Sunday 7 August 2016

Battle for Silverstone becomes bitter

Having lost out some three years ago in its bid to buy the Millbrook Proving Ground in Bedfordshire previously owned by General Motors, JaguarLandRover set its cap at buying the Silverstone racing facility.

However, according to the Daily Telegraph, Porsche AG has blocked JLR’s bid to acquire Britain’s Formula 1 track at Silverstone.
Venture capitalist Rutland Partners snapped up Millbrook Proving Ground in October 2013. Venture capital companies, however, have a habit of buying and selling businesses.
Not only does the Millbrook facility have a high-speed circuit but there is an excellent off-road track, a city circuit and ample test engine facilities. In addition there are large swathes of ground available for building.
But Millbrook is not as close as Silverstone (with its many motor vehicle associated businesses) to JLR’s Gaydon facility in Warwickshire, JLR’s principal design and engineering centre. Silverstone is more ideally positioned.
According to sources, Porsche “has put the brakes” on the £33 million sale by the circuit’s owner, the British Racing Drivers Club (BRDC).
Porsche operates a driving centre at Silverstone and is understood to have used a veto that allows it to block competitors from using the track from more than 45 days per year.
JLR’s deal, agreed in April, has been thrown further into doubt by a new, rival approach for Silverstone from the engineering entrepreneur and racing team owner Lawrence Tomlinson.
This weekend, JLR’s bid appeared gridlocked.
“Porsche has a covenant within their lease that says no manufacturer can use the circuit for more than 45 days a year,” a senior BRDC member has said. “JLR were aware of that covenant and assumed that they might be able to sort it out after the deal was done. I have been told in the last 48 hours that Porsche have indicated that they would not be prepared to waive their rights.”
According to the Daily Telegraph, JLR planned to use Silverstone as a high-performance test track for its customers, as well as building offices for up to 1,000 staff, along with a hotel and heritage centre.
The manufacturer is understood to have sought a deal for as long as five years, so may yet seek a resolution, sources said.
A spokesman for JLR confirmed: “JaguarLandRover remains committed to long-term and sustainable growth in the UK. Our discussions with the British Racing Drivers Club are ongoing, but there is no detail to share at this stage. All discussions remain commercially confidential.”
A Porsche spokesman said, predictably in the circumstances: “We are not prepared to confirm or deny any details contained within private contracts. We have a shared aim with the BRDC, in that we wish to see Silverstone and its local community thrive.”
Some BDRC members favour Tomlinson’s bid. The members express some disquiet over JLR’s owner Tata and its potential withdrawal from the British steel industry.
According to Tomlinson’s offer letter, he “would leave the BRDC with an upfront payment of £6m, capital investment, no debt responsibilities and ongoing rent of £1m per year for a further 248 years (index-linked). This equates to a commercial value today considerably in excess of the Tata deal.”
The BDRC has announced its intention to sell 249-year-old Silverstone over the track’s mounting losses and need for investment. In February members were warned: “We have no cash reserves to fund future development of the circuit”.
Silverstone is the only F1 racetrack that gets no government funding, and this has fuelled its losses. However, it has begun to turn around, and in the year to 31 December, 2015, the BRDC finished for the first time in a decade, with a profit of £1.2m.

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