Silverstone managing director Richard Phillips believes the Northamptonshire circuit can "invest and move forward" after it was announced that the British Grand Prix will be held at the famous venue until 2026.
The deal follows months of negotiation between Silverstone management, the British Racing Drivers' Club, which owns the circuit, and Formula One supremo Bernie Ecclestone after Donington Park, which had originally signed a contract for the race, fell by the financial wayside.
Financial terms were not released at the announcement in London, but well placed sources have confirmed that hosting the race for the next 17 years will cost Silverstone some UK£300 million. The Times newspaper reported that Ecclestone had softened his much-publicised stance on annual fee increase by dropping the increase from seven per cent to five per cent a year. That is expected to save Silverstone some UK£60 million over the length of the contract and was enough to satisfy the circuit management that the deal would not be financially crippling. Under those terms Silverstone's annual franchise fee over 17 years averages out at UK£17.64 million.
Phillips said the length of the deal would allow Silverstone to finally make good on its longstanding plans to develop the circuit and improve facilities, a perennial bugbear of Ecclestone's. "We've always had five year deals and never been able to get the investment we needed to develop," Phillips said. "But 17 years gives us the ability to invest and move forward."
Phillips revealed that the new contract with Formula One Management has a mutual break clause after ten years, at which point both parties can assess the state of the deal. He called it a "good safety thing to have."
British Racing Drivers' Club president Damon Hill, the 1996 Formula One world champion, added: "It is not easy to enter into a contract of this magnitude and you have to take on a lot of responsibility, but the BRDC wanted this relationship to continue.
"Everyone was well aware that the British GP is not just a sporting event, but it is dynamo of the industry in this country. Losing it would have been damaging and perhaps there would have been no coming back."
Silverstone, often regarded as the home of British motorsport, will also host a round of the MotoGP circuit next year. Phillips suggested that both events may take place on the new MotoGP-specific circuit currently being constructed, for logistical reasons given the shortened preparation time available due to the late confirmation of the deal. The British Formula One Grand Prix is scheduled for Sunday 11th July 2010.