Jenson Button is a member of the British Racing Drivers Club Photo: PA
Built on the site of a former airfield, Silverstone hosted the first race of the F1 championship in 1950. It is owned by the British Racing Drivers Club (BRDC), a group of 850 members including superstar drivers Jenson Button and Lewis Hamilton. This means that it lacks a single owner who can pump in money and instead investment decisions have to be put to a vote.
An escalation clause in the British GP contract boosts the annual hosting fee by around 5pc and it currently stands at an estimated £16m. The escalator is around half of that of its rivals and Silverstone also keeps half of F1’s corporate hospitality takings for British GP whereas other venues rarely receive any of it. Despite this, the race is still in financial trouble as it lacks government funding.
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State subsidies usually cover the running costs of an F1 race so Silverstone instead has to use the proceeds from ticket sales. This puts it on the back foot and organisers have been forced to increase ticket prices to compensate for the hosting fee escalation. Last year the British GP’s three-day pass was higher than that of any other race at £170 and Mr Allen said it is reaching the limit.
“If you put the price up you get less people,” he said. “It gets more expensive every year and there is a finite capacity that we can get into the circuit. So it is certainly increasingly difficult.” Mr Allen said ticket sales were currently 163pc up on 2014 but it was offset by the increase in costs.
An increasing fee isn’t the only cost which Silverstone has had to cover. Prior to signing the F1 contract it upgraded its facilities and in 2011 opened a new pit and paddock complex. This was funded with cash and a £12.7m bank loan with £12.4m borrowed from Northamptonshire County Council.
Turmoil: Three senior Silverstone executives have been suspended Photo: AFP
The narrow margins on the race gave the BRDC little free cash to pay down the debt so instead, 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 the loans but it led to the BRDC losing rental income from the land to plug the difference between the ticket revenue and the escalating hosting fee.
Adding to the pressure is the fact that Silverstone is one of few tracks which pays its hosting fee in arrears after years of under performance. “They are paying next year for this year’s race because I have allowed them to do this otherwise they would have closed before,” said Mr Ecclestone. It means that a letter of credit is necessary from Silverstone’s bank to guarantee that the British GP will go ahead. Mr Ecclestone said this might not be forthcoming due to Silverstone finding it difficult to cover its costs.
Mr Allen added: “What you really need for all parties is, in my opinion, somebody who wants to buy a trophy asset and is willing to put a large amount of equity in…You want somebody that has got lots of money, who loves motor racing, who really wants to run Silverstone profitably but has the capital to inject into the business so it fixes the balance sheet and takes the risk profile away.”