The question of whether a Grand Prix will ever take place in New Jersey has been intensified by today's revelation that three years ago Formula One's boss Bernie Ecclestone considered hosting a race on a permanent circuit in the area.

It is no secret that Ecclestone has long desired a Grand Prix in the New York area and, by his own admission, he has given "too much leeway" to Port Imperial Racing Associates (PIRA), the group which has been planning a street race there for the past two years. PIRA is named after Port Imperial, a district in the New Jersey towns of West New York and Weehawken, where the race is planned to be held. A 3.2-mile track on public roads has been designed by F1 track architect Hermann Tilke and has the striking Manhattan skyline as its backdrop.

Known as the Grand Prix of America, the race has the dubious distinction of being the only proposed event in the 64-year history of F1 to be dropped from the calendar twice and, as we revealed last year, it still needs £61m ($100m) to go ahead. Far from being the first of many options in the area, it seems that the street circuit was chosen after other alternatives were rejected which raises the question of what the back-up plan might be if it fails to get the green light. It is a real possibility.

In an interview for American motoring magazine Autoweek Ecclestone recently said "what is amazing with New Jersey is that the people signed a contract." He added "you have got to assume they knew what they had signed. They should have never made the commitment. We could sue them."

The race has had more than its fair share of false starts since it was announced with great fanfare in October 2011 at a press conference hosted by New Jersey's governor Chris Christie. The cracks soon started to appear as in August the following year its president Tom Cotter unexpectedly resigned. As Pitpass revealed, the next month saw the exits of Trip Wheeler, the chief marketing officer of the Grand Prix of America, and Michael Cummings, PIRA's chief financial officer.

In September 2012 the race was listed on the provisional 2013 F1 calendar which caused PIRA to release a statement saying that it was "proud that years of hard work have brought us to this point and we look forward to bringing world-class Formula One racing to New Jersey."

It was followed by a statement from Christie who said that he had spoken to the race promoter Leo Hindery junior a sometime racer and managing partner of private equity fund InterMedia Partners. "I asked if he needs any help and he said, 'No.' I am not looking for problems. I heard there may be problems, so I called. And he told me it's not a problem." In fact there was indeed a problem because the race did not take place in 2013.

The wheels came off the race at almost the same time that it was listed on the calendar as Ecclestone revealed that Hindery's 10-year contract had been torn up after he failed to comply with its terms. I have been one of the most vocal critics of the New Jersey race plan right from the start and there is good reason for this.

As Pitpass has reported extensively, the key hurdle with the New Jersey plan seems to be the lack of state funding. Few F1 races get revenue from trackside advertising or the sport's corporate hospitality outfit the Paddock Club. It means that ticket sales are their largest source of income and this rarely covers the race hosting fee and running costs.

Accordingly, F1 races rarely make a profit and it is therefore tough to get investment in a company which promotes them. Investors will provide funding if the business has assets which their money can be secured on. The most obvious asset is a circuit itself but of course it is hard for organisers to own the track in the case of a race held on public roads, such as the one planned for New Jersey. Government funding is usually needed to compensate for the difficulty of raising private investment and it gives a good return.

Permanent race venues are located outside city centres because building them requires large amounts of free land. As a result, few local landmarks are seen in the background when the race is taking place and in turn this limits the promotion it gives to the host nation. In contrast, street races are usually located in the heart of the city and showcase buildings and attractions as the track weaves around them.

Governments pay handsomely to get this kind of promotion particularly if the race could not go ahead without it due to the lack of an asset to secure investment on. It is no coincidence that council funding was even granted to the humble Formula 3000 Superprix, which was held from 1986 to 1990 on the streets of Birmingham. Bearing this in mind, it is even more surprising that PIRA decided not to get government funding for a race on the streets of New Jersey and it is no surprise that it has not yet got off the ground.

It was dropped from the provisional 2013 calendar but in May last year Ecclestone signed a new 15-year contract with PIRA after it agreed to work with Chris Pook who founded the Long Beach Grand Prix. During the same month rumours came to light that F1 had invested in the company promoting the race and this suggested that its place on the calendar was secure.