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JULY 26, 2003

The Silverstone crisis - a different view

While the British Racing Drivers' Club has taken the brunt of criticism about the problems surrounding the British Grand Prix, it should be remembered that the blame for what is happening should be shared. The original British Grand Prix deal was concluded in the Spring of 1999 when Bernie Ecclestone and Lord Alexander Hesketh, the then president of the BRDC failed to agree terms on a deal to continue the race at Silverstone. Ecclestone responded by going to Brands Hatch boss Nicola Foulston and signing a deal for the race to be held in Kent between 2002 and at least 2012. Within a matter of months Foulston sold her BHL company to the Octagon sports marketing and entertainment group, a division of the huge American advertising firm Interpublic. As part of the deal Octagon acquired the right to host the Grand Prix but rebuilding work at Brands Hatch was blocked by the planning authorities and Octagon decided that the only course of action was to lease Silverstone to run the race. Silverstone extracted very favorable terms for the 15-year lease.

The question now being asked by BRDC members is why Ecclestone is not chasing Octagon (now known as Brands Hatch Circuits Ltd.) to pay for the upgrading work at Silverstone, rather than pushing the BRDC as hard as he is. Ecclestone is not going to take a cut in the race fees for fear that this will set a precedent with other races around the world and it is unrealistic of the BRDC to consider this a possibility but at the same time Octagon's parent Interpublic is not going to suffer that much if more investment is needed in Silverstone.

The British government is not going to make a direct investment in Formula 1 because of the potential embarrassment from the inevitable stories which would link such a deal back to the scandal in 1997 which arose after Bernie Ecclestone donated $1.5m to the Labour Party, shortly before the party changed its stance on tobacco advertising. Thus the BRDC has little hope of direct aid. The recent compromise which saw the proposal of financial assistance from the regional development agency was rejected by the BRDC. The government could, however, agree to help Octagon with funding as the US company is investing heavily in the UK and could be given some subsidies or tax breaks.

The BRDC seems to think that it is Ecclestone who is under pressure because he needs to hold on to all the major races in the light of the planned GPWC series, which is being threatened by the automobile manufacturers. The flaw in this argument is that there are not many people in F1 these who believe that the GPWC will ever come into existence as none of the car manufacturers has so far been willing to back up talk with money. In order for there to be a solid GPWC someone has to underwrite the series and give guarantees to the teams. This is not happening because car companies cannot afford to have such liabilities on their books at a difficult time for the motor industry. Ecclestone and the F1 banks knows this and so are waiting for the GPWC teams to come back to the negotiating table to discuss a new Concorde Agreement. In other words, he does not see the GPWC as a major threat.

Ecclestone's attitude towards Octagon may also reflect the fact that for him the huge sports promotion company is not one with which he wishes to do battle as it could be useful to him in a number of different ways in the future. The BRDC is of little significance in Ecclestone's world, except as a thorn in his side.

The real question is whether or not Ecclestone will go all the way and pull the British GP from the F1 calendar. The BRDC thinks he will not be able to do it; the government and the race teams do not want to see that happen but they know that such a move would almost certainly precipitate a crisis which would find a solution once and for all and stop all the bickering.