The Baltimore Grand Prix, which Mayor Stephanie Rawlings-Blake promoted as a “game changer for Baltimore” that would pump cash into the local economy, has run out of cash itself.

The mayor’s office revealed Monday that the race’s organizer, Baltimore Racing Development (BRD), owes the city $1.54 million. The unpaid bills have led to a very public falling-out between City Hall and the race promoters.

In a statement released late yesterday, Deputy Mayor Kaliope Parthemos threatened to terminate BRD’s contract with the city unless it pays all of its debts and taxes by Dec. 31. (The five-year contract is in its first year of operation.)

Parthemos also called on BRD to “immediately restructure and recapitalize or sell itself to investors in order to make the event profitable in the future.”

Lower Economic Activity Than Predicted

After an initial flurry of excitement over the large crowds attracted to the event, the Grand Prix is proving less of an economic success than was advertised.

In promoting the event, the city and BRD said the race would generate nearly $120 million in economic activity for Baltimore businesses, such as hotels, bars and restaurants.

But depending on who is doing the calculations – two academic economists or consultants hired by a city tourism group – the event generated between $25 million and $47 million in direct and indirect spending. About $10 million of that would have occurred anyway over the Labor Day weekend, the academic economists estimated.

Baltimore officials invested a great deal of time and capital in the Grand Prix, including $7.75 million in state and federal funds used to prepare downtown streets for the race. At the same time, race promoters and contractors funneled more than $40,000 in campaign contributions to city officials.

The city is now demanding payment for the following costs and unpaid taxes from BRD:

• $750,000 for setup costs, police overtime, firefighters used to safeguard the pit stop and other expenses.

• $487,971 in unpaid admissions and amusement taxes. Parthemos vowed that “no tax abatement will be made” on the taxes owed.

• $250,000 for the race event fee. (The city received the fee after the race, but did not deposit the check “with the understanding BRD needed to restructure its cash reserves.”)

• $50,862 for parking at city-owned facilities during the races.

Jay Davidson announced he is stepping down as CEO of the racing group, and the company is trying to hire a new president and general manager. The Baltimore Sun reports that the promoters face numerous lawsuits from unpaid vendors and unhappy investors.