Silverstone’s new managing director unveils his profit plan

13 January 2015 | Posted in Notes & Insights | By David Cushnan | Contact the author

Silverstone’s new managing director unveils his profit plan

Caption: Jon Super/AP/Press Association Images

Silverstone’s new managing director Patrick Allen has prioritised cheaper tickets, better service and a more diverse offering as he begins the process of “refocusing the business” following sweeping management changes at the home of the British Grand Prix towards the end of last year.

Allen’s appointment was formally confirmed by the British Racing Drivers’ Club (BRDC), Silverstone’s owner, last week, but he was appointed just before Christmas following a few weeks spent examining the business operations of one of Britain’s largest sporting venues and one of Formula One’s most historic tracks.

“I see my single biggest responsibility as refocusing the business on the customer and developing that customer proposition for the million or so people that currently walk through the gates every year,” Allen told SportsPro on Monday. “To do that requires a shift in culture, really, to being a more consumer focused business.”

BRDC chairman John Grant and director Lawrence Tomlinson took a more active role in the business during the management restructure, following the dramatic and largely unexplained decision to suspend three of the senior executives at Silverstone Circuits Limited, the company which operates the Northamptonshire track, on full pay. As Allen’s hiring was confirmed last week, alongside Stuart Pringle in the new role of sporting director, so the departures of chief executive Richard Phillips, financial director Ed Brookes and legal director David Thompson were confirmed.

“I’m not here to criticise the previous directorship but I’m from a retail background – it’s understanding customers,” points out Allen, who as executive director of marketing at The Co-Operative Group until 2010, before leaving to set up his own retail consultancy brings with him a large bank of sales and marketing experience.

“I think we’d like to drive down the prices of things like Grand Prix tickets to make it more affordable and by making it more affordable you allow more people to enjoy the spectacle,” he continues. “But once they are inside the pay line, provide an experience that’s second to none. I would say that perhaps in the past that experience has not lived up to the ticket price.”

Silverstone no longer faces the uncertainty of retaining the British Grand Prix – the BRDC signed a contract to host the event for the next 17 years in 2009 – but there remains significant financial pressure on a venue which, unlike many Formula One hosts, cannot rely on financial support from central government.

The annual race hosting fee over the 17 years of the contract averages out at around UK£17 million per year, which must be added to the not insubstantial costs of staging an event which last year drew around 120,000 spectators on race day. Ticketing and concessions are the only major revenue streams for the venue around the Grand Prix, with large swatches of trackside advertising and hospitality swallowed up by Formula One’s central rights-holder. The Grand Prix represents around half of Silverstone’s annual turnover.

"Silverstone is not only the home but the very heart of motor racing in this country and it will remain so"

“We essentially have two businesses,” Allen points out. “We have a thing called the British Grand Prix and lots of other things that we do, which is the other half [of turnover]. If we expand the other half and make that more profitable, then that can help subsidise the cost of running Grand Prix.”

That means more motorsport and non-motorsport events – Allen puts forward music concerts and food festivals as examples – plus an expansion of the venue’s conference and banqueting services at the Wing, the vast new pit building which opened in 2011, an asset Allen describes as “underutilised”.

“Silverstone is not only the home but the very heart of motor racing in this country and it will remain so,” he adds. “I think what we can do, however, is introduce motor racing to different audiences who are not yet a fan of motorsport.

“If you manage it properly and maintain the brand essence of Silverstone, which is motor racing, you can expand your motor racing fanbase to much wider audiences.”

Aside from the Grand Prix, the circuit’s motorsport calendar in 2015 includes April’s opening round of the World Endurance Championship, the British Superbike Championship, British Touring Car Championship, plus the annual Silverstone Classic and 24 hours meetings, although MotoGP has been lost to Donington Park initially and the as-yet unbuilt Circuit of Wales in the longer term. There will also be a new focus on racing schools and driving academies, parts of the business that Allen admits “don’t really add dramatically to the bottom line” but are “brand-builders” and part of a “duty of care in the Silverstone culture that we should be adding and giving back to the motor racing marketplace”.

At the same time Allen is investigating how the cost base of the Grand Prix itself can be lowered. He has spent time with the organisers of last year’s Tour de France Grand Depart in Yorkshire and other non-motorsport event organisers to examine how policing and traffic management costs, for example, might be reduced. “It’s not being blinkered and looking at how other motor racing events run Grands Prix, it’s looking at other events in general because what they have in common is all the same thing, in terms of how you move around, how you move traffic in and out, how you police it, how you deal with security,” he explains.

"The easy thing to do would be to keep putting ticket prices up and I don't think that's great for consumers"

A wider portfolio of events and lowered Grand Prix staging costs should, Allen insists, lead to cheaper Formula One tickets. He is clear about what his targets are on that front. “Already we have an average ticket price that is less than last year. I would like to see a general admission ticket that is UK£99 and not UK£155. I would like to see the average ticket price begin with a one not a two. The metrics are fairly simple. Maybe in previous regimes it’s been ‘we’ll pass on the inflationary aspects of the tickets to the consumer. What I’m trying to do is lower that and work on people getting more people through the gates.

“The easy thing to do,” he adds, “would be keep putting ticket prices up and I don’t think that’s great for consumers, I don’t think it’s great for the fanbase.”

He also insists the distraction of a possible sale is no longer an issue. The BRDC, which tried and failed to sell the circuit last year, has refocused its efforts on making “Silverstone the best it can be”. Allen adds: “Their focus is now on running it as a profitable business,” Allen says, confirming that there are no longer any plans to sell.

As of last week, ticket sales for July’s Grand Prix were up 16 per cent on the same point in 2014. For the wider business, Allen sees 2015 as a “transitional year” in which he will instil a culture shift amongst staff towards a “consumer focus”. He continues: “We’ll introduce other events through the back-end of this year and into 2016 which will extend our wider event offer. The other major focus is on conference and banqueting and really sweating the asset of the Wing, which is a fantastic building and great for conferencing and banqueting but currently underutilised. I think we need to get the message out that we’re open for business on the conference and banqueting market.

“In three to five years, we’d have a very healthy bottom line and profitability that allows us to reinvest in the fabric of the circuit, allows us to invest in our drive products and make that a premier product offering.

“The biggest challenge is making sure we are all aligned behind what the vision for Silverstone is. To me, that’s making it the marquee event destination in the UK.”

blog comments powered by Disqus
Share |

Sports Business Directory

Square Mile Sport Paddy Power plc AIBA - International Boxing Association Full Access Hospitality Graham Budd Auctions
GreenFields Sports Turf Systems International Rugby Board IWC Schaffhausen Clipper Ventures FIFA U-17 Women`s World Cup Azerbaijan 2012