*Silverstone declares £7.6m loss which threatens future of formula one’s oldest race
*BRDC bosses are set to activate a break clause in their contract this weekend
*Pressures mount on Liberty Media to save Silverstone future
Formula 1 goes to Northamptonshire this weekend for the 72nd edition of the British GP. Sadly, the focus this weekend will not be on the intense battle of wheels between Mercedes’ Lewis Hamilton and Ferrari’s Sebastian Vettel, but on the renewed doubt over the future of one of the formula one’s oldest races on the calendar.
The announcement by the cash-strapped British Racing Drivers’ Club and Silverstone’s bosses before last weekend’s Austrian GP that they would reveal their intention to walk away from their 17-year contract with Formula One Management, citing spiralling cost of hosting the race as sole reason, has dominated discussions going to the 10th round of the 2017 formula one season. In a way, this has watered down the new rivalry between homeboy Hamilton and Vettel that formula one fans have enjoyed this season.
A source close to the British Racing Drivers’ Club which owns the track, told a UK based tabloid: “In 2015, we sustained losses of £2.8 and in 2016 losses of £4.8m, and we are projected to lose a similar amount this year. It is not sustainable.”
The announcement, however, did not come as a surprise to many formula one fans. Before Christmas, Silverstone’s owner, the British Racing Drivers’ Club had also sent a letter to its members suggesting it was considering activating its break clause.
The BRDC, which has until Sunday’s race to activate the clause, will do so in the hope of brokering a more financially-viable contract.
How did we get here?
For long, the British GP had been sitting on a keg of gun powder, it was always a disaster waiting to happen.
While several races on the formula one calendar receive government funding, traditionally that has not been the case for Silverstone. This has limited the funding available for hosting the race considering the huge financial implications of hosting a formula one race.
In 2010, circuit chiefs agreed a long-term contract with the sport’s former supremo Bernie Ecclestone to continue its association with the British Grand Prix. This contract runs until 2026 with a break clause that would come into effect after the 2019 and would need to be activated before this year’s event this weekend.
Under the current deal, Silverstone are paying nearly £17m to host this year’s race, which starts on Friday. The fee increases by 5% each year. Going by this annual percentage increment, by the year 2026 the cost will reach £26m.
This amount is huge and unsustainable, at least, judging by the limited fund available to the cash-strapped Silverstone’s owners and the drop in revenue from the race, hence, the need for further investment.
Silverstone has staged the race since 1987 but despite attendances of more than 139,000 at the past two meetings, it has continued to lose money hosting the event, with the BRDC chairman, John Grant, warning that high race fees were unsustainable even with such crowds.
While many within the formula one paddock would continue to blame former formula one supremo, Bernie Ecclestone for his failure to address Silverstone’s concerns at the time the opportunity presented itself in 2010, it is also worthy of note that BRDC missed a veritable opportunity to redeem their dwindling financial situation in 2016.
The president of the British Racing Drivers’ Club, Derek Warwick lamented in January this year: “For me personally, the second Jaguar Land Rover deal which has failed and gone away, that hit me hard as I thought that was a nice fit with Jaguar Land Rover and Silverstone but it didn’t happen and we must move on.”
There is light at the end of the tunnel
Speaking at Autosport International in January this year, Derek Warwick, president of the British Racing Drivers’ Club hinted that Silverstone had initiated talks with the UK government regarding the future of the British Grand Prix.
He expressed this optimism in a bid to allay fears over the future of British GP just a week after BRDC had warned of the potential financial risk of continuing to host formula one race at Silverstone.
Warwick did his best to calm fears of the race being dropped from the calendar by stating that Silverstone had entered into talks with the government as well as with formula one’s new owner Liberty Media.
“We sent a Christmas note to our members giving them an update of Silverstone,” explained Warwick.
“A lot of that came out as [there was] the possibility of activating the break clause before the grand prix this year, for 2019.
“Don’t worry, we 100% have it for next three years, up until 2019.
“I have just got a feeling that, ‘we can’t do without the British Grand Prix, we can’t do without Silverstone’, so some compromise will be made, either with Bernie or the new people that are now taking over, which is Liberty.’’
Since this expression of ‘fragile’ optimism by Warwick, Liberty Media have completed the takeover of formula one from Bernie Ecclestone.
The most positive news about the future of the British GP came this week when it was confirmed that formula one’s new owners Liberty Media have staged talks with both the BRDC and Silverstone with a view to finding a permanent solution to the uncertainty surrounding one of formula one’s heritage sites.
What should Liberty Media do?
It is the general belief within the formula one paddock that Formula One Management – the Liberty Media-run body are not willing to risk losing an event that has been an ever-present on the formula one calendar for nearly 70 years.
But a decision needs to be taken fast, as feelers from Silverstone suggest that BRDC is not willing to continue its relationship with formula one at the cost of financial ruin.
In recent days, immense pressures have mounted on Liberty Media not only to save the future of British GP, also to do something about the escalating fees of hosting formula one races.
Speaking on a radio show on Sunday in Lagos, Okao Oduagbon, President of Motorcycle Sports Club of Nigeria bemoaned the high cost of hosting formula one races and expressed fear about formula one losing some of its heritage races in places where there is genuine interest for the sport.
“The cost of hosting formula one race is ‘killing’ and formula one stands the risk of losing places like Monza, Malaysia in the nearest future,” explained Oduagbon.
Oduagbon, a race promoter, who has been at the forefront of organizing motorsport events in Nigeria since 2012, advised Liberty Media “to work towards reducing the cost of hosting a race event.”
In the same vein, a suggestion for Liberty Media to consider buying Silverstone has also been advanced.
Speaking at last week’s Austrian Grand Prix, McLaren’s Executive Director Zak Brown urged formula’s owners to buy Silverstone in order to ensure the future of the race.
“My view is Liberty should buy Silverstone,” said Brown. “I think they should buy it and much like the NFL, they own their Super Bowl. I have voiced my views on that to Liberty.”
The onus now lies on Liberty Media to save the future of a Silverstone that is widely regarded as the traditional home of motorsport.
Writer: Soliu Adeyemo
He is a renowned Formula 1 Expert. Follow him @SolihuF1 on Twitter and Instagram for more updates and analysis.