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Thread: SCRAMP audit shows Laguna Seca raceway manager millions underwater

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    Default SCRAMP audit shows Laguna Seca raceway manager millions underwater

    The pot isn't finished boiling.

    SCRAMP audit shows Laguna Seca raceway manager millions underwater

    By Jim Johnson, Monterey Herald
    POSTED: 05/20/16, 6:32 PM PDT | UPDATED: 2 DAYS AGO 1 COMMENT
    Salinas >> Nearly nine months after it was originally released and then withdrawn due to inaccuracies, the Sports Car Racing Association of the Monterey Peninsula’s 2014 financial audit was delivered to the county last week, showing the longtime Laguna Seca raceway manager owing millions of dollars more than it’s worth.

    Conducted by Clovis-based Price Paige & Co., the audit shows SCRAMP with an unrestricted net deficit balance of $4.86 million as of Dec. 31, 2014. That includes more than $3 million in bills with just under $1 million in current assets, after the formal transfer of about $11.875 million in fixed raceway assets, including improvements, to the county in August of that year.

    The previous audit claimed those fixed raceway assets on SCRAMP’s balance sheet despite the formal transfer and showed the organization more than $8 million in the black. That audit was withdrawn by SCRAMP’s previous auditor, who subsequently parted ways with the organization.

    The new audit reports that SCRAMP had about $2.45 million in temporarily restricted funds from the Mazda Raceway naming rights agreement to offset some of the $4.86 million deficit. But it also acknowledged the organization had been tapping those funds for operational expenses and did not have “sufficient liquid assets” to fund the track improvements that the naming rights funding is supposed to be used for, and reported only about $83,500 cash on hand.

    While the audit indicated that SCRAMP acknowledged owing the county more than $686,000 in concession-related payments, the auditor reported the county believes that amount is not accurate and the inability to obtain sufficient evidence of how much is actually owed and whether an adjustment to the financial statement’s liability balance is needed makes the audit a “qualified opinion.”

    The audit concluded that SCRAMP is “solely dependent” on receiving a long-term concession agreement with the county to operate the raceway and raceway-related revenues are not enough to support the current level of operations. It noted the organization is relying on loans to fund its operations and had implemented a “cost reduction plan” aimed at cutting operational expenses and developing additional funding from “new and existing sources.”

    In a statement, SCRAMP board of governors president Michael Smith confirmed the nonprofit organization had submitted the audit to the county and its receipt had been confirmed, though he said that occurred on May 5 when the auditor’s report was signed May 9 and county officials indicated the audit was received May 11. Smith declined comment.

    “There has been no additional response from the county so any further comment from SCRAMP at this time would be premature,” Smith said.

    County Auditor-Controller Mike Miller, who was highly critical of the withdrawn audit and accused the previous auditor of neglecting his “due diligence” obligations, praised the current one as “fair” and said it “gives the Board of Supervisors and the public information to make a fair decision on whether to continue to do business with SCRAMP or go with a different concessionaire.”


    Miller said the audit’s acknowledgement that SCRAMP had used Mazda Raceway naming rights funds for operational expenses a “very important disclosure,” noting that the amount intended for track improvements but used for other purposes had since climbed to nearly $3.5 million with no apparent capacity to cover the obligation. He said he’s looking forward to seeing how SCRAMP handles the fiscal issue on its 2015 audited financial statement.

    He also noted SCRAMP’s recent announcement that it had reached an agreement with Daytona-based stock car racing firm International Speedway Corp. to submit a joint proposal as part of the county’s search for a long-term Laguna Seca manager. He called ISC’s involvement an “extraordinary opportunity for the community.”

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    WHAAAAAT?!!! Looking forward to seeing some of those operational W-2s!!! This be ugly!

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    Senior Member robburgoon's Avatar
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    Odd since the schedule looks fairly full aside from whatever the hell it is that they do for a week to prepare for a bigger event.

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    OJR
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    Quote Originally Posted by robburgoon View Post
    Odd since the schedule looks fairly full aside from whatever the hell it is that they do for a week to prepare for a bigger event.
    Hanging posters is tough.
    Blackbird likes this.
    Just a guy racing stuff. #GetSickTour
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    So maybe the NASCAR guys looking at MRLS last year got a preview of the conditions and just bailed.

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    Administrator ucfbrett's Avatar
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    Quote Originally Posted by fatbillybob View Post
    So maybe the NASCAR guys looking at MRLS last year got a preview of the conditions and just bailed.
    Maybe they're going to use it to improve their negotiating position.

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    Quote Originally Posted by ucfbrett View Post
    Maybe they're going to use it to improve their negotiating position.
    This- It's a great tactic.
    Thanks,

    Chad
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    Chest hair required Olitho's Avatar
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    Quote Originally Posted by Plavan View Post
    This- It's a great tactic.
    Agreed, it might even be the due diligence work of ISC that uncovered the financial disparities and the inadequacy of the original audit... in fact, I would bet money on it.
    To the right of The Sheriff. Isn't everyone?

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