” Wehner said in a brief phone interview Tuesday.
Wehner, who was an out-of-work mechanic recovering from crack addiction, came up with the idea for the race and sold city and state leaders and race officials on the idea. He surrounded himself with a team of local businessmen, who eventually took over the project and agreed to buy him out two years later in early 2010.
The Daily Record first reported on Tuesday that the lawsuit had been filed in Baltimore City Circuit Court.
Jay Davidson, the current CEO of BRD, said that he had not seen the complaint but that the company has honored its commitment.
“If his claim is that we didn’t pay him what was owed under his redemption agreement, we are confident that the facts will show that this isn’t true and that we have paid him more than what was owed,” Davidson said in an e-mail.
Davidson has said that Wehner hadn’t contributed money to the race but stood to profit from his buyout deal. Wehner, however, claimed to have contributed $30,000 after taking out a second mortgage on his mother’s home, which was almost lost to foreclosure, according to court records.
Another early investor, Sean Conley, who met Wehner on Martha’s Vineyard, also filed suit Tuesday for lack of payment on the $320,000 owed to him for selling his shares.
The Grand Prix “is going to be a great event, but the people running it have a lot of issues,” Conley said in an interview.
Conley said his deal calls for BRD to pay him $320,000 over five years with no interest, which he calls a “good deal for a company.” He said he was due $18,000 in December but received only $5,000 in March, with no subsequent payments.
“It’s not a matter of money; it’s a matter of respect,” Conley said.
The Grand Prix emerged Monday as an issue in the mayoral race, with challengers to Mayor Stephanie Rawlings-Blake saying her support of the Labor Day weekend event raises questions about her spending priorities and how carefully she weighed the costs and benefits of the race. While street racing is a fixture in cities like Long Beach, Calif., and St. Petersburg, Fla., it has had mixed results elsewhere.
Supporters say the event will pump millions of dollars into local restaurants and hotels on a normally sleepy holiday weekend and contribute direct tax revenues of about $2 million per year. If the race is run annually for five years, the tax revenue would make up for the city’s investment. The city says the expensive roadwork — Baltimore contributed more for race preparation roadwork than any other city in recent memory, race league officials said — needed to be done anyway and came from federal grant funds.
The Baltimore Grand Prix will likely fall short of making a profit in its first year, which race supporters say is typical. The start-up company has battled several obstacles in the race’s first year.
The race has not secured a title sponsor, and organizers had to request more time from the Maryland Stadium Authority to make payments on a $2 million loan. There was also a glitch in sending out tickets to paid customers, and the cutting down of trees to make way for the race course prompted a petition signed by thousands.
“It’s a tough project,” Davidson said in an interview at the company’s Camden Yards office last month. “It’s a great project, and I’m certainly happy I’ve been part of it. But it’s not easy, and there’s been a lot of elements that as I stepped into didn’t know would be there.”