This week in the Business of Motorsport news roundup there are all kinds of developments to digest. From the growth of Formula One since Liberty Media bought the commercial rights, to Indycar’s quest for a third engine supplier, to IMSA’s new look GTP class and how the concept evolved. I also sadly bring news of some racetrack closures as well NASCAR racing in the Windy City, the aspirations of the W Series and the motorsport scene in India. All this plus the latest sponsorship deals, the business of running a race team and the latest movers and shakers. Its business news racers can use.
Motorsport Industry News
- Check out out the video above from Huddle Up that breaks down how Formula 1 became the fastest growing sport in America and the company that made billions of dollars doing it.
- In Formula 1: Drive to Survive, the New York Times looks at how ‘Drive to Survive’ made Americans fall in love with Formula 1. Three years on, ESPN’s ratings have nearly doubled. The attendance at last October’s race weekend in Austin was announced as the largest at any Grand Prix in the history of the sport: 400,000 fans over three days, including 140,000 for the race itself. This year, Miami was added to the schedule as a second American stop. In 2023, there will be a third, in Las Vegas; no other nation has more than two. Instead of the $5 million it had been paying to Formula 1 in annual U.S. television rights fees, ESPN agreed to a deal last month that will cost between $75 million and $90 million annually. Nearly everyone, inside and outside Formula 1, credits “Drive to Survive.”
- Autosport reports that Aston Martin is set to be boosted by new investment from Saudi Arabia’s sovereign wealth fund in what executive chairman Lawrence Stroll calls a “game changing event.”
- While Alfa Romeo have explained that they are “not blind” to Audi’s interest in the Sauber F1 team, Jonathan Noble at Autosport explains why Alfa Romeo is not interested in long term Formula 1 ‘lock in.’ “The best interests of Alfa Romeo is to have the return on investment each and every year, and the progress in terms of performance each and every year. That’s it. The rest is completely, I would say, separate.”
- After much haggling, the teams and the FIA have agreed on an updated cost cap. Autosport explains the risk the big F1 teams face with the updated cost cap. The key was by how much they would breach that target. The FIA financial regulations indicate a cut-off at 5% – a breach by less than amount is regarded as a “minor overspend.” Missing the target by over 5% is regarded as a “material overspend.”
- With Liberty Media making no secret of their interest in racing on the African continent, both FIA and F1 delegations have visited Kyalami as deadlines loom for a South African Grand Prix. According to RacingNews 365, “Of greater concern is the funding of any upgrades: Kyalami’s owner, Toby Venter, has repeatedly told RacingNews365.com that he is fully in favour of returning F1 to the Highveld circuit by renting the circuit to a promoter willing to stage the race, but not at any cost.”
- The Race reports that Michael Andretti’s criticism of the “snobbish attitudes” within the “European Club” of Formula 1 is “not constructive” according to Haas F1 team boss Guenther Steiner. “Obviously, in my opinion, these comments, they’re not constructive, or, you know, taking [things] forward but you live by your choices.”
- In The F1 dream: motorsport is seeing revived interest in India, but funds and facilities are hard to come by, The Hindu looks at the popularity of F1 in India and the current motorsport scene in the country. “Despite the struggle for resources, not many will allow their passion for racing to slip through the exhaust even when their pockets burn on empty. That is largely the essence of the story for many motorsport lovers in India. Karting, rallying and stock car racing remain the most widely practised categories. But off the track, it is Formula One that steals a march over the other formats in fans’ hearts.”
- On the darker side of F1, former Force India F1 team boss Vijay Mallya is facing four-months in jail, while ex-F1 boss Bernie Ecclestone has been charged with fraud.
- As I pointed out in last week’s Business of Motorsport, Indycar is growing in popularity but is hindered somewhat by having only two engine suppliers. Racer reports that talks over a third IndyCar engine supplier are continuing with Toyota the latest contender to take up the spot.
- Forbes looks at How An IndyCar Team Is Using A Children’s Toy To Generate Interest In STEM Education. “Paretta Autosport’s IndyCar team and associate sponsor KiwiCo are hoping to use a children’s toy known as an educational “crate” to help youngsters generate an interest in Stem education.”
- Forbes also looks at the Alex Palou contracts mess in A Driver With Two Contracts: Trying To Make Sense Of Alex Palou’s Situation In IndyCar. “It was a tumultuous Tuesday for the NTT IndyCar Series when in a period of four hours two different teams announced defending champion Alex Palou would be racing in their cars in 2023. It was the latest episode in what is turning into a bitter war between rival team owners Zak Brown of Arrow McLaren SP and Chip Ganassi.”
General Motorsport Industry News
- I mentioned last week the court ruling that has effectively halted all racing at Australia’s Wakefield Park and now word comes that the owners are exploring all options after the court ruling. The only potential good news is that the Goulburn council is to advocate for Wakefield Park’s future. “Goulburn Mulwaree Council and the Benalla Auto Club met [on Monday] to discuss the recent Land and Environment Court judgement and the future operations of Wakefield Park,” it reads. “Both organisations are committed to working together to investigate options, and to advocate for the long-term future of the facility.”
- More bad news as it has been confirmed that motorsport is to cease at New Zealand’s Pukekohe Raceway in 2023. “ATR is planning to focus the site’s activities on thoroughbred racing instead with chief executive officer Paul Wilcox saying the motorsport closure is the end of an era.”
- At least the Bunker Hill Dragstrip is not closing down as new owners have been announced for the Indiana racetrack. “NHRA Top Fuel veteran Terry McMillen and his family have purchased Bunker Hill Dragstrip, known as Indiana’s first drag strip.”
- Dragzine looks at how the Global Shipping Crisis Strikes Drag Racing Traction Compounds. “While there has been little in the way of visible disruption — a couple of canceled races that we are aware of — behind the scenes there has been turmoil among the key manufacturers of drag racing traction compounds. The issue centers around a brand of chemical used in the production of popular VP Racing Fuels and PJH Brands (formerly VHT and PJ1) compounds known as Lutanol, which is manufactured by BASF in Germany and has been unavailable since around the first of the year.”
- In an interesting partnership, Japan’s Super Formula has joined HIGHSPEED Etoile in an anime project. “While the feasibility of this concept is obviously still a pipe dream in our universe, the fledgling project has received the support of Super Formula. Japan Race Promotion boss Yoshihisa Ueno and King Amusement Creative producer Euro Sasaki formally announced the collaboration in a Saturday press conference ahead of the weekend’s Fuji Speedway round. The partnership comes through Super Formula’s NEXT 50 Project, a celebration of the series’ fifty-year anniversary overseen by Ueno and co-sponsored by Honda and Toyota. NEXT 50’s mission consists of two goals: “Mobility”, which focuses on developing environmentally friendly cars with alternative fuels and components, and “Entertainment”, which entails promoting the championship through modern and digital means like HSE and an official mobile app.”
- Autosport Plus explains why romanticism isn’t the key factor in Lola’s racing return. “The idea grew out of passion and a love for motorsport. The new owner of Lola reveals that his initial thought when he realised the iconic British race car constructor was up for sale was to rescue it from the dustbin of history. But then, Till Bechtolsheimer the businessman kicked in. He reckons there might just be a niche to be carved for an established brand in a changing motorsport landscape.”
- Racer looks at how an IndyCar-bred concept drove IMSA’s resurgence. “Aerodynamic bodywork is the key differentiating factor in racing car design, both visually and technically,” said ICONIC committee member Tony Purnell, the former head of Pi Electronics and the Jaguar F1 team. “Clothing the safety cell can be done with a fraction of the development cost compared to developing an entire vehicle.”
- In Formula E Aiming to Build on Rising Tide of Motorsport Fandom Following New York City E-Prix, Sport Techie looks at the strategy behind growing the popularity of Formula E. “At its founding, Reigle said, the corporate partners were “very premium marks buying into the fact that we were innovative, that we were a disrupter and the fact that we were a good guy, so to speak, in terms of the climate debated. We were not getting paid — just to be really direct about it on the commercial side — because of the audience we were delivering compared to the NFL, compared to IndyCar. People were buying into the future.”
- Matt Kew in Autosport Plus argues that the anticipated culture change at the top of motorsport that is yet to arrive. “The FIA implemented changes to its Formula 1 race management in the wake of the controversial Abu Dhabi final last November that appeared to be the culture shift needed to restore faith in the governance of the series. However, so far in 2022, ongoing inconsistencies and a perceived lack of transparency continue to create widespread frustration.”
- NASCAR continues their expansion into new markets as it adds a Chicago street course race to 2023 schedule. “Like the Busch Light Clash at the Coliseum, we seized an incredible opportunity to add an unprecedented element to our schedule and take centre stage in the heart of another major metropolitan market,” said Ben Kennedy, NASCAR senior vice president of racing development and strategy. IMSA is also expected to race on the same weekend but no details have been announced.
- In an article that has reignited debate around its place in the motorsport ecosystem, Sports Business Journal reports that the W Series is hoping to follow F1’s lead to reach its goals. Catherine Bond-Muir, CEO of W Series since its inception, told Sports Business Journal that while the series has made progress in its various goals on the business and sporting side, “we have a mindset here that we always want a bit more. … I don’t expect to get F1 figures [in terms of revenue], but I expect to keep growing at a significant rate.”
- Front Office Sports reports that private equity firms Juggernaut Capital Partners and Fiume Capital have acquired action sports platform Thrill One Sports & Entertainment for $300 million, according to The Wall Street Journal. “Thrill One has an opportunity to take advantage of the growing interest in motorsports. The company is making investments in its Nitro Rallycross property, which features short, action-packed races on custom-built courses. The sport mounted its first U.S. tour in 2021, followed by a global tour for the 2022-23 season that began in June and runs through March 2023.”
- Volkswagen-owned Porsche expects revenue of 38 billion to 39 billion euros ($38.63 billion to $39.64 billion) in 2022 from 33.1 billion in 2021, the sportscar maker said last Monday, despite registering a 5% drop in deliveries in the first half of the year. Long-term, the brand is targeting 20% or more return on sales, with a goal of 17-18% for 2022, it said, up from 16% in 2021.
- Racer talks to NASA astronaut Drew Feustel to determine How ‘space age’ is racing? “I started out as a motorsports fan and then eventually got into the space business – and what I’ve seen over the years is so much overlap,” Feustel tells RACER. “Not just the technology, and not between drivers and astronauts with the need for speed and living on the edge and excitement and wanting to go fast, but just even with the engineering people that are running the teams, and how they’re all very interested in space technology and how everybody in space technology is interested in race technology.
- With the news of a crypto “crash” dominating the headlines, Front Office Sports looks at Why NFTs Dominated the NIL Market In Year 1. “NFT company executives told Front Office Sports the popularity of NFTs lies in their convenience, brand-building opportunities, and revenue potential — and that they’ve found ways around the crash to keep the industry alive.”
- Somewhat related to the above, in a guest column on Sportico, David Nugent, CEO and co-founder of the technology services company Next League explains how Web3 still holds the key to the sports tech market in 2022’s second half. “In sports technology, many of us have moved away from the speculative nature of cryptocurrencies in favor of the potential of blockchain technologies focusing on NFTs for things like loyalty rewards, ticketing, and even media rights and licensing. More broadly, we look to the concepts of tokenomics and decentralized autonomous organizations (DAOs) as the foundation of new types of companies and ownership models. We feel strongly that these areas have great promise and will create real momentum for sports organizations as 2022 winds down.”
- Finally, Sports Pro Media has released part 1 of the Sport For Good Playbook: A how-to guide for brands looking to make an impact through sport. “SportsPro and Laureus, with the support of presenting partner Salesforce, are collaborating to produce an exclusive content series outlining how brands can create and implement a fit-for-purpose sports sustainability strategy, drawing on best practice and learnings from the inaugural Laureus Sport For Good Index cohort.”
Motorsport Sponsorship News
- Rich Energy’s controversial sports sponsorship are a textbook example of how not to conduct yourself and they are causing controversy again with their latest sponsorship fiasco in British Superbikes. Autosport has all the soap opera-like details.
- Williams Racing has signed an esports partnership with Currys according to Esports Insider. As part of the deal, Williams Racing and Currys will launch a campaign to provide accessible racing and uncover budding esports racers in the UK.
- The BWT Alpine F1 Team and hospitality company Accor have announced a partnership for this weekend’s French Grand Prix. “This initial partnership will enable both companies to explore multiple opportunities for potential collaboration within the world of Formula One and beyond, including design services, hospitality programming and travel management.”
- Also at the French Grand Prix, the team have announced a partnership with HYVIA, a joint venture between Renault Group and Plug dedicated to hydrogen mobility. “This partnership embodies the strong links between Renault Group, BWT Alpine F1 Team and Plug as well as their common investment in high-end technology and the transition to low-carbon mobility, with a major anchorage in France.”
- Speaking to Autosport, Alfa Romeo Formula 1 boss Fred Vasseur says he is starting to see increased signs of sponsorship interest from China thanks to Zhou Guanyu, but admits progress has been “difficult”. But although the Swiss squad has added deals with a couple of Chinese businesses, such as SenseTime and AMX, Vasseur says that things have not moved as quickly as they could have done.
- NASCAR cryptocurrency sponsor Voyager Digital, has filed for bankruptcy. “All good things must come to an end however, and that has never been truer than in the world of cryptocurrency. The currency, which only exists electronically, has fallen into what investors call a “crypto winter.” Cryptocurrencies have lost $2 trillion in value since last year.”
- Veloce is partnering with Mishcon de Reya’s technology consultancy, MDRxTech, to evolve its ecosystem to Web3. Veloce has both real world and digital sports assets, including a team franchise in the environmentally focused Extreme E series, as well as joint ventures with global sports stars such as F1 driver Lando Norris. Decentralisation and evolution to Web3 will enable greater fan engagement and rewards for the Veloce community as well offer vast utility throughout Veloce’s assets across Racing, Gaming and joint ventures. Veloce targeting early 2023 for the full digital transformation to be completed.
The Business of Running a Race Team
- Racefans looks at why McLaren believe Formula E’s champions can keep on winning after their takeover. However, Brown said he expected the team – having been taken wholesale from as it was as Mercedes – to be able to be competitive from the off. “From an on-track point of view I see no reason why the Formula E team can’t compete for the championship in year one.”
- McLaren Racing boss Zak Brown also explains the challenges that faced him when he arrived at the team in November of 2016. “It was worse than I thought it was going to be as far as the environment, what was going on,” he told FOX Sports. “I joined in the worst year in the history of McLaren.”
- Andrew Frankel at Motorsport Magazine argues that McLaren and Aston Martin can thrive by giving up their independence. “And it saddens me to say this because in my heart there’s a part of me that would like these companies to be not just British, but British-owned too. But the truth is that ship has long since departed the dock. Aston Martin is a public company whose largest shareholders are PIF (essentially the Saudi state, Canadian Lawrence Stroll and Mercedes-Benz whose share will rise to 20 per cent next year). The McLaren Group remains privately owned, the majority share by the Bahrain royal family.”
- Motorsport Magazine looks at Peugeot’s Hypercar transformation. ‘The team used to run on passion – now it’s about science.’
- Speed Cafe reports that plans for Blanchard Racing Team to expand to a two-car squad for next year’s Supercars Championship are on the back-burner amid uncertainty over Gen3. “However, it appears the timeline of Supercars’ new Gen3 era may have curtailed those aspirations, for next season, at least.”
- Dutch junior single-seater team Van Amersfoort Racing has confirmed to Formula Scout it is seriously considering entering the Formula Regional Asia and Formula 4 United Arab Emirates championships in 2023. However, with strong client interest in the two series already, VAR’s chief executive officer Rob Niessink says that there is “a pretty good chance” that VAR will commit to running in both championships, saying that “we are seriously considering it”.
- Eurasia Motorsport has explained how they have been racing on in a consultancy basis as they make plans for the future. “Those of you who know and have followed Eurasia in the past know that we love to race and that’s what we aim to do. Having competed recently in the 2020 and 2021 editions of the 24 Hours of Le Mans and the 2021 Rolex 24, the subsequent COVID pandemic really hit the team, and racing in general in the Asia region, hard. Therefore, we have not been competing as a single entity recently, but rather diversifying during this difficult period.”
- According to Autoweek, the newly announced 9.1 percent inflation rate is a concern to race teams, many of whom crafted their budgets nearly a year ago, NHRA Funny Car team owner/driver Cruz Pedregon, however, says his team is just fine. Pedregon has a word or two for teams who are airing their financial concerns during what some might even call trying times. ‘If You Can’t Afford to Race, Stay the Hell Home.’
- Polaris Off Road Vehicles has announced the renewal of its partnership with Xtremeplus for the 2022 racing season and the 2023 Dakar Rally. Led by driver Marco Piana, the French team has been a longstanding partner of Polaris since 2005.
Movers & Shakers
- STEAM Sports Foundation has announced the recipients for this year’s “Women of Color” scholarships in automotive/motorsports engineering are Ashley Jones of Wayne State University and Jinelee Galindez of Universal Technical Institute (pictured left to right, above). They both will receive a $5,000 per year grant that was funded primarily from the 23XI Racing SPEED Institute. More details can be found over at Racer.
- Ignition Human Performance has added Tristan Niesslein as their new non-executive Director focusing on Sustainability and ESG. Tristan is a Sustainability and ESG (Environmental, Social and Governance) specialist working in the sport sector, with a particular focus on opportunities in motorsport to deliver innovation and transformation globally and across industries. Tristan also has an impressive background in commercial, operational and strategic positions in a variety of sectors that has equipped him to apply a broad knowledge to sustainable development in motorsport and beyond. “I am really pleased to deepen the relationship with Ignition Human Performance and support ESG adoption further into motorsport and motorsport adjacent industries. As people sit at the centre of ESG, in terms of the benefits and delivery, delivering our expertise with IHP makes complete sense.” Tristan explains.