Following a number of years stormy relations with Bernie Ecclestone, the Silverstone F1 race promoters’ secured a new 17 year deal to host the British GP.
This deal was reported by the BBC to cost £12m in 2010 and each year a compound escalation fee of 5% would be added.
This year, the fee was £16.08m and Silverstone did not have the money; so uncle Bernie kindly deferred the payment until 2016.
At the time the deal was signed, Martin Brundle hailed it as “brilliant news. I always assumed it would happen in the end because everyone wanted the same thing. The new circuits are exciting and interesting but they always had to balance up with the historic circuits, like Silverstone.”
Of course in 2009 Silverstone required significant investment and the thinking behind signing a longer contract than the then usual five year term, was that the security of hosting the British GP would allow the circuit greater borrowings leverage.
The British Government Sports minister at the time – Gerry Sutcliffe – was quick to welcome the announcement saying, “The news the British Grand Prix is to stay at the iconic Northamptonshire track will be welcomed by millions of fans – not just in this country but across the world.”
Now Silverstone are in debt, can’t pay the hosting fee and in danger of losing the GP.
Silverstone was revalued in last year’s financial reports which in fact saw the circuit declare a profit of just over £3 million, however, had the capital value of the circuit not been revised, this would have seen a like for like – year on year – loss of around £3.5 million.
The cold reality is that the Northamptonshire circuit has been mismanaged for years and is struggling to clear its debt.
Further the ‘new’ deal with Ecclestone in 2009 was a tragic misjudgement. The agreed escalator increases the fee by 218% (£26.2m) and this was agreed without proper thought given to how revenue could also be more than doubled.
Over this time this would require ticket prices to more than double, when in fact the circuit management were been forced to discount tickets in 2015 and again for 2016.
Prior to the discounts offered for the 2015 British GP, Silverstone already charged the highest general admission prices in the world, at £155. This is a price which the new circuit CEO believes to be close to ‘the limit’ of what people will pay.
Ecclestone revealed recently, the unpaid fees mean he can invoke a clause and cancel the 2016 British GP. Yet Bernie has a solution; and calls upon the British government to step in and assist. “Our government should support the British Grand Prix. They support the Olympics and that costs a fortune plus other events.”
The ‘early bird’ discounting scheme in place for the 2016 British GP has seen ticket sales by the end of September 163% ahead of this time last year says circuit CEO, Patrick Allen. However, the circuit chief admits, “We have got strong sales but it is absorbing the escalator that is in the contract so just to stand still you have to sell increasingly more tickets each year and that will become increasingly difficult as years roll by.”
Along with paying a year in arrears.
If prices can’t rise much further, then attendances must and in 2015 some 15,000 more spectators attended the race – a total of 240,000. However, Mr. Allen reveals this is close to the capacity the circuit can manage.
The British audience has been turning away from their screens in their drovers over the past few races – with audience numbers down year on year between 25-40%.
Patrick Allen says Silverstone is ‘seeking a new investor’, but then again they’ve been on this hunt for years.
If the race going public act likewise, then without government intervention, the future at Silverstone looks very bleak indeed.
Somebody gotta give up a slot for the second European GP, in Tehran.
A spare slot for the Mediterranean GP in Morocco………..
You would think that Bernie himself would want to protect his home race, but he doesn’t do sentiment does he!
Money has no emotion.
Tehran is not in Europe, bur Morocco has Mediterranean coastlines.
Maybe it is time that more organisers tell Bernie to go fuck himself. No GP at Monza, Silverstone, somewhere in Germany, France, Spa…. Europeans will either run away from their televisions or turn them off in protest. It will cost CVC a lot of money. Let them go bankrupt instead of tracks, teams and tax payers.
Another factor is the Silverstone selling off land to try and meet cash flow demands not too long ago and then completely missing the fact that this land was giving them a rental income which has now ceased! Short sighted mismanagement joke….
That was some great math. Did anyone actually calculate how much that would be at the end? I assume only the luxury boxes have padded seating, and those guys never carry cash, so they can’t even go digging in the cushions.
Not even half way through and already deferring payments. The hosting fees are exorbitant, but no one is forcing the tracks to sign.
The more news I read about F1 the more I get the feeling F1 is crumbling and risks imploding because of F1’s own greed. Important tracks for the identity of F1 and the core fans of F1 can no longer pay enough to keep themselves on the grid. F1 without the home track of the most knowledgeable and biggest fans (Silverstone) or the home track of the Tifosi simply isn’t F1. There are 3 teams in danger of not being on the grid next year because of budget problems (Lotus (Renault has an option that could still be thrown away, the EU investigation could be the trigger for that), Force India and Sauber (both teams wouldn’t have gone to the EU if their budget problems weren’t so dire)) and 2 teams that threaten to walk away if they can’t get themselves in a position where battling for the championship is at the very least not excluded at the start of the season because of the engine. If FOM and Ecclestone want to continue to milk this cash cow called F1 they must change tactics or risk of discovering that the cow no longer produces milk and will only cost them money. Even after all signs show that something have to change Mercedes and Ferrari still show no signs of at least changing their position around receiving money from FOM (it is obvious that is the first thing that has to change) or changing the Strategy Group (the second thing that is clear that has to change). There is so much going the wrong way that I almost think that all parties are willingly heading towards self destruction.
)Plenty of teams in scrambling mode.
)The Nurburgring, Valencia, India and Korea all gone in the same heartbeat. Silverstone and Monza on the edge and lets be honest: the odds of those 2 staying on the calendar are slim. I believe the GP of Barcelona lost its government funding so it might follow suit sooner rather than later. Sochi is in the ropes financially aswell unless Putin pumps in the money. Interlagos still needs to update its pitcomplex/hospitalities or it will get the boot.
)The competitiveness up and down the field is dying because of all this Power Unit crap.
)Tracks have become boring, dull, stale and too easy on the drivers.
)The sound is still a questionmark. It better have improved considerably next year.
)TV ratings rapidly declining.
The house of cards might collapse rather quickly if they keep it up like this…
Most parasites do not kill their hosts, those that do need to do so to spread once reproduction is complete – Bernie is an exception to all natural laws!!
I am at the point that I would like to see the collapse of F1. Maybe it rises again, maybe it doesn’t but at this point it is just annoying. Ecclestone’s greed, Tilke’s tracks, Red Bull’s whining, Mercedes dominance, the treatment of small race teams, the whole circus is one big cluster F**k. This weekend we go to Sochi, in a country so f**cked up that the president has to be consulted to see if it is alright to turn the lights on for a night race.
I’m so disillusioned with F1 I can’t wait for the Formula E and Indy car seasons to start so I can remember what racing is about.
one gets better story lines, more intensity and mucho closer racing at the SCCA National Runoffs and Solo ll Nationals. and it comes without the ego-maniac ‘tood of greedy ultra rich “entitled” narcissists with Der’ Fuhrer complexes…
as a fan since ’62, I only see 3 positives to the entirety of F1:
1. a few great and exciting drivers. you can name a “Max” of 6. oops 🙂
2. a few great and exciting tracks. still feeling very generous – name 6… (Spa means 6 in English, right 🙂
3. a huge amount of nearly ad-free reasonably good coverage streamed for free by Sky
for all the rest:
two choices here. take your stand !!!
https://www.youtube.com/watch?v=aRiJNS8Oz6E
or:
Very true on all points.
You have to destroy before you can rebuild – don’t be surprised if Bernie ends up owning 100% of f1 when we come out of this time period.
He’s the master of burning his house down just to buy it back for pennies on the dollar.
just trying to be controversial. you know… like TJ13 was back in the day…
Last yr and again this year everyone was so quick to pat the back of Silverstone. Up and down the pit lane and in the news we had,’Silverstone is full,F1 is here to stay in the UK and the future is bright’. Again the wool was pulled over the average fans eyes and only the conspiracy nuts had half the story. No matter which way you look at it, f1 is in trouble. Our sport is running the risk of becoming the private race series of the dessert,the whole event is drifting away from its roots and is becoming a joke. If a track with as much history as Silverstone,one that has sold out all of its tickets and yet still cannot afford the hosting fee then my friends….its over. Even the die hard fan is shaking their head at the shear madness of this business model,its just not sustainable or,dare I say it? …enjoyable? If I had an answer to the problems that our sport is facing then I am sure i could make a mint but then again…maybe that’s the problem..too much taken out and not enough investment put back in
I don’t give a shit to calendar threats anymore. The same bullshit flies around every year about one or two of the most important GPs. Cancel it or not. Soon enough F1 will strictly race where no one cares and I’ll love to see Bernie sell it. If he’s still alive. Maybe his master plan is to destroy F1 shortly before he dies and then create the myth it died because he died.