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T in the Park organisers warned they could move out of Scotland unless they could address the "severely reduced revenues'' associated with its relocation to Strathallan before the Scottish Government awarded them £150,000 of state aid, Culture Secretary Fiona Hyslop has said.
The claim was met by incredulity from MSPs - including an SNP member - during a heated session of Holyrood's Education and Culture Committee in which Ms Hyslop was accused of funding a "fraudulent application'' by organisers DF Concerts with "a whiff of cronyism'' due to former government adviser Jennifer Dempsie's role in facilitating key meetings.
Ms Hyslop was asked why the Scottish Government provided state aid to a profitable company with a major corporate sponsor.
She said: "The Scottish Government provides funding to profitable companies to safeguard jobs and support the economy in all of the sectors that are part of the key economic strategy of the Government.
"However, in relation to T in the Park, the costs of the transition, particularly the unanticipated costs, meant that, in the terms that they themselves have given information, that a seven-figure amount was required to provide for those costs, in particular moving from Balado to Strathallan.
"In light of the seven-figure costs and also in relation to the severely reduced revenues that they were anticipating, as provided to us in their budgeting in relation to that event, meant that the event itself, for this year certainly and in years going forward, would not be in a position that they would want to continue.
"Shareholders of the company were giving them an indication that it would be preferable for them to move, if there was not profitability for the event itself, from the multi-day, multi-stage festival which brings the economic benefit to rural Perthshire, to a single-day, single-stage event possibly in other cities like Glasgow as they have been doing recently.
"Or to move the festival itself away from Scotland.
"That would have the economic situation where the £15.4 million of economic benefit coming to Scotland would no longer be in Scotland.''
Liberal Democrat MSP Liam McArthur said: "You've got an event that's sponsored by Tennent's, who I would have thought would have had some concerns about an existential threat to the event or it moving to a single-stage, single-day event and therefore could have been approached in relation to their own approach to the event.''
SNP MSP Chic Brodie said: "Because of the economic nature I disavow the notion that T in the Park, which is co-joined with Scotland, that they would move.''
Ms Hyslop said: "It was clear to me that the organisers faced a number of unanticipated additional costs in staging the event as a result of the requirement to move from the previous site at Balado and three-year only time-limited condition attached to the planning consent attached to the new site at Strathallan.
"Following a detailed consideration of options I approved £150,000 from the major events budget for operation costs associated with the transition to the new site.''
Conservative MSP Mary Scanlon said: "Can I put it to the Cabinet Secretary that this was a done deal given the applicant's close connection with the SNP?
"£150,000 to a company with multimillion-pound profits. You decided to allocate the money then you scurried round the state aid, which included more that £150,000 worth of officials' time, to find which budget it might fit into.
"The request was for infrastructure, but under no circumstances should this money have been paid for infrastructure.
"So if this was not a fraudulent application I would like the Cabinet Secretary to tell us why.''
Committee convener Stewart Maxwell said: "I would just urge caution about that language. Just be careful.''
Ms Scanlon said: "Well I would be very happy if she told us there was nothing fraudulent here.''
Ms Hyslop said: "I'm sure you will take the guidance of this committee very carefully in terms of the language that was used and the allegations that have been made.''
She added: "The applicant Geoff Ellis (DF Concerts chief) has, as far as I am aware, no associations with the SNP. It was Geoff Ellis I met with, Geoff Ellis I had the discussions with.''
She said she was permitted to provide "operational state aid for the transition specifically for venue hire and costs specific to the transition i.e. planning consultants costs''.