Silverstone given until tomorrow to accept Ecclestone’s ??370m offer

Silverstone is the last chance for a British Grand Prix in 2010

Silverstone is the last chance for a British Grand Prix in 2010

Bernie Ecclestone has told Silverstone it has until tomorrow to accept his offer to host the British Grand Prix in 2010.

Silverstone has been left to pick up the pieces after Ecclestone’s attempt to take the race from them and give it to Donington Park failed. Just as it did when he tried to do the same thing with Brands Hatch a few years ago.

But will Ecclestone give Silverstone the same generous deadline extensions Donington had? By my count Simon Gillett got at least three extensions on his deadline to prove he had the necessary funding to complete the building work.

The British government continues to refuse to put any money into the race. This would be a reasonable position if it weren’t also throwing untold billions into the London 2012 Olympics money pit (and I say this as someone who lives in London and appreciates the scale of the regeneration work going on)

The ??9bn the British government is putting into holding the Olympics for one year would be sufficient to pay Silverstone’s 17-year deal 24 times over – supporting an event which is vitally important to Britain’s hugely successful motor racing industry.

The deal: 17 years, ??370m

Ecclestone’s offer is believed to be a 17-year contract starting at ??12m with a 7% ‘escalator’. (Some sources have reported slightly different figures, but these three seem to be the most widely accepted ones).

By my reckoning, that means the total value of the contract will be ??370m ($613m / ??412m) over 17 years. The final race of the deal in 2026 will cost ??35.42m.

It’s important to appreciate how much of a difference that innocuous-looking 7% represents. Far from it costing them ??12m per year to host the race, the circuit in fact needs that plus an average of an extra ??9.7m every year. Here’s how it breaks down:

Year Ecclestone’s British Grand Prix price
2010 ??12m
2011 ??12.84m
2012 ??13.74m
2013 ??14.7m
2014 ??15.73m
2015 ??16.83m
2016 ??18.01m
2017 ??19.27m
2018 ??20.62m
2019 ??22.06m
2020 ??23.61m
2021 ??25.26m
2022 ??27.03m
2023 ??28.92m
2024 ??30.94m
2025 ??33.11m
2026 ??35.43m
Total ??370.08m

Clearly, the deal would commit Silverstone to annual increases in fees far above the rate of inflation.

Given the economic conditions, who knows what’s going to happen to inflation over the next decade-and-a-half. The rate of inflation in Britain is slightly over 1% at the moment, so even if Ecclestone applied a far more realistic ‘escalator’ of 2% Silverstone’s total bill would be slashed by around ??130m.

Ecclestone says the deal is the most favourable offered to any circuit, but most other tracks – even those in Europe – enjoy some kind of government support. However the length of the Silverstone contract is atypical – the longest are usually around ten years.

Silverstone’s financial statement for 2008, published two weeks ago showed a slender profit of ??662,000 from revenue of ??38.2m. Even in a growing economy it would be hard to imagine where it could conjure up ??21.7m on average every year to pay Ecclestone. In the current climate it’s utterly unrealistic.

Will Ecclestone accept a lower figure? Will he give them more time to work out how they might meet these extraordinary fees? Or will he not even give them as much as a deadline extension? We’ll know on Sunday.

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110 comments on Silverstone given until tomorrow to accept Ecclestone’s ??370m offer

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  1. Is it called Formula One or Formula Ecclestone!?
    FOTA had their chance to pull away….wish they took it! Now what? The only people to watch an F1 race in the flesh will be the rich and famous. We will all have to stick to watching it on TV :-(
    One day when I have kids I would love to take them to the F1 in Melbourne (if Australia still has it), the way its going, I will have to save for the next 10 years just to afford it!

    • Ronman said on 6th November 2009, 8:30

      I hear you IVZ, but FOTA could do its bit in forcing ecclestone’s arm into incorporating some races they think are vital, and Silverstone is one of those races…

      it’s not all about breaking away…

      in any case i think the 7% is the Killer, and it’s ridiculous… but maybe Silverstone can prove to be the home of motorsport by expanding its seating areas even further and improving its yearly events calender in order to break even…

      a fiver a lap Nurburgring style would be an idea they could do…or something like that to inject the much needed money..

      however please don’t take the above idea against me , i dont support Eccelstone’s stupid fees and i would be happy if race day tickets were no more than 60 USD.

      • 7% if it were true would be absolutely unbelievable, only superinflation or worse could save us but then we’d be screwed anyway.

        Fundamentally that cost would have to be paid by the fans. Already ticket prices are too high, I live in the UK yet I can go to the Hungarian Grand Prix for less than it costs to go the British GP.

      • Martin said on 8th November 2009, 17:52

        I would offer Bernie and CVC/FOM half of that iwth no increase per year and say to them take it or leave it. Silvestone doesnt need F1 but F1 does need Silverstone.
        Tracks like Silverstone , Spa, Monza, Imola, and a few others are the backbone and the sould of F1.

  2. Jonesracing82 said on 6th November 2009, 7:24

    not only that, but u’ll be travelling to Arabia or something! somewhere with no racing history whatsoever, as that is F1 goes these days

  3. I cannot believe B.C. Ecclestone’s stance on the British Grand Prix. Sure, he wants top of the line facilities at all the tracks, and that may still be an issue at Silverstone, I don’t know, but both Germany and Spain even got a 2nd Grand Prix when they had a World Champion on the grid, but the UK’s have not 1 but 2 WDCs, and their single race is under thread.

    • rmac923 said on 6th November 2009, 15:12

      Totally off topic, but Lustigson, could you please update the 2010 Silly Season topic at Autosport? (Since you started it).

      http://forums.autosport.com/index.php?showtopic=115981&st=3700&start=3700

      Oh, Bernie is a greedy troll!!! ;)

    • Nitpicker said on 6th November 2009, 16:28

      I also believe the offer he’s made is unrealistic — and therefore it looks like Ecclestone doesn’t want a British GP, no matter what he says. When a seller isn’t under pressure to sell, he puts the price right up — that is what Bernie has done.

      What I don’t understand is, why should F1 make a profit out of the circuits? They get plenty enough revenue from TV licensing, which seems to be the main income these days. Why try to bleed circuits dry? Oh, wait — it’s just the historic European tracks that can’t afford it. Never mind, we’ll have the entire F1 season in the desert instead.

  4. Ecclestone reminds me of the Danny DeVito character in the film ‘Other People’s Money’ – check it out if you haven’t seen it. Anyway, the philosophy of DeVito’s character is, the person with the most money wins.

  5. Prisoner Monkeys said on 6th November 2009, 8:06

    They should sign. They don’t have much of a choice.

    • And what happens if two years down the road Silverstone run out of money, or even worse, go bankrupt ?

      CVC Partners are the driving force behind Ecclestone’s murderous stance. They call the shots. Money is all that interests them. Ecclestone is their very own Rottweiler. An attack dog with interesting views on people and businesses that ‘get things done’.

      Yes, Silverstone needs to get the place cleaned up and a more professional
      attitude to business would help a great deal. But to expect any of the world’s historic F1 tracks to try to compete with the money-no-object venues like Yas Marina is a sick joke.

      And we all know what’s going to happen next don’t we ?

      • Prisoner Monkeys said on 6th November 2009, 9:30

        Then we’ll have the Grand Prix for another two years as opposed to not at all. Last time I checked, two is more than none.

        And how exactly is it a sick joke? If history had any of the weight you proscribe it, money would be no object for Silverstone, and it would be Abu Dhabi that struggled.

        • First point good. ‘Bird in hand’ principal
          entirely valid. But even then you have to admit that a man with a magnum pointed at his temple while his captors tell him his fortune is hardly in a position to make sensible long-term decisions. He’ll do whatever he has to do to stay alive.

          Silverstone people as scarcely in a better position to bargain with CVC/Ecclestone at this moment are they ?

          Is that the way we want F1 to go then…. ?

          • LewisC said on 6th November 2009, 12:55

            Silverstone does *not* depend on the F1 race for survival. They make a (little) bit of money on it, sure – and the manufacturer centres that are based there might move after a while if it wasn’t the ‘home of the British GP’ – but not enough to be a problem.

        • You only say two years is better than none because you’re only thinking of this from a fan’s perspective. Silverstone is turning a profit, so they are in no danger of closing shop if the Grand Prix leaves. The amount of money they would lose each year under this contract is far larger than their entire annual profit. So they would be risking their entire existence to hold these races. The choice facing the track is 1) sign the contract and likely put the entire track being lost to insolvency, or 2) refuse to sign the contract and risk losing the Grand Prix but keep the track and continue to operate it for other types of motorsport. Its hardly a difficult decision from a business stand point. The ONLY reason they might even think of signing the contract is because of the emotional factor of wanting to hold the Grand Prix. In the end I just don’t see them making a reckless decision just to say they held onto the GP.

  6. steph said on 6th November 2009, 8:12

    I’m glad the government isn’t involved. Don’t get me wrong the money spent on the Olympics is ridiculous, but that’s the wrong decision not refusing to get involved in this. It’slike when Webber got punished in Singapore when kimi didn’t at Spa for the off track excursion; it didn’t mean they were wrong to punish Mark just that they were wrong not to punish kimi. I hope that makes sense. What I mean is it shouldn’t be either or and ideally the games would be paid a lot less.,
    Hopefully this will be sorted so I can go to my first grand prix. F1 has lost a lot recently it doesn’t need to lose this too but whatever happens f1 will survive.

    • LewisC said on 6th November 2009, 12:59

      I agree. Much as I’d be gutted if there was no British GP, the government should no more pay Bernie’s unreasonable demands than they should give me a Lamborghini.

    • Ned Flanders said on 6th November 2009, 14:19

      I’d be happy for then Government to finance the British GP if it weren’t for the fact that half of the money will be used to line a certain Nazi sympathiser’s pockets, and to make a bunch of investment company fatcats even fatter.

      I’mvnot getting too worked up on the vast Olympic spending. We should be proud that our country will be hosting the Olympics. Anyway, isn’t London expecting to recoup most of what it is spending on the Olympics in tourism money?

      • David A said on 6th November 2009, 15:19

        I’mvnot getting too worked up on the vast Olympic spending. We should be proud that our country will be hosting the Olympics.

        Agreed, its a better use of money than the billions used to pay for MPs gardens or porn films.

      • Nitpicker said on 6th November 2009, 16:35

        Anyway, isn’t London expecting to recoup most of what it is spending on the Olympics in tourism money?

        Haha, that’s what they all say. The real issue is what will happen to all the sports facilities that we didn’t need prior to 2012 and probably won’t need after 2012. But that is another discussion.

        The biggest problem in F1’s commercial business is that the rights-holders are venture capitalists. Their purpose is purely to make money, and they don’t give a toss about racing or history or where the last two champions came from. The day Bernie sold out to CVC will continue to haunt us for a long time.

        • Brilliant…at last somebody acknowledges the bitter truth about who really runs F1. CVC partners probably couldn’t tell the difference between Michael Schumaker and Daffy the duck. Their only criteria is ‘does it make me money at the annual rate I expect ?’ F1 history ??? how much does that make me this year ? Silverstone ?? ….can I make any money out of it…by the way…what IS Silverstone ? ‘

        • Exactly.

      • steph90 said on 6th November 2009, 17:28

        Actually a report out this week said that tourism coould probably decline when the games are held

  7. James Bolton said on 6th November 2009, 8:19

    Formula 1 can cope with losing teams like BMW and Toyota, and to a much lesser extent Honda, because they don’t have a rich history in the sport. But the classic Grands Prix *are* the sport, they make up the fabric of Formula 1.
    No French GP, a struggling German GP, possibly no British GP. Will we lose the Italian and the Monaco GP’s too?
    If that ends up being the case, will it be Formula 1 anymore? Maybe even Ferrari would lose interest. F1 shouldn’t worry about the teams withdrawing because independents will always be there. But losing these races would be catastrophic.

    • 1+1=3 said on 6th November 2009, 9:16

      to a much lesser extent Honda,

      What nonsense are you talking? you must be a kid who doesn’t know nothing about the past!!

      Honda won 6 constructors championships between 1986-1991!! 2 with williams & 4 with maclauren. Yet you sat they don’t have any historical significance? I think you need to drown your self in a bucket full of Carlsberg Beer :P

      • James Bolton said on 6th November 2009, 9:26

        I’d love a beer! What I mean is that although Honda have a history in Formula 1, they aren’t as synonymous with Formula 1 as, say, the French Grand Prix, the British Grand Prix or the Italian Grand Prix, or indeed Ferrari or Mercedes. I think this is a fair comment and I did say “to a much lesser extent”.
        Anyway, my point is that we can lose teams but we can’t lose races. The races should form the championship and this should attract the teams to F1. It should not be the other way round.

      • Ned Flanders said on 6th November 2009, 12:17

        you must be a kid who doesn’t know nothing about the past!!

        That’s a double negative, it means James does know something!

        Anyway, I think he’s right, Honda may have had success in F1, but it they’re just another manufacturer that dips in and out of F1 when it helps them to sell cars. The British GP has been a permanent fixture

      • Phil T said on 6th November 2009, 16:16

        I dont get it, what you on about Carlsberg for ?

  8. 1+1=3 said on 6th November 2009, 8:21

    2026 £35.43m

    Would Bernie still be alive ? Totally ridiculous! I wish he dies very soon.

    • GeeMac said on 6th November 2009, 9:33

      Bernie managed to get hold of the TV rights to F1 for a period of 99 years (and he was in his 40’s I think)… I’m pretty sure Bernie doesn’t care about how ridiculous things sound, if he wants something, he gets it!

    • Could be a bargain with Crash Gordon steering us towards a nice bit of 70s style inflation.

  9. Chris Cole said on 6th November 2009, 8:22

    Does anyone know why Bernie wants Silverstone to sign up such a long contract? No other track has been asked to commit for 17 years so why Silverstone? Given that Bernie is unlikely to even be ALIVE at the end of that contract, what’s he trying to achieve?

    • James Bolton said on 6th November 2009, 8:26

      Maybe he’s aiming to bankrupt the BRDC? So he can buy Silverstone and show them how it should be done.
      What confuses me is he demands they build new pit buildings and spectator facilities, but doesn’t give them a chance to do this because of the extortionate fee he’s charging.

    • stjoslin said on 6th November 2009, 9:37

      Totally uncalled for I think 1+1=3!

    • Daniel said on 6th November 2009, 13:20

      Wasn’t it the same contract Donington signed first and failed to meet the deadlines?

    • donwatters said on 6th November 2009, 16:55

      If I recall correctly, the 17 year contract was Silverstone’s idea.

    • Camilo said on 8th November 2009, 3:38

      I was wandering the same.

      Anyone know about some kind of Bernie’s successor?

      Darth Vader?

  10. F1Yankee said on 6th November 2009, 8:35

    FOTA, FOTA, where art thou, FOTA?

    now more than ever, i wish the threat of a breakawy series was more than hot air. i don’t want to watch yachts and glow-in-the-dark hotels, i want to watch good car races.

    • 1+1=3 said on 6th November 2009, 9:10

      FOTA blew it! Should have pulled out when they had a chance. Ironically the FIA-FOTA meeting took place at Silverstone :P

    • When was the last time you saw a good F1 race at Silverstone? 2003 by my reckoning, and the last good one before that was …. well, before I started watching F1 at any rate (mid-1990s).

      It’s a myth that the “traditional” circuits always produce good racing. I have NEVER seen a race at Monza worth writing home about.

      • 1+1=3 said on 6th November 2009, 9:32

        2003 was made to look good cos jakie steward or his look alike ran on to the hanger straight :P we need to encourage more such stuff to make racing interesting.

      • Everyone has different tastes, but off the top of my head I liked the 2008 Grand Prix at both Silverstone and Monza, granted the rain played a big part in those races but they still count as good races for me.

      • flossyblossy said on 6th November 2009, 9:45

        Well i guess ‘good F1 race ‘ is subjective but Silverstone 2008 is one of the more recent memorable ones for me. Driving rain, everyone sliding all over the place and Lewis finishing something like 58 seconds ahead of second place. I was on the edge of my seat for the whole race!

        • LewisC said on 6th November 2009, 13:16

          Ah yes, a classic. One where the Ferraris spent more time going backwards than forwards :D

          • James Bolton said on 7th November 2009, 12:08

            No good races at Monza? I have to disagree. Monza has had some great races, 2007 was an all time classic.
            Monza 1999 was good, as was the Italian GP where the Ferrari’s started on the wrong tyres and had to fight back, maybe that one was 2003??
            1995 was a clsssic too, Gerhard Burger was so unlucky.

  11. wasiF1 said on 6th November 2009, 8:38

    I don’t think Bernie will accept low figure,but the government should step in & help.I live in Bangladesh but I still know how important is F1 in UK,we can’t loose any more traditional races as we did with French GP.

    • 1+1=3 said on 6th November 2009, 8:47

      ,but the government should step in & help.

      Yeah. Gordon Brawn will go nuts :P Best way out of this is to get rid of Bernie,PERMANENTLY

  12. Jonathan said on 6th November 2009, 8:46

    Bernie is in a strong bargaining position because F1 actually doesn’t need the British GP.

    F1 is a TV sport. It’s no big problem for F1 if the cars are racing in front of five camels and Eric Clapton in Bahrain rather than 120,000 at Silverstone, as the show will still get the global TV audience the sponsors pay for.

  13. “starting at £12m with a 7% ‘escalator’. (Some sources have reported slightly different figures, but these three seem to be the most wifely accepted ones).”

    My, my, that’s one expensive wife…..

  14. Chalky said on 6th November 2009, 9:23

    I honestly would not blame Silverstone for not signing up to this. How can a business invest in infrastructure for a single annual event and only get a return on ticket sales?
    They hardly get enough at the moment.
    Looks like I’ll be watching LMS Series of FIA GT instead for the next few years.

    If the British GP goes. Will F1 teams look at relocating to other countries in Europe?
    Or is the industry strong enough to manage without a home GP?

  15. Silverstone say they can’t commit to upgrading their facilities unless Bernie gives them a long-term deal. Bernie offers them a long-term deal and now they’re complaining that it’s not suitable either. Sorry BRDC, there’s a bit of give and take involved here.

    Bernie has publicly said that the BRDC can take any one of his contracts with other F1 venues, scratch out the name of the circuit and write “Silverstone” in its place. That tells you something – i.e. that, compared to other circuits, Bernie is being very generous with Silverstone.

    • 1+1=3 said on 6th November 2009, 9:53

      Bernie is being very generous with Silverstone

      Are you with the FOM? All Bernie wants is filthy sterling pounds. And the Sheiks of Arabia give him plenty of that. He doesn’t give a damn to Britain & its faithful F1 fans. We are a poor country, cos we don’t have oil. And Bernie is a shameless traitor who’ll sell his own nation for few pennies. He has no patriotism & doubt if he can sing our national anthem!!

    • steph said on 6th November 2009, 10:01

      Andy you’re always the voice of reason :)
      1+1 it doesn’t matter how wealthy our country is as the government won’t pay because they don’t see what’s in it for them. Compared to most tracks this is a good deal. If Bernie is too soft then other venues will demand better deals. Bernie may demand a lot but it’s up to BRDC if they pay or not. It’s may seem harsh but its how it is and not a lot more can be done.

      • 1+1=3 said on 6th November 2009, 10:12

        Bernie must be stripped of his British citizenship, cos everyone thinks the rest of us are like him.

        • steph90 said on 6th November 2009, 10:33

          Lol I think most people would know us Brits aren’t like that. We get it lots of times just take any celeb Winehouse or even the Prime Minister and a few will think ‘look at Britain’ and be shocked which is infuriating but most would recognise that they don’t represent us. It’s the same with any country.
          Anyway I’m not sure people thinking we are like him is that much if a bad thing-he’s very wealthy, gets what he wants and is a tough businessman. Quite a few people would like to trade lives with him :P

    • donwatters said on 6th November 2009, 16:59

      Any excluding Monaco.

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