Business of Motorsport for April 8, 2022-The Will They Or Won’t They Edition

This week in the Business of Motorsport I have another full slate of business news from the always fascinating world of motorsport. From Formula 1’s attempt to entice Audi and Porsche while dealing with increasing freight costs to Indycar’s focus on ovals and against international races, it’s all here. I also bring you news from such diverse racing series as Formula Drift and Formula E, BMW’s recent sustainable investment, a Canadian sportscar feud, racing team news and more. Never a dull moment in the Business of Motorsport!

Motorsport Industry News

Formula 1

• In the never-ending saga of “will they or won’t they,” the Volkswagen Group has indicated that they will wait for the full details of Formula 1’s new engine formula for 2026 before committing Porsche and Audi to the series. According to Autosport, “in a short statement issued after Thursday’s meeting, it was confirmed that both Audi and Porsche discussed plans for a ‘potential F1 entry’.” Interestingly, in the same article, speculation is that the previously rumored tie-up between McLaren and Audi may not happen with Aston Martin taking their place instead. “Sources have suggested that talks have already taken place, and the opportunity of an Audi buyout could offer an alternative long-term plan for Aston Martin owner Lawrence Stroll, whose outfit has failed to make progress in F1 since its rebranding last year.”

• Greg Maffei, the president and CEO of Formula 1’s parent company Liberty Media, said that F1 will command a higher price for its next U.S. broadcast rights deal. Maffei told CNBC that “we have a lot of interest” and several broadcasters are in the mix. “And it’s likely to be at a much better price for us that’s hopefully still good for our broadcast partners too. Our hope is we’ll find a great partner going forward which could be ESPN or it could be somebody else, and is likely to be at a much better price for us. It’s hopefully still good for our broadcast partners too.” Meanwhile in France, Formula 1 has extended their French TV deal with Canal+ through until 2029.

• I have mentioned this in the last few Business of Motorsport columns but freight issues have been an increasing concern for both MotoGP and Formula 1 recently and they show no signs of abating. Formula 1 organizers state that they are taking the issue “really seriously.” “I think F1 is taking it really seriously. It’s just one of these things which are out of control, as long as you don’t [have] your own planes you are always counting on other people to help you out. So hopefully we can get through it and they put a lot of effort in. But I think in the moment nobody’s got a guarantee of anything getting at the right place in the right time.”

• Edd Straw at The Race has a well written summary of where Formula 1 finds itself in light of the recent controversies over Russia and Saudi Arabia. In F1’s expansion exposes its flawed ‘positive messaging’ defence, Straw argues that F1 needs to decide on how it will address its further expansion outside of its traditional “Western” geopolitical area of operations. “The bottom line is that F1 is not a vehicle of diplomacy, a force for social change or a mediator for conflicts. For all the ‘we race as one’ rhetoric of the previous two years, it is a sporting and commercial entity that has a business model that race-hosting fees are key to.”

• Michael Andretti has indicated that he is still waiting for an answer from the FIA about his potential F1 entry. “While we’re waiting, we’re doing a lot of work behind the scenes, we are preparing for it, because we have to start,” Andretti told RACER. “So we are doing things, hoping that we get a shot at it. We have to start making some moves and hope and pray that the FIA allows us to have a shot at getting in there.”

Indycar

• IndyCar president Jay Frye told Autoweek that reports or rumors that the American open-wheel racing series will decrease the number of races on oval tracks is not the case. “This brand and the series is built on the diversity of the series, so you have to have a proper mix of ovals, street courses and road courses,” Frye said of the current 17-race schedule that features five races on four oval tracks, five races on temporary street courses and seven events on permanent road courses. “So ovals are very, very important to us and we have every expectation to keep the balance in the series to where it’s almost a third, a third and a third, the best way that we can.”

• While ovals will remain on the calendar, don’t expect international races any time soon, not matter how much some drivers would like it. “Defending IndyCar champion Alex Palou and two-time series champ Josef Newgarden are both in favor of not only Formula 1 coming to race in the U.S., but also having the NTT IndyCar Series to go play in F1’s backyard in places like Europe, Japan and South America.”

• Finally, while new engines are on tap for 2024, a new Indy Car chassis is not coming any time soon. Jay Frye: “Our racing product has been very good. Why would a new car make what we are currently doing better?”

Formula E

• 30,000 tickets have been sold so far for the Vancouver Formula E event 100 days out organizers say but time is getting tight for organizers of the race. “Vancouver’s deputy city manager, Karen Levitt, along with others interviewed for this story, expressed hope the event will be a great success. But they all also agreed the timeline is tight, with the event now 90 days away.”

• Formula E has officially revealed its list of manufacturers for the Gen3 era. Seven manufacturers have been accepted by the FIA. These are DS Automobiles, Jaguar, Mahindra, Maserati, Nissan, NIO 333 and Porsche AG. According to the article in The Race, “The FIA and Formula E have been approached by several other manufacturers in recent months about the possibility of entering as manufacturers for the second homologation period which will be in the summer of 2024 for FE’s 11th and 12th seasons in 2024/25 and 2025/26 respectively. One of these is known to be Lucid Motors, the California based specialist EV automotive and technology company.”

• Formula E has made great strides since the series started in 2014 but the recent dip in fan support means that the championship must regain the initiative. Hazel Southwell argues in RaceFans.net that these are the steps Formula E must take to recapture its audience.

General Motorsport Industry News

• Formula Drift attracts the youngest, most well-connected demographic in motorsports and Autoweek looks at how the series survived COVID and came back bigger than ever. “It’s been a pretty interesting trajectory, generally speaking,” said co-founder Ryan Sage. “I think the first 10 years were kind of like finding our grounding—what were we, what kind of motorsport do we want to be, and how much of that had some crossover to kind of lifestyle events. And I think we really hit our stride from 2012 on.”

• Having recently assumed the role of head of BMW M Motorsport, Andreas Roos has plenty of ongoing projects to oversee. In a recent interview released by BMW as reported in PMW Magazine, he detailed some of the key challenges that lie ahead, not least the company’s upcoming LMDh entry. “Roos is realistic that competition in LMDh and the WEC will be fierce with every manufacturer out to claim glory: “There are plenty of good manufacturers competing, all of whom have shown in the past that they can develop racing cars. Our aspiration at BMW is also quite clear, we don’t want to just be making up the numbers, we want to win races. However, it would be presumptuous to assert that we are so good that we can beat everyone right away, and that no-one else has a chance. Our aim is clearly to be challenging for wins and to be up at the front. A race season is long and hopefully we will have a say in the championship battle at the end of the year. But, of course, there are no guarantees in such a tough and hotly contested field.”

• It is always frustrating when the competitive spirit sometimes works against the sports bigger interests. As Stephanie Wallcraft explains in Feud over Canadian sports car racing ends with a series put ‘on hold’, “a bitter feud that fundamentally fractured Canadian sports car racing for more than a year has finally reached a conclusion — and brought about the collapse of a series that had been running for more than a decade.”

• Speed Cafe reports that Motorsport Australia is working on changes to its National Competition Regulations which will afford it greater powers over who can and cannot participate in sanctioned events within Australia. “The new rule would offer Motorsport Australia the ability to endorse or refuse a licence from competitors not only from a specific national sporting authority, but individuals.”

• BMW have announced their lead investment in the Series B financing round of Bcomp. Bcomp has developed several materials from flax fibers that provide sustainable and lightweight automotive interiors and exteriors including reinforcement grids and coverings. “In order to reduce the average carbon footprint of fleets, automotive players will have to find new levers to reduce carbon emissions. One avenue for auto OEMs to reduce their impact is to mitigate the impact from production by replacing energy-intensive thermoplastic composites with sustainable natural composites. Conventional internal car components are made of materials that are high in cost and weight relative to those made from natural fiber composites.”

• The NHRA incorporating sports betting could bring the premier drag racing league into the trendy mix of other major sports and expose it to millions more viewers. “John Force, the 16-time Funny Car champion and 154-time race winner, said, “If it’s a way to generate revenue, why not?” But to take that step, surely the NHRA would have to address its recent past and craft some new policies to ensure integrity.“

• While they are no longer involved in Formula 1 any more, The Gentleman’s Journal has the inside story of Lotus’ radical comeback.

• Everybody hates lawyers, until they need one. Canadian website Sport Law has an excellent primer for Canadian sporting federations and series on demystifying legal processes in sport that is a good primer for non-lawyers.

• Continuing in the legal vein, Law in Sport asks the question: Can sports formats be protected by copyright law?

• Johan Lindholm looks at how Russia’s invasion of Ukraine shook sports’ foundation. “Although the principle of political neutrality is in this sense foundational to sports as it is currently organized, it is not uncontroversial and has been the object of debate for some time. One highly salient issue is how the principle, when converted into practice, entails significant restrictions of athletes’ freedom of expression. One notable and noticeably broad restriction of athletes’ right to free speech can be found in Rule 50 of the IOC Charter which states that “[n]o kind of demonstration or political, religious or racial propaganda is permitted in any Olympic sites, venues or other areas.”

Motorsport Sponsorship News

• Last week, Oracle Red Bull Racing announced premium bike brand, BMC Switzerland, as a new Official Partner of the team in what is a multi-year agreement. “The multi-year deal see’s Red Bull’s partnership with BMC deepen, the pair have worked together since 2018 where they initially explored how Formula 1 expertise could improve high performance competition-spec cycles.”

• I have alluded to this in a recent Business of Motorsport column but it has finally been announced that Salesforce to “revolutionise” Formula 1’s fan engagement and accelerate its sustainability efforts with 5-year partnership. “Throughout the partnership, F1 and Salesforce will work together to expand our already growing global fan base and deepen the engagement of our existing fans. Salesforce Customer 360 will provide greater insight into and understanding of the F1 global fanbase and help inform behaviours, communication, and actions with our fans as they engage with the sport, while bringing them closer to the action than ever before.”

• The ever so mysterious PMI (Mission Winnow) has re-signed with Ferrari as Team Partner for 2022 after being absent during the first two races of the season. According to Racing News 365, “Mission Winnow, owned by PMI, bills itself as “a change lab focused on reframing conversations, sparking open debate, connecting people, and supporting the realization of innovative ideas.” However, the company have been accused of being a form of hidden tobacco advertising.”

The Business of Running a Race Team

• Changes are afoot again at Gilbert Korthoff Motorsports. The IMSA WeatherTech SportsCar Championship GTD points-leading team is now under the full operation of Herb Korthoff following the retirement of Henry Gilbert from professional racing team ownership. “Initially run as Gilbert Korthoff Motorsports, the newly renamed Team Korthoff Motorsports squad reflects Gilbert’s departure from the joint operation that began its WeatherTech Championship campaign last year.”

• The Dragon Penske team is lining up to race with DS Automobiles from the 2022/23 Formula E season after a long-term partnership for the Gen3 era was agreed earlier this year, The Race has revealed. Dragon will become the third team that DS, a member of the Stellantis Group, has raced with after previously working with the Virgin operation from 2016-2018 and Techeetah from 2018 to the end of the coming season.

• Meanwhile, The Race also explains why the Venturi name will disappear from Formula E later this year as it becomes the official Maserati Formula E team, but the majority of the present team structure will stay.

• Inc. has a great feature on McLaren Racing called So Good, Even Google Wanted In: The Rise of the Most Popular Team in Formula 1. “So how did McLaren, the second-most successful team in the sport with past championship-winning drivers like Niki Lauda, Alain Prost, Ayrton Senna, and Lewis Hamilton, build such a popular — and once again increasingly successful — organization?” They interviewed Team Principal Zak Brown to find out.

• The new Vanwall Hypercar has been testing but as Daily Sportscar reports, significant potential legal issues remain. “That appears to be an issue at the heart of the matter for the WEC. Allow the car to race and there is the prospect of significant legal intervention from the UK-based parties that are entirely certain that they own the trademark, having obtained, in good faith, the rights to the name in its native UK and indeed, it seems, across the EU, a decade ago, a matter which DSC understands is contested by German Vanwall trademark ‘owner’ PMC Gmbh, a company hard-wired to the ByKolles outfit.”