Pole Position

IT WAS like a dream come true. In a blaze of publicity, Nicola Foulston, the thirty-something head of the Brands Hatch motor racing circuit, last week announced she had bagged the rights to stage the British Grand Prix, an event held since 1987 exclusively by her arch-rival, Silverstone in Northamptonshire. Coincidentally, Bernie Ecclestone, the mercurial head of Formula One Administration, emerged from his mobile office at the site of the Monaco Grand Prix, to confirm that, subject to Brands Hatch gaining the necessary planning consents, he would indeed be shifting the event to Miss Foulston's Kent-based circuit.

But he added a kicker. If Miss Foulston managed to gain control of Silverstone, then he would think again and leave the event in Northamptonshire.

So is Miss Foulston's coup just a negotiating ploy in a long campaign of attrition to acquire Silverstone from its present owners, the illustrious British Racing Drivers Club? Or is Bernie serious about moving the event? For Britain's two premier racing circuits, the stakes are high. The race is estimated to generate around pounds 20m to pounds 30m per event, through gate receipts, merchandising, and corporate hospitality. On the stock market, Brands Hatch Leisure shares rose 34.5p to 362p after Miss Foulston announced her new six-year contract. Either way, the City figures, Miss Foulston is going to clean up. If Silverstone continues to resist her advances, then she will gain all that extra revenue. Alternatively, the loss will so weaken Silverstone that it will be forced into surrender and BHL will become a much more substantial company.

A BHL offer for Silverstone worth around pounds 75,000 for each of the BRDC's 834 members was rejected last month after a three-hour meeting. Instead it was decided to restructure the company with the help of the City investment bank Dresdner Kleinwort Benson.

The short-term BRDC goal is a restructuring that will issue shares to members, develop the Club's commercial activities, and create a "golden share" to protect against predators for up to three years. Longer term, the strategy is to prepare for flotation. The restructuring plans will be put to members before the British Grand Prix in mid-July. Lord Hesketh, the former Conservative government minister who is president of the BRDC, is determined to see Miss Foulston and her supporters off, whatever the cost.

Matters were brought to a head when Mr Ecclestone agreed to an pounds 11m-a- year bid from Brands Hatch to stage the race, a level of fee thought to be worth twice the current Silverstone contract. Silverstone was offered a similar deal, but baulked at the price. Voicing concern over Mr Ecclestone's demands, Lord Hesketh said: "We are not going to commit the club to financial suicide. We have got to have a negotiation that is sensible. Who can predict the state of F1 in 10 years' time?"

Mr Ecclestone, unabashed, says drily: "I offered the BRDC the opportunity to renew their contract but they felt they were not in a position to do so. I am therefore happy I now have agreements to maintain a round of the FIA Formula One World Championship in the UK until 2007."

Sceptical BRDC supporters believe Foulston has fallen for a classic Ecclestone "stroke" designed to lock BHL and Silverstone into a bidding war for the Grand Prix. A BRDC spokesman says: "Brands is not capable of holding a Grand Prix. This is a smokescreen and from it we expect BHL to emerge with another offer for Silverstone."

Brands Hatch would need heavy investment to host the Grand Prix, as well as 165,000 more seats. It is also surrounded by residents many of who are less than keen on the idea. Ms Foulston might not be able to get planning approval for changes as substantial as those needed, particularly if they are opposed by local residents.

Silverstone believes the Ecclestone/Foulston agreement to be just a ruse. "Nicola has a conditional contract, which she will use to try to put pressure on Silverstone members to agree to a new offer shortly," says a spokesman. "The feeling is very strong among BRDC members that Silverstone is not for sale." Silverstone is very strong commercially, with most of its income coming from activities other than the Grand Prix." Last year Silverstone increased pre-tax profits to pounds 3.4m on turnover of pounds 25.9m.

Ms Foulston insists that planning permission will not be a problem. Running the British Grand Prix at Brands Hatch would boost earnings by 40per cent, she says, and bring an average annual return on capital of 30per cent over the six-year term.

This is after taking account of spending of pounds 20m to upgrade the track and building new pit, paddock and seating facilities. To cover that initial spend, the Bank of Scotland has approved extra credit facilities of pounds 30m. Behind the numbers lies a personal tragedy. Miss Foulston was barely out of her teens when her father, John, was killed in a motor racing accident. Perhaps ironically, the accident took place at Silverstone, where he was racing his historic Indianapolis McLaren. Only a year earlier the millionaire owner of Atlantic Computers had bought Brands Hatch.

He had put this business into a family trust. When she was 22 Nicola Foulston asked the trustees if she could run the company. After a long and bitter dispute, she succeeded in buying the company from the trustees with backing from the venture capitalists APAX, later floating it on the stock market.

Since flotation in 1996, Brands Hatch has outperformed the FTSE All Share index by more than 80 per cent and the FTSE Smaller Cap by more than 500 per cent.

One insider close to the action says: "Nicola Foulston has a good relationship with Bernie Ecclestone which helps. She is very shrewd, no mug despite her years, though the feeling is that there is a game being played here to twist the arm of the BRDC members, it could work out for the benefit of all. If BHL gets Silverstone then BRDC members will each get a not insubstantial amount of money and retain all their membership advantages. Nicola will get Silverstone and Bernie will get a lot more for `his' Grand Prix."

Nick Potter, an analyst at SG Global Equities, says: "The deal for BHL is akin to a sizeable corporate acquisition without having to pay any bid premium. This is well thought out and we confirm our `buy' recommendation and a target price of 400p."

Friends describe Nicola Foulston as a formidably determined operator. "She is aggressive, business-minded, young and very female," says one. "If a computer were to generate the sort of character profile designed to get up the noses of a typical BRDC member, it might well come up with Nicola."

To demonstrate her commitment, she has pledged to "go to any BRDC member at any time and to any place in the world to get our message across" and convince them why she should control the British Grand Prix and, ultimately, Silverstone.

So far the BRDC is unswayed. The Club, founded in 1928, grew out of an informal supper club organised by eminent bacteriologist Dr Dudley Benjafield. The pinnacle of his racing achievement was when he took third place in the 1929 Le Mans race in a Bentley.

Today, racing drivers get millions of pounds for their efforts, Benjafield got a silver cigarette

box inscribed; "To the bald headed chemist in appreciation of a damn fine show."

Silverstone held the first British Grand Prix in 1948 and has been the sole British venue for the event since 1987. With HRH the Duke of Kent as President-in-Chief and Lord Hesketh as President, the exclusive membership list includes former F1 world champions Damon Hill and Jackie Stewart, as well as the former Chancellor of the Exchequer, Kenneth Clarke. Lord Hesketh is a veteran of the Grand Prix scene. His March team competed in 52 Grands Prix events. In the 1970s, a young James Hunt drove Hesketh cars to Grand Prix championship victory on two occasions.

Flamboyant and outspoken, Lord Hesketh has stoked the flames in recent weeks, referring to Miss Foulston in typically purple prose as "that temptress from Kent" . Of those wishing to buy Silverstone, he says: "The barbarians may not quite be at the gate, but they're in the park, looking at the buildings."

There is also anger. BRDC member Jody Scheckter, Ferrari's last world champion says: "If Silverstone has an agreement and it is broken, then they have to go after the person who broke it and get damages. My opinion is that, in the end, we will not lose the Grand Prix. We all know how powerful Bernie is, but I believe that if he has made an agreement he will stick by it.

"If he doesn't then the BRDC will go after him for breach of contract and, if I've got anything to do with it, there will be a massive legal fight."

Such threatened legal action might rate low on Ecclestone's current "to do" list, topped as it is by his stalled efforts to get his $2bn (pounds 1.25bn) "Bernie Bond" off the ground, and followed in short order by contending with an investigation into the sport by the European Competition Commissioner, Karel van Miert.

Bernie's Bond started life almost three years ago with Ecclestone seeking to endow a trust for his wife and children worth more than pounds 1bn by floating Formula One Administration, his operating company, through Salomon Smith Barney. Disappointed with that effort, Mr Ecclestone opted instead to launch a pounds 1.2bn bond linked to future FOA revenues. It is thought that investor resistance encountered by the US bank chosen to sell the Bond, Morgan Stanley Dean Witter, has been greater than anticipated, with talk the bond may need to be substantially reduced in value.