T in the Park organisers paid £5m dividend despite state funding

T in the Park was held at Strathallan Castle
for the first time this summer. Picture: Lisa Ferguson — T in the Park was held at Strathallan Castle for the first time this summer. Picture: Lisa Ferguson

The culture secretary told The Scotsman that although she was aware the company was profitable overall, DF Concerts had threatened it could pull the music festival from Scotland if it did not turn a profit at its new home in Perthshire.

Company accounts for DF Concerts for the 12 months to December 2014 show that the company paid out a total dividend of £5m over the year.

The Scottish Government payout, described as “state aid”, was granted to “help ensure the successful transition” of the event to its new home at the Strathallan Estate, where it moved after safety fears were raised about an underground oil pipe at its previous site at Balado, Kinross-shire.

Fiona Hyslop gives evidence to the Scottish Parliament. Picture: Scottish Parliament

It emerged in August that former SNP adviser Jennifer Dempsie, who was working for DF Concerts, set up meetings between the company and ministers including Ms Hyslop ahead of the application for the funding.

Ms Hyslop, who was last week questioned by MSPs on the issue, yesterday escaped a recall before the Education and Culture Committee after the SNP majority blocked opposition calls for her to appear for a second time. Instead, it is to send her a series of follow-up questions by letter.

Convener Stewart Maxwell said: “The committee unanimously agreed to follow its normal practice and follow up the evidence session with the Cabinet secretary for culture, Europe and external affairs in writing.”

Ms Hyslop told The Scotsman that the profitability of DF Concerts was not in question and pointed to funding given to other events such as the Mobos and the MTV awards.

She said: “The issue was about the profitability of the event rather than the company. It is very important that we keep T in the Park as a multi-stage, multi-day festival.

“If for the profits of that company it was moved to a single-stage, single-day event or indeed potentially moved out of Scotland, it would have put the T in the Park that we know in question. That is what was put to us.”

Glasgow City Council also handed £200,000 to DF Concerts for its summer session music events in the city.

DF Concerts accounts show that most of the dividends – a payment a company can make to shareholders if it has made enough profit – were paid to parent company, LN Gaiety Holdings, which has two DF Concerts directors, Denis Desmond and Paul Latham, on its board. However, the accounts showed that the directors of DF also received dividends totalling £1.08m during the year.

A statement by the directors which accompanied the accounts warned of “competitive pressure” in the marketplace and said that its margins “remain under pressure”.

A total retained profit – money kept in a business to finance growth – of £589,526 was carried forward, the accounts showed, down from the previous year’s figure of £615,502.

Meanwhile, operating profit was at a record high at £6.2m, compared with £4.5m the previous year.

The accounts also revealed the firm gave an interest-free loan of an undisclosed amount to chief executive Geoffrey Ellis, the balance of which was reduced to £16 by the year end. Liberal Democrat MSP Liam McArthur said: “At committee last week the culture secretary told us in no uncertain terms that the state aid deal brokered by Alex Salmond’s former special adviser was agreed on the basis that there was a real risk of shareholders forcing T in the Park to leave Scotland.

“These company accounts call into question the extent of any such risk.”

Scottish Conservative culture spokeswoman Liz Smith MSP said: “The Scottish Government still have a lot of explaining to do surrounding the criteria by which £150,000 of taxpayers’ money was given to a successful and profit-making company.”

A Scottish Government spokeswoman said it was “not unusual” for the government to support major events.

She said: “The Scottish Government carefully examined projected costs and revenue for the T in the Park event itself, and took action to ensure that it remains in Scotland, at Strathallan, as a multi-stage festival.”

DF Concerts refused to comment.