Donington Park's dream to stage the British Grand Prix for the next 17 years lay in tatters today after it announced it had failed to raise the £135million needed to redevelop the track.

The issue of high-yield bonds “has been unsuccessful” according to Donington promoter Simon Gillett. It leaves the future of Formula One's most historic race in doubt as Silverstone prepared to play hard ball with Bernie Ecclestone over a substitute contract.

The bonds were seen as a last-ditch attempt by Gillett, chief executive of Donington Ventures Leisure Limited (DVLL) which holds a long-term lease on the circuit, to save his Grand Prix project following a series of false starts and promises.

Formula One supremo Ecclestone had given Gillett a final deadline of today to prove he could raise the money through the bond issue. Although the final deadline on the contract itself is not until Monday it is almost inconceivable that Gillett will be able to raise the money needed from other sources by then.

Donington currently resembles a building site with initial work to add new pits and grandstands, and reprofile the track, having started earlier this year. But serious doubts now exist that England's first permanent track will ever again resound to the roar of racing engines.

The statement released by DVLL read: “Despite higher than expected levels of interest and very positive early indications, the bond has failed to secure enough subscription ahead of today's deadline.

“The news dealt an unexpected blow to staff and management at the circuit, who still have a deadline of 12pm on Monday to remedy a breach of contract with Formula One rights holder Bernie Ecclestone, in order to keep any plans for retaining the contract alive.

“Information regarding the circuit's future plans is not yet available, however the major focus is on providing security for the Leicestershire venue and all related parties, including staff and suppliers.”

That announcement is far more sombre than the triumphant one made in 2008 when Gillett shocked Formula One by securing his contract with Ecclestone, which would have begun next summer.

He revealed ambitious plans for Donington that included a new 200mph start and finish straight, a gleaming new pits and paddock facility, and the provision of facilities for an anticipated three-day crowd of 250,000.

Silverstone, which had hosted the British Grand Prix since 1987 when Brands Hatch ceased to be a Formula One venue, also has a plan to build new pits and grandstands costing £35m.

But Damon Hill, the former world champion and now president of the British Racing Drivers' Club (BRDC) which owns the former wartime bomber base, is insisting that Ecclestone agrees a fair deal if Silverstone is now to be confirmed as the permanent home of the British Grand Prix.

Hill is concerned by an “escalator” built into Ecclestone's contracts, by which the fee a circuit pays for the privilege of hosting a Grand Prix tends to rise substantially year-on-year.

The BRDC, which has already won the rights to stage the British MotoGP previously hosted by Donington, are prepared to invest in the updated facilities demanded by Ecclestone only if a reduced escalator allows them to generate sufficient income from ticket sales.

While the BRDC is desperate not to see Britain lose its Grand Prix, it will tell Ecclestone that Silverstone doesn't actually need the race to survive. Ecclestone's dilemma is that while he has continually maintained that the BRDC are run by “blazers” who are out of touch with modern motor racing, and that he would quite happily take the British Grand Prix off the calendar, the major teams are putting him under pressure to retain one of the championship's most popular races.