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Promoter deal will change face of TT
Author TTwebsite
Monday, Apr 25, 2016 3:07 pm
Tynwald next week will be ask to approve the appointment of a private partner to promote the TT.
If approved, Vision Nine will be promoter of the TT and Classic TT for a period of up to 10 years with an option to extend the contract for a further five years.
Under the Department of Economic Development’s plan, Vision Nine will take on more than £2m of the department’s annual costs to run the events and provide £2.5m of investment into the events.
In return, it will share the resulting net income in the proportion of 80/20 Vision Nine/DED.
Currently the events are operated by DED at a net cost of more than £2m, so Vision Nine can only achieve a profit if it delivers substantial growth in the events’ contribution to the island’s economy and government income.
Currently the events are break even for government due to the taxes they generate for Treasury and as a result, they make a substantial economic contribution at no net cost to the taxpayer, it is argued.
Vision Nine have ambitious growth targets that would see spectator numbers exceed 85,000 by year 10 of its contract – the current figure is about 60,000. If achieved, this would generate in excess of £69m economic benefit and government income of £12m per year while Vision Nine would generate annual profit of £5m by 2026.
Regardless of whether Vision Nine achieves the minimum contractual growth or more, the DED – and therefore the taxpayer – will save £23m over a 10-year period. By year four, the DED will no longer contribute financially to the operational delivery elements that are passed to Vision Nine
In its report to Tynwald, the department outlines the potential risks and what has been done to mitigate those risks.
For instance, the commercial income and reduced costs predicted by Vision Nine may not materialise. But the DED says a detailed promoter agreement has been drawn up outlining obligations and the costs of delivering these remain with the promoter for the term of the contract, and cannot be passed back to department.
Others risks cited are that Vision Nine could fail financially, not deliver the events or generate the growth required.
The DED says extensive efforts have made to mitigate these risks and Vision Nine is a highly experienced events manager. The agreement includes a provision to exit it early in the event that minimum growth targets are not met. T
Chief Minister Allan Bell said:
‘One of the major challenges facing the DED is maintaining the growth in the TT we are enjoying or stimulating further growth without drawing on scarce government finances when other government departments getting squeezed.
‘The department has put a great deal of work into finding a suitable partner. It will undoubtedly over the passage of time change the face of the TT.’
He said engaging with the private sector would bring a new sense of commercialism to the TT operation and reduce the continuing financial burden on the taxpayers.
There had to be an injection of new investment to expand the event and ‘hopefully maintain the races as a free show’, he said.
Mr Bell said the TT was a in very strong position and thanks to TV coverage awareness of the event was greater than it has even been.
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