British GP: Silverstone contract was 'unsustainable' but BRDC hopeful of future agreement after 2019 break
Full quotes as Silverstone's owners confirm break in F1 contract; BRDC chairman hits back at Liberty Media's 'posturing' claims
By Matt Morlidge
Last Updated: 18/07/17 12:15pm
The British Racing Drivers' Club claims to have had "no option" but to opt out of its Silverstone Formula 1 contract, but the circuit's owners are hopeful that a deal can be reached with Liberty Media to keep staging the British GP after 2019.
After months of negotiations with F1's new American owners, the BRDC's chairman John Grant claimed it was "no longer financially viable" for Silverstone to host the race under the current contract.
The 17-year contract signed eight years ago has been described as "the only deal on the table at the time" to preserve the event's short-term future, but a five per cent fee escalator means that what was a cost of £12m in 2010 has become £17m for 2017 and was set to exceed £27m by 2026.
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Despite the British GP's huge popularity, Grant also confirmed the circuit had lost £7.6m in the last two years alone.
"It's very simple - the costs are more than the revenues," Grant told Sky Sports News HQ's Craig Slater. "We generate a lot of revenue from this event, probably more than any other F1 race, but we still have substantial costs."
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But while the timing of the break-out clause - the British GP is live on Sky Sports F1 this weekend - has been criticised by Liberty Media, the BRDC are optimistic that a deal can be reached in the next two years and hope a revised agreement can "ensure a sustainable and financially viable future for the British Grand Prix at Silverstone for many years to come."
"I think we've got quite a lot of work to do," added Grant. "We need to sit down and spend more time with them, frankly, to understand things in detail so we can see what they want, what we want, and what the numbers look like. It will take more time, more calm reflection from both of us, to come to a solution. Is that possible? Absolutely that's possible.
"The good news is we have two years, that's lots of time to come to a solution. I think it will take at least many months to get through this probably, but I'm very hopeful that by the time we get to 2019 we will have found that solution."
BRDC respond to Liberty Media's 'posturing' claims
Grant has also hit back at Liberty Media claims that the BRDC were "posturing" and looking for a "short-term advantage to benefit their position."
Liberty Media, in response to the news that Silverstone intended to break their F1 contract, said in a statement: " We deeply regret that Silverstone has chosen to use this week to posture and position themselves and invoke a break clause that will take effect in three years time."
But Grant insisted that the BRDC left their options open for as long as they could before taking their last legal opportunity to reveal their termination notice.
Liberty Media's response to Silverstone break
"The week leading up to the British Grand Prix, should be a week of great celebration for F1 and Silverstone. We deeply regret that Silverstone has chosen instead to use this week to posture and position themselves and invoke a break clause that will take effect in three years time. We offered to extend the current deadlines in order to focus on everything that is great about Silverstone and Formula 1. Regretfully the Silverstone management has chosen to look for a short term advantage to benefit their position. Our focus is still to preserve the British Grand Prix. We will carry on negotiating with the promoter in good faith and in private to reach a fair and equitable solution."
"It is absolutely not posturing," he told SSNHQ. "We have one chance to protect our future. The Grand Prix would have run to 2026 and we have to stop losing money, that's what it comes down to. We lose millions of pounds every year running this event and we can't carry on doing that.
"We only had one legal opportunity to put a stop to that and that opportunity means we have to give notice before this year's event. We left it until the last possible moment because we wanted to leave our options open as far as we could, but we haven't got to the stage yet where we could do anything else except exercise this option to bring the contract to a close after the 2019 event."
Chairman John Grant's quotes in the BRDC statement in full
"It is with regret that I am today announcing that the British Racing Drivers' Club, the owners of the Silverstone Circuit, has triggered the break clause in its contract with Formula 1, now owned and managed by Liberty Media.
"This means that, unless a new contractual arrangement can be reached with Liberty Media, 2019 will be the last year that the British Grand Prix takes place at Silverstone - the only viable venue for a British GP.
"This decision has been an extremely difficult one for us to take. The BRDC is at the heart of British motor racing and we have been promoting the interests of our sport and its fans for generations. We've been the custodians of Silverstone for almost 70 years and have nurtured the British Grand Prix into one of the world's great sporting occasions. The BRDC has also invested £50m over the last 10 years to improve facilities here at Silverstone.
Gave a good chunk of my life 1996 to 2003 to help save Silverstone and the BGP as BRDC Director and Chairman. Very sad to see today's news 😢— Martin Brundle (@MBrundleF1) July 11, 2017
"However, we have reached the tipping point where we can no longer let our passion for the sport rule our heads. Put simply, it is no longer financially viable for us to deliver the British Grand Prix under the terms of our current contract. By running the British Grand Prix we sustained net losses of £2.8m in 2015 and £4.8m in 2016 - that's £7.6 million over two years. We expect to lose a similar amount this year. To continue on this path is not only unsustainable, it would put at risk Silverstone, the home of British motor racing.
"The challenges associated with the contract signed in 2009 with the then owners of Formula 1 have been well documented. As has been widely reported, the current contract requires the BRDC to pay a Promoter's Fee to Liberty Media to host the Grand Prix, with the fee increasing by 5% every year.
"Looking back, the decision to sign this contract was made to preserve the British Grand Prix and ensure this great, historic race was not lost. This was the only deal on the table at the time and the decision was taken to keep the British Grand Prix alive.
"But the reality is that for many years the British Grand Prix has made a net loss. Despite being the most popular weekend sporting event in the UK - with a live audience of over 350,000 attendees - the net revenue we receive is not enough to cover the Grand Prix's share of our overhead costs, let alone turn a profit.
"This situation is not sustainable - for the BRDC, but also for the British Grand Prix and Silverstone. We cannot continue to sell our core assets in order to fund the Grand Prix. Put simply, we've run out of road and have been left with no option but to trigger the break clause.
"Our membership is fully aware of the financial challenges facing the BRDC and Silverstone, and the risks we have taken as an organisation to keep going up to this point. While we would hate to lose the British Grand Prix, Silverstone will have a bright future without it - both commercially and in terms of continuing to serve as the heart of the British motor racing community.
"But losing the British Grand Prix would have a negative impact that is felt far beyond Formula 1 and Silverstone. The UK motorsport industry today is worth an estimated £10.5 billion - employing over 45,000 people and exporting over 75% of its output. That is larger than the equivalent sectors in Germany, Italy and France combined. Having the British Grand Prix at Silverstone - the biggest occasion on the motor racing calendar - serves as a focal point for so much of what is great about UK motorsports, and the wider engineering and manufacturing sectors.
"Seven out of the 10 F1 teams are based in the UK - many close to Silverstone. This brings vital jobs to the country, as well as having a positive impact on the local communities and economy. There's a good reason why the area around Silverstone is known as the "Silicon Valley of motor sport". Take away the British Grand Prix and this is all placed at risk.
"Under its new Liberty ownership, Formula 1 has put forward some great ideas for developing F1 and we fully support their plans for creating a better show and fan experience. Putting fans at the centre of our sport is exactly what we believe in - that's one reason why Silverstone has become the most popular Grand Prix on the calendar.
"That's why we've been in ongoing discussions with Liberty's new F1 team about how the situation could be resolved - putting forward a number of proposals that we believe could secure the long-term, financial viability of the event.
"Although we have now activated the break clause, we have made it clear that we are open to working with our friends at Liberty to find a solution that works for all parties. Our hope is that an agreement can still be reached, so that we can ensure a sustainable and financially viable future for the British Grand Prix at Silverstone for many years to come."