V8 Supercars may roll out of Hamilton

Grid girls at the ITM Hamilton 400 V8 Supercar event in April. Photo / Doug Sherring

V8 Supercars wants to quit Hamilton after next year's event in April and will pay the city a $1.2 million "exit fee" in return for infrastructure with a book value of $5m.

City councillors met today and will reconvene Friday at 8am to debate whether they accept the deal. Councillors had no warning of today's five-hour discussion and were taken aback by the "huge" news.

If the council does not accept the offer of $1.2m to terminate the contract two years early, V8 Supercars would apply to move the resource consent to November 2013 which was unlikely to get any support from the Frankton business community. The council would have to pay $600,000 for the new resource consent and V8 Supercars would walk away without even paying an exit fee if its attempt was unsuccessful.

The council and V8 Supercars are four years into a seven-year contract but have struggled to make a profit every year it has been run. The previous promoter, Caleta Street Management, was removed last year because they ran out of money and despite the new promoter V8 Supercars Australia investing money into this year's event only 105,432 walked through the gates over the three days.

The council also failed to get $360,000 from profit share arrangement this year.

One source told the Herald the council was in a "no-win situation" as V8 Supercars Australia wants to cancel the deal because it did not feel it could run sustainably in Hamilton but thought it could be a success elsewhere with a bigger population centre.

One councillor felt shafted by V8 Supercars Australia, while another questioned whether Hamilton was ever the right place for the event.

"It's kind of a no-win situation which every way you look at."

Councillors were not allowed to take the reports home with them and complained about the process where they were told they only had 15 minutes to read the information following the presentation from V8 Supercars Australia acting chief executive Shane Howard.

The council is still waiting on the findings from an independent audit by Audit New Zealand into the processes which led to the council racking up a loan of more than $14m and the event costing ratepayers more than $30m. The council paid $17.97m for set-up costs (despite initial amounts being reported at $7.95m) for the infrastructure which includes concrete barriers, the pit lane structure and fencing.

Hamilton mayor Julie Hardaker has been a sceptic of the event prior to joining council and previously said, whether she agreed with it or not, the city need to make the event a success because it had a contract.

The race organisers have not started looking for a new city to hold the event but would like it to stay in New Zealand.

V8 Supercars New Zealand Greg Mosen confirmed they were in on-going talks with the Hamilton City Council. Ms Hardaker was also unable to comment on the meeting because it was excluded to the public but expected a decision to be made tomorrow.

One race expert believed Pukekohe would be the only possible venue for the event as it would tap into Auckland's large population and did not think V8 Supercars Australia would have a go at another street circuit this side of the ditch.

The options:

- Terminate contract two years early after April 2012 event

- V8 Supercars pay council a $1.2m "exit fee"

- Council gives V8SC infrastructure with a book value of $5m as part of the termination

OR

- V8 Supercars apply for resource consent to move event to November 2013

- Council pays about $600,000 for resource consent

- V8 Supercars ends contract without paying exit fee if consent not granted