Formula One racing is in the blood of many Germans. The country is home to such car racing legends as Michael and Ralf Shumacher and Sebastian Vettel. And every two years, tens of thousands of Germans descend on the world-famous Nürburgring motorsports complex in the village of Nürburg for Formula One races.
But the days at the fabled track may soon be coming to and end. On Wednesday, the state of Rhineland-Palatinate, which owns the race track, said it would ask the operating company to file for insolvency, and bankruptcy proceedings could begin as early as next week.
The state's governor, Kurt Beck, is blaming the European Commission for not approving a 13-million ($16-million) state aid package in time for a July 31 payment deadline. The consequence, Beck said, "is a very high probability of an insolvency at the end of the month because of insufficient liquidity." After that, orderly bankruptcy proceedings would follow, he said. The state aid envisioned for the track would require EU approval.
Beck said the European Commission, the European Union's executive body, had sent positive signals in recent days that it might approve the aid, but it has now apparently delayed a decision. In recent years, the EU has sought to put a halt to years of giving millions in state aid for the failing race track complex.
Years of Losses
The Nürburgring is facing bankruptcy because its private operating company, Nürburgring GmbH, is no longer able to pay the interest on a 330 million loan it was provided by the ISB investment and structural bank, which belongs to the state. The company also hasn't been able to cover its lease payments. A report in the Rhein-Zeitung newspaper states that the operating company has debts of 413 million, including the ISB loan and 83 million in other outstanding loans. If the track were to be sold, it could come at a loss of several hundred million euros for taxpayers.
The race track has operated at a loss for years, frequently requiring millions of euros in both direct and indirect state aid to survive. The park's most serious troubles began in 2004 when it began building a year-round amusement park and hotel complex that has only been partially completed and has so far been a commercial failure. A roller coaster built to attract visitors has been so plagued by technical problems that it still hasn't opened.
Nürburgring is famous in Germany not only as a site that hosts Germany's Formula One races, but also as the location of the massive Rock am Ring music festival, which draws thousands of spectators to see headline music acts every spring.
Since 2007, Formula One races in Germany have alternated biannually between Nürburgring and the Hockenheimring track in the neighboring southern German state of Baden-Württemberg. The planned 2013 race is currently jeopardized by the dispute between Rhineland-Palatinate and the racetrack's operating company.
Nürburgring is one of the world's most famous race tracks. The 25-kilometer long course first opened in 1927. A new track was built in 1984 to accommodate Formula One racing. But in recent years, the future of the massively expensive Formula One race at the site has been in doubt. The state of Rhineland-Palatinate has threatened to reduce the level of subsidies it provides. The June conviction of former banker Gerhard Gribkowsky, who admitted he had accepted $44 million in bribes from Formula One boss Bernie Ecclestone, has also created uncertainty. For weeks now, speculation has been rife that Eccelstone could face corruption charges in Germany.
dsl -- with wires
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