Welsh Government Refuses Circuit of Wales Funding

The Circuit of Wales, the track which was to be built near Ebbw Vale in South Wales, has been dealt what will likely be a fatal blow. Today, the Welsh Government rejected the request of the Heads of the Valleys Development Company to underwrite the debts incurred for the construction of the circuit.

The HOTDVC, the company which had been set up to build and run the project, had originally requested that the Welsh Government underwrite the full £280 million cost the project had been expected to cost. After years of negotiation, the estimated costs had risen to £433 million, and the Welsh Government refused the HOTVDC proposal to underwrite half that debt.

The Welsh Government had demanded that the HOTVDC find external investors, and the firm had brought in outside money from UK investment firm Aviva, but Aviva had only agreed to become involved if the Welsh Government had promised to underwrite the project. With the Welsh Government refusing to underwrite the debt, Aviva's commitment now looks to be at an end.

The reason given for rejecting the proposal to build the Circuit of Wales is because the Welsh Government did not believe the projections for the number of permanent jobs. The HOTVDC had suggested that the circuit and its associated technology park would generate 6,000 full time jobs. The Welsh Economy Secretary, Ken Skates, said the project would only create 100 direct jobs and 500 indirect jobs, with a further 500 temporary jobs while the circuit was being built. 

Without the backing of either Aviva or the Welsh Government, the Circuit of Wales looks to be doomed. Attempts to raise the necessary funding through private investment only have so far fallen flat. Instead, the Welsh Government will build a technology park on the site.

What this means for the future of the British round of MotoGP is uncertain. Dorna signed a five-year contract with the Circuit of Wales to host the race from 2015. The contract allowed the Circuit of Wales to host the British MotoGP at an alternative circuit. For 2015 and 2016, the race was held at Silverstone, and it is scheduled to be held there in August of this year as well.

With three years (or rather, three races) left on the contract with the Circuit of Wales, the future of the British MotoGP round is clouded in doubt. The race in Silverstone in 2017 is almost certain to go ahead, as the plans are already too far advanced to do anything about it. However, where it will be held for the following years is unknown. If the Circuit of Wales is abandoned, then the contract with Dorna will also end.

This situation does put Silverstone in a very strong position with respect to Dorna. Dorna are committed to holding a race in the UK as part of their contract with BT Sport, who broadcast MotoGP in Britain. Currently, only Silverstone is up to the task of hosting a round of MotoGP.

The recent purchase of Donington Park by MSV, the organization which owns several other circuits in the UK and organizes BSB, could lead to the track being made suitable to host MotoGP, but significant challenges would remain. The facilities at the track are currently not capable of hosting a MotoGP round, as there is simply not enough space in the paddock to house all of the race trucks, let alone the hospitality. Should MSV commit to upgrade the facilities, then a return to the calendar could be possible. Until then, the contract is Silverstone's to lose.

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Comments

As expected from the start...Helped to accomplish the real goal, which was get Laguna Seca off the schedule...

Laguna Seca is off the schedule because Laguna Seca didn't pay its bills, couldn't afford to run Moto2 and Moto3 as well, and was not really large enough or safe enough for MotoGP. Silverstone, Circuit of Wales, none of that had anything to do with Laguna Seca being dropped. Laguna was only added to the calendar because Dorna wanted to go back to the US, and Laguna was the only option available at the time. 

It looks like a really good circuit and venue for MGP. China does not host an event but own so much real estate globally that investment in getting the event on track for what for them is 'nickle and dime' seems a sensible investment. Carmello should have a chat with them. Back in my own country, we have revamped the old Kyalami circuit and it is an awesome facility. I watched an interview with Carmello on Sunday and he figured 20 races per season would be the limit and great. The Chinese could easily get both the Welsh event and South African event on track and profiteer handsomely in collaboration with Dorna. I guess no one has whispered in Beijing's ear yet. AS F1 declines, MotoGP thrives. 

I'm amazed anyone is still taking anything to do with the Circuit of Wales seriously. 

The name will barely be remembered by people like me as the few time promoter of Silverstone marked by the tiny logo on a couple of ticket stubs. 

David,

Regarding statement that MSV has purchased lease on Donington. Nothing has been completed on that front as yet, as the competition market authority are investigating whether the purchase breaches competition rules, and have made a temporary enforcement order ensuring both businesses stay seperate while the investigation continues.

Read more at http://www.leicestermercury.co.uk/inquiry-into-proposed-donington-park-d...

And is Donington really that unsuitable to host the race as it currently stands? Granted the spectator facilities are sparse but temporary structures and facilities can be brought in for the event and the view is far superior to Silverstone. Since the last GP in 2009 additional run off and a number of changes to the circuit have taken place and i understand the circuit already has a grade 1 license. As for the size of the paddock, perhaps DORNA should be asking themselves how a track that used to hold Grand Prix and supporting classes with up to 200 competitors cannot now hold less than 90 today..aah the price of progress.

 

Totally unsurprised by this news and only slightly amazed that the proposal dragged on as long as it did.

Anyone with an ounce of financial and logisitic acumen would have taken one look at the costs, location, infrastructure etc., and concluded it was a non-starter. The fact that taxpayer money was required in order to underwrite this white elephant only indicates how the backers of this planned circuit also had little faith in their own project.

6,000 jobs? I doubt that if you added up all the jobs at all the circuits in the UK you would approach this number.

However, we should feel some sympathy with the local populace who would have been hoping for new jobs in what I understand is still a badly deprived area.

I would be interested to hear more about profitability of major tracks around the world. Do they make profit, is public funding needed or available..

This is because I live 10 kms from upcoming Kymiring which should host a MotoGP event in 2018. This far the track company has apparently been operating on 100% public funding. The latest 17.5 million € public investments in May were conditional - the company will have to sort out their private funding first.    

How tracks survive financially varies enormously from place to place. It also depends on how they are run. I know that Assen turns a profit without public subsidy, although they did get funds from the local government to build a couple of new grandstands and carry out some other improvements to the track. Other tracks rely very heavily on public subsidy. COTA is also privately funded, I believe, which is part of their problem, as they are struggling to make a profit. 

While I am not sure about the circuits themselves, most races are heavily subsidized by local governments. That actually makes some sense, as having between 70,000 and 120,000 people visit an area generates a lot of income for a region, and the region usually earns back in taxation what they invested to host the race.

What a surprise. I've been sceptical about this whole project right from the start - the more I learned about it, and HoVDC, the dodgier it all sounded and, much as I would love to see another Grand Prix quality circuit in the UK, this wasn't it. Just hope Dorna can sort something out with Silverstone now.

I certainly can't name a handful of profitable tracks around the world. Perhaps David or others could help me with that. The point being our sport face an enourmous barrier as the costs in building and runing a track are imense.

Seriously, was this ever going to become a Mecca for motor racing in the UK? I used to live half an hour from the site and loved it for, among other things, the wildness of the weather. Wales is wet. Very wet. It's what makes it so green and lush. Of course it's a garden of Eden when it's sunny, but one thing you learn, living there, is to make the most of those days because chances are, it won't be like that tomorrow.

However, I do feel for those who live in the area. I left, reluctantly, because there were so few opportunities but I can't help feeling they may do better out of something where the weather doesn't matter so much.

As for donnington, for me, apart from the crappy last two corners it's a fabulous circuit to watch on the telly whereas Silverstone is bland. It's a while since I went to either but I'm not the best person to comment on the spectator perspective as, to be honest, my expectations in that regard are always rather low.

Dorna signed a five-year contract with the Circuit of Wales to host the race from 2015. Ha Ha.

Who made that decision? and when will they be terminated

more than Two years later still nothing, no doubt the directors of Heads of the Valleys Development Company have been paying themselves for all the work they have done.

How long has this been going on ? I thought it was a scam right from the start. some comments from people in Wales suggested that the (usually wet) weather was totally unsuited to a race circuit. Shonky as a three dollar note.

If it looks like a duck & quacks like a duck Don't invest in it!