If you were as mesmerized, horrified and otherwise bemused by the trainwreck that was Rich Energy’s sponsorship of the Haas F1 team in 2019 as I was, then this edition of the Business of Motorsport is for you.
If you are also curious about the state of mobile phone provider Rokit’s role in sports sponsorship, you will also want to check out this week’s column.
In addition to all that, I look at the big news regarding the cost cap in F1, the situation in the business of NASCAR and the premature end of the season in the W Series.
I also cover how various race teams are conducting and growing their business, the latest sponsorship deals and the current motorsport Movers and Shakers. All this and more in this week’s Business of Motorsport. Its business news that racers can use.
Motorsport Industry News
- The big news in Formula 1 this week has been the findings by the FIA that Red Bull has made a minor F1 cost cap breach while Aston Martin has infringed some procedural rules. Huddle Up has a good summary of the issue here. The major concern at this point is the FIA’s lack of transparency of what is going on. How much did Red Bull exceed the budget gap by? What will the punishment be? How severe should a minor punishment breach be? When will it be announced? Why is it taking so long? My only comment about minor breaches of the cost cap would be this. What I think should be added to the regulations is that, if a team has been found to have committed a minor breach at least twice in any 3 year period (consecutive or not), it would then be considered a major breach and subjected to both sporting and financial penalties. This would prevent teams from incurring minor breaches for a competitive advantage. Below are a few articles which deal with these issues and why they are so important to the future of F1.
- Red Bull ‘surprised, disappointed’ at F1 cost cap breach verdict
- Why Red Bull’s F1 rivals see its “minor” breach as anything but
- What happens now with F1’s cost cap rule breakers?
- No official appeal process is in place for FIA budget cap rulings
- The one thing that can’t be sacrificed amid Red Bull’s F1 overspend controversy
- One aspect of the cost cap that is revealed in the release of Mercedes F1’s numbers is how the cost cap can potentially increase team profits or, at the very least accrue profits. This is a welcome change from the past where an F1 team was an endless money pit jeopardizing the smaller teams and preventing reasonably capitalized new teams from entering the sport. Here are some details of how the cost cap impacted Mercedes F1 revenue.
- With a spate of recent controversies such as the cost cap issue, Abu Dhabi 2021, being overly cautious with rain starts etc, many feel that the FIA is facing a credibility crisis. Here are some opinions on the topic.
- With regards to the FIA, Joe Saward in his recent Green Notebook has some wise words for those too quick to judge. “The signs are that there will be a new more egalitarian and sensible FIA in a year or so, but there must first be a vigorous flushing out of bureaucrats that Jean Todt loved to have around him. In my experience most of the people who work for the federation in F1 (with a few exceptions) are very competent and work hard. They care about what they do. The stewards do it for free, but they are always working amongst themselves to make things better. They are constantly slighted and disrespected by almost everyone. They are an easy target.”
- Formula Nerds looks at the recent agreement between F1 and Sky which it describes as a marriage with costs. “As Sky becomes the sole broadcaster for F1 in most of Europe, F1’s days of free-to-air races are well and truly over. This will have repercussions for the sport, both positive and negative.”
- At Racing News 365, Dieter Rencken feels that premature talk about new Grands Prix does nobody favours. “Still, all this irresponsible talk raised the hopes and dreams of tens of thousands of South African F1 fans, but who cared: Such stories are prime clickbait to be exploited across the globe and Liberty, of course, revelled in coverage as such stories implied squabbles for races, in turn boosting FWONK share price. Hence F1’s commercial rights holder regularly talks up demand, all too prematurely at times.”
- On Episode 327 of Monocle’s Tall Stories Podcast, Emily Sands visits Monaco to see how the tiny principality with a big reputation for motor racing is affected by its annual race. You can listen here.
- As NASCAR prepares for their playoffs, there has been almost as much action off-track as on. The first has revolved around driver concerns over the safety of the Next Gen car, with questions related not only to the design of the car but to the lack of transparency that drivers feel they are getting from NASCAR officials. The second is that owners are concerned that the current franchise system, where according to some reports the teams receive only 7% of total NASCAR revenues, is broken. They are looking to improve NASCAR’s business model to make it more sustainable financially for the teams as a whole. Here are a few articles setting the tone for what is happening.
- NASCAR Boss: ‘It’s on Me’ for Lack of Communication with Drivers over Safety Concerns
- Tap the brakes? Car safety concerns have some questioning the pace of change as NASCAR continues to transform
- Teams Say NASCAR’s Financial Model Not Sustainable
- Nascar teams criticise ‘broken’ revenue-sharing model
- Teams seeking a ‘fairer deal’ with NASCAR
- NASCAR teams call revenue model ‘broken,’ warn of layoffs
- ‘Nascar team ownership interest never been so high,’ claims Steve Phelps
- ‘Race for the Championship’ gives NASCAR its close-up
- Dodge’s talks about re-entering NASCAR have stalled
- Jeff Gordon and Team Execs Go Public Over TV Deal Negotiations and Sound Alarm Bells About NASCAR’s Future, According to Report
- Confirming speculation that had been mounting since the Singapore Grand Prix, the W Series announced an early end to their 2022 season due to funding issues with a focus on raising the necessary finances to enable a full 2023 season. “As a start-up in only our third season of racing, we are always working hard to ensure regularity of funding as we continue to grow our business, but due to recent unforeseen circumstances outside of W Series’ control, we had not been in receipt of contracted funds due to us. We have worked hard to raise the required funding to enable us to finish the season. Unfortunately, it was not possible to do this in the short time frame required following the failure of contracted funds to arrive and the global economic downturn. However, while we are all incredibly disappointed that this decision has had to be made in the short term, we remain positive about the future of W Series in the long term.” F1 Feeder Series has a comprehensive summary of how the series reached this point.
- While W Series CEO Catherine Bond Muir has stated that ‘Life is tough in women’s sport’, she feels confident that funding can be raised for 2023 and beyond. She also stated that the W Series still intends to fund seats for drivers as she considers this to be part of the DNA of the series. Interestingly, she intends to pursue U.S. expansion once the series is on stable footing. “The all-female open-wheel series has had to curtail its 2022 season with two rounds remaining due to a lack of funding, after contracted investment failed to materialize. After calling off the U.S. and Mexican rounds to end the year, CEO Catherine Bond Muir says holding races in America remains an important target as she works to finalize longer-term funding to allow the series to continue in 2023.”
- In the video above, W Series driver Abbie Eaton explains from an insiders perspective on the Motormouth podcast how things evolved to where we are at today.
General Motorsport Industry News
- In what I believe is a first, IndyCar is heading to The Thermal Club for its 2023 Spring Training. “Located 15 minutes south of where the popular Coachella music festival is held in south central California, the February 2-3 event in the town of Thermal will serve as the venue’s first collaboration with a major racing series. The vast property, which serves as a country club-style track where members build homes and garages to house their high-performance cars and racing machines, has grown in stature as a testing facility used by numerous IMSA and SRO teams.”
- IndyCar is also close to signing off on a TV documentary series to hopefully soak up some of the “Netflix-effect” that F1 has received from Drive to Survive. “We all just flew down here on the same plane, and one of the topics of conversation was hopefully finalizing a series deal,” IndyCar CEO Mark Miles told RACER as the series’ executive leadership landed in Texas for meeting. “It is definitely a work in progress. This one seems quite, quite close. So hopefully, we’ll have a specific announcement to make before long.”
- Blackbook Motorsport looks at how a Fox Sports broadcast deal revolutionized American Flat Track’s sponsorship strategy. “A new national broadcast deal with Fox Sports has injected fresh commercial momentum into American Flat Track. Now, as chief executive Michael Lock explains, the premier dirt track motorcycling championship is working to deliver for its partners like never before.”
- The ABB FIA Formula E World Championship has reported that it has grown its cumulative audience for Season 8 beyond the achieved the previous season. “ABB FIA Formula E World Championship Season 8 cumulative audience increased 20% year-on-year to 381m as live viewership grew to all-time high of 216m, up 10% on Season 7 with total viewing hours increased year-on-year by 58%. Scheduling consistency and highly competitive racing supported by a new qualifying format were key drivers for audience growth to record levels.”
- MotoGP organisers Dorna Sports have become the latest party to file a lawsuit against the KymiRing circuit in Finland after the planned Finnish Grand Prix was cancelled once again. “Finnish publication Yle has now revealed that Dorna has joined the list of creditors looking to recoup some funds from the circuit, specifically with the KymiRing Events subsidiary of the business that the Spanish organisation signed its deal to host the first Finnish GP since 1982.”
- The FIA has published an interview with Lung-Nien Lee, FIA Vice President for Sport Asia-Pacific on their YouTube channel who discusses how they intend to grow motorsport in Asia. You can watch it above.
- Electric kart manufacturer Blue Shock Race is expanding rapidly globally and looking towards an IPO. “In 2022, in the first half of the year, BSR already surpassed all the indicators of 2021 by delivering more than 260 units to 32 countries with a turnover exceeding 2 million Euros till Q3. The goal in 2022 is to reach a turnover of 4-5M Euros. BSR has been able to increase its turnover 10x in the times of Covid and we are sure that the current situation in the world is an opportunity that BSR must use to the maximum.”
- In their special report titled Let It Ride?, PRI Magazine looks at the betting environment around motorsport in the United States. “Life is a gamble, especially in motorsports. Every time drivers suit up, they are playing the odds—calculating their chances to win, while not letting themselves get distracted by the odds of making it to the end of the race unscathed. Increasingly, though, fans are now able to have some skin in the game, with the ability to wager on the action taking place on the track. Over the past four years, a growing number of states have legalized sports betting. The motorsports industry is in the unaccustomed position of being a backmarker as stick-and-ball sports rush to embrace the gambling wave. But legal sports betting will soon be coming to a track near you…if it isn’t already.”
- Despite the “crypto winter” and what seems to be weekly reveals of crypto asset hacks, Miheer Walavalkar, co-founder and CEO of LiveLike argues in Sportico how the Web3 sports industry can emerge from the crypto crunch stronger than before. “Looking toward the next stage of Web3 and its place in our digital economy, maintaining a focus on interactivity and utility is vital—and sports fandom explains why. Currently, most digital collectibles in sports go to the highest bidder and do little to entice higher engagement rates or fan retention. But what if they were used as rewards for fans who genuinely engaged with the events, teams, athletes and sports brands?“
- The provisional list of FIA driver rankings for 2023 has been published with some 137 ratings provisionally altered (subject to appeal) and a further 37 currently under review. Daily Sportscar has all the details.
- Tickets are now on sale for the World Motorsport Symposium, an event organizers describe as “the Davos of Motorsport Engineering.” You can see the list of speakers here.
Motorsport Sponsorship News
- Motorsport attracts some interesting characters to put it mildly and one of the most controversial no doubt has been Rich Energy CEO William Storey. If you are looking for the inside story of what went down in this motorsport equivalent of a bad soap opera, Elizabeth Blackstock and Alanis King have just released a book that delves into how this sponsorship fiasco played out. “For the 2019 Formula One season, the American Haas F1 team took on a sponsor no one had ever heard of: energy-drink startup Rich Energy. What followed was a whirlwind year of bad tweets, lawsuits, and distortions that never quite answered the questions everyone wanted to know. Where did Rich Energy come from? Who was its CEO, William Storey? And what happened after its unceremonious exit from F1?” You can find more information here. Look for a review on Motorsport Prospects in the coming weeks.
- Speaking of controversial sponsors, in Rokit Leaves Trail of Millions in Deserted Deals, Lawsuits and Bankruptcies, Sportico takes a deep dive in how a company with a dubious structure and revenue streams continues to be a player in sports, including motorsport, sponsorship. “Sports sponsorship has been just a small part of Rokit’s sprawling ambitions, which its co-founders have directed at everything from e-bikes, apparel and water purification to nationwide internet infrastructure, discount legal services and telemedicine. Despite its varied interests, and a complex web of private limited companies to pursue them, financial reports and interviews with former Rokit insiders chronicle a company that has never proven financially sustainable, produced very few actual products, and failed to deliver on many of its business commitments. Rokit has shown itself to be quite adept at one thing: attracting bold-faced names and high-profile companies, from sports to Hollywood, into its orbit, only to leave many of its partners feeling shortchanged.”
- Leather and travel goods brand Carl Friedrik will be the AlphaTauri F1 team’s official luggage supplier after signing a deal with Swedish firm. “Scuderia AlphaTauri represents elegance and lifestyle in the Formula One paddock, that’s why a premium and fashionable brand like Carl Friedrik is a great fit for our team,” said Franz Tost, team principal of Scuderia AlphaTauri.
The Business of Running a Race Team
- DirtFish looks at why Tanner Foust believes that McLaren is raising the game in Extreme E. “I’ve been a part of many motorsports that have just been getting going, and it takes a level of patience and understanding to come in as a competitive spirit to a burgeoning new motorsport. With McLaren coming in and the level of professionalism they bring, it’s upped the game for the entire series,” he continues. “They essentially took the rulebook and rewrote it for Extreme E in a lot of ways, and so I’m really happy to be a part of that.”
- McLaren’s Zak Brown is not just making waves in Extreme E. Bruce Martin of Forbes looks at his moves in Indycar in McLaren’s Zak Brown Talks IndyCar, Kyle Busch In The Indy 500, A Potential Fourth Indy Car And The Shakeup Of His Race Team. “McLaren Racing CEO Zak Brown has left quite an impact in a short period of time since he acquired Sam Schmidt’s IndyCar team in 2020. On a path to taking full control of the team, the man who helped shake up Formula One is prepared to do the same in the NTT IndyCar Series.”
- Continuing with Indycar, Bruce Martin also looks at why this AJ Foyt Racing rebuild In IndyCar might actually work. “Thirteen different drivers have competed for Foyt’s IndyCar team since Sato drove to victory on the streets of Long Beach 10 seasons ago. Out of that group were some “Indy 500 only” drivers that did not compete for the full season. Engineers have come and gone. The team has split its race shop into two – one in Waller, Texas near Foyt’s home and another in Speedway, Indiana – within the shadows of the Indianapolis Motor Speedway. It seems that every year, Larry Foyt is trying to reinvent the team.”
- Despite Tanner Foust’s opinion (see above) Dominik Wilde in Racer explains why Nico Rosberg’s team is the standard-bearer in Extreme E. “We’re almost at the end of the second season of the all-electric off-road series, and throughout those two years, Rosberg X Racing has been the undisputed class of the field, winning five events out of nine so far. As well as having three of the strongest drivers in the series – Johan Kristoffersson being partnered by Australian rally ace Molly Taylor last year and rising star Mikaela Ahlin-Kottulinsky this year – the team has had an impeccable reliability record.”
- The Silverstone Park website takes a look inside EV manufacturer NIO’s Formula E base at Silverstone Park. “It is about to celebrate the first anniversary inside its 12,401 sq ft property at Silverstone Park which houses its race team and is packed with innovation in race car design, engineering and sustainability.”
- DS Automobiles and Penske Autosport have formally announced a Season Nine alliance. “The start of a new association is always a big moment, and all of us at DS Performance are eager to begin this new adventure with PENSKE AUTOSPORT,” said Thomas Chevaucher, the Director of DS Performance. “And we are starting this partnership in the best possible way by having two world champions in the team! Thanks to Stoffel and Jean-Eric, we probably have one of the best line-ups and also the fastest pairing on the grid. With the powertrain and software expertise of DS Performance, we are now in an ideal position to continue our hunt for victories and titles.”
- TJ Speed is set for a Road to Indy Campaign in both USF2000 and Indy Pro 2000 in 2023 according to F1 Feeder Series. “We’ve had a character-building year in Indy Lights and are doing very well in Formula Regional Americas,” explained Tim Neff in a recent interview with F1 Feeder Series. “Now we’re excited to get going in Indy Pro and USF2000 next year. The Road to Indy is a proven pathway for young drivers who want to get to INDYCAR, and we’ve got some promising talent on our radar already.”
- Females in Motorsport profiles Justina Williams of BTCC team EXCELR8 Motorsport. “Things go wrong more often in motorsport than they do go well generally,” she says. “You have more lows and you have highs, but when you have those highs they’re so incredible. You put up with the lows almost to get those highs because of how you feel when it happens. What I can do for the team is let them know I care. And I do. I do care about them and all the hard work they put into it.”
- Formula Scout looks at why Trident Motorsport is thriving in its first Formula Regional campaign. “Ricci confirms that expansion had always been part of Trident’s long-term plan: “Today, you must have inside the team at least three categories,” he says. A year ago, Trident moved into a new larger factory, adding both capacity and expense. “The more categories you have, the more budget and resource you have in the team and the more development, also globally, you can carry on. And that’s important,” Ricci continues.
Motorsport Movers & Shakers
- SCORE’s new marketing sales manager Kurt Miller explains to PRI Magazine how he is plotting a course to expand the sport’s reach to a wider audience while building new opportunities for manufacturers and fans.
- The Short-course Off-road Drivers Association has appointed Dan Vanden Heuvel as Interim President. “You may recognize Dan from his years of involvement in off-road racing. Dan has over 45+ years of experience racing Class 13, Class 8, Sportsman 2, and Pro 2. Dan was also the original MORR president and spent time promoting races in Antigo and Oshkosh. We are so happy to welcome him to the team.“
- Wasserman has signed current IndyCar driver and former F1 driver Romain Grosjean for representation in endorsements, speaking and other commercial opportunities. Wasserman is looking to raise the Andretti Autosport driver’s profile in North America.