One of the longest-running deals in recent Formula One history has finally come to a close according to a report in today's Independent. It reveals that Silverstone is under new ownership as the British Racing Drivers Club (BRDC) has sold a lease on the track - a process which it put in motion four years ago.
The news comes just 24 hours after a BRDC member told Pitpass' editor Chris Balfe that in the last few months due diligence on Silverstone has been done five times. The Independent article acknowledges our discovery and although it doesn't name the new owner of the track, it points out that the most recent company linked with a takeover was MEPC, a property group owned by the BT pension fund.
Its offer was reportedly for £40m and paves the way for a 200-acre business park to be built on the land. This fits in with the BRDC's masterplan for Silverstone which includes construction of a new business park, a technology park, education campus and three hotels. MEPC said "as a matter of policy, we do not comment on any transactions" and a spokesman for the BRDC also declined to comment.
There have been rumours that Silverstone has been taken over by F1's boss Bernie Ecclestone with one blogger hypothesising that "the winning bid is from a wealthy family with connections to the BRDC and that the bid came to make sure that Silverstone remains the centre of British motorsport. How many families are there that fit the bill? Hmmm… No wonder some have suggested that the most likely buyer is an Ecclestone Family trust company." However, Ecclestone has strongly denied this as Pitpass has reported and it looks like we won't have long to wait before the identity of the new owner is made public.
The Independent article was written by Pitpass' business editor Christian Sylt who got the news from a senior motorsport personality who is a BRDC member. He told Sylt that "a deal has been done on Silverstone. I don't know who bought it and I don't know what the terms are but it is absolutely categoric that a deal has been done and not due to be announced until next month probably." Sylt then spoke to Ecclestone who confirmed the news and revealed that he is due to meet the new owners next week.
The leaseholder will take over as the promoter of the race and it is understood that terms were finalised over the past ten days.
The BRDC wants to use the proceeds of the deal to pay down loans it took out from Lloyds to fund construction of a new pit and paddock complex which opened at Silverstone in 2011.
Ecclestone demanded the new facilities as a condition of the BRDC signing a 17-year British Grand Prix contract in 2009. It left the club with £26.1m of net debt in 2011, the most-recent year for which its accounts are available. Interest on the debt alone came to £842,000 and this contributed to the BRDC making a £4.5m net loss.
The BRDC's members have not given consent for the board to sell Silverstone outright which is why it embarked on granting a long-term lease.
It did a similar deal in 2000 when marketing firm Interpublic took over management of Silverstone. The arrangement was short-lived as Interpublic made huge losses on the deal and it ended in three years early in April 2004.
Hosting a Grand Prix can be a poisoned chalice as circuits generally do not get any revenue from the television broadcasts or corporate hospitality and advertising hoardings during the race. This revenue goes to F1's operating companies and it leaves the circuits with ticket sales as their sole source of income from the sport. This usually barely covers the annual hosting fee with running costs often covered by investment from governments.
The British Grand Prix gets no state subsidies so to compensate for this it has some of the highest ticket prices in F1. They started at £145 this year making them more expensive than tickets to the men's final at Wimbledon, the Grand National and the final day of The Open.
Race organisers are forced to increase ticket prices due to an escalation clause in their contracts with Ecclestone and this boosts the British Grand Prix hosting fee by an estimated 5% annually.
The race to find a new investor for Silverstone has already stalled once. It began in 2009 when the BRDC members gave permission for a lease to be granted on the land. The club then engaged accountancy firm PricewaterhouseCoopers to contact potential investors and it entered into exclusive talks with a preferred bidder. The talks fell through and in May last year the BRDC announced it had opened discussions with other parties. After four years the race is finally over.