Silverstone, the historic race track which hosts the Formula 1 British Grand Prix, is to be sold for little more than £10m, according to recently released documents. The sale price stands in stark contrast to the construction cost of purpose-built racing circuits: a new 3.5-mile track, which is set to rival Silverstone, is being built in Wales at a forecast cost of £250m.
The Silverstone track is ultimately owned by the British Racing Drivers Club (BRDC), a group of more than 800 senior motorsport figures currently including the F1 stars Jenson Button and Lewis Hamilton, which took over the lease of Silverstone from the Royal Automobile Club in 1952 and then bought the site’s freehold from the Ministry of Defence in 1971. It now wants to distance itself from the track, which made a £3.3m net loss last year.
In August The Independent revealed that the BRDC was selling Silverstone and this was confirmed the following month when the club announced that Mepc, a property group owned by the BT pension fund, had paid £32m for a 999-year lease on 280 acres of land surrounding the circuit. The BRDC also said it had agreed terms to sell a lease on Silverstone itself but did not confirm the sale price.
However, although the deal for Silverstone has not yet closed, the terms were agreed on 8 August when the BRDC signed a conditional binding agreement to sell its circuit business, Silverstone Circuits Ltd, along with a separate lease of 467 acres of track-related land. As this took place before the BRDC’s 2012 accounts had been filed, they needed to be adjusted to show the value of the circuit based on the sale price.
The accounts show that at 31 December 2012 the track, plant and machinery had a value of £10.8m. This is about a third of the amount that the BRDC spent on building a new pits and paddock complex, known as The Wing, which opened at the track two years ago. It was part of an upgrade which helped the BRDC land a 17-year contract to host the British Grand Prix from 2010.
In a letter to BRDC members on 24 September, its outgoing chairman Stuart Rolt said: “The revised value reflects the commercial value of the amounts offered for the business including upfront payments and the present value of future rental income.”
Although the realisable value of the circuit is significantly less than the construction cost of the new onsite complex, a spokesperson for the BRDC said: “In fact, had the money not been spent to build The Wing and improve the circuit, there would have been no 17-year F1 contract, the circuit would have had no value, and the BRDC would not have been able to secure such a successful deal with Mepc, who were attracted by the on-going value of the Silverstone brand.”
Mr Rolt said the sale price of Silverstone was driven down because the business was loss-making. “The value of an asset that has a locked purpose as a business – in Silverstone’s case to be operated primarily as a motor racing circuit – is largely calculated from the profit that can be derived from it. Typically a multiple of annual profits will be used to generate a balance sheet value.” He added: “We made a net loss in the year … Our circuit assets value reflects this.”
Although the identity of Silverstone’s new owner has not been revealed, it is understood it wants to retain the existing circuit management.
Mepc appears to have got an equally good deal, as the accounts show that the land surrounding the circuit had a value of £50.1m in 2011, which had reduced to £29.7m at the end of 2012. Over the eight months between then and the land being sold, £2.3m of net additions brought it up to the £32m sale price.
The price paid by Mepc for the land around the circuit comes to roughly £114,000 per acre. Adrian Willet, a director at the property adviser CBRE, says: “It is too simplistic to say that the deal struck is below market norms. If conventional housing development could be built, values for consented land are currently circa £800,000 per net developable acre, with industrial land between £250,000 and £300,000 per acre. As always, the devil is in the detail, but on the face of it, this looks like a good strategic play by Mepc.”