Commercial Agreement for the Development of Silverstone

This announcement is therefore exactly in line with what was stated in August 2011 by a source close to the matter: « To carry out all these developments, they have to borrow a lot of money and, in the long term, the club cannot afford it. They therefore want to get a lot of money through a very, very long lease from a very wealthy entity, maybe an investment fund, which would continue the development. »

At the time, the investment fund in question was that of Qatar. However, the discussions never came to fruition, but an agreement was indeed reached with MEPC. As expected, the duration of the contract is extremely long, which aligns with the traditional vision used by the investment fund for its seven commercial activity parks. As for the payment of 32 million pounds, it allows the BRDC to settle all of its short and long-term debts at once, contracted for the significant works of The Wing, the new paddock used by F1.

The agreement will allow Silverstone to equip itself with infrastructure around the circuit, which will ensure its economic viability. Indeed, the British circuit is one of the few on the calendar that does not receive any public subsidies. Therefore, activities outside of racing are essential for the circuit, as Richard Phillips, the circuit director, explained to us during our exclusive interview on the occasion of the edition: “If you look at our profits, hosting events like Formula 1 or MotoGP accounts for about 32% of our income. The rest comes from our other activities. We must do this. Even if we make money with Formula 1, the fixed costs involved are huge. So we need to spread those fixed costs across other activities, and that’s what we’re doing with our diversification program that we started nearly ten years ago. In the future, we will try to diversify even more by increasing our leisure activities. We thus have an event organizing company that operates on three continents. We have a lot of ideas to move forward and ensure that motorsports can remain important at Silverstone. It is important to maintain this resilience because motorsports may lose profitability in the future due to the way costs are developing. So if we diversify, the business will be resilient, and we can stay.”

On the other hand, the agreement with MEPC does not include the management of the circuit as such. Another agreement has been reached with a different partner, but confidentiality conditions prevent BRDC leaders from commenting on it. However, being relieved of its debt burden allows the circuit to ensure its long-term presence and to cope with the 10% increase in costs imposed by F1 as part of its 17-year contract.

With the participation of www.Racingbusiness.fr