Fears for Silverstone as KPMG auditors wave red flag over F1 fees
SILVERSTONE, the motor racing circuit, is seeking a lifeline of up to £13m amid “material uncertainty” over its future, fuelled by losses from hosting the British Grand Prix in Formula One.
The track sits on a former airfield in Northamptonshire and is owned by the British Racing Drivers’ Club, a group of more than 800 motorsport luminaries including Sir Jackie Stewart, Nigel Mansell and the reigning F1 champion, Lewis Hamilton. The club’s accounts for the year-ending Dec 31 2017 state: “Discussions with potential lenders have commenced … and sensitised forecasts indicate a facility of between £10m to 13m will be required.”
Since 2012, the club has run up combined net losses of £52.2m driven by its flagship race. Silverstone is the only F1 track that lacks government funding so it has to cover the grand prix running costs and £17m hosting fee largely from ticket sales.
The fee is paid to F1’s owner, Liberty Media, and rises by about 5pc a year, meaning that ticket prices have to rise to compensate. In turn, that makes it harder to attract spectators – crowds fell this year by 5.1pc to 130,000.
In an attempt to staunch its losses, the club has broken its F1 contract seven years early and the 2019 race is on track to be the last. The club’s pre- carious financial position led to a deferral of the F1 fee five years ago. The payment is due in 2019.
A letter sent earlier this month by John Grant, the BRDC chairman, to members said that the club will have to pay “F1 following the ending of the deferred payment arrangement agreed five years ago for the annual promoter’s fee, which ends after the 2019 BGP (regardless of whether the BGP continues thereafter).” Mr Grant said that the club “planned to meet this payment from available cash, supplemented if necessary by bank borrowings”.
The circuit itself could be used as security as the accounts state: “The directors are confident that, based on the existence of valuable security in the form of the Silverstone circuit, agreement of an appropriate facility will be reached to allow the group to continue to meet its liabilities.”
Although the club has begun discussions with lenders, no facility is yet in place, prompting auditors KPMG to raise the alarm. KPMG said: “The group’s cash-flow forecasts indicate that it will require additional debt facilities in September 2019 in order to meet its obligations as they fall due, the amount of which, and the group’s ability to service and ultimately repay any such facility, is dependent on the substantial achievement of its forecasts.
“These circumstances constitute a material uncertainty that may cast significant doubt on the group’s ability to continue as a going concern.”