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JULY 24, 2003

An analysis of the Silverstone affair

The British Racing Drivers' Club rents out the Silverstone circuit to Brands Hatch Circuits Ltd. (formerly known as Octagon). This deal was agreed to ensure the future of the British Grand Prix after Octagon bought the rights to the race but did not have a circuit on which to hold the event. The deal was for 15 years and in exchange the BRDC receives something like $7m a year. Brands Hatch Circuits Ltd. pays Formula One Management for the right to hold the race each year and generates its income from ticket sales for the Grand Prix. The problem is that investment is needed in the circuit to bring it up to the necessary standard expected by FOM. BHCL is not doing well and is selling off its other circuits in an effort to stem losses. The company says it cannot afford to fund construction at Silverstone without help from the circuit owner.

The BRDC argues that, for some reason, it is being victimized and that other circuits have much worse facilities. Formula One Management says that Silverstone needs to be better than everywhere else because it is the centre of the world's motorsport industry.

In order to break the deadlock FOM, BHCL, the Minister of Trade and Industry and the East Midlands Development Agency all had a meeting at Silverstone on Sunday at which the structure of a settlement was agreed. This was then offered to the BRDC on Tuesday evening. That offer was rejected.

The BRDC has issued a statement saying that it did not block a settlement but rather "said clearly that it would be prepared to contribute financially to retaining the British Grand Prix at Silverstone at Silverstone in the longer term, certainly to 2015". The statement added that the club believes that the financial contribution must be a four-party investment from East Midlands Development Agency, Formula One Management, Brands Hatch Circuits Limited (previously known as Octagon - and the BRDC."

The BRDC added that it looked forward to further negotiations.

The current situation is that in 30 days Silverstone faces a deadline to come up with a financial solution or lose the Grand Prix. The BRDC says that a contract exists between the BRDC and BHCL for a 15 year lease of Silverstone. There is a break clause in 2007. BHCL is responsible for the maintenance of the facilities and expenditure on any compliance works required by FIA and other governing bodies. The implication is that if the British Grand Prix is lost it is not the fault of the club.

"What has been put to the BRDC," says FIA President Max Mosley, "is that they take a great deal less rent and do not monopolize facilities at the circuit. In return for that, Bernie and Brands Hatch Circuits would finance the building and all the work. This is a blinding deal from their point of view. It's open and shut. No rational person could argue against it."

On the face of it, it does seem strange that the BRDC has not accepted the deal. BHCL pays the fees to FOM in order to have a place on the F1 calendar and others are willing to fund the development work which will, in the end, be owned by the club. The club does not have any enormous expenses other than the Grand Prix but seems to be arguing that a deal is a deal and there should be no renegotiation. On this they have a point but at the same time there is now an incentive to accept change.

The BRDC's rejection of government help in the form offered is not going to go down well with the government and there is no reason why the politicians are now going to agree to a different deal which will help to fund Silverstone.

The only conclusion that one can draw is that this is not an argument about what is best for Silverstone or whether the Grand Prix can be saved but rather a battle of egos between the management of the BRDC and the others. The BRDC will have been miffed at not being invited to the meeting at Silverstone which came up with the proposal to save the race.

No-one seems to have yet addressed the question of why the BRDC was excluded. All the other players were there and there must be some reason for the BRDC not to have been invited.

The rejection of the package was, in this respect, all too predictable but in the light of that decision the BRDC must come up with a better solution, accept the offer on the table or get out of the game and sell the circuit and then use the money raised to turn the BRDC into the vehicle it was intended to be, promoting the sport, helping drivers and not messing about in political games.

If it continues with its current stance, the British Grand Prix will not happen...