Damon Hill announced a deal to keep the British Grand Prix at Silverstone for 17 years yesterday, but secrecy over the growing costs involved led immediately to suspicions that ticket prices were destined to rise.
The former world champion, now president of the British Racing Drivers' Club which owns the track, is believed to have agreed to pay a total of £250m, with the annual fee starting at £10m and rising by around 5 per cent year on year until 2026. But since the terms allow little room for income to grow, fans fear they may be left to foot the rising bill.
The Formula One Supporters Association believes the BRDC has taken a financial gamble in signing the contract with Formula One Management, controlled by Bernie Ecclestone. Silverstone managing director Richard Phillips admitted it would be necessary for the circuit to be "creative" in raising income, but with sources such as television fees, circuit advertising and high-earning corporate hospitality already controlled by FOM, the only serious income accruing to the BRDC from the race comes in ticket sales.
Last year an aggregate 320,000 people entered the circuit over the race weekend, with more than half buying a three-day ticket costing around £100. As a result the BRDC was able to make a profit of around £2m on staging the event.
But FOSA president Georgio Zorbas said there was no guarantee those numbers could be maintained, let along increased, over the period of the contract. "When you get over the pleasure at the prospect of the British Grand Prix actually going ahead, it's an astonishingly brave, bold or some might even say dangerous financial commitment on the part of the BRDC," said Zorbas.
"Last year the weather was OK, and we had two competitive British drivers in Lewis Hamilton and Jenson Button, so numbers were good, but I know quite a lot of our members waited before buying, because tickets went quite slowly at first and so they got them at reduced prices.
"Hopefully Lewis and Jenson will still be at the top for the next few years, so the interest will stay high, but economic conditions are tough, people are finding it hard. Even staying at a campsite it's an expensive weekend, and if prices start rising, numbers will start falling off. It has to stay affordable."
Ecclestone is understood to have been demanding an annual fee of £12m, with an annual escalator of 7 per cent, but Ecclestone is understood to have agreed to lower this escalator to five per cent, or even 4 per cent.
Even assuming the initial annual fee agreed to be nearer £10m, however, that still means in 2019 the BRDC will have to find £15.5m, and in 2026, when the contract expires, the fee will have risen to nearly £22m.
"Our concern is how they intend to generate enough income to cover that, bearing in mind the number of people who can go is effectively capped anyway by agreement with the local police," said Zorbas.
The BDRC chairman rejected figures reported elsewhere that the first year's payment was as high as £12m and insisted he is "very happy" with the deal. Hill added of the deal: "It is a tough one to fulfil, there is no question of that, but it is a commitment. We have moved into a new realm where we are committed to developing Silverstone and making big investments into the circuit."
Silverstone is already committed to investing £7m on circuit developments this winter. In addition, a new £5m pit-lane garage and media centre facility – more in line with those of affluent government-supported circuits such as Abu Dhabi – is due for completion by 2011.
According to Phillips, the length of the 17-year contract is the key to securing the development, with speculation that money will have to be borrowed against future income.