Nashville Fairgrounds terminates contract with racetrack operator Formosa Productions

Yihyun Jeong | The Tennessean

Show Caption Hide Caption NASCAR in Nashville: Chase Elliott talks about bringing NASCAR back to the Fairgrounds Chase Elliott calls Fairgrounds Speedway Nashville one of the "coolest short tracks in the United States."

The city's fair board will terminate its contract with Fairgrounds Speedway Nashville racing operator Formosa Productions.

The Board of Fair Commissioners voted Tuesday to terminate its contract — initially set to expire in March 2023 — with the father-daughter duo behind racing operations at the city-owned racetrack.

The move to end the city's ties with Tony and Claire Formosa comes a month after commissioners voted to give the group until Dec. 31 to pay its outstanding debt to the city.

Formosa Productions by the end of the year will owe the city nearly $180,000, fairgrounds spokesperson Holly McCall said Tuesday.

The Formosas asked to renegotiate the contract terms, saying ongoing fairgrounds improvements and a "series of unfortunate events," including weather and uncertainty with the Major League Soccer stadium, have meant a hit to the group's cash flow.

The city and the Formosas agreed in last month's meeting to continue the contract talks to keep a positive working relationship and communicate that the racing season remains strong at the site. The speedway hosted its final event, the All American 400 on Nov. 2-3, to conclude the racing season.

But on Tuesday, the Fair Board voted to give the Formosas a 90-day notice — the contract will end in February — citing the group's lack of "good faith" toward resolving ongoing issues.

Nashville Fairgrounds Director Laura Womack said she and Fair Board member Jason Bergeron met with the group on Oct. 14. That was when the city requested the Formosas provide specific contract changes, as well as attendance and revenue records from the racing season.

A second meeting was set for Oct. 28 when the requested documents were due, but the Formosas rescheduled for Nov. 6 and then canceled that meeting, Womack said.

"This shows little to no faith that we will be paid by the end of the year," said Fair Board member Caleb Hemmer. "Which begs the issue that we need to start looking to the future and what we need to do as a board to ensure there's racing next year if the (Formosas) can't fulfill their obligations as put forth by (the contract)."

Womack also said she was notified by an attorney who said Fairgrounds Speedway Nashville was sued over $122,000 the facility did not pay to Insinger Performance, which supplies gasoline for races. Then, she was sent an email from a 3Star Strategies, who said they were not paid $1,000 for robocall services by the Formosas.

Formosas' attorney pushes back, blames board

Jim Roberts, an attorney representing the Formosas, said the Insinger Perormance lawsuit is currently being appealed and that the Formosas have paid for the robocall services after they found out that the invoice was initially sent to a former employee.

"I expect favorable results," Roberts said. "To hold that against my client, a non-final judgement, would be inappropriate."

Roberts said it could also be argued that the city, too, breached its contract with the Formosas.

"In fact, a lot of what was promised to the Formosas was not forthcoming," he said, citing use of fairgrounds buildings. "The contract was not fulfilled by the board."

"I ask the board not to be hasty," Roberts said before the vote, also saying he believes Tuesday's meeting was in violation of the Open Meetings Act because it was not properly noticed.

The meeting was delayed two hours, as it follows the practice of Metro Nashville Public Schools, which uses the fairgrounds to park buses. Due to winter weather, schools opened two hours late on Tuesday.

"It's disappointing we haven't made any progress," Fair Board chair Ned Horton said before the vote Tuesday. "We've got to get a season going for next year ... We can take into account what we’ve learned with the terms of this recent one."

Formosas alerted in April and August to ongoing issues

Womack told the Formosas in a letter in August that they had not paid rent since June. The Formosas have failed to pay the city $96,400 in rent from June through September, along with $31,930 from concessions commission from the 2018 race season.

The note followed a similar notice Womack gave the Formosas in April that laid out the the concessions payment and that the group didn't pay rent on time. They paid for January through March rent in April, according to the notice.

The Formosas denied there was a breach at the time, and said there was no timeline on when their payments to the fairgrounds were due because of the way the contract was written. They asked for consideration to make payments over a period of time.

The Formosas, who have run the fairgrounds 5/8-mile track since 2010, were awarded a contract in 2017 to continue running the racetrack.

The city bypassed a bid from one of the world's preeminent racing companies — Speedway Motorsports, the publicly-traded company that owns Bristol Motor Speedway and operates seven other NASCAR tracks.

Speedway Motorsports struck a deal with Formosa Productions last year to pave the way for NASCAR's return to Nashville and for weekly racing to remain at the venerable city-owned short track.

Bergeron said Tuesday that he was told during the Oct. 14 meeting that Speedway Motorsports paid the Formosas about $100,000 last year to make up a financial gap.

"We've got a multi-year issue," Bergeron said, adding that even with weather and contract issues, the city would have reached this point with the Formosas soon, had Speedway Motorsports not helped.

Bergeron also said the Formosas told him that they were instructed by Speedway Motorsports not to book events under their current contract with the city.

"That's concerning," he said. "I don't know what the end game is there on that."

SMI 'ready to engage' on racetrack vision

Speedway Motorsports went public in May on a potential $60 million renovation project at the Nashville Fairground to bring NASCAR back to the historic racetrack.

Jerry Caldwell, executive vice president and general manager for Bristol Motor Speedway, said the city's decision Tuesday does not change the group's interest or belief that the city's historic racetrack can be "returned to prominence and to help create a true renovation of the fairgrounds."

“We appreciate all that Tony and Claire Formosa have done to sustain local racing in Nashville over the years,” Caldwell said in a statement to The Tennessean. "There is huge local, regional and national interest in the future of the Nashville Fairgrounds Speedway. As Mayor (John) Cooper, the Fair Board and Council determine what’s next for the historic race track, we are ready to engage with them on the vision that we believe can deliver a bright future for the Fairgrounds.”

Speedway Motorsports courted former Mayor David Briley's administration for months to clear a way for Nashville to hold a NASCAR race on the fairground site, but the feasibility of a major upgrade has been questioned.

The potential roadblocks include how the project will be financed and concerns about the placement of a mixed-use apartment building and parking lot, 20 feet from the racetrack entrance, as part of the MLS stadium deal.

Questions remain on the fate of the stadium deal and the future of racing in Nashville with Cooper in office.

"The mayor is still in conversations with the internal working group regarding the fairgrounds, and he is not available to discuss this topic," Cooper's spokesperson Chris Song said Tuesday morning.

Song declined to comment the fair board's decision to terminate the city's contract with the Formosas.

Yihyun Jeong covers politics in Nashville for USA TODAY NETWORK - TENNESSEE. Reach her at yjeong@tennessean.com and follow her on Twitter @yihyun_jeong.