Business of Motorsport for March 4, 2022-Unprecedented Times

Business of Motorsport for March 4, 2022
Photo courtesy of MotoGP

As I mentioned on Wednesday in my Motorsport Series News column, the Russian invasion of Ukraine is weighing heavily on a lot of us, making it sometimes difficult to focus on motorsport which is relatively insignificant when it comes to matters of life and death as a result of war. If you are able, one way to help the people of Ukraine is by donating to the International Red Cross Ukraine Crisis fund or the UNICEF Ukraine Children Fund. Every little bit helps.

This week the Business of Motorsport is once again overflowing with news. Top of the list is the effect of the Russian invasion of Ukraine and how it is affecting international motorsport. I also look at how several racing teams are making plans for the future, F1’s crypto obsession, sponsorship and industry news, a trade show speaking opportunity and more.

The Latest on the Invasion of Ukraine and its Effect on Motorsport (Updated as of March 20, 2022)

The FIA Ruling and its Continuing Fallout

After calls from the Ukraine Automotive Federation and the IOC to ban Russian race drivers from competing in international motorsport, the FIA has decided after an emergency World Motorsport Council meeting to allow Russian drivers to compete but under the FIA flag. The FIA’s decision is believed to have been the reason for the postponement of the 24 Hours of Le Mans entry list, with several drivers and teams having initially been in question. The FIA has also announced a code of conduct for drivers from Russia and Belarus. The FIA has also not ruled out taking more action against Russian and Belarusian drivers. Drivers have been explicitly warned that they could yet be refused entry to events if the FIA elects to adopt a tougher stance. UPDATE: The 24 Hours of Le Mans entry list has now been released minus the participation of G-Drive.

In response to the FIA’s decision, a number of national federations have either decided to ban Russian and Belarus drivers from competing in their countries or are in consultation to decide what they should do. Motorsport UK has banned Russian-licensed drivers from competing in the UK. Update: Motorsport UK has clarified its position relating to drivers competing in events with Russian or Belarusian issued licenses. “With regards to this statement, drivers and competitors are regarded as one and the same,” a spokesperson from Motorsport UK advised when approached for clarification. UPDATE #2: Sources with knowledge of the situation have told that Motorsport UK Hugh Chambers called the FIA last Friday to clarify their position. Chambers is said to have explained that although Motorsport UK had no statutory right to adopt the stance they did, they had acted upon moral grounds.

“The Swedish Motorsport Association believes that it is completely unreasonable to participate in competition or training in Russia or Belarus right now, and we—just like most other large Swedish sports federations—do not welcome athletes from Russia or Belarus in competitions on Swedish soil,” said the Swedish side. “This applies for the time being, at least as long as the Russian unjust invasion continues.” (source: The Checkered Flag)

AKK-Motorsport, who oversees racing in Finalnd, announced it endorses the “recommendations of the Finnish Olympic Committee and the International Olympic Committee that Russia and Belarus be completely excluded from international sports activities. AKK has also decided that Russian and Belarusian licensees—athletes and administrators—will be completely excluded from Finnish motorsport competitions. In addition, the participation of AKK licensees—athletes and administrators—in motorsport competitions in Russia and Belarus is prohibited. (source: The Checkered Flag)

Australian motorsport bodies are assessing their Russia position and should have an announcement to be made soon. Formula 2 team bosses have stated that they would have respected a driver’s decision not to participate in the Russian F2 race that has now been cancelled, along with the F1 race. The SRO has announced that they will “adhere” to FIA and ASN positions on Russian drivers.

Meanwhile, the Russian Automobile Federation has responded to the FIA ruling amid Russian, Belarusian driver bans from others. On Wednesday, the Russian Automobile Federation released a statement that accused the ruling of being “discriminatory and contrary” of the FIA statutes. In particular, the RAF claimed it violates Article 1.2 of the statute which reads, “The FIA shall promote the protection of human rights and human dignity, and refrain from manifesting discrimination on account of race, skin colour, gender, sexual orientation, ethnic or social origin, language, religion, philosophical or political opinion, family situation or disability in the course of its activities and from taking any action in this respect.” Despite disagreeing with the verdict, RAF president Viktor Nikolayevich Kiryanov along with other officials from the association will comply with stepping away from their posts for the time being.

UPDATE 1: The FIA also reminded its members they are obliged by FIA Statutes to enforce its latest decisions. Failure to do so will constitute a breach of the International Sporting Code, which may result in – subject to the international tribunal – the revoking of licenses or exclusion from FIA championships, and for non-complying ASNs removing the right to run events.

UPDATE 2: Motorsport Australia has written to the Federal Government to request all Russian and Belarusians be refused entry to Australia.

UPDATE 3 : F1 teams urged “very strong position” over Russian Grand Prix – Horner.

The Commercial Effect of the War in Ukraine

While it may be hard to comprehend motorsport during a time of war, there are a number of commercial implications that a race team or series organizer must take into account not only morally, but legally as well. Here are some of the latest developments.

  • Credit for the swift reaction by F1 in cancelling the Russian Grand Prix can be attributed to a rare united front amongst F1 drivers. “Change felt inevitable as drivers fell in line behind Sebastian Vettel in objection to a race in Russia – a united front we are unfamiliar with.”
  • Hitech GP team boss Oliver Oakes has taken back full ownership of the race team. “It was always part of the strategic plan for Bergton Management to exit Hitech in early 2022 and myself to own Hitech fully,” Oakes explained to Formula Scout. UPDATE: Hitech GP also has officially confirmed the termination of its sponsorship deal with Uralkali.
  • This does not currently impact any major sports car racing series, with Formula 1 and the FIA WTCR two of the highest-profile championships to have canceled races so far.
  • Earlier this week the FIM announced it had cancelled all world championship events in Ukraine and Russia because of the war. Igora Drive in Russia was a reserve circuit for MotoGP last year in case any races had to drop off the calendar due to the COVID-19 pandemic. However, it is unlikely to remain a reserve circuit amidst the current crisis.
  • Aside from questions around whether Nikita Mazepin will continue to have a seat at Haas in F1 for 2022, the W Series has announced that Irina Sidorkova, the Russian driver who had been set to compete in testing for the W Series this week, will no longer be taking part. “A decision about Irina’s future participation in W Series will be taken in due course.”
  • While not completely dedicated to motorsport, in the latest SportsPro Podcast “Associated Press global sports correspondent Rob Harris and Professor Simon Chadwick, global professor of sport at Emlyon Business School, join Eoin Connolly to reflect on sport’s reaction to Russia’s invasion of neighboring Ukraine.” You can listen here.
  • UPDATE 1: AKKA-ASP are monitoring the situation with Russian drivers. Russian competitors Timur Boguslavskiy and Konstantin Tereschenko are both signed to drive Mercedes-AMG GT3 Evos run by the French outfit.
  • UPDATE 4: In light of the G-Drive team withdrawal, Algarve Pro Racing is now working to lobby Pierre Fillon, president of the ACO, to have the entries reinstated but under the Algarve Pro Racing banner. (Updated below)
  • UPDATE 7: Uralkali is set to begin legal proceedings against the Haas Formula 1 team and Hitech Grand Prix to reclaim its sponsorship payments after the team terminated its contract in reaction to Russia’s invasion of Ukraine.
Business of Motorsport for March 4, 2022-Unprecedented Times
Image: DragonSpeed
Business of Motorsport for March 4, 2022-Unprecedented Times
  • UPDATE 14: As Ukraine’s defense against Russian invasion continues, Roger Penske is the next NASCAR Cup Series team owner to pitch his aid. On Thursday, Penske announced that his Penske Corporation will donate $1 milion to the World Central Kitchen, which provides meals during times of crisis.

UPDATE 15: For F1, the implications of Russia’s war go beyond one race and one team.

UPDATE 16: Alexander Smolyar remains part of MP Motorsport’s FIA Formula 3 line-up for 2022 despite an announcement that he would not be taking part this season.

UPDATE 17: Russian driver Smolyar returns to race in FIA F3 as neutral driver.

UPDATE 18: 2022 Rally Kazakhstan cancelled.

UPDATE 19: All 20 Formula 1 drivers will support a championship appeal to support the work of the United Nations Children’s Fund (UNICEF) in Ukraine, ahead of the Bahrain Grand Prix.

Needless to say, this is a fluid situation. National ASNs may decide to follow Motorsport UK’s lead and ban Russian licensed drivers. International sanctions may make it difficult for teams to receive sponsorship payments and for Russian registered teams to compete internationally. I will try to update this post as events warrant. These are sad and unprecedented times and MotoGP rider Marc Marquez summarizes our frustration and helplessness when he says “I cannot understand how in 2022 we arrived at that point, I cannot understand how we cannot stop [this war].” My heart goes out to the people of Ukraine.

More on the Andretti Global Plans for an F1 Team

Business of Motorsport for March 4, 2022-Unprecedented Times
Andretti mock-up F1 livery by TommyWTF1, 3D model by Chris Paul Design/Unkredible Studios

Last week I went into considerable detail about Michael Andretti’s plans to launch an F1 team that would compete in 2024. More details have emerged since, especially in light of some of the current F1 teams relatively muted if not outright hostile reaction to the plan. Andretti has been surprised by the negativity surrounding his F1 team plans arguing that he will be bringing a lot to the F1 party. “We feel we bring a lot to the party, especially with Liberty Media (F-1 owners) and what they’re doing in the U.S., pushing the U.S. market. If we were to have a U.S. team, U.S. driver, I think that would go a long way for the popularity of Formula One in the United States.”

Andretti also revealed that he has the money and investors, and revealed a backup plan to get into F1 which would be his offer to be buy Haas, something he has been trying to do for the last two years. In all the years I have followed F1, to me this is one of the best prepared bids for an F1 team and I agree with The Race as they argue the case for giving Andretti an F1 entry.

Finally, connected to his F1 bid and a reputed engine supply from Alpine, Andretti is in talks with Alpine for a possible LMDh effort to launch concurrently with the F1 team in 2024. Mario Andretti confirmed that a “formal agreement” has been made with Renault for a F1 engine supply deal, which has apparently opened the door for opportunities on the sports car front as well, potentially in the IMSA WeatherTech SportsCar Championship.

I say give the guy the opportunity to make a go of it. It will be great to see the Andretti name on an F1 grid again.

Motorsport Sponsorship News

Business of Motorsport for March 4, 2022-Unprecedented Times
Business of Motorsport for March 4, 2022-Unprecedented Times
Photo via McLaren

The Business of Running a Race Team

Business of Motorsport for March 4, 2022-Unprecedented Times
Photo: Vector Sport

The business of running a racing team is both similar to and also very different from any other business. The Business of Running a Race Team looks at how various teams conduct their business both on and off the track.

  • FIA World Endurance Championship debutant Vector Sport was formed on a “blank piece of paper” for its first season in the LMP2 class, according to team principal Gary Holland. “It’s new in every sense, although there are some familiar faces around it. It’s a blank piece of paper.”
  • G4 Racing’s Director Adrian Munoz spoke to the F1 Feeder Series website about their plans beyond Formula Regional European by Alpine (FRECA): ‘The next step is FIA F3.’
  • Emil Frey Racing’s decision to move one side of its GT3 program to ADAC GT Masters was influenced by “several topics” according to team principal Lorenz Frey-Hilti. He explains what those are to Sportscar 365. “For us, the Emil Frey group is working strongly in Germany and nearby areas. The German-speaking market is quite important for our core business, as a promotion tool.”
  • Supercars Championship team PremiAir Racing is already plotting their 2023 expansion before they have even debuted in 2022. Team owner Peter Xiberras has offered further proof to Speed Cafe of his commitment to establishing a top-class operation.
  • Finally, Flying Lizard Motorsports program manager Darren Law explains to Sportscar 365 the various changes that have occurred within the legendary American team and how he plans to manage the multiple series the team competes in. “We will have over 40 people working for us and sharing work between multiple series.”

Motorsport Industry News

Business of Motorsport for March 4, 2022-Unprecedented Times
  • Formula 1 is continuing to show robust health as it recovers from the pandemic. Liberty media announced the F1 division’s fourth quarter earnings and they are impressive. The Formula One Group’s revenue rocketed 62.3% from $485 million to $787 million, primarily attributed to increased race promotion revenue as the same period the previous year saw limitations on fan attendance. F1’s media rights revenue was flat, but sponsorship revenue increased during the quarter. Autosport has more details.
  • In addition to the increase in revenues, McLaren’s Zak Brown indicates that Formula 1 is extremely healthy commercially. “TV’s extremely strong, digital’s very strong. Netflix has been wonderful. So you kind of put all that together, including obviously the on-track competition, and Formula 1’s extremely attractive to corporate partners.”
  • Red Bull has extended Max Verstappen’s F1 deal to 2028. Both The Race and Motorsport Week break down the deal and explain why this is the right deal for both parties.
  • IndyCar and Motorsport Network have revealed the results of its largest ever Global Fan Survey. Conducted in 11 languages across the platform and receiving feedback from over 53,000 fans in 147 countries, the survey revealed that INDYCAR has maintained a loyal and approving fanbase while growing its ranks among younger and more diverse demographics in recent years.
Business of Motorsport for March 4, 2022-Unprecedented Times
Julia Steinbrenner (Photo courtesy of Indycar)
  • As I had mentioned last week, Steinbrenner Racing has undergone a slight management adjustment with George Michael Steinbrenner’s role set to change. Sister and new co-owner Julia was visible at the first race of the season in St Pete’s and she has stated that she will be happy to steer more women to Indycar. “I love to see (women leaders), and I hope to see it continue,” she said after being introduced as a co-owner of Steinbrenner Racing, which is part of rookie Devlin DeFrancesco’s NTT INDYCAR SERIES program at Andretti Steinbrenner Autosport. “I would love to see more of it.” Steinbrenner went on to say it’s important for “people from all creeds and colors, all across the map” to be included in leadership positions. “I think that it should matter much more what your qualifications are and what you can bring to the table.”
  • Amongst all these positives, veteran drag racer Mike Salinas has sounded an alarm about the future of the NHRA. “There’s not enough people looking at” some obvious facts that signal some changes, a fresh mindset, some marketing initiatives, that are imperative now.
  • It was February 26, 1944, when seven sports car enthusiasts met at the Boston, Massachusetts home of Chapin Wallour to form a club dedicated to the preservation of sports cars. That small gathering started Sports Car Club of America, an organization that has gone on to change the face of motorsports in the United States. Happy Birthday SCCA!
  • Yamaha has announced that they are ending any future Dakar and Rally-Raid motorcycles races. In its press release, Yamaha makes mention of its long success in the Dakar Rally, but success for the brand has been hard to come by in the recent year, and that has perhaps led to Yamaha’s decision to seek easier venues to showcase its bikes.
  • Just released is the Circuit Business Index 2022 report. The Circuit Business Index collects structured, scientific results of the racetrack market and features 105 different KPIs based on data from 200 racetracks. Full information and how to obtain a copy can be found here.
Business of Motorsport for March 4, 2022-Unprecedented Times
Photo courtesy of Mercedes F1
  • Mercedes has shared the progress they have made toward a more diverse, inclusive team with their Accelerate 25 program after one year. Overall, the percentage of female employees increased from 12 to 14 percent while minority ethnic groups saw an increase from 3 to 6 percent. Mercedes-AMG Petronas Formula One Team Principal and CEO Toto Wolff said that this progress is only the beginning for the team’s long-term vision. “To see a small but significant increase in our numbers of team members from under-represented groups is a sign that we are making progress, however we remain acutely conscious that this is a long-term commitment and look forward to building on those initial steps.”
  • CNET has a great article describing how Porsche’s Customer Racing Series directly influences its sports cars. “Porsche’s race car development directly influences its road cars, and vice versa. The two teams work closely with each other at the R&D headquarters in Weissach, Germany, where around 4,000 people are employed. When development of a new road car begins, the racing division will give suggestions and requirements for features and specs they want the road car to have, which are then integrated into product planning. This system makes eventual homologation and race car development much easier, since everything that’s needed is baked into the road car from the beginning.”
Business of Motorsport for March 4, 2022-Unprecedented Times
Ligier JS2R + JSP4 2019 at Magny-cours July 9 – Photo Jean Michel Le Meur / DPPI
  • Ligier Automotive has extended its network of Ligier Official Partners in Europe. In 2021, the constructor announced its first official partnership with Horag Racing in Switzerland. With more than 530 chassis produced since 2014 and a range of cars from GTs to sport-prototypes and single-seaters, Ligier Automotive is now pursuing its development by expanding its network. Three new Official Ligier Partners are joining the French brand. LR Dynamic Events in Italy, Smart Driving in Romania and Xwift Racing Events in the Benelux. Their objective will be to promote the Ligier models designed to discover driving and competition, the Ligier JS2 R in GT and the Ligier JS P4 in sports-prototype; and launch new single-make championships in their territories.
  • The FIA has approved a new trackside debris fence system, developed by Swiss company Geobrugg, for use at Grade 1 circuits that host Formula 1 and other top-level championships. The debris fence is said to provide increased safety, while offering better views of the action for spectators and greater sustainability for racetracks.
Business of Motorsport for March 4, 2022-Unprecedented Times
  • Skip Barber Racing School and Operation Motorsport have announced an official partnership as they work together to engage medically retiring military members and veterans, using motorsports to help build a sense of Team, Identity, and Purpose. SBRS will become the US branch of the OpMo Academy Driver Development Program, as OpMo becomes an official charity of SBRS.
  • PMW Expo will return to the Köln Messe this November, bringing together motorsport and high-performance automotive engineers and suppliers from across the globe. This year, the expo will host a comprehensive program of technology seminars and discussion panels, providing attendees with unmatched insight into the cutting-edge developments shaping the industry. If you or your organization are involved in any of the following areas and would like to present a topic or join a discussion panel, please click here to submit a proposal for consideration. If you would like to present on a subject not listed below, do not hesitate to get in touch with the PMW Expo team to discuss.
    • Development of low-emission powertrains or fuels for motorsport and high-performance applications
    • Technology transfer from motorsport to niche and OEM vehicle manufacture
    • High-performance electric and hybrid vehicle powertrain development, including motor, inverter, battery system, cooling systems, transmission and brake-by-wire systems
    • Sustainable motorsport, including materials development, manufacturing processes, logistics and ESG auditing of events, series and companies
    • AI and machine learning for engineering applications
    • Driver-in-the-loop simulation for performance engineering
    • Reverse engineering and additive manufacturing technologies
    • Race strategy and performance simulation
  • Motorsport Network has announced new dates for Autosport International. The show will run from Thursday 12 to Sunday 15 January 2023. The first two days will be trade-focused, featuring the Autosport Engineering show and the Motorsport Business Leaders Forum. The full four-day show will have a fresh look and feel, reinventing the event for a new generation of visitors. For trade, industry, competitors and fans alike, the 2023 show promises a greater variety of content than ever before. A comprehensive activity plan will be revealed soon but the core areas such as the trade networking opportunities, Autosport Engineering Show, Performance and Tuning Car Show and Live Action Arena will be reinvigorated and be a core part of the relaunch.
  • IndyCar race director Kyle Novak has been named an FIA Courts judge. The appointment means that Novak can be summoned by the FIA to sit on a panel of judges to hear cases brought to the FIA’s International Tribunal or the International Court of Appeal. “To be able to add to the list of IndyCar representatives who have served the FIA is a tremendous honor,” Novak said. “With the great competition and all of the growth we’ve experienced over the past few years, I think this shows the level of worldwide respect for the IndyCar Series.”
  • Finally, in November 2021, the International Court of Appeal (ICA) of the Federation Internationale de L’Automobile (FIA) handed down its judgment in the appeal brought by Mr Yohan Rossel (Driver) against the decision of the Stewards of the EKO Acropolis Rally (Greek Rally). The Driver had been disqualified by the Stewards from the rally as the front subframe of his car during the rally weighed more than the authorized maximum weight. The ICA rejected the Driver’s appeal in favour of the decision of the Stewards. As LawinSport points out, “This is an interesting decision as it highlights that the lack of performance advantage is not a necessity to be sanctioned if found in breach of the applicable regulations. It also showcases the limited scope that exceptional circumstances in relation to technical irregularities can be admitted in.”
Mark Boudreau
Author: Mark Boudreau

Mark is the publisher of Motorsport Prospects. As a former lawyer, he applies his legal background and research skills to assist race drivers by showcasing the resources they need to make their motorsport careers happen.