F1: Questions grow over Donington’s finances
By LJ Hutchins
Wednesday, February 11th, 2009
Concerns about the ability of Donington Park to stage the British Grand Prix in 2010 are growing exponentially this morning with indications that track owner Tom Wheatcroft may have lost faith in the company behind the bid.
Today was intended to be a good news day for the circuit, with journalists gathering to see celebrities race on a computer mock-up of the planned layout. However, it is rapidly being dominated by the latest in a series of question marks hanging over the future of the British Grand Prix.
Simon Gillett, boss of Donington Ventures Leisure Ltd, the company that leases the track from Wheatcroft in a 150-year agreement, has strongly refuted stories reporting he had filed accounts showing substantial debts and losses, saying the 2008 accounts had not yet been filed.
But new reports today demonstrated the figures were from the 2007 accounts – the most recent available – while the Daily Telegraph is also reporting in a fresh story that the 85-year-old Wheatcroft is in discussions with Gillett over unpaid rent – with the possibility of legal action raised and later denied.
Wheatcroft is an iconic figure in British racing for his work to reinstate the circuit after it fell into disuse after the war and for building the Donington Grand Prix Collection of classic racing cars. Gillett has always cited his willingness to work with DVLL as a mainstay of its credibility.
Dissatisfaction from Wheatcroft could well be the point at which the goodwill from fans who rate the Donington circuit highly, and would love to see Formula One cars run on it again, is exhausted.
This news follows a story earlier this week in the Daily Mail claiming Lee Gill, a former director of the business and a shareholder under the name Kanwaljit Gill, is taking legal action for unfair dismissal after he left on the eve of the circuit’s redevelopment planning application being filed in September. The figure citied in court papers is reportedly £150,000.
On Monday evening Simon Gillett issued a statement through news agency PA questioning reports in The Telegraph and other papers over the weekend that the accounts of Donington Ventures Leisure Ltd, recently filed with Companies House, showed debts of £66.7 million and a loss of £12.7 million.
He said: “Our 2008 financial report has not been filed with Companies House, which leaves me confused as to where certain publications have sourced their facts and figures from.”
He has also since claimed that the debt is “an accounting treatment of a 150-year lease being depreciated into capital asset.â€
However James Allen has published a piece today explaining exactly where the figures came from – the 2007 accounts rather than the 2008 ones mentioned above.
Allen has seen the accounts – as anyone prepared to pay a fee to Companies House can – and says the figures quoted by The Telegraph definitely do appear. He adds that it is not clear what the debt is made up of, apart from the £16 million bank loan, £4m of which is guaranteed by Gillett’s partner Paul White.
He continues: “The accounts are for year end 2007, so they cover the period at the peak of the business cycle and the assets are valued in there at £55 million. It does not say who valued them. Not much in the property world is worth the same today as it was in 2007.
“Interestingly, the accounts say that the group meets its day to day capital requirements through the bank loan and through support from [Paul] White. White has indicated that he is willing to go on supporting it, but the auditor notes that he is under no obligation to continue to fund it. There is no mention of Gillett guaranteeing any of the loan.
“There are warning signs all over the accounts from the independent auditors, who say that they were â€˜not able to obtain or review’ documents of financial forecasts or evidence that Donington has binding commitments with providers for the funds required.”
Allen’s piece is accompanied today by the new Telegraph story. It also points out that the figures relate to Donington’s 2007 accounts but reports that Gillett is in discussions with Tom Wheatcroft over unpaid rent as well as problems with a security company. It says that Wheatcroft & Son Ltd has declined to comment.
It later put allegations of legal action over the issue to Gillett who, while not denying the issue was under discussion, said that no writ was outstanding.
Gillett continues to refer to the debenture scheme he hopes will fund the cost of hosting the Grand Prix and the redevelopment work necessary to turn Donington into a Grade 1 FIA-licensed track as well as plans to sell 20 luxury homes with track access, raising £40 million in the process.
He claims that redevelopment work continues on schedule and that the circuit’s financial position cannot be fully understood without this information, which he says will be made public at the end of March.
James Allen also mentions details of the scheme in his piece, having been told last year by Gillett that he has a deal with a subsidiary of sports marketing firm IMG and investment bank Goldman Sachs that guarantees him investment cash.
However, if Donington is not in a financial position to stage the race, what happens next?
FIA president Max Mosley said in a recent lunch for journalists that his organisation had a remit to protect the six ‘classic’ European races on the F1 calendar that have been there since the beginning – Britain, France, Italy, Monaco, Germany and Belgium.
But he said that remit did not extend to forcing promoter Bernie Ecclestone to accept unfavourable commercial terms.
Silverstone, the only Grade 1 licensed track in the UK which is in a position to stage the race – Brands Hatch being hamstrung by planning conditions – has said it is still prepared to play host if Donington Park is unable to.
But Ecclestone has explicitly said that the only alternative he will consider is moving the race abroad. Gillett has revealed that he must convince Ecclestone that Donington Park is a viable proposition for 2010 by September this year.
Whatever happens in the long term, the story is likely to move quickly after the press conference held at the track this morning to demonstrate the new computer simulation of the track.