The Business of Motorsport for June 3, 2022-Monaco, Money and Motorsport

This week in the Business of Motorsport, I take you behind the debate on the future of the Monaco Grand Prix, the resurgence of the Indy 500, long term plans for Formula 1, why some think that NASCAR’s business model must change and more business news from across the world of motorsport. I also look at McLaren Racing’s expansion and business plans, find out what’s in new FIA Single-Seater Commission president Gian Carlo Minardi’s inbox, look to the future of Road America and more. Toss in the latest sponsorship deals, personnel moves, and some opinions and analysis and this week’s edition makes for a packed week of motorsport business news racers can use.

Motorsport Industry News

Formula 1

• Mercedes Formula One team principal and chief executive Toto Wolff is looking to reduce the number of customer teams that race with their engines from three to two. As quoted by Blackbook Motorsport, Wolff said that the budget cap of US$140 million for this season means the Mercedes team are no longer earning “substantial amounts” from providing engines to other teams. He added that the current process is not “compelling and interesting” due to the International Automobile Federation (FIA) limiting how much customer teams can be charged, which is part of efforts to level the playing field.

• With the popularity of F1 having exploded in the USA, ESPN is looking on locking down their renewal of broadcast rights as soon as possible with the network describing the talks as “positive.” According to Sports Business Journal (SBJ), ESPN currently pays about US$5 million annually for the rights, but Formula One’s owner Liberty Media is reportedly seeking upward of US$75 million per year for the next contract.

• F1 CEO Stefano Domenicali had a lot to say during the recent Business of F1 Forum organized by the Financial Times and Motorsport Network in Monaco last week. He emphasized that F1 won’t lose their European race focus amid its Africa and Asia calendar plans. “There are areas of the world that want to have Formula 1, and I think that one area that we want to develop is the African area,” he said. “We are a world championship, and that’s an area where we are not there. “But we don’t want to lose the interest, of course, of Europe. We were born here, and we will stay here.”

• He also commented on Michael Andretti’s F1 plans casting doubt on the need for an 11th F1 team. “And if anyone wants to come in, it has to be really significant.”

• Autosport dove in a bit deeper into what was revealed at the Business of F1 Forum in Why F1’s top bosses are thinking about a “bigger future”. “We have the benefit of the stewardship of a 72-year-old enterprise. So we think about the long term and what it will do. We have a lot of interest now. We want to sustain the growth of that interest more broadly.”

• I have discussed in this column at length the debate about the Monaco Grand Prix and whether it will still be part of the F1 calendar going forward. Motorsport.com has a great summary of the five factors that will decide Monaco’s F1 fate. Even the New York Times is getting into the act as they debate The Future of a Storied Race.

• The Monaco Grand Prix is certainly popular as it became the first European race to attract an audience of more than two million for UK pay-TV giant Sky Sports.

• I have been reading Joe Saward’s column for years and in his latest Green Notebook from Solarium Beach, he tackles some of the current business issues in F1 today. His take on Christian Horner’s pleas for more money in the budget cap is right on the money (pardon the pun!).

• In F1 teams are showing big faith in young drivers, by blocking others out, Formula Scout looks ahead to what will happen in the F1 driver market beyond 2022. “If a driver is in the Red Bull Junior Team and targeting a Red Bull seat in three to five years, that will inevitably mean going up against Verstappen (who is almost certainly going to continue improving) in the same car and without vast amounts of experience to draw off. Naturally, any driver doing so will want to believe they can get the upper hand, but is it entirely realistic they will? Perhaps not.”

Indycar

• Front Office Sports looks at how McLaren is Speeding Toward Profitability. “We want to have a bigger North American platform than our competitors in Formula 1,” McLaren Racing CEO Zak Brown told Front Office Sports.

• As part of their North American growth, McLaren Racing has commissioned a new IndyCar facility in Whitestown, Indiana. The new facility will combine modern office space with technical areas, workshop space, logistics and transport areas, and even a dedicated space for the team to practice pit stops. The building will also feature a gym with an emphasis on sports science, allowing all employees to focus on their physical and mental wellbeing on and off the track.

• The Washington Post looks at how Indy 500 drivers find crypto craze fuels needed sponsorship. “The IndyCar driver is among a growing number of athletes getting in the crypto game. At Indy, where culture is traditionally steeped in bricks more than bitcoin, the shift to cryptocurrency sponsorship may still be a curious concept to the almost 300,000 fans who will pack the track Sunday. But inside the paddock — and locker rooms around the sports world – new forms of digital money help pay the bills and salaries for teams and athletes.”

• Possibly eying warily the growth of Formula 1 in North America, Roger Penske is positioning IndyCar as an ‘accessible’ alternate to ‘elitist’ F1. “Penske has tried to position IndyCar as “accessible” and “authentic,” Penske CEO Mark Miles said, since it acquired the circuit in November 2019—a different approach than the one taken by F1 owner Liberty Media Corporation. “[IndyCar is] essentially a North American series, and North American tastes in some ways differ from European tastes,” Miles said. The former ATP CEO pointed out that while tennis’ most successful events during his tenure often had “caviar everywhere in the hospitality area,” that wasn’t always as popular in the U.S.”

• The Indy 500 certainly looks like it is regaining its stature as the 2022 edition pulled in 325,000 fans for its second-best attendance in 20 years. The paycheck was a record as well. “This year’s winner Marcus Ericsson also took home a record US$3.1 million and runner-up Pato O’Ward earned US$1 million, which was among the highest totals for a second place finisher. The average winnings for drivers reached US$485,000.”

NASCAR

• Denny Hamlin argues that NASCAR must “get with the times” to reach new fans. “I will go on the record saying that I had a meeting with Jim France [Nascar’s chief executive] and my message was clear that we need to stop talking about cutting,” said Hamlin. “Cutting does not equal growth. If we start working collectively then we can grow this sport together. But the business model will have to change for that to happen. We at 23XI have big plans, but those plans are on hold until we see change.”

• Stratasys, a producer of 3D printing solutions, has announced that it has been named an official competition partner of Nascar to produce the first-ever 3D printed production parts to be featured across all next-generation vehicles in the stock car racing series. “The new 3D printed parts provide Nascar with enhanced performance, flexibility, cost savings and improved aerodynamics, and are being used by every team that competes in the Nascar Cup Series. The parts are a culmination of nearly three years of planning, design, and development, as the next generation car underwent more than 37,000 miles of testing before its introduction at the Busch Light Clash in February.”

General Motorsport Industry News

• Vroom Kart has am interview with Gianfranco De Bellis, the CEO of Tatuus where he expounds a bit on the business of selling race cars. “Today, starting from the new 2nd generation F.4, safety has been elevated to the highest levels; it was unthinkable until even just a few years ago that an entry-level category like “F.4” could have this degree of safety; the crash tests and the tests to be sustained for FIA homologation are similar to those of F.1. The introduction of the Halo system, but also the new chassis rules and other related components, have unparalleled importance for the driver’s safety. Credit to the FIA and credit to our designers who were able to integrate all these components in a car with a low final cost; we’re talking about 80,000 euros for a new complete car (ready-to-race) F.4 2nd generation.”

• Formula Scout talked to FIA Single-Seater Commission president Gian Carlo Minardi and asked, what’s in Minardi’s inbox as he takes over FIA single-seater role? They discussed the costs of F4, a common chassis amongst championship classes, the single-seater pyramid, super-license points and probably my biggest pet peeve, the “Formula Regional” name. “I have to say that I really don’t like the name FRegional. Of course, we can’t now change the name of F4 or call FRegional Formula 5. When I left ACI Sport, FRegional was still called F3. Then Liberty Media acquired F2 and F3 and took away the name of F3. I fought to change it in the commission but was not successful in introducing the names of F3 and F3 International. I was the first to say that the name is confusing. It was not a choice that I made.”

• Lamborghini has explained their decision to enter LMDh one year after their rivals. “Knowing and taking into consideration that we are rookies in this kind of category and project, we need also the time, not only to develop the car but to develop also the structure,” Lamborghini motorsport boss Giorgio Sanna explained to Autosport.

• Mike Kertscher, Road America’s president and general manager spoke to the Milwaukee Journal Sentinel about the future of the track in a wide-ranging interview. “The big details are important but so are the little ones and we continue to reinvest with the support of our shareholders and our board in making the Road America experience the best it can be so this year, no exception.”

• Queensland Raceway has received the endorsement of Motorsport Australia allowing top-flight racing sanctioned by the governing body to return to the Ipswich facility. “In order to get that track licence, the venue has undergone significant improvements to its safety standards, including installing the appropriate safety barriers where required. The track now meets the relevant criteria for its licence and we are thrilled to welcome back Motorsport Australia events to this important venue.”

• Finally, The Drive has a get look behind the scenes at CXC Simulations. “Put more simply, they take real-life data and use that to precisely match it to the sim. Any and all requests are accommodated, including highly specific pedal feel and button placement to closely mirror the real race car. I even tried a simulator that was a complete frame from an off-road truck mounted on six electric motors to simulate jumps, yaw, pitch, and nearly every degree of motion that a hardcore Baja truck would experience. “Approaching $1 million” is the figure that was reported to me and the experience of driving it is uncanny. Jumps have that stone-in-your-stomach feeling, the steering is heavy and numb to simulate large off-road tires and the virtual reality headset is perfectly calibrated so that it doesn’t induce motion sickness and it plays nice with the motion of the simulator. Best of all, it’s being made for a Norwegian cruise ship that already has a go-kart track aboard.”

Motorsport Sponsorship News

Series Sponsorship News

• Shell and Pennzoil have announced a multi-year extension and expansion of their sponsorship agreement with the NTT IndyCar Series, Indianapolis Motor Speedway (IMS), and Team Penske. “For more than 100 years, Shell has been forging long-lasting relationships that extend beyond the brand and products the company produces,” said Steve Reindl, president of Shell Lubricants Americas. “Our relationship with Penske continues to evolve, both commercially and in motorsport, giving Shell and Penske a vast platform to pursue our respective sustainability and decarbonisation goals.”

Team Sponsorship News

• The BWT Alpine F1 Team has extended their relationship with Roland DG until 2025. Roland DG will supply their industry-leading TrueVIS VG3-640 print and cut machines to the Paint Shop and Graphics Department. This includes all necessary ink supplies as well as training to BWT Alpine F1 Team staff.

• The Alfa Romeo Formula One team have announced a partnership with AximTrade, a financial services provider specialising in Forex and CFD trading. “The world of financial services and Formula One may appear distant, but have lots in common: both are technology-driven, high-pressure realms where performance is ultimately down to the human factor,” said Frédéric Vasseur, team principal of Alfa Romeo F1 Team Orlen.

• McLaren Racing has partnered with Circle K, the global brand of Couche-Tard, a Canadian multinational operator of convenience stores, for the upcoming Canadian Grand Prix. ʺThe Canadian Grand Prix is a beloved and premier event that draws millions of viewers and fans globally so this partnership with McLaren is the ideal backdrop to showcase our global Circle K brand and our shared love for speed, convenience, and world-class mobility innovationʺ says Melissa Lessard, head of marketing for North America at Couche-Tard.

The Business of Running a Race Team

• McLaren Racing is definitely one of the most active racing teams on the planet as far as competing in multiple series around the globe. In How McLaren Racing are engaging the next generation of motorsport fans, Claire Cronin, chief marketing officer for McLaren Racing, explains how the team is constantly evolving its content strategy, the benefits of expanding into other series such as Extreme E, and why it thinks of its commercial partnerships like a marriage. “We were coming from a position where, when Zak took over, we were not winning races,” she tells the BlackBook. “He saw the opportunity for us to work together to actually give fans an insight into how we are going to get back to the front, and to make them a part of the team that helped us get there.”

• One of the new series that McLaren is getting involved in is Formula E and The Race explains how the Mercedes takeover is just the start for McLaren in Formula E. “Once McLaren is established in Formula E, then perhaps a more comprehensive approach will stretch out in relation to McLaren either white-labelling the hardware or partnering with a new manufacturer for the Gen4 period from 2026 onwards.”

• Daily Sportscar conducted an extensive, two-part interview with Will Turner, Michael Dinan, and Robby Foley of Turner Motorsport about everything from driver ratings to how they have become one of North American sports car racing’s most popular teams with a pedigree of success and a fun-loving social media presence. “What has kept Turner Motorsport from suffering these same sorts of supply issues with their new cars as their brethren? “I think we’re more prepared because we saw this coming,” said Turner. “And also, because we had to race Daytona – we needed to be prepared before Daytona. I think we did a good job putting in place systems to make sure we have the parts that we need.” You can read Part 1 here and Part 2 here.

• Dragzine has a great feature on how NHRA Top Fuel racer and team owner Buddy Hull has carved his own path to success. “Even my family says it: I’m like an alien. I’m really nothing like the rest of my family,” the NHRA Top Fuel owner-driver said. “What I’ve done is completely different, in terms of path and level of successes, than anyone else my family ever. Not one person in my family taught me much about what I do.”

Movers & Shakers

• The FIA has announced the departure of F1 Executive Director Peter Bayer and the interim appointment of Shaila-Ann Rao. Bayer took up the role as the FIA’s secretary general for sport in 2017, overseeing all activities in the FIA’s sporting department right the way from go-karting up to F1, as well as working closely with member clubs across the world. Both Autosport and The Race look at the implications of the move and why it may have happened.

• Chairman and CEO Rick Hendrick of Hendrick Motorsports has named four longtime senior executives to lead key areas within the organization.