The Nürburgring’s parent company, Nürburgring GmbH, has officially been declared bankrupt after a request for a €13 million bailout from the European Union was refused. The news puts the future of the German Grand Prix in serious doubt.
The rot has been setting in for some time, and it kickstarted when the circuit was leased to Nürburgring Automotive GmbH (NAG) on a long-term deal ending in 2040. The two parties have been locked in a protracted legal dispute where both are suing the other for monies each claim they are owed.
NAG set about undertaking a wholesale development of the site, including the addition of new hotels and a motorsport-themed amusement park. Neither has taken off, adding to the mounting debts.
The Rhineland-Palatinate state government, which owns 90% of Nürburgring GmbH, had applied to the EU for a rescue package to prevent the circuit being shut down completely, but this has been refused. The EU is itself investigating allegations that the circuit was given state funding, which is a contravention of the EU’s competition rules.
Nürburgring GmbH is some €413 million in debt, and if the government attempted to sell the circuit – which is believed to be valued at some €125 million – then it will still be almost €300 million in the red.
In all, this looks disastrous for the venue’s ability to honour many of its motorsport contracts, not least of which being its ongoing agreement to alternate with Hockenheim as the host of the German Grand Prix. That deal came about because neither circuit had the funds to hold their respective events – the Nürburgring round was dubbed the ‘European Grand Prix’ when both venues were on the calendar.
Formula One Management has offered some respite by reducing the sanctioning fees it charges from the Nürburgring to stage its Grand Prix every two years. It is understood that the fee was $17 million in 2007, but has reduced to $13 million last year.
While there are obvious economic benefits to the region in hosting the Grand Prix, the state government s simply not prepared to invest further capital to prop the event up.