Two weeks ago it became painfully clear that Donington Park CEO Simon
Gillett was not able to pull off his stunt to host the British Grand Prix
from 2010 onwards, after the circuit failed to meet the third deadline
imposed by Formula One commercial rights holder FOM (Formula One
Management) and Bernie Ecclestone. And now the Silverstone circuit is back
in the race to once again host the 2010 British Grand Prix. At he beginning
of this year, Gillett proudly announced he had signed a seventeen-year
contract with FOM to host the event, and rejected the claims of his critics
that it would be impossible to give the Donington Park circuit a complete
revamp before the race in July 2010. But the critics were right, from the
beginning the historic Donington circuit ran into problems. So when and
where did it all go wrong?
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Simon Gillett Donington Park CEO. Photo by xpb.cc.
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Ecclestone and Silverstone
The British Silverstone circuit is not only regarded as a classical
European race circuit, but is also the cradle of Formula One. On May 13,
1950 the first ever official Formula One Grand Prix took place at the
Silverstone circuit, and was won by Italian Giuseppe 'Nino' Farina, in his
Alfa Romeo. Until this day Great Britain, together with Italy, remain the
only two countries which have been on the Formula One race calendar without
any interruption since 1950.
Ecclestone already was very critical of the Silverstone circuit and its
facilities during the last five years, but in 2008 things turned into an
all time low, and it seemed the only thing Ecclestone and Silverstone still
had in common, were the last five letters of their names.
As early as 2004, Ecclestone had stated Silverstone was: "...still like an
old house that keeps getting repaired when the roof leaks." Venues like the
Bahrain Grand Prix had raised the standards and Ecclestone wanted the
Silverstone circuit to fall in line with these new standards and told them
to invest their money in the future of the circuit.
In 2007 Ecclestone again warned the Silverstone circuit owners, the BRDC
(British Racing Drivers' Club), and told them to 'wake up' and make plans
to upgrade the pit and paddock facilities. A month later he warned them
again, and demanded that improvements would be carried out before the race
in 2010, if not, Silverstone would lose their contract after the 2009
venue. In June 2008, he upped his game, and stated in the media: "We are
discussing the possibility of reaching an agreement with Donington to host
the British Grand Prix." That was a clear message, but Silverstone didn't
react, and in July 2008, during the race at Silverstone, the FIA announced
that the British Grand Prix would be moved to Donnington.
Max Mosley: "After many years of patient but fruitless negotiation with the
BRDC, we are delighted that Bernie has nevertheless been able to ensure
that the British Grand Prix will keep its place on the Formula One World
Championship calendar. We understand that the development programme planned
for Donington will achieve the very high standards we and FOM expect from a
modern Formula One circuit. Finally, British Formula One fans will get the
Grand Prix venue they deserve."
Ecclestone and Donington
So the FIA and FOM weren't happy with Silverstone and the BRDC anymore and
moved the British Grand Prix to Donington. Ecclestone explained: "We wanted
a world class venue for Formula One in Britain, something that the teams
and British Formula One fans could be proud of. The major development plans
for Donington will give us exactly that. A venue that will put British
motor sport back on the map."
The last Formula One race at the Donington Park circuit was the 1993
European Grand Prix, and as it turned out, it was one of the most memorable
races in the history of Formula One, with Ayrton Senna, Damon Hill and
Alain Prost battling it out on a very wet and rainy circuit. But that was
sixteen years ago, and today the circuit isn't really suitable for
Formula One races anymore.
The circuit needed a major make-over to comply to modern day standards, and
although the company which operates the Donington track, Donington Ventures
Leisure Ltd, owned by Simon Gillett, didn't have the money to do that, they
signed a seventeen-year contract with FOM. Gillett's company had acquired a
150-year lease of the circuit from Donington Park's owners, Wheatcroft &
Son Limited, the family company of entrepreneur and race enthusiast Tom
Wheatcroft, who sadly passed away on October 31, 2009.
A bridge too far for Donington?
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The Donington circuit in 2008. Photo by xpb.cc.
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Plans for the new circuit were made by architect Peter Wahl who worked
together with German race circuit design guru Hermann Tilke to redesign the
circuit layout. The cost of the development of the new circuit were at the
time estimated at a ?100 million, and included the build of a Club House,
the Hollywood and the Redgate suites, a Medical Center, a Media Center, new
grandstands and a complete new pits and paddock complex, and a ?750,000
tunnel to provide access to the infield area, where the pits and paddock
complex is located.
In January 2009, Donington received an official planning permission to re-
develop the circuit, and works on the new access tunnel had begun. But
there were already some signs things didn't quite go according to plan, a
few months earlier Donington Park COO Lee Gill had left the company for
unknown reasons. Many skeptics, like Ron Dennis and Frank Williams, had
already expressed their concerns whether Donington would be able to secure
the necessary funds, and doubted the plans would be realized in time for
the 2010 British Grand Prix.
Financing the Donington project
By April 2009 the circuit had ran into serious financial problems, the
Wheatcroft Company demanded the payment of ?2.47m for the lease of the
circuit, apparently Wheatcroft hadn't received any payments since September
2008. The dispute was resolved in June and Gillett was still adamant his
plans would be successful and insisted that the funding of his plans were
still on course. In July, British newspaper the Guardian reported that the
North West Leicestershire district council had sofar not received the
actual planning application from the Donington circuit, and many people
raised their eyebrows again.
In August Gillett announced that the Red Grouse Properties company was
appointed to take over the construction project, again further fueling
speculations the circuit would have financial problems. Although Ecclestone
had already granted an extension of the deadlines as agreed in the
contract, the circuit had fallen behind schedule and was running out of
time. Ecclestone: "Even if they get the money, I cannot see how it will all
be ready in time to go. It is very disappointing -- because we thought it
would happen -- but they cannot go on missing deadlines."
In September the Donington Holdings PLC, the parent company of Donington
Ventures Leisure Limited, finally came up with a plan to raise the
necessary funds, they would issue high-yield bonds to raise the ?135m they
needed to rescue the circuit. FIA and FOM had given Donington another
deadline until October 26 to materialize their plans.
On October 23, after months of uncertainty, skepticism, financial problems
and negative publicity, Simon Gillett issued a statement and told the media
his plan had failed miserably. Gillett: "Despite higher than expected
levels of interest and very positive early indications, the bond has failed
to secure enough subscriptions." Ecclestone's reaction was clear: "They
missed the deadline and really that's all there is to it. We kept extending
that deadline to give them a chance, but they missed it. It's a pity, to be
honest."
Now what?
I must say I admire Gillett's enthusiasm and tenacity, but he has made a
few fundamental mistakes. He signed a contract with FOM without having
secured the financial resources, he had not acquired the necessary planning
permissions from the North West Leicestershire district council, it took
him six months to get those permissions, and he probably didn't realize how
difficult it would be to find ?135m in times of a global economic
recession. The British government wasn't prepared to invest money in
Silverstone or Donnington because all the money goes to FOM and capital
investor CVC and is not re-invested in the circuits, in short, all the odds
were against him when he embarked on his Formula One adventure.
What will happen to Donington now? The work has already started on the
tunnel, the famous Bridgestone bridge has been taken down, and it will now
take a considerable investment to get the circuit back into the state it
once was.
The future
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The New Abu Dhabi Yas Marina Circuit. Photo by xpb.cc.
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Ecclestone likes to brag about the new circuits in Malaysia, Bahrain,
China, Turkey and Abu Dhabi, and it almost seems he is no longer interested
in saving the traditional European circuits. True, these new circuits, and
especially the circuits of China and Abu Dhabi, are marvels of modern
technology and with all their glitter and glamour it seems they are a
perfect fit for the new Formula One era.
But those circuits have been build with the money of the oil sheiks, Arab
investors, or the governments of those countries. The races in Turkey and
China are already under scrutiny, the number of spectators have drastically
declined in recent years, and many people are wondering whether only 30,000
spectators are enough to justify a Formula One race. And whether
Silverstone is outdated or not, the 120,000 spectators in 2009 didn't seem
to mind that, and proved Europe is still very much Formula One-minded.
There is another thing FOM seems to have forgotten, we have been confronted
with a global economic recession, which started at the second half of 2008,
and the end is still not in sight. The recession has triggered an exodus of
sponsors and manufacturers who withdrew from Formula One to cut the costs
of their mother companies. However, FOM doesn't believe in cutting costs
when it comes to promoting or hosting a Formula One race.
Price-wise FOM has raised the bar again and again, the show must go on,
crisis or no crisis. Many circuits have since then ran into financial
problems, not just Great Britain, but also France, Germany, Italy, Canada
and Belgium have been struggling to keep their slot on the Formula One
calendar. Many of those circuits now depend on the money they receive from
the local authorities or the government to survive in Ecclestone's Formula
One jungle. And when things go wrong, FOM doesn't lose one single penny,
the tax payer's money will be used (some authorities prefer to use the word
'wasted') to cover the losses.
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Damon Hill, president of the British Racing Drivers' Club. Photo by Dave Dyer.
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Will Silverstone host the British Grand Prix in 2010?
BRDC President Damon Hill has made it clear to FOM and FIA that he is not
interested in a 'once-off' race in 2010, Silverstone is only interested in
a long term contract. They also want reasonable circuits fees. Hill:
"There's always been the question of the FOM fee, and ultimately that is
the deciding factor. The money from the people [the spectators] who come to
Silverstone goes to Formula One, and that money doesn't come back to
develop the infrastructure of Formula One. None of that money has been re-
invested with regard to the infrastructure of the circuits, and Silverstone
is part of the infrastructure of Formula One."
The truth is very simple and easy to understand, no circuit owner, investor
or government will ever invest money in a venue that doesn't make a profit,
they might as well throw their money right out of the window. Belgium
recently again reported a loss of over 5 million Euros over 2009, and that
is exactly why Silverstone and the BRDC haven't reached an agreement with
FOM yet, the only thing FOM can guarantee Silverstone, is the loss of many
millions of Euros, and that is something that should change.
It is now time for FOM to show us Formula One is not just about money,
Formula One has always been very profitable for FOM , CVC and Ecclestone,
and now is the moment to return the favor to Formula One, the teams, the
circuits and the fans, and do something about the fees the circuits have to
pay, which in the end have led to this financially very unhealthy
situation.
