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Nürburgring Must Be Sold; EU Commission Denies Bail Out
The EU Commission denied a €13 million in bail out on Tuesday to the Nürburgring GmbH that operates the Nürburgring track. In a press conference on Wednesday, Minister-President of the German state Rheinland-Pfalz Kurt Beck confirmed that the track was insolvent. Beck said that the liquidators were already being appointed and that bankruptcy proceedings would likely start on Monday or Tuesday of next week.
The German state of Rheinland-Pfalz revoked Nürburgring GmbH's lease to the track in February. Nürburgring GmbH has not declared bankruptcy yet, but this decision makes the company's future dire.
According to the Rheinland Zeitung newspaper, Nürburgring GmbH will definitely declare bankruptcy. It is broke. According to accounting firm Ernst & Young, the track is worth about €126 million but owes €413 million in loans counting private investment.
According to the EU Commission, the bail out would be against EU competition rules. That also means that if the government bailed out the track, it would be considered illegal state aid. The state is now being investigated for previous aid given to the track. That also means that the government cannot legally give the track any more money.
When Nürburgring GmbH declares bankruptcy, then the liquidators will have to satisfy its primary creditors, one of which is the state government. The government cannot afford to pay the loans on the track and will have to sell it. The liquidators will be in charge of finding a buyer for the track.
After revoking Nürburgring GmbH's lease, the government agreed to allow them to continue to operate the track until October 31 because it did not want to interrupt the racing season at the track. After that, it would find a new company to lease the track. Because the EU Commission has denied the bail out, it means that the government will responsible for the €330 million in government loans.
Bernie Ecclestone has already offered a solution for the Formula 1 race at the course for next season. He will pay for all expenses related to the race but take all revenue. This is still a proposal and has not been agreed upon.
The rest of the season will continue as planned. After that, it is in the hands of the liquidator. This does not mean that the track is closing down permanently. This winter, things will probably be tough for the track, but too many of the events make too much money to abandon it. For instance, there were 235,000 people at the Nürburgring 24 Hours this year.
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