Owners of the Silverstone race circuit have activated a break clause in their contract that will end the venue's tenure as host of the British Grand Prix beyond 2019.
F1's new owners and Silverstone have been negotiating a deal to secure the future of the race, which has been held at the Northampton circuit every year since 1987. The British Racing Drivers' Club, the owners of the circuit, were unhappy with the terms of Silverstone's existing deal and have been looking to agree new financial terms.
The deadline for those talks was this week, just days ahead of the next edition of the British Grand Prix on July 11. It appears a solution has not been found, with BRDC chairman John Grant claiming the circuit has "reached tipping point" with the current negotiations.
"This decision has been taken because it is not financially viable for us to deliver the British Grand Prix under the terms of our current contract," Grant said. "We sustained losses of £2.8m in 2015 and £4.8m in 2016, and we expect to lose a similar amount this year. We have reached the tipping point where we can no longer let our passion for the sport rule our heads. It would not only risk the very future of Silverstone and the BRDC, but also the British motorsport community that depends on us.
"However, I want to be clear that although we have now activated the break clause, we are fully supportive of the changes the Liberty team are making to improve the F1 experience. Our hope is that an agreement can still be reached, so that we can ensure a sustainable and financially viable future for the British Grand Prix at Silverstone for many years to come."
Tuesday's development means the 2019 race will be the last at Silverstone unless a new deal can be reached. A recent report in Reuters suggested F1 had offered to take the race over for the next five years, absorbing the annual losses of £2-3 million. That was rejected by the BRDC, as was the offer of extending the deadline for a decision to the end of July.
The BRDC rejected that offer as it would mean handing over the circuit to a third party for free three weeks of the year, while still incurring the costs of maintaining the circuit throughout the year -- putting it in a worse financial situation than it is in currently. One issue with the circuit's current contract is that it involves a Promoter's Fee which increases five percent every year. That means it has increased from £11.5 million in 2011 to £16.2 million in 2017.
Grant insists the circuit's future can be bright without F1 if an acceptable deal is not found in the future.
"Looking back, the decision to sign this contract was made to preserve the British Grand Prix and ensure this great, historic race was not lost. This was the only deal on the table at the time and the decision was taken to keep the British Grand Prix alive. But the reality is that for many years the British Grand Prix has made a net loss.
"Despite being the most popular weekend sporting event in the UK - with a live audience of over 350,000 attendees - the net revenue we receive is not enough to cover the Grand Prix's share of our overhead costs, let alone turn a profit. This situation is not sustainable - for the BRDC, but also for the British Grand Prix and Silverstone. We cannot continue to sell our core assets in order to fund the Grand Prix. Put simply, we've run out of road and have been left with no option but to trigger the break clause.
"Our membership is fully aware of the financial challenges facing the BRDC and Silverstone, and the risks we have taken as an organisation to keep going up to this point. While we would hate to lose the British Grand Prix, Silverstone will have a bright future without it -- both commercially and in terms of continuing to serve as the heart of the British motor racing community."
Tuesday's press release also said; "The BRDC is determined to secure a sustainable future for the British Grand Prix at Silverstone. The organisation remains in discussions with Liberty Media about finding a solution that secures the long-term financial viability of the event, and hopes that an agreement can be reached."