Why Silverstone sale will keep Bernie Ecclestone onside over British GP
Historic venue has been seen as bad business by F1 supremo for years but new deal will protect it
With its testing, rapid turns and historic setting, this weekend’s Belgian Grand Prix is an annual restating of Formula One’s core values, celebrated by the drivers and loved by the fans. Long may it last. Doubts about its future eased last year with a new deal until 2015, a stay of execution perhaps as European races struggle to justify the costs of hosting grands prix.
France has been lost to us. Germany is hanging on, just. Valencia, a recent entrant to the pageant, is said not to be renewing next year. This makes the much-anticipated takeover of Silverstone, revealed in The Independent last week (below), by a property investor a minor miracle. The owners of the 760-acre site, the British Racing Drivers’ Club, are close to completing a leasing deal that will wipe out the club’s £26m-plus debts and release funds to complete the transformation of the venue.
Bernie Ecclestone, Formula One’s commercial rights holder, is said to be meeting the unnamed group next week. It has already been a busy summer for the 82-year-old impresario, who appears to be working double time before the next stage of his legal battle with the authorities in Germany, where he faces charges of bribery relating to the sale of Formula One in 2005. Ecclestone’s lawyers must present his case before a German judge next month, whereupon a decision will be made on the move to a subsequent trial or not.
In the meantime he has struck a deal to reinstate, with Red Bull financial muscle, the Austrian Grand Prix, has been pictured in Hungary in friendly repose with Jean Todt, the president of Formula One’s governing body, the FIA, as he seeks to conclude negotiations on a new Concorde Agreement, the commercial contract that will ensure the stability of the sport whatever his fate, and is instrumental to the deal that is set to transform the landscape along the southern boundary of Northamptonshire.
Silverstone’s new investors, reportedly linked to a BT pension fund, will take over the commercial operation, meeting the costs of hosting the grand prix – upwards of £12m annually – which increase five per cent year on year. The group is thought to be throwing £40m at the project. In May, Silverstone was awarded a Lottery grant of almost £500,000 as part of a wider £9m application for the development of a heritage project on the site. But they also need Ecclestone onside to ensure the viability of the race. Any contribution he might make, by way of a joint venture, perhaps, or financial guarantees, would further substantiate the proposition.
It would be some turnaround for a circuit that appeared doomed five years ago when, on the eve of the 2008 British Grand Prix, Ecclestone announced the signing of an agreement to take the race to Donington. Ecclestone had finally lost patience with the BRDC’s reluctance to upgrade the facilities to keep pace with the state-backed complexes popping up in the Far East.
It could have been worse. Fed up with negotiating car parks-cum-hippo baths (2000) and getting lost in his chauffeur-driven limo on the way to the paddock (2002), Ecclestone threatened to can altogether the oldest race on the Formula One calendar in 2004. All forgotten now.
Donington proved the wisdom of the old adage: if a thing is too good to be true it probably is. Within a year the ball was back in Silverstone’s paddock. A scheme first outlined in 2009, labelled the Silverstone development plan, gained full planning approval two years ago, permitting, among other things, the building of hotels, business and technology parks, educational facilities and a museum. Negotiations that faltered last year with a Qatari investment group have been resurrected with a new buyer.
The BRDC was forced to ramp up the cost of tickets this year to a minimum £145, resulting in a predictable outcry. Since, under the stringent terms of the trading agreement, the promoter has limited means of making any money beyond gate receipts, Silverstone is forced to hike the price up just to break even. Across Formula One’s new frontier in places like China, Singapore, Abu Dhabi, Korea and India races are subsidised by governments willing to pay Bernie’s price for a weekend of positive global exposure.
Silverstone has none of that. It stands or falls as a commercial enterprise using a deck stacked in favour of the rights holder, who banks dough from all angles across the weekend, from everything, in fact, other than the turnstiles. The alternative would be no grand prix. Ecclestone appears to care nothing for the heritage of the sport. He is merciless in his pursuit of profit. That’s business. It is not his responsibility to keep the race in Britain, especially when a stack of bidders is queuing up to pay the going rate.
Silverstone went out on a limb to keep the British Grand Prix alive and into big debt to commit to the present 17-year deal to host the race, which was conditional on the building of the new pit and paddock complex that is the Silverstone Wing. The public are largely onside. The cheapest tickets flew out the door, as did the most expensive at £450. The middling prices were slowest to retail, but even then sales topped 300,000 for the weekend. The sun shone, Lewis Hamilton qualified on pole and exploding tyres layered the race with drama. Adrian Newey, the design guru behind the success of Red Bull, claimed the sport was lucky that no one was seriously injured, or worse.
A car falling apart at 200mph sells. The audience would have probably traded some of the excitement for a Hamilton victory. But for the neutral, and the stakeholders looking to turn a profit, the spectacle proved a marvellous advert for their product.
The climate gods obliged, wrapping an unblemished sky around the packed stands like a great blue ribbon. And at the centre of the piece, the Silverstone Wing shimmered in the haze. Any self-respecting property investor would have wanted a chunk of that.
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