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.

Read what you can do to help save the British Grand Prix. If you’re on Twitter, use the #savethebritishgrandprix hashtag and wear the Save the British GP Twibbon:

2010 British Grand Prix

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

  1. Do we know any more yet?

    I need to know……..

  2. Angus said on 9th November 2009, 19:46

    Silverstone should not mortgage its future for the benefit of staging a once per year event, Let BE/CVC take their race to another desert camp, the world fans would loose interest and Circuits like Silverstone would eventually be reinstated.

    Silverstone should say: NO thank you, wish BE/CVC well and Good bye!

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