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Silverstone's sky-rocketing F1 fee fuels losses

NEWS STORY
20/06/2011

Last week the Telegraph reported that the British Racing Drivers' Club (BRDC), which owns the Silverstone circuit, moved from a 1.3m profit in 2009 to a 1.9m loss in 2010. This news was intriguing for a number of reasons and they all caught the attention of Pitpass' business editor Chris Sylt.

Interestingly, the BRDC's 2010 accounts have not yet been filed so presumably the financial results were given directly to the newspaper. The BRDC's chairman Stuart Rolt was quoted in the article so it would be logical to assume that he told the paper about the results.

Quite why the chairman of a company would want to give a newspaper a tip-off about falling profits is interesting in itself. It reminded Sylt of the Williams team since its chairman Adam Parr last year also tipped off a media outlet that the team's upcoming accounts would show a 13.8% fall in revenue with profit more than halving. As Pitpass wrote at the time, it is extremely useful to journalists like Sylt when the boss of a company gives a public tip-off to say that its annual accounts will soon be filed. It allows multiple newspaper articles to be written - one about the tip-off and another about the meat of the accounts when they are filed.

However, whilst it is useful for a journalist like Sylt one has got to wonder whether it is really sensible for the company which is filing the accounts. Given its recent financial performance, Williams isn't perhaps the best example to follow. It is certainly hard to see how Silverstone has benefited from the recent revelation.

The Telegraph article states that the reason for the fall in profits is that "sales for the Formula 1 race were affected by Silverstone securing the race only seven months before its scheduled date." It added that "the BRDC said profits fell because it had less than a year to sell tickets for the Formula 1 race and there has been an increase in costs from agreeing a new contract with Formula 1 to host the Grand Prix." This last point could be more than just a little bit important.

Sylt was surprised to say the least when he read the BRDC's claim that profits fell because it had less than a year to sell tickets for the F1 race. Sylt was in the media centre during the British Grand Prix race weekend last year and doesn't remember seeing too many empty seats in the grandstands. That view was reflected in a press release distributed after the race by Silverstone itself which said the following:

"Silverstone Managing Director Richard Phillips has hailed this year's event as one of best British Grand Prix in years, attracting near-capacity crowds of 115,000 on Sunday and record-equalling attendances of 85,000 and 105,000 for Practice on Friday and Qualifying on Saturday respectively."

Given that, by its own admission, Silverstone was at "near-capacity" on race day and had "record-equalling" attendance on Friday and Saturday, it seems hard to follow the claim that "sales for the Formula 1 race were affected by Silverstone securing the race only seven months before its scheduled date." If Silverstone was at near capacity with record-equalling attendance then it seems unlikely that ticket sales could have been the driving force behind the loss. So what could it have been? You don't have to look very hard to find out.

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