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Branson stalking Silverstone

NEWS STORY
08/05/2012

Last week the British Racing Drivers' Club (BRDC) finally bowed to the inevitable and announced that its talks with an investor about buying a lease on Silverstone had come to nothing so it is going "to broaden its search and engage with other interested parties." It was no surprise.

The origin of the story stretches back to August last year when internet chatter said that "the word on the street is that Silverstone circuit has been leased for the next 100 years by the British Racing Drivers' Club." Pitpass' business editor Christian Sylt set the record straight by revealing that in fact, what had happened is that the BRDC was in exclusive talks with an investor which was believed to be a consortium from Qatar.

Given that an agreement had not yet been concluded after more than eight months of negotiations it was abundantly clear that the talks had come to nothing. The BRDC's announcement about this was followed by reports that one of the new interested parties is an Anglo-American syndicate which is codenamed Project Penelope and includes Sir Richard Branson as a commercial partner. The way that some of the reports were talking you could be forgiven for thinking that this is a new development. It is not.

Whilst certain newspapers presented the Branson-backed bid as news last week, the details were in the public domain nearly a month earlier. They came out when the Mail on Sunday ran an article entitled 'Silverstone in jeopardy as Qatar's £500m deal stalls' which also trumped the BRDC's own announcement that its investor talks had come to nothing. The purpose of pointing this out is not as a side-swipe against anyone but to show that a Branson-backed bid has not materialised almost overnight. He may now be the best hope that the BRDC has of securing a lease on Silverstone and that could be crucial to the future of the British Grand Prix.

Nick Harris, the reporter for the Mail who broke the news about the Branson bid, is somewhat of a Silverstone specialist. He recently revealed seeming discrepancies in the number of tickets sold and the announced attendance at Silverstone events and in November he reported that corporate intelligence firm Kroll had been hired to investigate the bidding process for the lease on the circuit. Harris followed that up with news that Nigel Mansell and other key BRDC members had effectively been barred from talking about the lease negotiations. Harris' piece which revealed Branson's involvement claimed that as a result of the talks with Qatar coming to nothing "the long-term future of the British Grand Prix is back in jeopardy." It could well be accurate.

The most widely-reported use for the funding which will be provided by the lease is to continue with the redevelopment of Silverstone which saw it open a new pit and paddock complex last year. In its recent announcement, BRDC chairman Stuart Rolt said that "with or without any investment, the long term futures of both Silverstone and the Formula 1 British Grand Prix are absolutely secure... If we cannot find a suitable partner, we shall continue with the development ourselves, albeit at a slower pace." However, what Rolt doesn't refer to is the financial health of the BRDC itself.

Back in October last year Sylt revealed that the BRDC depends on bank funding to continue as a going concern and has net current liabilities of £11.9m. It has been driven into this position following investing in the redevelopment of Silverstone.

Bearing this in mind, it is no wonder that in 2009 the BRDC members gave the Club's directors the authority to grant a lease of the circuit and non circuit land. According to a letter written to members last year there were four reasons why the directors were given the authority to grant a lease and they give a good indication as to what state the BRDC may be in if a buyer isn't found.

The first reason was to de-risk the BRDC and provide the Club with a stable income stream going forward. The second was to attract additional investment in Silverstone to further its aim to maintain a high quality motor racing venue. The third was to attract additional skills to enable the BRDC to develop the land in accordance with its development brief. Finally, the BRDC directors were given the authority to find a buyer for the Silverstone lease to pay off debt incurred in developing the new pit and paddock complex. It will be interesting to see how the BRDC will achieve these aims if a leaseholder is not found.

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