Douglas Borough Council is slashing the rent it charges the Manx government to use the TT paddock area, in exchange for improvement work.
Chairman of the Leisure Services Committee Stephen Pitts says the fees will drop from £35,000 a year to £5,000.
The deal forms part of a long-term agreement aimed at improving the site after complaints raised by racers and fans during last year's Manx Grand Prix.
Heavy rain and a lack of maintenance caused major problems, but Councillor Pitts says the deal will prevent any further mudbaths in the future:
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