The Nürburgring close to bankruptcy
A global automotive racing myth could disappear: by the end of the month, Nürburgring GmbH might be forced to file for bankruptcy due to a liquidity crisis and excessive debt.
For months, the future of the Green Hell has been threatened due to its enormous financial difficulties. Last February, the Minister of the Interior, Sports, and Infrastructure of Rhineland-Palatinate, Roger Lewentz, requested to terminate the alternating contract with Hockenheim: “I therefore proposed to the cabinet to request the end of the management agreement with Nürburgring Automotive GmbH as well as the other related agreements, particularly the concession contract for organizing Formula 1 races at the Nürburgring.”
Since then, the situation has hardly improved for the German circuit. Indeed, the European Union has refused to grant 13 million euros in subsidies in the name of competition law. Yet this amount was only intended to cover the interest on the significant debt that the circuit has accumulated. In fact, the major development work that began in 2009 has led to a financial chasm, as the circuit’s debt now amounts to 413 million euros, with 330 million owed to the state bank alone.
The state of Rhineland-Palatinate is therefore facing a potentially significant loss since the latest assessment by Ernst & Young estimated the total assets of the circuit at 126 million euros. If Nürburgring GmbH were to file for bankruptcy, the various creditors would try to recover what can still be salvaged.
As F1 arrives in Hockenheim this weekend, the future of the German event seems very complicated. Indeed, the historical host of the German Grand Prix had stated that it could not hold the event every year, which led to the current alternation. According to information from Joe Saward, Bernie Ecclestone was surprisingly conciliatory with the local authorities as he had agreed to a reduction in fees for each new edition: 17 million dollars in 2007, 14 million in 2009, and 13 million in 2011.
F1 finds itself in a relatively absurd situation compared to the real economy: Spain, burdened with debt, still hosts two races a year (even though Valencia is in favor of an alternation to relieve its public finances), while Germany, a champion of financial rigor, sees one of its circuits disappear due to excessive debts…
With the participation of RacingBusiness.fr
