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|
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.
2010 British Grand Prix
- Another Donington deadline missed: will Ecclestone give Silverstone its race back?
- More pictures of Donington Park 2010
- Donington Park has British Grand Prix deal until 2026, claims government
- Donington Park boss Simon Gillett on building the new British Grand Prix circuit
- Council backs Donington Park’s Grand Prix plans ahead of application hearing
- 2010 Donington Park F1 track revealed
- Donington Park, Silverstone, Brands Hatch and the British Grand Prix
- British Grand Prix switches to Donington Park from 2010. Really?
- 2010 F1 calendar