Nurburgring set for F1 race demise
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| Nurburgring |
The package of state aid that seemed to have rescued Nurburgring Automotive GmbH—the company that operates the publicly owned German race circuit—is being investigated by the European Commission.
If the commission judges that its state-aid regulations have been breached, it would insist that the financial package be withdrawn. This would almost certainly trigger the immediate bankruptcy of the Nurburgring, making it even less likely that it would be able to stage the Formula One German Grand Prix as scheduled in 2013.
The Nurburgring is 90 percent owned by the regional government of Rhineland-Palatinate and 10 percent by the local administrative district, Landkreis Ahrweiler. The operating company over-extended itself in 2009 by building nonmotorsport facilities—including a leisure park, a retail mall and a hotel at the Nürburgring. This extensive redevelopment was funded with a loan of almost $370 million from the Bank Rhineland-Palatinate, the state's own central economic-development agency.
Last month, when Nurburgring Automotive and associated companies applied to the Executive Commission of the European Union for a $16 million loan to cover interest payments on its debt, they were told that the request was in violation of EU rules covering operational aid. Consequently, the company began an insolvency process. But then the state intervened with a new loan guarantee and modifications to the repayment schedule.
The European Commission said in a statement:
“The European Commission has extended the scope of an in-depth investigation, opened in March 2012, under European Union state-aid rules regarding a set of aid measures supporting the racetrack and leisure park at Nurburgring in Germany. The extension concerns several additional financial measures aimed at avoiding an immediate insolvency of the companies concerned.
“At this stage, the commission has doubts that the measures were granted on market terms and that the companies are viable without continued state support. The extension of an in-depth investigation gives interested third parties an opportunity to comment on the additional measures under assessment; it does not prejudge the outcome of the investigation.
“Additional public-support measures in favor of the companies that operate the Nurburgring were decided on [May 15] and partly implemented in order to avoid an immediate insolvency of [these] companies. The measures consist of a rescheduling of interest payments on previously awarded loans, a subordination of claims and, possibly, an additional shareholder's loan in order to keep the companies in business for six months. During that period, a restructuring or liquidation plan will be drawn up.
“The commission considers that these additional measures are strongly linked to other aid measures that it has been investigating since March 2012 because of concerns that they may not have been granted on market terms. The commission is concerned that Nürburgring may already have been a company in difficulties in 2008, when it received the previous aid. Because of its highly distortive effects on competition, rescue or restructuring aid to a company in financial difficulties may be granted to a given company only once in a period of 10 years (the 'one time, last time' principle of the EU guidelines on the rescue and restructuring of companies in difficulties).
“The commission will now investigate whether these repeated public interventions were in line with EU state-aid rules." AutoWeek
07/26/12 (GMM) The operators of the Nurburgring are considering buying the embattled circuit.
The development comes after the German grand prix host last week commenced an insolvency process, which has endangered the future of the venue's biennial formula one race.
One solution could be for the circuit's existing management to propose a buyout, amid reports the Nurburgring's current debts actually outweigh its overall value.
"If it is on the table, we would think about whether and how we would participate in the tender," Nurburgring Automotive GmbH chief Jorg Lindner is quoted by the German news agency SID.
He also revealed: "We have developed a concept for the formula one race at the Nurburgring that does not require a cash grant from the state."
7/18/12 (GMM) Bernie Ecclestone has reportedly offered to waive F1's usual race sanctioning fee in 2013 amid the Nurburgring's deepening financial crisis.
State governor Kurt Beck on Wednesday announced that the circuit, scheduled to return to the calendar next year, is launching "orderly insolvency proceedings" because the European Commission is to reject a government bailout.
That sounds disastrous for the future of the F1 race, which in recent years has annually alternated the German grand prix with Hockenheim.
But German reports by the news agencies DPA and DAPD, and by the Abendblatt newspaper, said that despite the news, "there could still be formula one races at the Nurburgring in the future".
The reports revealed that the German race organizers have agreed with F1 chief executive Ecclestone that the sanctioning fee in 2013 will not be paid, with the 81-year-old agreeing in return to "bear all costs but also claim all revenues".
07/18/12 (GMM) Dark clouds continue to hang over the Nurburgring.
The latest reports in Germany suggest the circuit's management is close to insolvency, raising the prospect that a German grand prix could be held only once every two years, at Hockenheim.
"At the moment there is no request," Hockenheim chief Georg Seiler told DPA news agency when asked if Hockenheim could step in for 2013 and beyond.
He said "everything would have to be right" for Hockenheim to agree a new annual contract. Its current alternating deal runs until 2018.
The Rhein Zeitung newspaper reported that a European Commission bailout of the ailing Nurburgring has been ruled out, and that a partial or complete sale is now almost "inevitable".
The newspaper said the Nurburgring's debts amount to many millions of euros.
When asked to consider the possibility that Germany only hosts one race per two years, Hockenheim's Seiler admitted: "It would not be good.
"I also think this is not in the interests of Bernie Ecclestone and the constructors."