Why billionaire Kharitonin has bought the most dangerous road in the world

Nürburgring race track for Formula 1 is called "Green Hell": dozens of drivers died on in. But for Viktor Kharitonin the track is, first of all, profitable business.
29.01.2015
Forbes
Origin source
"We slept two or three hours a day, but the distance, more than 1800 km, passed in one breath" - says businessman Victor Haritonin its participation in the Italian car race for retrokarov Mille Miglia, his favorite pastime of collectors and hedonists. Haritonin through May 2014 was not fond of any race or motorsport, and the first motor race on the Italian cities against a black Mercedes-Benz 1935 release ended for him an unexpected turn - in October 2014 the businessman became a co-owner of one of the oldest European routes - the German Nürburgring.

"For me, the Nürburgring - not an expensive toy, not a dream, but a very pragmatic object for investment - says in an interview with Forbes Haritonin. - If it can be beneficial to buy something in Germany, why not do? "

Nürburgring is located 70 kilometers from Cologne. The first race was held here in 1927.

For a long time the track was one of the most dangerous in the world - on the track winding among pines, called the "Green Hell", killing several dozen riders.

In addition to the Grand Prix, "Formula 1", held at the Nürburgring thki endurance, DTM, MotoGP, race trucks, and even festival Rock am Ring.

Around two race rings - the GP (Grand Prix circuit) and the Nordschleife (North Loop) - over time has grown a whole city: hotels, restaurants, theaters, concert and exhibition hall, karting and even a roller coaster. Since 2009, the reconstruction of the complex has been invested more than € 400 million of borrowed funds. The track is owned by the government of Rhineland-Palatinate, which drew on the development of the project bank loans. According to a source close to the former owners, poor management and a high credit load in summer 2012 led to Nuerburgring Automotive GmbH (NAG) bankruptcy of the operating company. In the summer of 2013 the entire complex was put up for sale.

In the spring of 2014 67% in the capital of NAG obtained Dusseldorf Capricorn Automotive GmbH businessman Robertino Wild, and 33% went to companies GetSpeed. In addition to them for the purchase of the investment company HIG claimed route from Miami. The deal amounted to € 77 million, € 25 million more investors promised to invest in infrastructure. The company Ernst & Young estimated the track at € 126 million. The debt € 400 million state government RhinelandSeam shifted from investors to the local taxpayers.

Already since January 1, 2015 and Capricorn GetSpeed ​​become full owners of the track, if we could until 20 December 2014 to pay € 15 million in three tranches. Spring GetSpeed ​​made the first payment on the € 5 million, but the head of Capricorn did not find money for the payment of € 10 million. Not even helped postponement from July to the end of October 2014, the company Robertino Wild proved itself on the verge of bankruptcy. The money came from not waiting - from Russia.

Back in May, during the arrival at the Mille Miglia Haritonin and his friend and partner in the race Victor Martin met with German avtopromyshlennikom, who told them about the Nürburgring. In October Haritonin first I traveled on the road, his visit did not last more than an hour.

"I was not looking at the car, and at the figures," - says the businessman.

Excursion for it conducted the head of Capricorn. WILD Haritonin proposed to create a consortium with him to pay the fee.

"Initially, we considered this option, but when they realized that the consortium - it is only the name and we have to participate in this alone, we went to the bodyizatora transaction by KPMG (bankruptcy trustee racing complex Nürburgring) and invited to participate on their own, "- says Haritonin.

KPMG very quickly all agreed with the local authorities, and within a week the parties signed documents. What has caused the rush? "Seller [government of Rhineland-Palatinate] already faced with a situation where he does not pay, - says Haritonin. - If the deal collapsed, they had to look for new customers and receive EU approval, or find a replacement for Wilde. The seller tried to implement a quick scenario. "

Under the deal, which has already been approved by the European Commission and will be closed by July 2015, if no one will contest it in court, Haritonin received from Capricorn 67% stake in the complex, which includes track, bleachers, boxes, hotels, exhibition and concert hall, carting , restaurants, a movie theater. Another 33% of the shares remained with GetSpeed.

Haritonin, like its predecessor Wild, received the property free of debt. The total amount of the transaction the former - € 77 million, the first payment, € 10 million, Haritonin made before 31 October. Another € 5-7 million it will invest up toCA, in the operational management of the complex. In the "Pharmstandard" noted that the transaction is not related to the company. "This is a private purchase", - says Irina Bakhturina, Advisor to the General Director of Investor Relations.

Haritonin created "Pharmstandard" on the basis of five plants purchased from the American ICN Pharmaceuticals in 2003 with partner Roman Abramovich and other shareholders of "Sibneft". In 2008, a year after the IPO «Pharmstandard" in London, during which investors valued the company at $ 2.2 billion, bought Haritonin share partners. Now the company - one of the leaders in the Russian market of drugs production. Revenues for the first six months of 2014 according to IFRS - 17.2 billion rubles, net profit - 3.6 billion rubles.

"Motorsports and pharmaceutical business does not meet for me. If this landmark facility will help me to organize the presence of our business in Germany, where a very high barrier to entry, I do not mind, though, we advance not count on it ", - says Haritonin.

Is it difficult to manage the highway? "Circuit of Contents- Unrealistically heavy business. Nürburgring will require annual investments in service around € 20-30 million, - says Forbes known Russian racer. - Fend it ticket and a museum, a hotel it is possible to empirically ".

Who takes the Nürburgring Grand Prix "Formula 1" every two years. Automotive journalist Anton Pogorelsky notes that "Formula 1" tracks do not earn, and spend, because the Formula One Management (FOM), the holder of the commercial rights to the "Formula 1", requires the organizers of each stage of the multi-million dollar fee for the right to host Grand Prix when.

Compensate for this contribution is impossible, since all advertising revenue during the weekend, "Formula 1" gets the FOM. "But sooner or later, the contract will end, and then the new owners will have to decide," Formula 1 "Do they need in the future", - says Pogorelsky.

In Haritonin is an example of successful investments in the sport, his former partner Roman Abramovich bought in 2003 stuck in debt in London "Chelsea", and favorite football club of the British political elite has become for him propylskom in higher English society.

"If Haritonin be able to bring the iconic track to a new level, to make the project a candy, for the Germans it will consummate authority", - says Ivan Strekopytov, creator of the project nuerburgring.ru, organizer of racing and corporate rest on a sports car.

"Of course, I tip my hat to the characters, but do not understand what makes people, especially from Russia, not inside the racing companies to make such purchases," - is perplexed Russian racer. According to him, in recent years, the top echelon of motor sport is in a difficult financial situation, the fans used to watch the race on TV, not in the stands.

Haritonin doubts in the financial success of the Nürburgring - the trail showed "income about € 7 million" for 2014. According to him, without a "Formula 1" trail may well feed herself: a dense calendar of professional racing, contracts with auto companies that test on the track prototypes of future models, tourist arrivals (€ 27 - circle). "This is a brand new complex with painPWM potential, but it catches the eye is very weak governance. I think we can solve this issue, "- said co-owner of" Pharmstandard ".