WRITTEN STATEMENT BY THE WELSH ASSEMBLY GOVERNMENT

Title: Wales Rally GB

Date: 24 April 2009

By: Ieuan Wyn Jones, the Deputy First Minister and Minister for the Economy and Transport

On the 19th of February this year I took the decision, based on official advice and discussed with the First Minister, on future sponsorship of the Rally of Great Britain, to serve notice to terminate the contract with International Motor Sports Limited (IMS), while also being willing to enter into negotiations with IMS to explore the possibility of a new arrangement on the basis of a reduced financial contribution. Such negotiations would be on a strictly without prejudice basis, and would of course be conducted on the clear understanding that the Welsh Assembly Government fully reserves its position at law (in particular as regards its legitimate termination of the contract).

The decision to serve notice on the contract was made by the Welsh Assembly Government as a result of the decision of the FIA, the World Motorsport Governing body to change the status of the Wales Rally GB, removing it from the 2010 World Rally Championship (WRC) calendar.

IMS submitted alternative proposals to run an event with a lesser status and complemented by an additional Rally in North Wales in alternate years. This was not seen as a suitable alternative given the level of funding involved and the loss of the World Rally Championship status.

On the 6th of March lawyers acting on behalf of the IMS informed the Welsh Assembly Government of their intention to legally challenge the decision, and indeed today IMS’s lawyers have served on the Welsh Assembly Government’s lawyers a Claim Form which they issued yesterday, with an indication that Particulars of Claim will follow.

In view of recent press interest it is necessary to set out the background to the decision. In March 2006, the former Welsh Development Agency entered into a five year agreement with International Motor Sports Limited (IMS) for title sponsorship of the Rally of Great Britain. It was a condition of the agreement that the Rally would be a qualifying round of the World Rally Championship (WRC) in each of the five years covered by the agreement, up to and including the 2011 event.

In December 2007, the FIA Council took a decision (ratified by the FIA in June 2008) to adopt a biennial calendar of WRC which would mean that the Wales Rally GB would be omitted from the calendar in 2010.

This was not the basis on which the WDA, and latterly we, the Welsh Assembly Government, had agreed to support the event. It should also be noted that at no stage were we, as a major sponsor of one of the sport’s ‘blue riband’ annual events, directly contacted or consulted by the FIA on their proposals for reviewing the WRC calendar.

In June 2008, IMS informed us that the FIA had reaffirmed its support for the revised WRC calendar. Despite this, during 2008 IMS were telling us that there was every prospect that the FIA would reverse its decision so that the Wales Rally GB would be reinstated as a qualifying round on the WRC calendar every year. Towards the end of 2008, IMS conceded that it was becoming increasingly unlikely that the FIA would reverse its decision.

It also became apparent in the last few months of 2008 that the FIA’s decision would indeed have a profound and material impact on the WRC calendar, the host countries, sponsors and stakeholders around the world, not least on Wales.

Having patiently and persistently outlined our concerns to IMS in February this year we decided to terminate our agreement with IMS, as was the Welsh Assembly’s entitlement under the circumstances.

As to the economic consequences of the termination, an independent report carried out in 2006 by the Welsh Economy Research Unit for the Assembly Government found that there is evidence to show that the Wales Rally GB has had a positive impact in showcasing Wales as a destination through global broadcast and media coverage. However, the report also stated that the event has only had a marginal impact on the development of the Welsh motorsport/advanced engineering sector, and in terms of repeat visitation generates a modest tourism spend of circa £1 million per annum. The report confirmed that the 2006 Rally generated £3.3 million of gross value added, which represents a return on investment of less than 2:1. In comparison, Event Scotland, the national events agency in Scotland aim for a return on investment of 8:1 across their portfolio of supported events.

In response to certain media claims, I am assured by our Major Events Unit that the change in status of the Wales Rally GB and the possibility of reviewing the contract has been discussed with Cardiff Council officials. Ministers have not been in a position to make any public statements on this matter because of the on-going legal discussions.

The Welsh Assembly Government made a multi million pound commitment to hosting an annual round of the WRC in Wales and we have a clear duty of care to manage the public interest and the investment of public funding in this and all other major events that we support.

I have now written to IMS confirming that, even though the contract has been terminated for entirely legitimate reasons, our team stand ready to enter into strictly without prejudice discussions on possible new arrangements, based on a re-evaluation of the sponsorship amount. In the meantime, the Welsh Assembly Government awaits service of the Particulars of Claim, after which it will serve a Defence in which the legal proceedings are resisted.