Business of Motorsport for October 21, 2022

The Business of Motorsport is absolutely jam packed this week but here are a few highlights to look forward to:

• See how an iconic Las Vegas hotel is investing 1 billion dollars in preparation for the inaugural Las Vegas Grand Prix.
• Learn about the first and so far, only sports betting app dedicated entirely to motorsport.
• See how NASCAR is looking to crack the prestigious New York City market as they pursue a race in the lucrative American City
• Finally, get a peek at the game-changing digital technology that some feel is the future of motorsport sponsorship.

All this plus the latest motorsport sponsorship deals, off-season plans that racing teams are pursuing in preparation for the 2023 season as well as the latest motorsport movers and shakers. Its business news that racers can use.

Motorsport Industry News

Formula 1

• Ahead of this weekend’s U.S. Grand Prix, Circuit of the Americas (COTA) chairman Bobby Epstein explains to Racer how COTA helped F1 regain its U.S. credibility. “The path between the inaugural race and this anniversary has not been a smooth one. While Epstein is now spending some of his time trying to find more metal for additional bleachers – “demand has been incredible, we sold everything we put into the system the first two days” – that wasn’t always the case.” In a feature on Blackbook Motorsport, Epstein maintains that they created the model for how a Grand Prix should be run.“We’ll never have the celebrity or the glitz and glamour of [Miami and Las Vegas], but we’ll certainly do our best to keep the focus on the fans and the sport,” he says.

• Ahead of 2023’s inaugural Las Vegas Grand Prix, the Venetian, known for its replica canals and gondolas, is investing over $1 billion in renovations. “The hotel company is a presenting partner of the Vegas Grand Prix, and the street track will pass the Venetian. The Venetian is revamping its casino floor, restaurants, and entertainment areas, as well as spending $50 million on a beach day club. The Venetian will also offer suites and experiences connected to the race. Race founding partner MGM Resorts plans to purchase $20 million–$25 million in F1 tickets and could offer packages around the event priced over $100,000.”

• Clouding this weekend will be continuing speculation over what kind of punishment Red Bull Racing and Aston Martin F1 will be receiving in light of their cost cap regulation breaches. McLaren’s Zak Brown explains why Formula 1’s financial regulations are critical. “If you didn’t have a cost cap, you’d spend as much as you can afford to lose.” According to Jake Nichol and Dieter Rencken of Racing News 365, Red Bull Racing’s breach was approximately $1.8 million.

• While Haas’ Guenther Steiner believes that F1 does not need new teams, and that includes Michael Andretti, the FIA insists that Porsche’s Formula 1 entry plans are not dead. In a note motor racing’s governing body sent out after a meeting of its World Motor Sport Council on Wednesday regarding the 2026 engine rules, it said: “At Spa-Francorchamps in August, Audi announced it was joining the FIA Formula 1 world championship from 2026 as a power unit manufacturer. “This announcement was an endorsement of the hard work by all stakeholders to develop those regulations. We also note that Porsche are still in discussions with Formula 1 teams.”

• Finally, in addition to the pit and paddock complex that Liberty Media is building in Las Vegas with the intention of turning it into an “experience center,” they also plan to open an entertainment arcade in London. “The Arcade promises to fully immerse racers in the unique feeling of driving an F1 car, while special prizes are up for grabs. There will also be “enhanced experiences” running concurrently with F1 race weekends.”

General Motorsport Industry News

• Sports business news these days is dominated by sports wagering with new deals between wagering companies and sports teams as well as new betting apps being announced seemingly every week. Motorsport interestingly enough has flown under the radar in the sports betting space, at least until now. GridRival, a motorsports-focused app that launched in 2021, is rolling out its daily fantasy sports service in 23 states with a goal of better serving racing fans that aren’t interested in wagering money on stick-and-ball sports. The hope is to have the DFS platform live in the U.K. and Canada in the first half of 2023. “GridRival has already proven itself capable of targeting and engaging the motorsports fan base at scale with an authentic, richly-featured app, and the appetite for a motorsports-specific betting platform is clear, so we are thrilled to have launched our DFS offering.”

• NASCAR is looking at the possibility of numerous US cities, including New York, Denver and Portland, staging street races if its inaugural Chicago event with that format in 2023 proves successful. Ben Kennedy, Nascar’s senior vice president of racing development and strategy commented, “Synonymous with a lot of things that [Nascar president] Steve Phelps has said over the last couple of years, we’re going to be bold and innovative as we think about a number of things,” Kennedy said. “You’ve seen it with the Next Gen car, some of the things in the digital space, content space, fan experience space and scheduling as well, to really set ourselves up for the future.” Whether they can crack the lucrative New York City market where many have tried and only Formula E has gained any kind of a foothold is something that will be interesting to see play out. Formula 1 has been trying to hold a race in this market for years with no success.

• The TCR Scandinavia owners are currently in search of a new promoter for the 2023 season, when they plan to hold six race weekends in Scandinavia, following its split with the STCC which switches to electric touring cars next year according to Touring Car Times. “We are currently holding a dialogue with potential promoters ahead of 2023 when we aim to hold six race weekends on circuits in Scandinavia with primary focus on Sweden,” said Greger Petersson, managing director of TCR Scandinavia.

• The American development series Road to Indy has been rebranded to the USF Pro Championships. “Although we are rebranding the Road to Indy, our goals remain the same – to develop drivers, teams and crew to advance to Indy Lights and ultimately the NTT IndyCar Series,” said Dan Andersen, owner and CEO of Andersen Promotions. “With INDYCAR taking over the operation of Indy Lights this year, the Road to Indy designation really doesn’t work moving forward for all steps on the ladder. We are proud of our accomplishments under the Road to Indy banner and intend to further develop the full USF Pro Championships as the only real place for talented young drivers on the open-wheel path.” According to Motorsport Week, “Andersen Promotions is the long-time promoter of the junior series, and Motorsport Week understands that its loss of the ‘Road to Indy’ moniker is due to licensing requests from IndyCar itself.” F1 Feeder Series looks to answer the question, who killed the Road to Indy?

• The SCCA has posted a recap of the President’s October Address. “As most of SCCA’s 49,777 annual members have seen in their daily lives, the cost of goods and services has been on the rise. Unfortunately, SCCA is not immune to this development. Costs associated with SCCA operations and event execution, which includes everything from track rentals to insurance coverage, have gone up. Consequently, Cobb noted some changes in membership dues and sanctioning fees will be required to keep pace.”

• Following an announcement by FIA president Mohammed Ben Sulayem, the FIA has revealed its first-ever motorsport engineering scholarship at Cranfield University in the UK. Designed as a global talent search initiative, the scholarship aims to provide a pathway for a young engineer from one of the FIA regions to obtain a master’s in advanced motorsport engineering.

• In addition to the engineering scholarship above, the FIA recently concluded the fourth edition of the FIA University Senior Executive Program held at Columbia Business School. “Over the course of this three-day tailor-made programme, 26 leaders of 17 FIA Member Clubs attended strategic courses on ‘Leadership and Negotiation Strategies’, ‘Qualitative Intuition’, ‘Quantivative Intuition – Leading in a Data-driven World’, and more. The programme aimed to equip participants with the necessary tools to respond to the crucial challenges they are facing today.”

• Professional Motorsport World Magazine has a great article on Driver in the Loop (DIL) simulators. “The last decade has seen driver-in-the-loop (DIL) simulators become indispensable vehicle development tools. The idea of using DILs for engineering tasks originated in the world of racing – first F1 and then other series – but more recently mainstream automotive manufacturers have recognized their benefits. BMW, for example, has installed no fewer than 14 examples of various types at its Research and Innovation Center (FIZ) in Munich. DILs range from static units to those with full motion platforms, the latter being the focus of this article; specifically, how do different manufacturers quantify the capabilities of their systems and what impact does this have on the end user?“

• Performance Racing Magazine also has an excellent article on using sims in motorsport in their column When Virtual Becomes Reality. “From training rigs to engineering studies, simulators have become commonplace in racing. As more motorsports organizations look to leverage the increasingly sophisticated technology, it’s poised to become an integral development tool for a variety of applications in the real world.”

General Sport Business News

• In the video above, SPORTEL Monaco 2022 has revealed their full speaker line-up.

• The Centre for Sport and Human Rights has unveiled their Sport and Human Rights Case Collection. “This collection of cases reflects disputes from the world of sports with human rights at stake. It is a work in progress, capturing past and recent cases that have been dealt with by the listed mechanisms in a chronological order, and for which public information is available. The aim of this depository is to support representatives of affected persons, lawyers, civil society, and others working on sport and human rights cases to find relevant precedents and other information on sport and human rights cases that have been addressed.”

• SailGP is aiming to have a professional sailing team owned and operated by a decentralized autonomous organization, or DAO, that complies with the U.S. securities law, Russell Coutts said in an interview in Singapore on the sideline of the Forbes Global CEO Conference. Coutts, a five-time America’s Cup winner, cofounded SailGP with Oracle’s billionaire chairman and CTO Larry Ellison in 2018. Coutts believes that the DAO-operated sailing team is the “ultimate implementation of a fan loyalty program.” He said there are many possibilities for members of the DAO to engage in the sport, including participating in a team briefing and meeting with star players. “Fans will no longer just sit on the sidelines,” Coutts said. “Web3 has the potential to allow fans to be fully immersed in the sport they love, including having a say in team decisions and accessing experiences previously reserved for only those in the owners suite.”

• Sportico sports finance reporter Brendan Coffey argues that Wall Street will demand more results as sports relies on its money. “The first is that Wall Street managers aren’t like Green Bay Packers cheeseheads buying a share to hang in a frame: They demand results. Historically, teams provided attractive gains. From 1996 to 2021, values grew 1,118% for NHL teams, 1,560% for MLB, 1,850% for NBA and 1,890% for NFL franchises, according to Sportico data. But that isn’t as spectacular as you might think: The total return (price plus dividends) of the S&P 500 was 1,260% in that time. Expectations are that sport owners will do what it takes to keep providing growth of a similar trajectory.”

Motorsport Sponsorship News

• McLaren Racing is set to run what is described as game-changing dynamic branding at the U.S. Grand Prix. McLaren has agreed a multi-year deal with British company Seamless Digital to use the technology, which allows the branding or messaging on panels next to the cockpit opening to be changed while the car is running. “We are pleased to work with Seamless Digital to debut one of the most exciting innovations in digital advertising technology,” said McLaren Racing executive director, brand & marketing, Louise McEwan. “Being able to rotate different brands on our cars is a game-changer in this space and we are looking forward to seeing the impact this has on the wider industry.”

• Jonathan Noble at Autosport explains how this dynamic branding technology stemmed from an idea to help save the small-budget Manor F1 team. “Manor’s inability to be able to commit space on the car livery to sponsors – because of the unpredictable nature of deals and the fact it did not want to undersell prime real estate too cheaply – got SPT’s co-founder and CEO Mark Turner thinking. He wondered if there was a way for sponsors to be swiftly rotated without the complications being caused by endlessly putting stickers on and pulling them off.”

• Haas F1 has signed a new, multi-year deal with American company MoneyGram to be their new title sponsor starting in 2023. Team Principal Guenther Steiner says that the team will now have the funds to operate on an equal footing with the majority of teams and can target podiums in the longer-term as a result. “With the budget cap now in place, with this deal we can go to the budget cap and everybody’s on a similar platform,” Steiner said. “Obviously the big teams can spend outside of the budget cap more, but I always say that with the budget cap in the mid-to-long-term there shouldn’t be this problem anymore that you cannot fight for podiums. That is what we want to do, and with this deal I think we make that step that in the next few years we can fight for podiums. I’m not promising it for next year, because we just came back from two years which were very bad for us. We recovered pretty well and really continue to improve, but it will take time.”

• Speaking of Haas and title sponsors, last week I mentioned the release of the book “Racing with Rich Energy” which explores the rocky relationship between the Haas F1 team and 2019 title sponsor Rich Energy. The authors of the book were interviewed on the latest edition of Torquing Point, the Planet F1 podcast. “Journalists, editors and podcasters Elizabeth Blackstock and Alanis King join PlanetF1’s Henry Valantine and Thomas Maher to dig a little deeper into what became an infamous part of modern Formula 1, when Haas were sponsored by a company where things were not quite as they seemed on the surface. “Both co-authors have spent the past three years finding out the whole story behind Haas’ energy drink sponsor, exploring court cases, financial records and getting exclusive interviews with those in the know about what really happened when Rich Energy became emblazoned on the team’s cars, and when they suddenly disappeared from Formula 1.” You can watch the podcast here.

• Drive Sports Marketing explains why brands must enter F1 right now. “The following story is the same old story that every sponsorship guy in the F1 Paddock will tell you regarding why brands should partner in F1: it is the pinnacle of motorsport and it is a global sport that runs every single year from March to December. Fine, everything is right and correct. But it is not enough. Brands are not affected anymore by the CEO syndrome (when a company sponsors yacht racing because a top executive likes yachting) and marketing executives need to show a positive ROI from almost everything they do. They think more strategically now and decisions are very much based on analytical evidence, that’s why the same old story that I told you above, although true, is not as effective as used to be.”

• Eight Formula 1 drivers are listed in the top 100 most marketable athletes by SportsPro, with Lewis Hamilton as high as third. SportsPro then goes on to answer the question, what makes the likes of Hamilton, Verstappen and Leclerc F1’s most marketable drivers? “Yet the fact that ten per cent of the athletes on this year’s 50MM list are from a historically niche sport – only soccer and tennis have more representatives than motorsport – reflects well on Formula One’s efforts in recent years to better showcase the personalities of those behind the wheel. It also speaks to the changing face of athlete marketability. This year’s list, which was developed in collaboration with NorthStar Solutions Group, was generated using methodology that took into account a wide range of factors – spanning data analysis, social media monitoring, economic valuations and real-world consumer insights.”

• Dorna Sports, the series promoter of MotoGP, has announced that Liqui Moly will extend its long-term partnership with the global motorcycling series. It will also continue in its role as official lubricant supplier to the MotoGP support series, Moto2 and Moto3. This is also a four-year contract extension, with that deal expiring in 2023 too. By the end of the contract, Liqui Moly will have supplied the support series for 12 years.

• The ESA Sponsorship Sentiment Tracker (SST) has revealed that confidence in the health of the industry is at its highest level since the COVID-19 pandemic, peaking at 7.5 out of 10 in Wave 15 (see below). But the survey also revealed extensive concerns about the cost-of-living crisis. ESA Chairman, Andy Westlake, said: “After a break in measurement during the spring and summer of 2022, this felt like the perfect time to gauge the health and confidence of the European sponsorship community. At the same time, we are now staring down the barrel of another crisis that will affect all businesses and individuals across the sector. With energy bills set to soar over the winter, it is hard to predict the consequences this will have for sponsorship, but it seems telling that the majority of sponsors and agencies have already been planning to mitigate against the impact.”

• An interesting fact that can be found in last week’s Axios Sports newsletter is that brand deals for female athletes and teams grew 20% year-over-year in 2022, and USWNT star Alex Morgan was the most-endorsed athlete, per exclusive data from deal tracking platform SponsorUnited. You can find more details in this post at Front Office Sports but here are some highlights:
  • The finance sector, already the most active among women’s sports sponsors, increased their activity in the space by 30% to lead all verticals, followed by apparel/accessories and media.
  • “Brands are being pressured to be more data-driven, and what we’re finding with female athletes and teams is that it’s a great place to test and launch campaigns, similar to what we saw in the music festival space years ago.”
  • “They have incredibly passionate fan bases, and audiences both on television and in-person are up across the board, which makes it easier for brands to participate in this space.”

• Radical Motorsport, has announced a new partnership with Hagerty International. “As a part of the agreement, the popular Radical Challenge championship will become known from 2023 as the Hagerty Radical Cup which also includes Hagerty branding on the podium backdrop, on winners trophies and throughout track hospitality areas. Hagerty branding will also appear on all cars participating within the UK championship and will also feature on Radical support vehicles. As the season develops, Hagerty will campaign a guest driver to compete in a selected UK race meeting, driving a factory-supported Radical SR3, and will launch an exciting range of competitions which will include the chance for a competition winner to race a Radical in an official round of racing.”

• In NFTs As Expressive Works? Does The US First Amendment Protect Against Trademark & Copyright Concerns, LawinSport looks at the legal status of NFTs. “Beginning with a case comparison of trademark and copyright decisions from differing jurisdictions, we then explore how those cases might inform treatment of NFTs under the First Amendment. Concluding with implications for interested parties, this article suggests best practices to protect both existing IP and newly minted and sold NFTs.”

The Business of Running a Race Team

• Abt chief Thomas Biermaier feels his squad and Mahindra are operating as a four-car team as they gear up to compete in Formula E’s Gen3 era together in 2023. “Clearly there is a difference from being a whole manufacturer [in the past] to being a customer now, but the way we are working and the way Mahindra allows us to work, to support, it’s quite similar [to a factory team],” Biermaier told Autosport.

• One team that won’t be on the Formula E grid in 2023 is multiple Formula E champion team Techeetah but according to The Race, key figures are aiming to put together a package for a 2024 return. “The Race understands that Techeetah has spoken to several undisclosed manufacturers about a deal to race in 2024, after using 2023 to re-establish a team after the majority of its staff left to join the new DS Penske tie-up.”

• Nathan Brown of the Indy Star explains how Meyer Shank looks to bring IMSA success to IndyCar. “It’s all real simple, and I don’t hide from this. That’s all like throwing points on fire, and that’s on me and us, man. (Expletive), it’s just on us,” Shank said. “There’s a ton of runway for us to clean up our act, and that’s what we’re going to do.”

• Francesco Simonazzi has described to Formula Scout how he and BVM Racing are becoming more competitive in Euroformula as a one-car operation. “Well, I have to do a lot of work because the other guys can work on other set-ups, while I have to do everything on my own. So I need to be extremely precise in what I do, careful, because I can’t miss any free practice etc. Just it’s super hard, because they can work on three set-ups at once, and I have to maximise my time on one set-up, and then later talk a lot.”

• In The Journey of One of the World’s Most Diverse Motorsport Team, Markets Herald looks at Motors Formula Team (MFT) and their quest to continue and grow as Europe’s most diverse racing team. “Throughout the last eight successful years, MFT expanded its racing-centric services to encapsulate pilot management, coaching, training, motorsports consulting, communication, sim racing, advertising, and event planning. MFT stands out among the motorsports industry by its commitment to diversity, which in addition to benchmarking against industry standards, is at the very core of its strategy.”

• There are a lot of developments amongst the various sports car racing teams around the globe and here are just a few of the most recent developments.
  • Falken First Customer Team to Race New Porsche 911 GT3 R
  • Kelly-Moss Planning Two-Car Porsche GTD Effort for 2023
  • Kelly Moss to race a GTD Porsche in IMSA next year, team confirms
  • McElrea Racing Expands to U.S. With Planned Multi-Car Effort
  • Barwell Targeting Le Mans as Part of Lamborghini EVO2 Plans
  • Dinamic Set to Continue Two-Car Program With New Porsche

Motorsport Movers & Shakers

• Radical Motorsport Ltd has announced Kevin Gaskell as its new Chairman, elevating him from his non-executive director role in just 12 months. Gaskell has enjoyed three decades of success as a business leader; founding start-ups, driving turnarounds, and leading major brands in a variety of sectors including technology, manufacturing and professional services. Prior to joining Radical in October 2021 as Non-Executive Director, he served as Managing Director of Porsche Cars Great Britain from 1991, transforming the business in under five years to the UK’s most profitable car company before moving to BMW UK as Group CEO achieving record sales growth during his tenure.

• Formula One has appointed Jonathan Haworth as its new director of commercial partnerships, the global series has confirmed to the BlackBook. In his new position, Haworth will focus on sales across sponsorship, licensing, esports and digital, reporting to Brandon Snow, Formula One’s commercial managing director.

• NASCAR has announced that long-time Canadian motorsports executive Tony Spiteri has been named general manager of NASCAR Canada. In this newly created role, Spiteri will be responsible for growing all facets of NASCAR in Canada, including the NASCAR Pinty’s Series, the largest national motorsports series in the country.