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

  1. 1+1=3 said on 6th November 2009, 9:28

    Britain gone, France gone, next Germany? Wouldn’t be too surprised if that were to happen. But I guess Mercedes will slam Bernie’s face with a hammer if he does that.

  2. There basicly buying a historic track out. If silverstone take it they might be paying there selves to close down. I think id rather have a non british GP for a few years till silverstone get the money…then we can have a guaranteed british GP

  3. GeeMac said on 6th November 2009, 9:57

    Bernie won’t rest until Silverstone is off the calendar.

    His argument seems to be “who wants to spend a weekend sitting in a rickety old stand in a windy, rainy, abandoned airfield in England when we can all spend the weekend somewhere exciting and glamorous like Singapore or Abu Dhabi?” I have to say I agree with him that Silverstone needs to up its game in respect of its facilities. Expecting every track to look like Abu Dhabi is a bit extreme, but surely Silverstone could rub a few pennies together and build a nice, modern looking, corporate hospitality centre, a few new covered grandstands and update the pit complex a bit (Expecting a barrage of comments here! “How naive are you! etc etc etc! ;-)).

    If updating the circuit’s facilities secures the future of the British Grand Prix, then do it! I for one am getting really bored of hearing “Silverstone isn’t going to be on the calendar next year” every year! Sort it out!

    Despite its “glamour” shortcomings, I’m sure even Bernie would acknowledge that Silverstone is one of the few tracks left that poses a real challenge to the cars and drivers, so hopefully if Silverstone get’s its act together it will remain on the calendar until 2026 and beyond…

    • 1+1=3 said on 6th November 2009, 10:03

      Bernie is schizophrenic. And Yas Marina is total rubbish. We have our own heritage and culture, the Sheiks theirs. We should leave Silverstone as it is.

      i’m sure even Bernie would acknowledge that Silverstone is one of the few tracks left that poses a real challenge to the cars and drivers

      i’m sure even Bernie would acknowledge that Silverstone is one of the few tracks left that poses a real challenge to HIM & HIS GODFORSAKEN EGO

      • GeeMac said on 6th November 2009, 10:16

        Yas Marina track = agreed, it wasn’t that great.

        Yas marina facilities (for keeping celebrities and drivers happy) = top notch by all accounts.

    • Charlie said on 6th November 2009, 12:20

      I think they should update Silverstone to the level of Brazil. HAHAHAHAHAHAHAHAHA!!!

      All the talk about the facilities not being up to scratch with Abu Dhabi is pretty irrelevant when you realise that there are other circuits not under threat that don’t have the facilites of Silverstone.

    • Mark Hitchcock said on 6th November 2009, 13:33

      It’s going to be impossible for Silverstone to update their facilities if they accept this deal. They’ll be losing a vast amount of money every year until they can no longer afford to hold the grand prix.

      You’re right, Bernie is just trying to get Silverstone off the calendar because this deal is ridiculous and the only aim is to bankrupt the circuit as soon as possible.

  4. I don’t think any Government should have to step to fund its Grand Prix, if Ecclestone didn’t demand such huge fees and on top of that take all the money from advertising at the track, most circuits would be able to charge fans a reasonable price for tickets and not make a loss.

    Besides even if the Government wanted to help, can you imagine what the reaction in the popular press would be with the national finances in such a state and then subsidising a rich sport like F1, when the money is just going straight to Ecclestone and his bosses at CVC.

    Without the 7% escalator the deal might work, ticket prices are not cheap now and if they went up by 7% each year it would not be good at all.

    Ecclestone may have said the deal is the most favourable offered to any circuit but considering Monaco is supposed to not pay any fee and gets to keep the revenue from trackside advertising I would ask for the same deal as Monaco.

    Ecclestone’s idea of give and take is they give and he takes.

    While I do not want the British Grand Prix to disappear from the F1 calendar I don’t think Silverstone should sign any deal that doesn’t make financial sense in the long term. After all if people generally had thought about the long term sustainability of some of the deals they were making the economy may not be in such a mess now.

    • Icthyes said on 6th November 2009, 13:23

      Ecclestone’s idea of give and take is they give and he takes.

      I laughed myself silly at that, but the sad thing is it’s entirely true.

      The facts are that Silverstone doesn’t have the worst facilities on the calendar, produces more exciting racing than many circuits by sheer virtue of the superiority of most its circuit (can’t wait for the Arrowhead) over others, especially the new Tilkedromes, has a fanatical crowd which can be guaranteed to max out capacity because of the two British WDCs, and on top of that all the history and heritage and being located in a country that is the home of many F1 teams and would be a world leader in the motor industry if it wasn’t for its *expletive* government.

      And yet Bernie still comes up with his nonsense when he doesn’t have a leg to stand on. Pure unadulterated greed. F1’s commercial policy is rotten to the core and mostly down to this rotten man.

  5. James Bolton said on 6th November 2009, 10:30

    He’s created one of the biggest sports in the world, it’s a simple as that. He came into Formula 1, saw the potential and did us all a big favour by professionalising the sport and making it profitable for the competitors, thus guaranteeing it’s medium term sustainability.
    Now, I agree that he has gone too far by overdeveloping the sport to the point where the classic teams, races and circuits are being squeezed out and this is a problem that needs to be addressed because, as I said before, Formula 1 isn’t just a name, it’s the races that make up the Championship.
    But this is no reason to hate the man, he believes he’s acting in F1’s best interests by bringing the sport to new markets and generating revenues for the teams.
    The criticism is that he’s got the priorities confused and he’s gone too far. Malaysia and China: great additions from a commercial point of view; Abu Dhabi and Bahrain: unnecessary; France and maybe Britain losing out: tragedy.

    • 1+1=3 said on 6th November 2009, 10:47

      The fact that he owned one of the classic teams is reason enough to label him nuts. Its cos of his lust for money that we lost Brabham. I think age has caught up with him & he must retire decently.

      I was under the impression that all western products are outlawed in the Arabian world. So F1 is no exception. But Bernie shamelessly puts money before national pride & decides to go to Arabia. I love this sport & I want it back in the country I love!!!

    • Chalky said on 6th November 2009, 12:04

      he believes he’s acting in F1’s best interests by bringing the sport to new markets and generating revenues for the teams.

      or is that CVC’s best interests?

    • Icthyes said on 6th November 2009, 13:26

      But this is no reason to hate the man, he believes he’s acting in F1’s best interests

      It is often the do-gooders and self-righteous who cause the most damage to a cause!

      by bringing the sport to new markets

      Most of which treat is as a sideshow to attract tourists, places where it will take far longer to create an F1 tradition than is warranted by the massive expansion into these areas at the expense of established venues

      and generating revenues for the teams.

      Which he then nicks 50% of.

    • David A said on 6th November 2009, 15:39

      He came into Formula 1, saw the potential and did us all a big favour by professionalising the sport and making it profitable for the competitors, thus guaranteeing it’s medium term sustainability.

      If its so profitable, then why have we seen teams drop out left right and centre?

  6. Meander said on 6th November 2009, 10:51

    I’m just wondering.. What would happen to all that money? Where does it go? Not Ecclestone’s pockets.. What are Silverstone paying for?

    • Rob B said on 6th November 2009, 11:22

      I’m guessing the teams share of profits, driver prizes and the likes. The FIA too?

      Then a big chunk goes back to FOM and its shareholders..

      • Charlie said on 6th November 2009, 12:24

        It goes to pay off CVC’s debts that they took on when they bought the rights off Bernie.

        Which is odd as that means that Bernie’s sitting on a pile of money anyway. Bernie is of course hired by CVC to do their work (and that was probably part of the deal) but getting an extra £100m or so from Silverstone over 17 years isn’t really going to change much in respect of CVC’s debts. Bernie doesn’t need to stick to this deal, but, of course, he will.

        Power mad?

  7. John H said on 6th November 2009, 11:20

    Well, what can we say.

    As most of us knew all along (right back to when Donington was awarded the contract safe in the knowledge they would not deliver)… Bernie will now get what he wants. No British GP and more money for him to do god knows what with for what price?

    I’m finding it very hard to not swear or use insults here.

  8. Update:

    Silverstone deadline set to pass without deal
    Friday 6 November at 08:31 : Nov.6 (GMM) The 48 hour deadline issued by Bernie Ecclestone is likely to pass without a deal for a 2010 British grand prix in place.

    It was reported earlier this week that the F1 chief executive was giving Silverstone bosses a “day or two” to sign his contract before the British race is pulled from next year’s calendar.

    The Times reports that the Northamptonshire track’s management was “surprised” by the ultimatum, which is now set to end.

    “Their puzzlement is such because they say Silverstone is waiting for Ecclestone to respond to amendments to the contract, not the other way round,” the London based newspaper said.

  9. JHunt123 said on 6th November 2009, 13:10

    Nice job by Damon to leak the numbers, pulled a page right off Max’s playbook, when Bernie is trying to him him/BRDC look the bad guys. If I run Silverstone the answer is certainly no, and don’t even need to waste a moment on it. The business plan that they have in place hasn’t factored in the GP for the next 17 years, so why saddle yourself with extra losses now?

  10. Sorry, but in the climate of everyone on F1 cutting budgets left right and center how can bernie think these kind of financial demands are appropriate?

  11. The Limit said on 6th November 2009, 14:07

    I think Keith hit the nail on the head in the article. Silverstone’s problem is that it is not ‘government funded’, pure and simple. The days of privately owned circuits hosting grands prix are long gone, they have simply been priced out of existence.
    When we look at circuits like Abu Dhabi, or next year’s proposed circuit in South Korea, it is totally way beyond anything a private organisation like the BRDC can come up with. The sword has two sides, and for Bernie Ecclestone, that also means keeping his new circuits happy. He knows that if he gives Silverstone too big a break, other circuits are hardly likely to want to pay his already inflated prices.
    For example, the Chinese event in Shanghai disclosed huge losses earlier this year, a circuit that enjoyed huge financial backing from Beijing when it opened in 2004. The list goes on and on, and extends to many European circuits also.
    For me, the real villians in this scandal is the British Government, who have never invested in Formula One since the day it began nearly sixty years ago. As Keith brilliantly pointed out, Westminster happily has invested in London 2012, and that huge ‘tent’ in East London which have both cost the British taxpayer billions in hard earnt money.
    The loss of Silverstone could quite easily fatally damage Britain’s role as a leading power in international motorsports forever. This goes far beyond national pride, but effects real jobs and real people that number in the thousands.

  12. Robert Cooper said on 6th November 2009, 14:35

    I think in some ways we need a couple of years without a GB Grand Prix. So the government or whoever can actually build or at lest update a circuit that can compete (in terms of facilities) with other tracks.

    I mean lets face it. Wondering round Silverstone traversing the make shift toilets with the horrendous feeling that not only are you going to have to use them you are also going to have eat something from one of those vans and to top it off wash it down with a warm fosters Fosters that you probably half split cos the think that you used to carry four of them disintegrated.

    F1 markets itself as a glamorous and as such Silverstone, in its current state, doesn’t fit. So, as much as I dislike the little man he does have a point and hence why he tabled such a ludicrous contract.

  13. Brian said on 6th November 2009, 15:12

    He is a greedy little troll, nay, a greedy little leprachaun trying to protect his little pot of gold. And I’m sure that that isn’t the only little thing about him.

  14. rmac923 said on 6th November 2009, 15:22

    British GP out, Qatar GP in? I think so!!!

    This looks bleak.

  15. Gusto said on 6th November 2009, 15:47

    Very sad times for F1, boring tracks in obscure locations watched by people who know nothing of F1 while qouffing prawn sandwiches and compairing who`s got the most money, but what will happen to F1 when the money finds a new playgroud?, and dont believe for a second it wont happen. Least I`ve still got BTCC and Moto GP to look forward too. I think we`ve gotta face facts and accept that F1 is changing, personally F1 is losing its appeal to me as it is no longer about racing.

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