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Silverstone Lease Talks To Continue With JLR

The main straight and 'Wing' pit building at Silverstone.
By:
 Neil Tipton
Added:
 Saturday, April 9, 2016

The takeover of the Silverstone circuit by car maker Jaguar Land Rover is still on the table following a vote by the British Racing Drivers' Club. At an extraordinary general meeting on Thursday,  members of the club - the circuit's current owner - supported by a narrow margin a motion to continue exclusive talks with JLR.

The Tata-owned car maker wants to take over the circuit on a long-term lease and transform it into a venue to showcase its rapidly expanding range of vehicles. Up to 1,000 sales and marketing staff and 700 engineers from its Midlands bases could be transferred to Silverstone under the deal, with the track developed as a leisure venue centred around motor racing. Additional facilities would include a five star hotel, Jaguar Land Rover heritage centre, motor industry museum, vehicle design workshop, offices and a visitor centre.

The deal, which is thought to be worth in the region of £33 million, would see JLR lease the circuit for 249 years, with the BRDC becoming a tenant of the circuit and Silverstone Circuits Ltd (SCL), the operating company that is a subsidiary of the BRDC, running the track on JLR's behalf. Payments by JLR would phased in installments.

Any deal would also be designed to ensure motor racing events continue to be hosted at the circuit, according to the BRDC, which said it would only agree terms with JLR that it believes "to be in the best interests of the BRDC" and would "preserve Silverstone as the UK's premier racing circuit". There would be "legally binding agreements that they will do nothing that would cause destruction of major events".

The BRDC has effectively been forced to consider selling off the family silver thanks to mounting debts, caused in part by the hugely expensive F1 deal as well as a loss of rental income caused by its earlier decision to lease off around 280 acres of surrounding land to business park operator MEPC. A previous deal to sell the circuit to an undisclosed buyer collapsed in 2014.

Further financial pressure is heaped on by the contract to host the British Grand Prix, for which SCL signed a 17-year extension in 2009. In late February, members were advised that the current deal which sees the circuit pay its Grand Prix hosting fee to Formula One Management a year after the race, has now been revised.  Payment now has to be within a month of the event, putting severe pressure on the circuit's balance sheet.

Counter bid discussed

The JLR deal is controversial among some BRDC members, who are concerned that the car-maker's activities would reduce the circuit's core usage for motor racing. Thursday's vote was complicated by a counter bid from Ginetta boss Lawrence Tomlinson - himself a former BRDC board member - who with several fellow members wrote a letter to the club last week, calling for a no vote.  The letter argued that the JLR deal would leave the club "having to protect rather than promote British motor racing". In particular, should the F1 event be lost, SCL would be unable to diversify its business because it would only have control of the land within the national circuit - a claim flatly rejected by BRDC chairman John Grant.

Tomlinson is reported to have offered to take over Silverstone in its entirety, with an initial payment of around £5million matching what is thought to be JLR's first installment payment. Tomlinson would also take over the BRDC's liabilities including the Grand Prix contract - thought to be around £15-20million per year - and lease the circuit and the SCL business for £1million each year.

Discussion over this counter-bid is said to have diluted support for the JLR deal, with the eventual 'yes' vote to continue negotiations with the Indian-owned firm said to have been passed by only around 54 percent of members.

The BRDC would only confirm in a statement that it would "reflect on a wide range of views expressed by members during the EGM in determining its next steps", although it is understood the vote would allow the deal to go ahead without further mandate from members if negotiations can be completed with JLR. An exclusivity deal with JLR means that the BRDC would not be able to enter any negotiations with Tomlinson until July at the earliest.

For its part, JLR is thought to be keen to wrap up a deal quickly, though any major changes to infrastructure would likely not take place until 2020. A spokesman remained tight-lipped on the subject, saying only that: "Jaguar Land Rover regularly evaluates opportunities to support its long-term and sustainable growth in the UK. As part of this, we are exploring potential options at Silverstone with the BRDC, but it is too soon to share details at this stage. All discussions remain confidential."

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