The uncertain future of the Nurburgring

Like nostalgia, the Nurburgring sure ain't what it used to be. Where once its daunting Nordschleife annually filled even the most fearless Formula 1 drivers with utter dread until it was removed from the calendar in the wake of Niki Lauda's well-documented 1976 inferno, the 'Newburgring' now stages Germany's Grosse Preis on odd years - with Hockenheim hosting the evens.

This agreement was signed in 2007, but became effective in 2009, with the first race under the five-race (each) deal being hosted by Nurburgring GmbH (NG) - a company 90 per cent owned by the Rhine Palatinate, with the remaining shares held by Kreis Ahrweiler, the district within which the Eifel circuit falls that year.

A race had been staged in 2007, but as the European Grand Prix because Hockenheim still held the sole rights to the 'German' moniker, but sat out the season, while in 2008 Valencia hosted the European version and Hockenheim its final exclusive German Grand Prix.

When it was the Nurburgring's turn to skip a year, it used the hiatus to totally upgrade the complex's infrastructure at the urging of state minister Kurt Beck, who considers the circuit to be Rhineland Palatinate's totem pole.

Thus the five-race (10-year) deals were scheduled to last through to 2017 and 2018 respectively, although the Nurburgring's obligations were restructured just a year after the promoters - at that stage still NG - threatened to pull the plug thanks to racking up huge losses.

A special deal was agreed solely for 2011, but as matters now stand the Nurburgring has no F1 obligation, although, as we shall see, Bernie Ecclestone is eager to put a deal in place.

Here it is important to note that the circuits' contracts are totally separate entities, i.e. should one or other drop out, the other is not obliged to step into the breach in the national interest. It is down to Ecclestone and the individual circuit to fill any missing years; thus Hockenheim is committed to hosting races in 2010/12/14/16 and 18, and what happens in between is of zero concern of the Baden-Wurttemberg venue.

For the revamp, Beck's administration authorised a budget of close on €200million (then £150m), but overruns quickly blighted the project, with the final product costing almost double that - excluding a further €350million underwritten in guarantees by the state.

The subsequent outcry cost the then finance minister his office, while the then circuit CEO is long gone (to India, as a consultant to the Buddh Circuit, and Beck is said to be under severe pressure over the issue).

In fact, 'upgrade' or 'revamp' are total misnomers: a massive shopping mall incorporating a luxury hotel and a hi-tech rollercoaster were constructed, and the museum extended - in a tiny village situated in a forest in the middle of nowhere. Little wonder, then, that allegations of mismanagement immediately flew about the place faster than sportscars negotiate Nordschleife's Flugplatz on a flying lap.

Nurburgring was back on the calendar last year © LAT

In 2009 Beck and his cabinet believed they found a solution: approached by two German businessmen, one of whom had dealings with the circuit's management through holding the lease on the hotel, Nurburgring GmbH agreed to let their company, dubbed Nurburgring Automotive GmbH (NAG), take over the running of the place lock, stock and barrel - for an effective pittance: average €6m (£4.5m) per annum - with an implied right to host grands prix subject to agreement with Ecclestone, with the first year being rent-free, although the lessees were required to hand over 90 per cent of that initial season's profits.

However, despite the rent panning out at €150m over the full period for a complex whose recent developments alone cost over double that, NAG is said by the state to have been unable to pay its dues.

Worse political news for the circuit rapidly followed: in March 2011, Beck's SPD party narrowly won from the CDU in the state elections, but by insufficient margin to govern outright. Thus the socialists sought a coalition with the Greens to prevent the democrats taking control of the only German state to have a wine ministry. One thing Greens do not appreciate is motorsport, particularly not when practiced in the lush verdant forests surrounding the 'Ring...

Then allegations of sharp business practice surfaced before the relationship between circuit owner and lessee deteriorated to the degree that, at a press conference called in Mainz on Tuesday, the state announced the lease had been cancelled, and that Nurburgring GmbH would take over operations of the circuit until new tenants could be found.

Trust between the two parties had irretrievably broken down, explained the minister responsible (Roger Lewentz, SPD), before adding that retained revenues paid by NAG for the first year amounted to just over a million euros. NAG had thereafter demanded a full refund, he added.

However, the press conference then took an interesting turn, for the three politicians present (two representing the SPD and a Green, with Beck not unexpectedly tendering his apologies) divulged that the contract was cancelled despite NAG offering to commit to a substantially upped monthly rental (to €600,000) and further suggesting that Ecclestone had offered to extend the grand prix contract by five races, ie 2013/15/17/19/21, with options for 2023 and beyond.

Bernie Ecclestone © LAT

The state's exposure, should such a deal be agreed, would amount to a maximum of €9.8m (£8m) per race - being effectively a stop-loss guarantee. This notwithstanding Ecclestone's regular threats to move F1 out of Europe...

Should Ecclestone have made such an offer it seems he has assumed that either the Nurburgring will step into the breach when Hockenheim's deal expires after 2018, or that the latter is prepared to extend, which would be rather surprising: the latter venue receives little state support - like Rhineland Palatinate, Baden-Württemberg, within which the circuit falls, is governed by a (Green) coalition - with the race's losses being largely carried by locals, most of whom gain little from the event as surrounding cities such as Heidelberg, Speyer and Mannheim hoover up what little race-goer spend Ecclestone does not pocket.

The burning issue now, though, is what happens to the Nurburgring - both circuits, that is, for the legendary Big Daddy layout remains the region's major focus, being host to what is arguably the best populated event (both entries and spectators) in international motorsport, namely the Nurburgring 24 Hours in the 'Green Hell', as Jackie Stewart dubbed the Nordschleife in the '70s, while the grand prix track provides a halo effect by riding on the back of F1.

Clearly, NAG will not roll over and play dead, with an NAG executive refuting the rental allegations, telling this column "according to our understanding of the contract we have paid the full amounts due". He also indicated the matter would head for arbitration or a full court hearing.

That said, Lewentz believes the cancellation is legally enforceable as NAG had not paid rent for three-quarters of a year, during which period the state shelled out on interest on its loans and maintained the complex.

The state has pledged to find tenants to run the whole show; simultaneously it fears any action brought by NAG could take up to 18 months to resolve. While the ministries hope it will not come to this - particularly as much political laundry would be aired, in turn likely to reduce tenant interest - any case will significantly delay the tenant-seeking process, which Lewentz admits could take up to a year to complete. Possibly three years in total, then, with the circuit hopeful of hosting next year's German Grand Prix in July, i.e. 16 months hence...

According to sources, 92 staff risk losing their positions - something the Greens are obviously anxious to prevent even if only to gain political points, hence its solid support for a solution to a problem certainly not of its making in an activity it is not particularly partial to, while all this uncertainty is hardly attracting tenants to the 'over-dimensioned' shopping mall - dubbed Nuro Disney - or Hotel Lindner.

Then, NAG's owners' insistence that all entities booking the venue for activities use their hotel for accommodation has turned away many prospective punters and alienated the local hospitality industry, so going forward the place is not exactly overbooked, all of which jeopardises the chances of luring replacement tenants.

The future is uncertain for the historic circuit © LAT

The net effect is that the state could be forced into selling off the iconic circuit, ironically built back in the '20s by politicians as a showcase for German automobile engineering and racing talent during times of unemployment, particularly if the Greens bring political pressure to bear.

None of which bodes well for the German Grand Prix. According to the NAG executive, the future of the race is currently up in the air, with no firm contract signed for next year. While NAG is hopeful of promoting the race, it cannot commit until all legalities are resolved; equally, NG is currently in no position to sign with Ecclestone.

One scenario has both parties signing provisional contracts; another has each cutting their own deal with Ecclestone - financial suicide that would be, as anyone who has negotiated with Ecclestone can attest, but where desperate folk are involved all rational thinking goes out the window - but one thing is certain: Hockenheim will not shoulder the burden, and plans to stick resolutely to its (already loss-making) contract.

Thus it seems that F1 fans in Germany - the country which gave the world the automobile, and every type variation of internal combustion engine; the country currently represented by no less than five grand prix drivers; the country which gave the sport its two top record- setters, one of whom is F1's reigning double champion - will soon need to travel to Belgium for their annual fix. Oh, wait - Spa-Francorchamps could soon be time-sharing with France, unless, that is, the Gallic Socialists get themselves elected in March...