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FEBRUARY 3, 2006

Power struggles at Hockenheim

It seems that Hockenheim's problems are getting worse every day with news now leaking out that there is a power struggle going on between the circuit managing-director Hans-Jurgen von Glasenapp and the Mayor of Hockenheim Dieter Gummer, who is the chairman of Hockenheim-Ring GmbH. All this is happening against a background of allegations of fraud which now involves the public prosecutor of Mannheim.

The track is owned by the town of Hockenheim (51%) and by the Badischen Motorsport Clubs Hockenheim (49%). Its commercial operations are run by a group of companies including Hockenheim-Ring GmbH and its sister operations Hockenheim-Ring Sisyphus Event GmbH, Hockenheim-Ring ADAC Fahrsicherheits Zentrum GmbH and Hockenheim-Ring Hotel und Gastronomie GmbH which look after promotions, a driving safety school and the hotel and catering operations. The regional government of Baden-Wurttemburg has been involved since 2002 when it provided $13m towards the $60m needed for a major reconstruction of the track. Since then the track has officially been known as Hockenheimring Baden-Wurttemberg.

Since then things have not gone well with high repayments for the money borrowed to rebuild the track, increasing race fees and declining numbers of fans combining to make life difficult for the circuit. In 2004 the Mayor of Hockenheim changed for the first time since 1978 with Gummer replacing Gustav Schrank but at the end of last year the circuit's debts had reached $35m and the company is facing a loss in 2006 of an estimated $1.78m. Therre is even talk that it may go out of business. The regional Minister-President Guenther Oettinger says that the circuit needs to find private investment and improve its marketing efforts and that only then can the authorities help out. The German car companies have already made it clear that they are not going to help any more.

Various solutions have been discussed including selling the circuit to a bank and then leasing back the facility over a 10-year period. This would solve the immediate cash problems but would mean the city would lose control of the track. If the bank was the local state bank then Baden-Wurttemburg could have more control over the development of Hockenheim. It is also worth noting that Dietmar Hopp, the founder of the software company SAP, is talking about constructing a $40m stadium which he wants to use to house a local soccer team that he is supporting to take it to the German national league. There is a possibility that this facility could be located at Hockenheim which would greatly increase the earning potential of the venue. A decision on that is due in March.