Downforce Racing

Daniel Reck, left, Dale Dillon, center, and Felix Dawson head Downforce Racing, which will now operate the Baltimore Grand Prix. (Baltimore Sun)

Mayor Stephanie Rawlings-Blake's administration has struck a five-year deal with a new team to manage the Baltimore Grand Prix race, including new safeguards designed to insulate the city from losses — a provision crafted after last year's financial debacle left millions of dollars in unpaid taxes and vendor bills.

Officials plan to unveil a contract Wednesday with Downforce Racing, a company headed by an Indianapolis contractor and two former Constellation Energy Group Inc. executives, to run the second annual Baltimore Grand Prix. The company takes its name from the strong force exerted as a racecar hits high speeds. The contract, which still could be tweaked, must be approved by the city's Board of Estimates.

The contract stipulates that a portion of the proceeds from each ticket sold will be placed in a "lock box" escrow account controlled by trustee chosen by city — ensuring that the racing group, unlike its predecessor, would pay city admission and amusement taxes and service fees.

The lock box "eliminates any concern that we won't get paid," said Councilman William H. Cole IV, one of the deal's architects. "Only the city of Baltimore can authorize release of it. They can't get loans against it. They can't charge against it. They can't pledge against it. They can't dance on it. It's our money."

Under the contract, the city also would retain the right to inspect Downforce Racing's financial records at any time. While city officials say they frequently reviewed statements from Baltimore Racing Development, they acknowledge they were not aware of the extent of the group's debts, or of a high-interest loan the company took out weeks before the race.

At the same time, the city isn't imposing some of the same fees that the previous organizer, Baltimore Racing Development, blamed in part for its financial woes. The city is demanding hundreds of thousands of dollars less from Downforce Racing than it did from Baltimore Racing Development, which failed to pay $1.5 million in city taxes and fees.

Cole and Deputy Mayor Kaliope Parthemos, who negotiated the contract with Downforce Racing, say they are confident that the group will not fall into the same financial problems as the previous group. The city terminated its five-year contract with Baltimore Racing Development late last year, after the group accrued a total of about $12 million in debts.

Although three other groups submitted proposals to organize the race, only the members of Downforce received the blessing of executives from IndyCar, a racing league that has already added the second Baltimore Grand Prix to its 2012 calendar of events, she said.

The new group has about six months to snag sponsors, line up vendors and sell tickets before the three-day racing festival over Labor Day weekend.

Downforce is headed by Dale Dillon, a contractor who built tracks for IndyCar races in St. Petersburg, Fla., and Toronto, and swooped in to serve as Baltimore Racing Development's general manager in the final weeks before last year's race. Dillon is also seeking to start an IndyCar race in Fort Lauderdale, Fla., next year.

Dillon said he was confident that his experience working on other races would prevent the group from having the same problems as Baltimore Racing Development.

"Those are great events with great attendance," he said. "It's a model we'll be fortunate enough to learn from. These races can be successful and they can be money-makers. There's a passion side to it, and they go hand in hand."

The other members of the team are Felix Dawson and Daniel Reck, who met while working together in the energy commodities trading side of Constellation Energy.

Dawson was president of the global energy trading and investment division, which had offices in Baltimore, Houston, London and Sydney. In 2008, after that division ran into financial difficulties, Constellation was forced to order significant layoffs, and the entire company was driven to the brink of bankruptcy.

"A lot of businesses had trouble in 2008," Dawson said. "It was a fantastic business to be a part of. That entity went from a handful of people to 800 people."

Reck also worked for Enron Corp. and left shortly after the energy company imploded amid a financial scandal in 2001. He declined to discuss in detail his experiences there.

"I'm happy to have that conversation. I could talk for days about that topic," Reck said of Enron. "But it's not really related to what we're talking about today."

Both Dillon and Dawson played a part in last year's race.  Dillon is credited by city officials with pulling off the race as Baltimore Racing Development struggled with leadership issues. Dawson invested $300,000 weeks before the race began. Neither was considered an officer of the company, city officials said.

While the three have strong business backgrounds, and Dillon has worked on three other races, the Baltimore contract would mark the first time any of them would organize all aspects of a race.