"The Rent is Too D@&#) High!

Both ITV and Motorsport are reporting that Silverstone, a track that is considered the ancestral home of F1, is considering breaking it's contract to host the British Grand Prix due to the rising costs of hosting the race.

The track is in the middle of a 17 year long contract to host the race that was signed back in 2009, but it appears that an exit clause exists in the contract which would allow the track to break the contract provided that they gave FOM 1 notice of their intent to do so.  The track is considering exiting their contract at the end of 2019, and it appears that the track would need to notify FOM of their intent to exercise the exit clause before this year's race.

This issue appears to be the 5% "escalator fee" that is reportedly a common feature of FOM's contract with most tracks.  The escalator means that a track's hosting fee rises by 5% every year, regardless of money that the track may spend on assorted improvements made specifically for the F1 race.  It also does not appear that the escalator fee is affected by changes in attendance either, so tracks may be (and have been) confronted with making substantial investments into facilities in order to keep F1 happy while also dealing with declining ticket sales for the F1 race.

In Silverstone's case they've spent in the area of 50m GBP building a new paddock area for F1 and revising the track layout, while also trying to find ways to boost attendance throughout the F1 race weekend. We also know that the track has been struggling to turn a profit over the last several years.

But what is Silverstone's goal in letting this news out? Are the BRDC and Silverstone Circuit Ltd (the race promoters) trying a frequently used Bernie Ecclestone negotiating tactic? Bernie has a long history of threatening tracks with taking his races elsewhere if he doesn't get what he wants.

As much as we're in agreement with BRDC and Silverstone Circuit that typical FOM hosting fees are too high (we've been known to call them extortion fees), if the two are trying to play chicken with Bernie Ecclestone they're going to loose. Bernie's already said that if the track decides to exercise the exit clause he can't stop them...  

Unfortunately, Bernie has all the power here and he knows it. If there's anything that the disappearance of the French, German, and Austrian Grand Prix have taught him is that no matter how beloved a race is, no matter how strong a country's fan base may claim to be, the series can survive the loss of a race. In the case of both France and Austria, not only can the series survive the loss of their races, but there's even the possibility that somebody will come crawling back several years later with a willingness to pay even more money to bring the series back...

So what happens if Silverstone isn't bluffing? Brands Hatch has hosted the British GP before, although it's currently FIA Grade 2 certified. If Brands Hatch isn't interested in getting a Grade 1 Certification there isn't another Grade 1 certified track in the UK.  But why would Bernie want to negotiate with a UK track and deal with getting them up to FIA Grade 1 standards let alone up to his standards for facilities? Imola has expressed interest in getting a race back - why struggle keeping the British GP on the calendar if he doesn't need to?

Yes, the hosting fees demanded by Bernie and FOM are way too high.  Yes F1 is a "premium" event and deserves to command substantial hosting fees (unless you're Monaco, in which case F1 doesn't charge you anything), but how much is too much? When tracks have to beg local governments for money? When ticket sales can't cover the event fees?

As much as we want the British Grand Prix to remain on the calendar, if the BRDC and Silverstone Circuit Ltd think that leaking word that they were considering exiting their contract is going to give them any sort of leverage over FOM I think they're sadly mistaken. If this isn't a bluff, and Silverstone truly feels that the event is now cost prohibitive we will be extremely sad to see them go.  However, if FOM and Bernie Ecclestone hasn't been willing to rethink event contract terms after the first loss of the French GP, Turkish Grand Prix, European Grand Prix (Valencia), Korean Grand Prix, Indian Grand Prix, or the potential loss of the Malaysian Grand Prix, and German Grand Prix why would the possibility of loosing the British Grand Prix concern Bernie Ecclestone of FOM in the slightest?

Posted on January 5, 2017 .