Lahti Events has struggled first with the Ski Association’s million-dollar debts and then with Kymiringi’s problems. The municipally owned company is finding it difficult to operate in the international events market.
Lahti Events is currently waiting for information from the municipal owner on whether the loss-making company will be wound down and the timeframe for doing so. While waiting, the events company is operating more or less as normal, organising its contracted events. These include the UCI Tour Lakeland and the MXGP Motocross World Championship next summer.
Politicians in Lahti are tossing around the event strategy statement and waiting to see what happens to the Kymiringi redevelopment in Iitti. That should be decided in a few weeks.
The fate of Kymiringi is intertwined with the fate of Lahti Events.
Some councilors from Lahti have always suspected their own subsidiary’s operations and questioned the city’s role in the event business. The other half of the council would like the city to take full advantage of major international events.
Now the city of Lahti should make decisions about how it will be involved in the events. Before that, there is laundry ahead. How did Lahti Events’ losses of millions come about?
Lahti Events aimed for big events
Lahti Events was founded in 2015 to organize the Salpausselkä Games and the 2017 World Ski Championships. The World Championships caused losses of 1.6 million euros, which were initially charged to Lahti Events’ account by agreement between the Ski Association and the city of Lahti. It was the Ski Association’s debt to the city of Lahti, which the Ski Association undertook to pay within 15 years.
A couple of years ago, the organization of the Salpausselkä Games was transferred from Lahti Events. Lahti Events started aiming for even bigger, international events, which were planned for the neighboring municipality of Iitin Kymiringi.
Lahti Events by no means made the decision on its own. The council decided in May 2019 that Lahti Events will buy a 12.5% \u200b\u200bstake in Kymiring. Behind it was a long council discussion, where politicians wringed their hands about whether the city should get involved in the rail business through its subsidiary.
However, the decision was appealed to the administrative court and the administrative court overturned it, because the city of Lahti had not determined whether the partnership was prohibited state aid.
Complaints, inquiries, requests for rectification and complaints to the Chancellor of Justice
The Kymiring decision left some of the city councilors in doubt. The track still didn’t look close to being ready, and getting MotoGP races to Iitti was not certain. More concern was caused by the fact that Lahti Events’ financial statements were losing money year after year.
However, the majority of councilors and the city’s executive management followed their own group guidelines:
The councilors tried to get information through council inquiries and various reports, when the Kymiring contracts were secret, citing trade secrets and the Limited Liability Companies Act.
What caused the most confusion was that the mayor had granted Lahti Events a loan of 2.8 million euros immediately after the agreement with Kymiring had been signed.
This decision has been appealed to the Chancellor of Justice.
The complainant suspected that the city would have circumvented the decision of the administrative court with the arrangement and financed Kymiring through Lahti Events. Lahti Events had paid Kymiring 2 million euros in advance for the event area.
The Chancellor of Justice did not investigate the matter, as a police investigation was also underway. It’s still in progress.
The City Council has ordered a risk assessment from Lahti Events. According to the survey completed last winter, the company’s most significant risks are: narrow financial room for maneuver, risks related to the corona virus, risks related to reaching the audience goal, risks related to event production, risks related to production partnerships and risks related to security.
The last staple
Many risks were triggered last spring, when the Kymiring track did not pass the inspection of the international motorcycle association in early summer and Finland’s first MotoGP was cancelled. and one of the creditors is Lahti Events. The amount to be recovered is two million euros.
Politicians from Lahti started talking about shutting down Lahti Events. The problem is that the company still has contracts valid for a few years. If the company does not fulfill its obligations, it commits a breach of contract, which results in fines.
The group and facilities division still wanted to find out whether Lahti Events had followed the group instruction. No abuses were found and the exchange of information between the city and the company had been lively. The company considers that it has followed the will of its owner. Even though the council’s decision on the Kymiring shareholding had been overturned, the council had not decided that Lahti Events could not organize events at Kymiring.
The decision-makers are now waiting to see if Kymiring will enter corporate restructuring. If Kymiring continues in one way or another, Lahti will have to decide how it will participate in the event business in the future. Lahti Events still has the rights to Kymiring’s event production.