More debt, fewer tickets sold: Montreal’s Formula E organizers open their books one last time

Photo: cbc

 

Organizers of Montreal’s ill-fated electric race gave one last reckoning of its accounts on Monday, admitting they sold only 15,000 tickets to the event, are millions of dollars in debt and have no clear idea how that money will be repaid.

Montreal it’s electric still has to pay $13.55 million, including $600,000 to race promoter Evenko and $6.3 million to Formula E Operations, the Europe-based body overseeing the races around the world, for race rights and other associated costs.

The latter figure could still rise given Montreal backed out of its agreement to hold races again in 2018 and 2019. Formula E Operations indicated in December that it was exploring its legal options.

But with Montreal it’s electric no longer operational, it’s not clear who will pay its outstanding debts.

“We received a formal notice from Formula E. They asked us to pay the residual amounts of the contract,” said Simon Pillarella, who was the non-profit organization’s director-general.

“Given that Montreal it’s electric doesn’t exist anymore, we obviously won’t be paying Formula E.”

Plante indicated on Monday that her administration wouldn’t be paying Montreal it’s electric’s unpaid bills — at least not voluntarily.

“The contractual agreement was between Montreal it’s electric and Formula E, so we’ll let the bankruptcy trustees and the lawyers work it out,” she said.

“For the moment, there is no way Montreal will shoulder any expenses whatsoever.”

Promised money never materialized: organizers

The race was a major issue in last year’s municipal election. Then-mayor Denis Coderre boasted this summer’s inaugural event was a success and committed to holding at least two others.

​But Valérie Plante cancelled the remaining Formula E races shortly after defeating Coderre, calling the first one a “financial fiasco.” She was sharply critical of how the race was organized and the amount the city agreed to invest in it.

As it turned out, the Coderre administration handed over very little of the money it promised the race organizers.

Of the $11.5 million Coderre committed in subsides, only $3.5 million was actually paid out. That’s the principal reason Montreal it’s electric recorded a deficit last year, organizers said as it wrapped up its operations.

On top of the $6.9 million owed for accounts payable, Montreal it’s electric also owes $6.65 million on its line of credit, of which the city is a guarantor.

Only 15,000 tickets sold

In disbanding its operations, Montreal it’s electric also revealed how few tickets to the event were actually sold to the public.

During the election campaign, Coderre was steadfast in refusing to provide a clear breakdown of ticket sales. He relented a few days before election day.

But even then attendance figures were obscure. Of the 45,000 people who attended, organizers said 25,000 tickets were “sold to the public and under agreements with partners and sponsors.”

On Monday, Montreal it’s electric acknowledged only 15,000 tickets were sold to the public; the rest were given away. At the same time, it said higher ticket sales would not have dramatically altered its bottom line.

“Note that even if the tickets given away had all been sold, this would have only brought in $1 million on a deficit of $13.55 million,” the organization said in a statement.

“The success of the event did not depend on ticket sales but rather on other forms of financing, as well as the long-term economic and touristic spinoffs of the event.”

Montreal it’s electric claims the race created 220 jobs, contributed $15.4 million to the economy and generated $2 million in additional revenues for the federal and provincial governments.

Source :

cbc

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