F1: Donington CEO wants you to come up with improvements cash

By LJ Hutchins

CalendarSunday, July 6th, 2008

 
 

It appears that the future of the British Grand Prix might now depend on your willingness to come up with some cash to get it staged.

That’s the import of remarks made by Simon Gillett, one of the two CEOs of the Donington Park circuit, during the run-in to the ITV coverage of today’s British Grand Prix.

In case you’re one of the six race fans in Britain who are not yet across this story, Mr Gillett and his partner Lee Gill have signed a contract with F1 supremo Bernie Ecclestone to stage the race at their venue, Donington Park in the east Midlands, from 2010.

That gives them two years to bring about the considerable infrastructure and access improvements needed to make Donington Park a viable F1 circuit — something that reportedly requires an investment of £100 million.

There has been a lot of speculation about where Gillett and Gill are going to get this money from, with a popular theory pinpointing Ecclestone himself as a ‘mystery investor’ who would cough up the cash.

But, speaking to ITV journalist Louise Goodman during the race preview, Mr Gillett said: “You’re going to hear a lot more about this over the next couple of weeks. Unfortunately there’s not a mystery fairy godfather with a £100 million cheque out there.

“I wish there was, and if there are any out there, please call! But we’ll be announcing a fan-powered debenture scheme in the next couple of weeks.” (Our highlight)

Debenture’s not a word you hear in regular conversation. It is legal jargon, but its meaning is quite straightforward – a kind of fixed-term loan to a business, or the certificate representing that loan.

This would seem to suggest that Mr Gillett will be looking for a sizeable slice of his £100 million to come from lots of small investments from fans like you and me, the people that enjoyed watching the British Grand Prix today and would like to see it continue.

And he wouldn’t be the first person in sports administration or even in F1 to have had this idea.

Justin Wilson’s salary deal

Take for example The Justin Wilson Investors’ Club, set up in 2003 in order to help an ambitious young racer raise enough to pay for a F1 drive with that eternally cash-strapped Minardi team.

Wilson promised investors that, in return for an up-front sum, he would receive a limited income until they had earned back twice their investment. Thereafter they would get 10 per cent of his earnings until 2012.

The offer was massively oversubscribed and more than 900 people were given the opportunity to invest in Justinho, of whom nearly three-quarters were granted the minimum option of £500. Only about 90 investors were allowed to invest more than £1,000.

So, what made this offer so appealing? There is no doubt that Wilson was offering insanely generous terms. The risk was that his career would tank and he’d fail to earn enough cash to pay back his shareholders.

However, while his F1 career was fairly short-lived, he has gone on to conspicuous success in the US Champ Car and Indy Car series — just click on his category on this site for more information.

The Investors’ Club is still active and it seems safe to assume that its members feel they have had a reasonable deal.

But a lot of its appeal was the idea of plucky Wilson taking his fate into his own hands and making a major financial commitment to his fans in order to further his career without assistance from insider contacts, big business and corporate sponsorship.

Of course, the feeling of privileged involvement in a sport as glamorous as F1, even when the team courting Wilson was a back marker like Minardi, can’t have hurt either. And it is likely to be exactly this sentiment that Gillett and Gill hope to tap into.

Fantasy football

Another example of fan investment in sport is the MyFootballClub website which set about getting 50,000 football enthusiasts to sign up and then stump up the cash to buy a football club.

In November last year, and after considerable interest from clubs seeking funding, the site announced that it would buy Ebbsfleet United, thus setting up a completely new model of online, collaborative club administration.

The purchase was approved in January this year and more than 30,000 members in 75 countries are participating in the project through a subscription model, according to the site’s promotional materials.

MyFootballClub was set up by journalist Will Brooks and succeeded in catching the imagination of fans who felt alienated from a sport dominated by seven-figure sponsorship deals, a multi-million pound market in players, restrictive broadcasting rights — and taking no account of the views of ordinary fans.

So the site’s investors might be attracted by any of the following: a liking for the ‘fantasy football’ nature of the set-up; support for the traditional, community-based values of football; a feeling of making their voices heard in an arena where that is increasingly difficult and coming up with an alternative to the current business-dominated structure of sport, however small the scale.

A Fan’s Club

A final example also comes from football. AFC (apocryphally standing for A Fan’s Club) Wimbledon was set up after investors bought up the former Wimbledon FC lock, stock and barrel and moved it to Milton Keynes, thus flying in the face of everything that football has traditionally been about.

It is run by a supporter-owned fans’ trust who, deprived of their local team and spurred on to direct action, held player trials on Wimbledon Common in June 2002 where any players with talent and no existing contract could try out for the team.

A squad was chosen and the new team managed to attract more than 4,500 fans to its first game. It went on to score notable successes including winning the Combined Counties League championship with an unbeaten league season and holding the all-time English record for the most consecutive unbeaten league games by any senior football club.

Reality check

This, in our view, is where Donington Park might hit a bit of a reality check.

Do you feel that there is some instinctive difference between supporting an up-and-coming driver prepared to rigorously limit his income to pay you back, or bailing out a lower-league football team, and putting up funds for the major improvements necessary to a circuit so it can stage a Formula One race?

Yes, us too.

This is what we think that difference is about. Britain already has a circuit quite capable of staging the Grand Prix. That’s Silverstone, the venue that has just put on a fantastic show for a sell-out crowd.

The reason that Silverstone cannot continue to stage the British Grand Prix is because its owners, the British Racing Drivers’ Club, and the rights holder, Bernie Ecclestone, cannot come to a financial agreement.

It is pretty well-documented that the reason BRDC president Damon Hill does not have Bernie’s signature on a contract right now is because of the amount of money the latter wants the circuit to pay him for the rights to the race.

So the reason Donington needs improvements is because the multi-millionaire Bernie Ecclestone wants more money.

Personally, we don’t much feel like helping him out. And we don’t think we’ll be the only ones.

David and Goliath

And if the presumed Donington scheme has any of the ‘David versus Goliath’ elements which seem to be present in most successful fan-funded schemes, then we have yet to spot them.

Rather, Gillett and Gill may find they are perceived as allying themselves with Goliath against David — in the form of the ringing endorsements they have won from both Ecclestone and his recently-rediscovered ally FIA president Max Mosley.

It hardly needs saying that a thumbs-up from Mosley is pretty worthless currency right now.

And fans have been watching the TV footage of a bruised and regretful Damon Hill, that former F1 world champion and son of a motor racing legend, having to field the news that his circuit has lost its landmark race on the eve of its 60th anniversary event — thanks to a particularly malicious piece of timing.

While there might be a degree of impatience with the way the BRDC has been conducting negotiations recently, we reckon that Hill might be able to command considerably more public sympathy than Mosley.

The bottom line

So, if sentiment won’t make us invest in Donington, then what about a cold, hard bottom line?

Gillett and Gill might offer generous terms on our investment, the chance of paddock access, seats in the grandstand for life or the chance to meet top motorsport names.

The problem with this would be credibility. People are having a lot of trouble believing at the moment that the Donington plan can really be brought off in two years, however good the intentions of its principals. So much for generous terms.

Gillett has mentioned harnessing fan power in the manner of Wembley Stadium and other stadia worldwide and indeed Wembley runs a 10-year seat licensing scheme. But in order to fancy buying in to something similar, you’d have to be confident that a) Donington Park will definitely host the British Grand Prix in 2010 and b) that it will continue to do so for a number of years.

Doubting Thomases may point in the direction of Kent and murmur about what happened to Brands Hatch (whose management appears to be showing the great good judgement to keep right out of this one) when it tried to take the British Grand Prix off Silverstone.

In the early 2000s Brands Hatch found it was unable to host the race due to planning problems and leased Silverstone instead in order to get it staged.

Your seat paid for in Derby. The race unavoidably moved to Northants. Or, if Bernie wields his contract waivers with sufficient ruthlessness, on another continent entirely. Point made.

There have been some nasty rows in football when fans who paid out cash found their seats for life were really anything but. And we’ve all read about the problems caused when, for example at Newcastle United, a team has so many season ticket holders that it’s very hard to get a one-off event ticket.

Given the amount of people that would have to buy into such a scheme to finance a £100 million expansion, they might be the only ones ever able to get access to Donington Park again.

Where’s the smart money?

Another problem with the image of fan-funded projects is that they carry the perception of being invoked when professional investors refuse to get involved. If financiers don’t rate Gillett and Gill’s project, then why should we entrust our hard-earned to the pair?

And the high-level endorsements from team bosses and drivers that are being flung about are mostly, when read closely, simply expressions of relief that the British GP is still on. Promises of paddock access and celebrity contact may be great inducements but it would be best to ask whether the venue owners would actually be in a position to offer such perks.

Of course all we have to go on at the moment is a few words said in haste to a journalist. It’s possible that there is a credible and well thought-out scheme in place that can overcome all these objections.

But at the moment it feels more like Gillett and Gill have been smeared with beef dripping and thrown in the piranha pool.

Destination Russia or India?

To close, and to give some suggestion of what may be lurking in that pool to eat them, here’s a couple of paragraphs from a recent Guardian article by chief sports writer Richard Williams.

He says: “A darker possibility is that, 12 months after Silverstone hosts its farewell grand prix next year, the Donington development will not have reached the stage at which a race can be held there.

“At that point a default clause might allow Ecclestone to pull the plug, giving him the opportunity to remove the British grand prix from an already overcrowded calendar and replace it with a government-subsidised race in one of his new territories, such as Russia or India.”

Indeed.

Donington Park has been presented to us by Formula One’s management as a great deal for fans, as a professional business outfit and as the future of British motor racing. But if it’s asking for us to stump up the cash to make sure the race gets staged then it’s absolutely none of those things.

And it’s possible that by using the words “fan-powered debenture scheme” on national television, Simon Gillett has made it look like amateur hour instead.

6 responses to “F1: Donington CEO wants you to come up with improvements cash”:

  1. Craig Says:

    July 6th, 2008 at 8:52 pm

    It certainly is,erm, strange to say the least.

    I think the method of announcing it was strange too – who first put out the information that their was this £100 million mystery man? Was that Donington, or was it Bernie – or indeed was it just the media? Seems there’s not one person, but rather there is the hope that there will be several mystery men willing to pay smaller amounts!

    And just how small will these amounts be? If someone said to me that I could pay a certain sum and be guaranteed my own seat at a GP for the next 5 years say, I wouldn’t be willing to pay any more than the actual cost of that seat at another race – so perhaps £200 per year?

    That would make it £1,000 over the five years – so to get £100million, they need 10,000 people to sign up which would mean about 10% of the crowd wouldn’t actually be paying year on year as they walk in the gate. Would that then put up the other prices? At the moment they need £100million up front, but they will also need money as time goes on as well, plus obviously they will want to make a profit.

    Of course, they won’t price it like this – there will be some horrendously priced tickets, with benefits to match. These will likely be aimed at the corporate element, but as you say people in this sector may be feeling the pinch at the moment and could shy away from splashing any more cash.

    This assumes that paying them the money assures me a seat, but looking at other debenture ventures such as rugby, paying the money only guarantees you the chance to buy a ticket – ie the ticket priceis on top of the debenture cash. No way would I be up for that!

    At the end of the day, I agree with your Wilson comments above – it is so much easier to feel the emotive contact with supporting a real life person rather than a circuit.

    This is going to boil down to being similar to Kimi’s pitstop today – it was risky and was always going to end up winning or losing him the race. What Donington are trying hasn’t been tried before, and like Kimi it could end up losing them the British GP if people aren’t willing to buy into it.

  2. marc Says:

    July 6th, 2008 at 10:54 pm

    Where’s the smart money?

    The smart money says in anyone’s pocket. Including Uncle Bernie’s who reportedly has already sunk 20 mil or so into Silverstone over the years.

    If the Donington major-domos think the public will go for this they are sadly misreading the current world and U.K. economy and the scheme will go down in flames.

  3. F1Wolf Says:

    July 7th, 2008 at 9:49 am

    it sounds odd when on one hand Ecclestone refuses to sign a deal with Silverstone simply because they do not show him enough money, but all of a sudden comes out with Donington contract with people who are willing to invest lots of money they do not have (as they themselves admit)

    this is not the last we hear of this … your hint at India may not be too far off the mark, 2010 is the year the Indian GP is planned for …

  4. links for 2008-07-07 » vee8 - a Formula 1 blog Says:

    July 7th, 2008 at 5:30 pm

    […] Donington CEO wants you to come up with improvements cash – Brits on Pole Very interesting post, looking in-depth at the Donington funding proposal (tags: money business BernieEcclestone Donington BritishGrandPrix Britain) […]

  5. The proposed move to Donington » vee8 - a Formula 1 blog Says:

    July 10th, 2008 at 5:40 pm

    […] the upgrades will be finished within two years. And that £100 million will somehow be raised by a fan-powered debenture scheme. Then again, you could just as easily ask where Silverstone would get the money it needs to make […]

  6. Mohammed Abacha Says:

    March 6th, 2010 at 9:54 am

    I HAVE AN INHERITANCE OF US$1BILLION FROM MY LATE FATHER GENERAL SANI ABACHA WHO WAS FORMER PRESIDENT OF NIGERIA. I WANT TO BE THE FIRST AFRICAN TO OWN A CLUB IN EUROPE. I NEED PARTNERS.

    [Hilarious – advance fee fraud through blog comments? Now that’s desperation. Obviously all requests like this are a scam and you should never reply to them – but we’re tempted to leave it here because it’s just so damn funny.

    BoP]

 
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