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Silverstone removes suspended directors

NEWS STORY
17/11/2014

Silverstone has removed its managing director and two other senior executives following their suspension last month according to an article in the Express by Christian Sylt.

Managing director Richard Phillips, legal director David Thompson and financial director Ed Brookes stepped down from the board of the track's operating company Silverstone Circuits last week following the announcement on 20 October that they had been suspended on full pay.

They have been replaced by touring car champion Jason Plato, motorsport lawyer Ian Titchmarsh and John Grant, chairman of Silverstone's owner the British Racing Drivers Club (BRDC), a group of more than 800 members including F1 drivers Jenson Button and Lewis Hamilton.

The reason for the departure of Silverstone's directors has not yet come to light but a root and branch investigation is being carried out by the BRDC.

It is the latest in a series of blows to the Northamptonshire track which hosts the British Grand Prix. In July its chairman Neil England stepped down, though there is no suggestion that this was connected to the recent developments. It followed a bid to sell the track which hit the buffers in May.

Over the past five years the BRDC has been trying to distance itself from Silverstone which made a £15.1m net loss last year. In August 2013 the BRDC agreed terms to sell Silverstone Circuits, along with a separate lease of its 467 acres of track-related land, in a deal which was reportedly a management buyout. As this was agreed before the BRDC's 2012 accounts had been filed, they needed to be adjusted to show the value of the circuit based on the sale price rather than its previous valuation of £40.5m.

As Pitpass revealed, the accounts showed that the track, plant and machinery was worth £10.8m but five months after deal was agreed its value was boosted to £15.5m according to a new appraisal by Jones Lang LaSalle. It is revealed in the BRDC's accounts for the year-ending 31 December 2013 which also show that just £859,000 worth of updates were made to the track last year.

The accounts state that the circuit assets "have been revalued at year end so that values represent the net present value of income expected to be generated by these assets based on forecasted profits and cashflows indicated from the adopted business plan. The valuation was conducted as at 31 December 2013 by Jones Lang LaSalle on an existing use basis. The valuation has resulted in a partial reversal of the previous impairment."

Although the Silverstone sale got the red light, the BRDC didn't end up empty handed. In September 2013 it leased 280 acres of land surrounding the circuit for £32m to MEPC, a property group owned by the BT pension fund. The money was used to pay off a £12.7m loan from Lloyds and £12.4m borrowed from Northamptonshire County Council. The finance was used to fund construction of The Wing, a new pit and paddock complex which opened in 2011 and helped Silverstone land a 17-year contract to host the British Grand Prix from 2010.

The impact of the MEPC deal is seen in the BRDC's 2013 accounts which show that net debt reversed from £28.8m to £1.7m cutting interest payments in half to £1.3m. The track's costs were stable at £52.9m with revenue also remaining unchanged at £49.6m. Its £15.1m loss was fuelled by a £10.8m provision for an intercompany debtor but it would still have ended up in the red regardless.

Silverstone's biggest single cost is the estimated £14.4m hosting fee for the British Grand Prix which is paid to the F1 Group, the sport's management firm controlled by the private equity firm CVC. Unlike the hosts of other sports, F1 circuits generally do not get any revenue from the television broadcasts or the corporate hospitality and trackside advertisers during the race. This goes to the F1 Group leaving circuits with revenue from ticket sales which just covers the hosting fee.

According to Silverstone's accounts, the company had net current liabilities of £20.2m at 31 December 2013 but is still a going concern as it uses bank financing and cash from advanced ticket sales to fund its operations. The accounts add that by the end of 2013 Silverstone had already received £10.9m of forward bookings for this year's race which ended up having the third-highest crowd in its history with 120,000 fans cheering Hamilton to victory.

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