International news
Doubt clouds Silverstone sale
BRDC ponders next move as JLR deal hits stumbling block | By Gary Watkins
The proposed sale of Silverstone to Jaguar Land Rover hangs in the balance after the board of circuit owner the British Racing Drivers’ Club won only a narrow majority in its favour after polling its members.
At an extraordinary general meeting in April, just under 54 per cent of the club membership voted for negotiations with the Indian-owned car maker to continue. It remains unclear whether the board will view such a slim majority as the mandate it requires to push ahead with the JLR deal.
BRDC chairman John Grant said that the small majority in favour still technically gave the board the authority to bring the negotiations with JLR to a conclusion. But he stressed that a decision on how to proceed would take some weeks.
“We don’t want divisions in the club,” he said. “We mentioned at the meeting that we would take any concerns away and address them. It will take a few weeks to work out how to move forward.”
The arguments
The EGM was preceded by a letter to the membership from a group of concerned members, led by Ginetta Cars boss and former BRDC director Lawrence Tomlinson, expressing fears over the JLR deal. Tomlinson was then allowed to put forward what was in effect a counter-offer for Silverstone at the EGM, to show that there was an alternative, although the vote was solely a ‘yes/no’ on the JLR deal.
Tomlinson said the deal with JLR, which involves selling a 249-year lease on the circuit for £33 million in staged payments, would result in the BRDC having to “protect rather than promote British motor racing”. He argued that it would leave the club financially vulnerable, because under the terms of the proposed sale it would still bear the burden of the contract with Formula 1 Management (FOM) to host the British Grand Prix, as well as other financial liabilities.
The JLR proposal would result in the BRDC, through its wholly-owned Silverstone Circuits Limited company, continuing to run motor sport at the track. In a written reply Grant told Tomlinson that he believed a majority of members “want to retain an involvement in motor racing at Silverstone”.
Grant argued that the JLR sale would allow the BRDC and SCL to put its finances on a sound footing, at the same time as allowing it to continue to operate the circuit.
Tomlinson claimed that JLR’s stated expansion plans would put the infrastructure of the circuit at risk and that SCL would be unable to diversify its business because it would only be in control of the land within the national circuit.
Grant countered that Tomlinson’s fears were unfounded, because there would be “legally binding agreements that they [JLR] will do nothing that would cause destruction of major events” in the terms of the sale.
“Silverstone will only be used for customer-facing and heritage-type activities,” he said. “JLR demonstrated to the board that its ambitious growth plans will be accommodated at other sites in the Midlands and elsewhere… and bought into the masterplan that governs and limits planning approval on the Silverstone estate.”
He added that JLR had plans “to undertake a range of improvements to enhance the circuit”.
Tomlinson’s counter-proposal is believed to involve him matching JLR’s initial payment, underwriting any financial liabilities of the BRDC and then paying an annual lease of £1 million for the circuit, which his companies would then operate.
Big names against a sale
There appears to remain a significant group of members who believe that the club should not sell the circuit. These include Prodrive boss David Richards and McLaren’s Ron Dennis, who both aired their views against a sale – Dennis via letter – at the EGM.
“There are many of us who believe that the circuit is not ours to sell: we are custodians for future generations,” said Richards. “We should look at all opportunities in raising funds that do not involve selling the family silver.
“This deal would change the BRDC forever and the membership should not allow it to happen. JLR could be a good partner for Silverstone, but not in the terms of the deal being proposed.”
He pointed out that the current SCL management team put in place at the end of 2014 under new boss Patrick Allen had turned the company around. Silverstone reported an annual profit for the last financial year and revealed that the GP was out of the red for the first time in a number of years.
“What is being proposed is selling the assets and putting the money into the operating company,” added Richards. “If the operating company is so good, why not let that company trade ourselves out of any difficulties?”
Richards claimed the narrow ‘yes’ vote did not give the board a mandate to sell. “If the board tried to plough on, there would be an EGM called overnight [50 members could trigger one with a vote of no confidence],” he said.
The latest proposed sale of the fabric of Silverstone circuit follows a sale of land to commercial property management company MEPC in September 2013. Development land around the circuit, including the track’s industrial areas, was sold for £32 million on a 999-year-lease.
That followed a run of annual losses for SLC and a £26 million loan taken out in 2010 while the new Wing pit and paddock complex was being completed.
The BRDC board revealed at the same time that it was negotiating to sell the track to an undisclosed bidder. The board had received a mandate from the members to seek a buyer, but the so-called ‘Members’ Charter’ enabling them to do this had a finite lifespan that came to an end in 2014, after those negotiations collapsed.