Donington not adding up

I posted last month on Donington, which is due to host the British Grand Prix in July 2010, seventeen months from now. I gave details of a conversation I'd had with Simon Gillett at the Motorsport Business Forum in December. But now some worrying noises are coming out on this story, regarding the circuit's financial position

The story has run this week in the Mail, the Express and the Telegraph. It refers to the accounts for the year 2007, which were filed at Companies House on 21st January this year, three weeks ago.

They refer to the eye-catching figures of £67 million of debt and losses of £12.7 million. I've seen the accounts and that's definitely what they say, but it's not clear what the debt is made up of, beyond a £16 million bank loan, £4m of which is guaranteed by Gillett's partner Paul White. White owns a construction business in the Midlands.

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 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 'not able to obtain or review' documents of financial forecasts or evidence that Donington has binding commitments with providers for the funds required.

This is interesting because Gillett told me last year that he had a deal with IMG and Goldman Sachs on a debenture scheme, which guaranteed him the money. He has said all along that he would reveal details of the debenture scheme at the end of March, so we'll have to wait until then to get the full picture. Bernie Ecclestone has said that he wants to see that the thing is on track by September if the race is to go ahead.

The auditors add that the current downturn creates 'uncertainty particularly over a) the level of demand of the group's services and b) the availability of bank and other finance in the foreseeable future.'

Gillett told Ian Parkes of PA Sport this week that the whole thing is on track, despite the doubters. He denies that it has the debts being quoted and says that a computer model of the new track facilities will be launched very soon. He said that the 2008 accounts had not been filed yet, but the current stories relate to the most recent set of accounts, for 2007.