APRIL 27, 2004
The British Grand Prix
The future of the British Grand Prix is not secure, despite the fact that Interpublic has finally faced up to the financial realities and bailed out of its commitments. Giving the rights for the race back to Bernie Ecclestone and paying him $93m to accept them may seem to be an odd way to do business but it makes sense because it sends the right messages to the shareholders of Interpublic. The company is admitting that it made a mistake getting into motorsport and committed itself to illogical deals. The damage has been done and the best thing is to get out of the commitments as quickly and cheaply as possible.
The next step is for Interpublic to settle up with the British Racing Drivers' Club over the lease of Silverstone. The company says that its commitment to the BRDC in terms of the costs of this year's Grand Prix and future lease payments is around $61m. The BRDC may argue that it should be more because it is a full "repair and renewal" lease with very specific obligations about keeping the track up to FIA standards and open for testing and other such activities. The BRDC may argue that settling the lease should cost Interpublic up to $100m. This would be a huge financial windfall for the club but it is still not enough to fund a complete overhaul of the facility. According to our sources to do the job properly would cost at least $150m and to make it the motorsport hub of Britain with visitor centres and museums and so on would raise that price to $300m. The British government is promising about $25m but the argument is that this money needs to go into sustainable projects and the latest talk is of a full-sized rolling-road windtunnel attached to a university which would be used by automobile manufacturers some of the time (at premium rates) and then be available more cheaply to racing teams when demand was less intensive. Such facilities are currently rare and overbooked. This might help the overall motorsport industry in Britain but it is no help to Silverstone.
The money is apparently in place for a new pit and paddock at Silverstone but at the moment this is not being built as it has not been signed off by all the partners. Even if it is built it will only be another short-term fix rather than a long-term solution.
The BRDC is thus faced with a choice of trying to keep the track alive and risk getting into debt because of the demands of the F1 world; finding a new partner to replace Interpublic (an unlikely result given the returns on a Grand Prix these day); or face up to the fact that if Britain is going to have a Grand Prix, the best thing would be to sell the track to the Formula One group and use the money to turn the BRDC into an organisation which supports British motorsport without being a track owner. This would be difficult to achieve because of blocks on the sale of the track which are built into the structure. The most likely result therefore is that the BRDC will in the end have to bite the bullet and conclude that they should run Silverstone without Formula 1. Other circuits have shown that this can be done if the management is good enough and it would leave Formula One without a British race. As a result if Bernie Ecclestone wanted to have a Grand Prix in his home country he would have to find a new venue and fund the whole thing himself. In short, it is not going to happen.
|Print News Story|