The company contracted to run Brighton Pride’s bars until 2011 has had its relationship with the festival terminated.

Aeon Events, the gay-run promotion company which owns the Wild Fruits night, said its contract was terminated after it demanded to see proof of Brighton Pride’s financial position.

Brighton Pride has suffered a rocky 12 months. In November, it admitted that the festival was not paying for itself and Yvonne Barker stepped down as chairman.

Last year, the event announced a £50,000 budget deficit and the 2009 festival was described by organisers as “a bad year” in financial terms.

Aeon Events, which began a three-year-contract last year, said it was advised by its lawyers to view Pride’s financial situation before making any advance payments of its own money or money from other businesses which subcontract bars from it on the day.

In an emailed statement, Aeon promoter Paul Kemp said Brighton Pride had refused to allow access to its records and the company subsequently found its contract terminated.

He said: “We have made it very clear to Pride that, without receiving or viewing written financial reassurances that Pride has enough funding to stage the event in its entirety (including both the dance and cabaret tents), we are not prepared to commit any funds. This is a simple procedure that would be required by any bank, business or institution under the present circumstances.

“After witnessing the cancellation of the Beachdown festival last year, we felt it only fair and transparent that Pride demonstrate to us that sufficient funds are in place to implement some positive health and safety controls, stage this year’s event with all the main attractions, and provide insurance cover for our licence fee.

“Pride however have not shown us any proof that funds are in place to stage the full event despite our enquiries, and so we have found ourselves in a difficult position. We cannot gamble blindly with both ours and other businesses’ money, and so it has come as some surprise that we have received written notification from Pride that our bars contract has been terminated.”

Mr Kemp continued: “It is saddening to think that this really is the end of a great chapter in Pride’s history, when local LGBT businesses were key to the event and essential funds were raised for our voluntary groups.”

He said that Aeon, which has been involved with Pride since the festival began, would continue fundraising for Pride weekend events.

A letter sent to Aeon Events from acting Brighton Pride head Robert Clothier said the company had breached its contract by falling behind with the contract fee.

The undated letter said: “The first instalment of the fee (due 1st March 2010) was not received and following a mutually agreed extension to the deadline for payment (to 1st April 2010), still no payment has been received.”

Brighton Pride refused to comment on Aeon Events’ claims today.

Spokeswoman Judith Manson told PinkNews.co.uk she could not comment as organisers were still putting together a statement.

However, she rubbished reports that Pride would be left without any bars and said the festival would soon be announcing “good news”.