Bernie Ecclestone

by Terry Lovell

  Banging the publicity drum, Foulston was soon announcing the news that the FIA had approved the provisional design plans. With Ecclestone on her side, the FIA’s blessing was never likely to prove a difficulty. Getting the necessary planning permission through in time posed the real problem. She had considerably less than two years in which to get the show up and running. Ecclestone, anticipating the problems she might face, included a standard penalty clause in the contract – if Brands Hatch was not ready in time, she would pay him a sum of $11 million, one year’s fee. But, unbeknown to Ecclestone, none of this mattered to Foulston.

  From the day she had begun talking to Rohan about a takeover of Silverstone some 12 months earlier, her central aim had been to get control of the British Grand Prix. It had never been part of her plan to deliver a Grand Prix at Brands Hatch, any more than if she had been successful in acquiring Silverstone, which she wanted purely for the market valuation of the Grand Prix, on which she planned to raise sufficient debt to modernise Brands Hatch and then sell the two circuits at a figure she had already calculated would enable her to retire and live in high style for the rest of her life.

  She had seen what the stresses and strains of big business had done to her father, how all he had achieved had been wiped out by his early death. At the age of 20, even before she was appointed commercial director of Brands Hatch Leisure, Foulston had vowed to make her pile and retire by the age of 40, the age her father was when killed at Silverstone. She was determined to enjoy a better-quality life. It was for this reason that she had rejected the idea of what would have been in effect a reverse takeover, with BRDC members becoming shareholders: she would have needed their approval in order to sell. Only two trusted colleagues within Brands Hatch Leisure Plc knew of her real agenda in going for Silverstone and then the Grand Prix contract.

  In June 1999, just one month after Ecclestone announced that Brands Hatch had been awarded the contract, Foulston was formally and secretly talking to Les Delano, a director of Octagon Motorsport, the sports marketing and entertainment division of the New York-based InterPublic Group (IPG), one of the world’s largest advertising and marketing communications groups, with an annual revenue that year of $4.56 billion. She had, in fact, started informal talks with Delano even while bids were being made for Silverstone at the beginning of the year. Octagon was an obvious first call. A positive relationship through the Octagon-owned Flammini World Superbike Championship, a round of which was staged at Brands Hatch, had already been established.

  To Foulston’s advantage, Delano – he took part in the Le Mans 24-Hour race in 1986–7 – was also a keen fan of motor sport, as were Frank Lowe, the founder of Octagon and shortly to be appointed its chairman and chief executive, and Phil Geier, the chairman of IPG. Selling Brands Hatch, which now offered the critical allure of the British Grand Prix, wouldn’t prove to be the toughest sales pitch Foulston had ever made. The talks with Delano, after he had consulted with the IPG board, proved positive and, by September, the due diligence process began, with Brands Hatch Leisure making disclosures of all its operational activities, including all Formula One contracts, and the far from certain position of planning permission, without which the contract with Ecclestone would have been made null and void. This was the big obstacle Foulston had to overcome.

  Exuding confidence, she insisted that the proposed redevelopment meant little more than a formality – an extension to existing planning permission, rather than a change of use. Her confidence was based on a local-plan designation called WK2, which encircles the boundary of Brands Hatch and associated buildings. Within that area, the planning authority of the local Sevenoaks District Council accepted and allowed motor sport, recreation and leisure activities, but subject to certain criteria governing noise, visual intrusion, Green Belt violation and vehicular access. In fact, Foulston’s proposed plans fell foul of all of these conditions. Area Planning Officer, Mr Colin Smith, said a few months later: ‘Brands Hatch’s view is that they have WK2 designation and that means they can do anything associated with motor racing. Our view is that they can do anything related to motor racing but subject to all the controls that are in place through the local-plan policies. That is where the arguments will occur.’ Due to the impact on the environment, and possible conflict with national planning policies, Smith believed it was highly likely that the Government would take the matter out of the hands of the council by calling it in for judgement, which would mean a public inquiry. ‘Even with the best scenario,’ added Smith, ‘I think it will prove a very tight schedule for the work to be completed in time for a Grand Prix in 2002.’

  However, in her talks with IPG, Foulston’s precarious position was strengthened by a report issued by planning consultants engaged by Brands Hatch Leisure which stated that, in their opinion, planning permission would be eventually granted. In September, Brands Hatch Leisure submitted an application for outline planning permission to the local planning authority, which was done principally to demonstrate to IPG, who, somewhat naïvely, had accepted without question or analysis of the planning consultants’ report, the extent of Brands Hatch Leisure’s confidence in its success and its determined commitment to meet the deadline for the 2002 Grand Prix.

  By 9 November the legal and technical process had been completed. By then Foulston had also taken care of another very important matter. The previous month she had gone to see Ecclestone once more, to avoid making the same calamitous mistake that the BRDC had made. Rather than risk his wrath by his finding out through a leak, she told him that she was selling Brands Hatch Leisure to Octagon. When he asked why, she explained that she needed the money to finance the hugely expensive modernisation of the circuit. Ecclestone accepted her explanation, unaware, like others, of her real agenda. With the legal and technical process complete, Foulston began to turn the screws to complete the deal within 30 days of the year end. It was for this reason that she had particularly targeted an American company, because of US business regulations which govern the acquisition of UK companies. They allow, for example, an initial 21-day deadline for the completion of an open offer for the acquisition of 90 per cent of the issued share capital, which suited Foulston’s strategy perfectly.

  Her determination to close the sale of Brands Hatch within 30 days of the year end was based on no more than an intuitive fear that the beginning of 2000 would see the start of a global economic downturn that would badly hit the share value of a small company like Brands Hatch Leisure and from which it would take months, if not years, to recover. On 10 November an offer to buy was issued, with closure to take place at 3 pm on 30 November. IPG in New York became focused on the legal and technical process, assuming that the commercial realities of the deal – not least the uncertainty of the planning permission – had been satisfactorily dealt with elsewhere within the company. When a lone voice raised certain doubts, Foulston threatened to pull out.

  While these backstage negotiations had been going on, Foulston had been wearing another hat, publicly declaring that everything was on schedule for a British Grand Prix at Brands Hatch in 2002. ‘It would be a first for me to sign a contract I couldn’t deliver on,’ she said. And of comments that the huge financial burden she was taking on would cripple the Brands Hatch Leisure Group with no guarantee of where the British Grand Prix would be staged after 2006, she said: ‘People who hold that view tend not to be financial entrepreneurs. If anyone can source a lot of money, spend a lot of money, and make a lot of money, it is Brands Hatch Leisure.’ But by early December 1999 it was no longer Foulston’s problem. Octagon bought Brands Hatch Leisure for £120 million – at £5.46 a share based on net earnings forecast at £5.4 million before tax. It was an extremely good price, as it was based on the historic earnings of a Grand Prix whose future at Brands Hatch was far from certain. The takeover enriched Foulston by almost £50 million.

  A month later she resigned for ‘personal reasons’ as chief executive, to be replaced by Rob Bain, formerly with Ernst & Young, who had jo
ined Brands Hatch Leisure as financial director in 1998, two years after advising Foulston on its successful stock-market flotation. Foulston was able to walk away from the company because it seems that IPG had failed to notice that her contract allowed her to parachute in the event of a change of control. Her managing director, Richard Green, had a similar contract. He walked away with £1 million.

  It wasn’t until June 2000 – 13 months after Ecclestone had awarded Foulston the British Grand Prix contract and she had long gone – that Brands Hatch Leisure was finally in a position to submit a planning application for its redevelopment programme to Sevenoaks District Council, which went before its planning committee without the recommendation of the council’s planning officers. Nevertheless, on 26 June, the committee voted 12–6 in favour. But by then the feared intervention of the Government, with all the time-consuming bureaucracy it would inevitably involve, took place. Three days earlier, on 23 June, the Department of Environment, Transport and Regions (DETR) had issued an Article 14 Directive, which removed the responsibility for the decision from the district council. The directive didn’t necessarily mean that the Government would call the application in for judgement – Bain was confident it wouldn’t – but that is precisely what happened two months later.

  The sheer scale of the proposed development programme and its impact on the environment led to Secretary of State John Prescott deciding to call in the application on 8 September for a public inquiry, thanks in no small part, it was suspected, to an effective lobbying campaign by the BRDC – it allegedly included organising a protest petition to Sevenoaks District Council – whose directors were well aware it would scupper any hopes Brands Hatch Leisure realistically had of getting its circuit ready in time for 2002. Its last start date was, in fact, that December. Following pressure from Brands Hatch Leisure, it was agreed to fast-track the inquiry, set for 9 January 2001 and due to last three weeks. The DETR’s decision was anticipated to be announced by the end of May at the earliest, a time when ministers were expected to be otherwise occupied in campaigning for a second term of government for the Labour Party. Assuming that timetable, it left Brands Hatch Leisure with little more than about 12 months to complete what they initially assessed would take two years – a build time it was claimed, with hopeless optimism, that could still be achieved by substantially increasing the labour force.

  Observing Brands Hatch Leisure’s acute discomfort from the sidelines, no doubt with a sense of some schadenfreude, were certain senior members of Silverstone’s BRDC. The tide of events was turning most favourably in their direction. It confirmed the opinion of those within the BRDC who had believed from the beginning that Foulston had been chasing an impossible deadline – one which, in line with her plans, had never existed – and that sooner or later Brands Hatch Leisure would be forced to try to strike a deal to stage the Grand Prix at Silverstone. Prior to Octagon’s arrival on the scene, it had been Tommy Sopwith’s opinion, though, that BRDC members were unlikely to agree. He said: ‘It would be much more economic [for Brands Hatch Leisure] regardless of the rent … but I would be surprised if our members would say yes.’

  At that time he favoured a return to the negotiating table with Ecclestone to secure the Grand Prix at Silverstone. ‘It would be, as our American cousins say, a whole new ball game [but] I would not underestimate the little man [Ecclestone]. We have a long way to go before we come out of the end of this one.’ He believed that, as with everything else in Formula One, in the end it would all come down to money. He said: ‘I think Bernie only wants one thing. Bernie wants to be richer than he is. I can’t imagine anyone being richer than he is, but Bernie can.’

  But the deadline was not actually as critical as the BRDC and others had thought. Ecclestone was so keen to help Foulston stage the British Grand Prix at Brands Hatch that he was prepared to postpone the contract a year, to 2003, a concession that would, in fact, prove unnecessary with Octagon’s takeover of Brands Hatch Leisure and the arrival of Martin Brundle as Sopwith’s successor as chairman of the BRDC and Jackie Stewart as its president. There emerged a fresh dynamic to find a way of resolving the situation to their mutual advantage.

  In December 2000, a year after Octagon had purchased Brands Hatch Leisure, IPG’s chairman and chief executive, Frank Lowe, Brundle and TAG McLaren boss Ron Dennis met for discussions that led to a solution that went far beyond merely leasing Silverstone once a year for the British Grand Prix: the BRDC would grant Octagon a lease to manage the Silverstone circuit for 15 years. Such an arrangement was made possible by the intervention of Ecclestone, who had entered the arena to broker the talks between the two parties. He had taken a risk in backing Foulston and he didn’t want to lose face by it appearing that a deal with Silverstone had come about by chance. He agreed to triple the five-year Grand Prix agreement to justify the massive investment that Octagon proposed to make in Silverstone, including the construction of a new pits complex, improving spectator facilities and major improvements to access roads, as a core part of a lease contract.

  An essential element of the contract was Ecclestone’s insistence that IPG underwrote the massive costs involved. It was rapidly conveyed to Phil Geier, the chairman of IPG, in New York, who agreed that his company would carry the risk. Les Delano flew to London from New York with Geier’s guarantee. Octagon’s estimated expenditure, in addition to increased development costs estimated at that time at more than $20 million, included an annual lease payment to the BRDC of £5 million, and an annual fee to Ecclestone of $10 million. To facilitate the deal, both the BRDC and Ecclestone agreed to receive staggered payments for the first five years.

  To claw back its costs – at one stage Octagon wanted a 25-year lease to improve the level of projected returns – it was speculatively claimed that it planned to stage high-profile events from conferences to pop concerts. But a spokeswoman in New York insisted that only motor sport events would take place at Silverstone. She said: ‘The purpose of this transaction from the Octagon standpoint was to be able to combine all commercial activities of Silverstone with those of the BHL group, not simply to promote the British Grand Prix. The combination of BHL and Silverstone professional management, and the marketing power of Octagon as well as the resulting synergy benefits, make this an attractive prospect for Octagon. We have no plans to extend operations beyond motor sports-related activities.’

  There was some doubt, though, that, given the aggregate costs it faced, Octagon was likely to show a profit on such events alone. ‘Even when we were paying Ecclestone £4 million for the Grand Prix we weren’t covering our costs,’ said a senior BRDC member, although that, it was countered, was because some of its management was less than efficient. More credibly, it was believed that the company got itself into an inevitably high-spending situation because it had relied on Nicola Foulston’s reassurances. ‘It took her word at face value over the development costs and the ease with which it would get the necessary planning permission,’ said the BRDC member. ‘Once it got in so deep, there was no turning back.’ The Octagon spokeswoman declined to respond to questions on this claim.

  Certainly the new regime, which took over Silverstone Circuits Ltd as part of the lease deal, introduced a new and profitable commercial phase for the BRDC as property landlords. It agreed a deal with Ford to develop 4000 square feet of its new technology park to accommodate the transfer of its Jaguar team from Milton Keynes and its Cosworth operation from Northampton, in a multi-million-pound development to include a full-sized wind tunnel, a turn of considerable good fortune for Silverstone, which ironically came about through Foulston’s personal ambitions.

  It concluded a remarkable episode in British motor sport, a win-win situation for Silverstone – which will continue to stage the British Grand Prix thanks to a ‘blue-chip’ tenant who will finance its transformation into one of the best circuits in Europe – and Nicola Foulston, who disappeared into the sunset with a king’s ransom to finance her lifelong departure from the corporate rat ra
ce. And, at the age of 33, seven years ahead of her ‘retirement’ deadline.

  The purchase of Brands Hatch Leisure by the InterPublic Group of Companies (IPG) was to soundly prove the wisdom of the well-grounded business principle: stick to what you know. Its decision in 1997 to approve a proposal by Manchester-born Frank Lowe to set up Octagon Motorsport, of which he would be chairman, and move into motorsport would reveal itself to be an ill-conceived venture that would cost IPG dearly. It was a text-book example of a corporate giant, whose wholly owned companies included Foote, Cone & Belding and McCann-Erickson and which was enjoying a boom period, believing it could take into its stride, with audacious confidence, the management and marketing of an industry about which it knew little.

  The first British Grand Prix at Silverstone under Octagon’s management as promoter, in 2001, was back to its usual July slot, the previous year’s rain-lashed event, switched by Ecclestone and Mosley – ‘It was commercial suicide for us,’ said the then BRDC president Sir Jackie Stewart – to the climatically fickle month of April now no more than a nightmare memory of a car-park bog causing an 18-mile static tailback on the narrow A43 access road. It was a grand prix noted for its monsoon weather conditions rather than the impressive win of McLaren’s David Courthauld, who, in appalling conditions, beat team-mate Mika Hakinnen and championship leader Michael Schumacher into second and third place respectively to win his second consecutive home grand prix victory. It portended the man-made disaster that, for Octagon, was to come.

  Rob Bain, Nicola Foulston’s former finance director and now chief executive of Octagon, authorised the expenditure of £1 million to implement short-term traffic-flow improvements, including the laying of 660,000 sq ft of reinforced meshing for the car park, widening of gateway entrances and improvements to road approach angles. In the summer of 2001, work also began on a long-awaited dual-carriageway linking the M1 and M40 by passing through Silverstone’s northern car park, and which was completed in 2002. The 2001 grand prix at Silverstone went relatively smoothly, but Octagon came under renewed pressure in December that year, when the FIA confirmed Silverstone’s place on the following season’s calendar only after receiving ‘a binding commitment’ from Octagon – and a letter of support from prime minister Tony Blair – that further road and access improvements would be in place to prevent an occurrence of ‘the chaos experienced by motor sports fans’. Failure to honour its pledge would incur a $5-million (£3.6-million) penalty, warned Max Mosley.