Hungarian GP in Limbo After Bank Pulls Funds

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Loris Capirossi seemed destined to owe Dorna boss Carmelo Ezpeleta a steak dinner after the Balatonring supposedly secured funding from the Hungarian Development Bank. That bad fortune (for Hungarian MotoGP fans, not for Capirex) seems to have changed however as the loan has now been refused by the Hungarian bank, which leaves the Hungarian circuit a big question mark for the 2010 MotoGP calendar as it struggles to raise the needed $80 million. Story gets worse after the jump.

After conducting its due diligence, the Hungarian Development Bank has apparently refused to underwrite the Balatonring’s loan, which was to come from a third party investor. The cause of this reversal would seem to be an age old problem in racing: a lack of return on investment. The Hungarian Development Bank is a government sponsored entity, and was expected to underwrite 70% of the Balatonring’s construction costs, while only receiving a 30% stake in the track.

While that equity position might not necessarily be a bad deal for the investor (and the bank), the due diligence process also showed that no one has calculated a possible ROI on the funding the bank was going to help facilitate. With no payoff in sight, the bank rightfully got cold feed about getting on the hook for the lion’s share of the project, and subsequently could not convince its main investor to go along with the deal.

To further cast the track’s completion into doubt, the management company responsible for overseeing the construction of the Balatonring, Grupo Milton Management Zrt, was convicted under corruption charges back in 1995. This piece of information was apparently also discovered by the Hungarian Development Bank, and with issues of transparency surrounding the build, it created further cause for the bank to pull away from the project.

Whatever the reasons may be, the Balatonring seems to be plagued now with complications and intrigue. The liklihood of the track suceeding in collecting the required funding now seems doubtful. Accordingly, Carmelo Ezpeleta should probably start looking for a nice steak house. Of course we thought the opposite before, so…

Source: MotoMatters