14/05/2020
NEWS STORY
In recent weeks there has been talk of Silverstone hosting two rounds of the 2020 season, but along with reports that the UK government is considering a 5-day quarantine for all F1 personnel, not to mention the impending introduction of a 14-day quarantine for all travellers arriving in the UK, the owners of the Northamptonshire track are embroiled with F1 bosses in a row over money.
With the race due to take place without spectators, and ticket money the only significant revenue Silverstone receives from the race, the Northamptonshire track is asking for a fee in order to host the event(s).
Though F1 bosses have agreed to waive the customary hosting fee, and have offered to reimburse Silverstone for any associated costs incurred in hosting the event(s), it is claimed that the Northamptonshire track is claiming as much as £15m, which is about the same amount it pays in hosting fees.
As a result, it appears that there is currently an impasse, and with the deadline fast approaching by which time Silverstone must start preparing for the event(s), F1 bosses are said to be looking at alternative venues including Hockenheim and Imola.
Of course, ignoring the various dramas on track over the years, in recent times the former airfield has had more than its fair share of off-track dramas, not least when it appeared to have lost the Grand Prix to Donington.
While that issue was eventually settled, the circuit subsequently ran into money issues which once again cast doubt on the future of F1 at the Northamptonshire track.
Locked into a deal which saw its hosting fee increase by 5% year on year, the financial situation was hardly helped by the need to fully upgrade the circuit's facilities including a new pit and paddock complex, though certain aspects of the upgrade ('The Wing') are widely regarded to have been a vanity project.
In a bid to ease the financial situation the circuit's owners, the British Racing Drivers' Club (BRDC), sold the lease on 280 acres of land, which, while easing the burden also meant that valuable income from rental was lost.
Aware of the circuit's plight, Bernie Ecclestone allowed the BRDC to defer payment of its hosting fee, but still this wasn't enough, and in 2017, chairman John Grant finally pointed to the elephant in the room.
"(Following) sustained losses of £2.8m ($3.5m) in 2015 and £4.8m ($6m) in 2016," he said, "we have reached the tipping point where we can no longer let our passion for the sport rule our heads".
With two years of its contract still to run before a break clause could be triggered, the BRDC served notice that the 2019 race - by which time the hosting fee would have risen to $23m - would be the last.
As we all know, at the eleventh hour, indeed at the very start of what was looking likely to be the last Grand Prix weekend at Silverstone, a new deal was agreed which kept the circuit on the calendar.
However, the circuit's latest filings reveal that "the termination of the British Grand Prix contract crystallises the repayment of the current contract's hosting fee for its final year. Repayment of this fee will continue on a monthly basis until March 2020".
In negotiating the new contract with Silverstone, it was made clear that in addition to payment no longer being deferred, the arrears from the 2019 event - the final race under the old contract - had to be paid on a monthly basis until March 2020.
While it is not known how much the new fee is, the BRDC's financial statements reveal that while the outstanding fee for 2019 and the fee for 2020 had to be paid within a 12 month period, "no additional funding will be required by the company."
All of which left the Northamptonshire track sitting pretty, financially speaking, that is until the pandemic...
Having confirmed last week that if the Grand Prix takes place this year it will be without spectators, organizers advised that those wishing to attend next year's race may use the same tickets while full refunds will be offered to those that don't.
According to Forbes, Silverstone's financial statements state that "the company relies on cash received from advanced ticket sales to fund its operations".
Tickets for this year's race went on sale last July, and shortly after John Grant said that "early ticket sales for 2020 are currently up on last year by no less than 50%."
It is not known how many tickets to this year's race have been sold or how many people with tickets will want a refund, but according to Forbes the upper limit could be £29m ($36m).
This is because Silverstone's financial statements say that "approximately half of revenue is generated from a single event, the British Grand Prix" and in the year-ending 31 December 2018 it came to £58.3m ($72.4m), leaving Silverstone with a £0.5m ($0.6m) net profit and £10m ($12.4m) in cash in the bank.
In 2018, the British round of the MotoGP championship was cancelled due to heavy rain, and while it is understood that the circuit's insurers covered the cost of repaying the 40,000 ticket-holders for the event, it is unclear if this would be the case in terms of the current pandemic.
At the beginning of the year, it was all looking rosy for the Northamptonshire track which hosted the first ever round of the Formula One World Championship exactly a year ago.
However, the pandemic has put paid to that, for in paying off the 2019 hosting fee, it is unclear how much remains in the kitty, leaving one wondering how Silverstone will meet the costs should ticket holders opt for a refund as opposed to holding on to their tickets for 2021... assuming mass public gatherings are allowed by then.
Now, if only there was a source of candy - sorry, money - that might hand over £15m.