Formula One: Silverstone’s stance driven by desire to bring the price down

Silverstone managing director Patrick Allen wonders out loud how long Silverstone can justify the game of fiscal brinkmanship

The clouds gather over Silverstone during the British Grand Prix this summer (Getty Images)

With the house of Formula One on the point of sale, it is just as well that prospective buyers know what lies under the floorboards. Silverstone obliged with a rum rendition of a long-standing complaint, paying way over the odds for a product that no longer stands up to critical scrutiny.

There is obvious self-interest in the rocket launched in these pages by Silverstone’s new chief executive, Patrick Allen, who has one more year left on a deal signed by Silverstone’s owners, the British Racing Drivers’ Club, with Bernie Ecclestone in 2008 before an option to continue for a further 10 years kicks in. There has to be some doubt that it can do so on terms that never did add up to sound business practice.

Allen signs off on a cheque for 16 million big ones for the privilege of hosting the British Grand Prix, a product that he describes as “shit” and “not saleable”. It is not quite that, but the point is made. Predictability is death to an endeavour that is supposed to be about deeds of derring-do and drama.

The British public is happy enough to see Lewis Hamilton roll home first, but for how much longer will they be willing to pay if, all things being equal, only one other car is capable of stopping him, his team-mate’s, and even that is a rare event?

Silverstone brings in about £53m a year across all its commercial activities, of which the British Grand Prix accounts for the greater part. A then record race day crowd of 120,000 helped produce a £3m pre-tax profit in the latest figures. That record was broken again as 140,000 turned up this year to see Hamilton parade around the old airfield unchallenged, so the books are unlikely to turn red next year either.

But with the asking price rising annually, Allen wonders out loud how long Silverstone can justify the game of fiscal brinkmanship as he is forced to hike ticket prices for an event that risks contravening trades descriptions.

When the BRDC entered into the current agreement it did so against a background of dissent from rank and file members who, despite their love of the game, believed Formula One had priced itself out of the enthusiasts’ market. They could not see value for the BRDC in the extravagant sums Ecclestone was asking.

There is no state cash propping up the British Grand Prix, or the Italian, Belgian or Spanish races, where grands prix face the same unequal struggle in an environment driven by government-backed events in emerging markets. Races in these far-flung outposts are organised not to satisfy the demand of a people steeped in motor racing culture but to engage in geopolitical messaging.

The French Grand Prix, the country that staged the first road races a century ago, gave up the ghost seven years back. The German Grand Prix followed suit this year, denying the marque of the moment, Mercedes, an opportunity to race before its own people. How mad is that? The Germans, like the French, are unwilling to pay the same rate as that signed off by exchequers playing politics with sport in the likes of Abu Dhabi, China, Mexico, Singapore, Malaysia and Russia, where this weekend the Russian Grand Prix takes place in that strategic folly, Sochi.

What makes Silverstone’s latest uprising interesting is that is appears to have the support of Ecclestone, who as the commercial rights-holder set the sport on its avaricious course in the first place.

Ecclestone has made his billions by ruthlessly exploiting brand power in countries seeking to get their message across sharpish via the vehicle of the sporting big show.

So this weekend, through the stage-managed spectacle of the Russian Grand Prix, Vladimir Putin’s apparatchiks have a global platform at their disposal to present the nation as they want it to be seen. And for that Putin coughs up something in the vicinity of $30m (£20m), ditto China, Abu Dhabi et al.

The fact that the product is neither relevant, nor in its present guise riveting, is neither here nor there to them, or rather not a priority. Visibility is all that matters. Don’t forget the Olympic Games in China played out behind closed doors. The stadia were full and for those watching on television around the world the pictures were spectacular, but walk around the Olympic complex and the thoroughfares were deserted save for volunteers ferrying accredited folk about in buggies.

The locals who might have flooded into the empty spaces flogging their replica junk and black market tickets were fenced out of the project, sent on their way for a fortnight so as not to intrude on the enjoyment of the foreign dignitary. Even the weather had to take its cue from control freaks in laboratories firing moisture-absorbing pellets into the air.

This is the age of the made-for-TV sporting extravaganza, a feature of the landscape pioneered by Ecclestone with F1. But he can’t direct everything. The regulatory arm of Formula One is in the hands of a governing body, the FIA, which has repeatedly demonstrated an inability to read the runes, delivering a rulebook that has led to a dominant team ahead of rivals bound by regulations that do not allow them to respond.

Thus hemmed in by FIA bureaucracy, Ecclestone is unable to hit the reset button he so desires in order to make F1 the exciting product of lore and maintain interest in the heartlands, not to mention sell on to the next venture capitalist looking for easy money. Ecclestone teased an audience in Austria this week with the titbit that three buyers are looking to relieve majority shareholders CVC Capital Partners of its grand prix trinket.

It is hardly a selling point knowing Hamilton is lining up a ninth victory of the season on Sunday with only the weather and another case of bad rubber, à la Singapore where his tyres mysteriously malfunctioned, capable of standing in his way.

For Silverstone the issue is simple: either Ecclestone, and any new owner, drop the price of participation, or they make it worth the while. The last time Britain was in danger of losing the F1 show it launched at Silverstone in 1948, it was Ecclestone who threatened to pull the plug. On this occasion Silverstone is poised to beat him to it.