In this special report series we will examine the Business perspectives, Economic impact and Financial data of Motorsport from around the world.
24 Hour of LeMans – Slowing Down…
Feb 2009-
Perhaps just getting to the starting line of the legendary race may be the toughest part of the Le Mans 24-hour event this year.
As millionaire amateur drivers see their fortunes dwindle because of the financial meltdown and companies rein in sponsorships, some teams registered are abandoning plans to take part in one of motor sport’s most storied races in June.
“It’s not on the cards for us,” said Jim Dunford, manager of Benicia, California-based Team CytoSport, which raced in the French event last year. “There’s way too much uncertainty in the markets.”
Teams are funded by wealthy individuals — including a former Wall Street banker and French pop singer last year — and corporate sponsors. Although 82 teams applied for 55 berths, some say they don’t yet have money to compete in the endurance race, which pushes cars around the 13.65-kilometer (8.7-mile) track for as many laps as possible in a day.
“I don’t know anyone who hasn’t had problems,” said Christian Ried, who owns the Ummendorf, Germany-based Team Felbermayr-Proton.
Race organizer Automobile Club de l’Ouest announced the entry list at a news conference in Paris today. Officials didn’t return requests for comment.
In this year’s race, Paul Drayson, the U.K.’s minister of state for science and innovation, will steer an Aston Martin V8. U.S. actor Patrick Dempsey, a doctor in television series “Grey’s Anatomy,” is on the reserve list to drive a Ferrari F430 GT.
Applications Down
To be sure, some teams are vowing not to miss a spectacle that drew a record 258,000 spectators last year and was headlined by a duel between Audi AG and PSA Peugeot Citroen. The race was started in 1923 near the town about 220 kilometers southwest of Paris and was featured in the 1971 movie “Le Mans” starring Steve McQueen. The event, held June 13 and 14 this year, uses regular public roads instead of a smooth track, making it hard for cars and drivers to complete the entire day.
The number of applications for entry slipped by only six from last year, according to a Jan. 29 statement by Automobile Club de l’Ouest.
“We’re a bit affected by the crisis but we’ll be there,” Portuguese publishing investor Miguel Pais do Amaral, whose team is named after his Lisbon-based Quifel Holdings. “It’s a privilege to take part.”
Struggling for Backers
Other motor sports are struggling to find backers. Formula One’s ruling body is trying to cut team budgets to 50 million euros as the industry is hit by the credit crunch.
Part of the allure of the Le Mans event is competing against former Formula One drivers, who last year included 1997 champion Jacques Villeneuve and Olivier Panis, he said.
Also racing last year was 63-year-old Austrian Horst Felbermayr Sr. — whose civil engineering company sponsors Ried’s team — former Wall Street banker Pierre Ehret and French pop singer David Hallyday. Amateur drivers need to cough up about 100,000 euros for a drive, Ried said.
Three-driver teams need to spend at least 300,000 euros ($382,470) to cover equipment, fuel and other costs, says Martin Short, owner of the Cambridge, England-based Rollcentre Racing squad. His team lost Deutsche Bank AG as a sponsor last year and costs rose after the U.K. pound slid 18 percent in the last year to a record low against the euro.
“British teams are being hammered,” Short said. “We have really taken a hit.”
Short’s team, which featured in the 2006 film “Le Mans: In the Lap of the Gods,” is asking drivers to find sponsorships themselves to secure a place. One possible participant’s planned agreement with a software company collapsed recently because of the economic climate, he said.
Team CytoSport sold its Lola car after last year’s event partly because fuel costs and the exchange rate “shot holes” in the budget, manager Dunford said. Team owner Greg Pickett, who founded sports drink maker CytoSport Inc., was prepared to pay for his own way again this year but the team struggled to raise more money, Dunford said.
German owner Ried, whose team uses Porsche SE cars, says he doesn’t know if he can go ahead with plans for a second team for what he called “gentleman drivers” as the luxury carmaker reviews its backing.
“We’re waiting to see what happens,” Ried said. “Everyone is stretched for money.”
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The Formula One Bahrain Grand prix – 2008
March 28-The Bahrain International Circuit has announced that ticket sales to the 2008 Gulf Air Bahrain Grand Prix are up 65% from March of last year. Fans and enthusiasts have already bought their tickets and confirmed their attendance to the biggest sporting event in the region. The fifth Grand Prix event is estimating to attract a record number of fans and dignitarys in 2008. BIC Commercial Director, Steven Umfreville highlighted that the demand for preliminary ticket sales were a clear indicator of the growing motor sport awareness being generated in the region. He said, ‘To many across the GCC, the Gulf Air Bahrain Grand Prix has become the sporting event of the year to attend.
For the business visitors there was also the allure of the first Motor Sport Business Forum Middle East which took place on April 1st and 2nd. The conference brought together the top leaders of the commercial world of motorsport and many key decision makers from the Middle East. In the past four years the Middle East is estimated to have invested more than $12 billion dollars in building international motorsport building venues, investing in teams and motor manufacturers and as sponsors. The Bahrain real estate boon along with the vast petroleum and natural gas resources easily lends itself well to the large, on-going investments in the motorsport arena. 60% of Bahrain’s total economic activity is derived from oil exports alone – which also makes up 30% of their total GDP.
The Grand Prix has become one of the central marketing tools in Bahrain’s drive to promote itself as an international tourism destination, with the event directly serving to draw thousands of foreigners to the kingdom. According to Whitaker, there is no doubt the Grand Prix has given Bahrain a global market via one of the world’s largest sporting events.
2008 Attendance figures ring in-
Bahrain International Circuit (BIC) chief executive Martin Whitaker said of the three day event which attracted only 19 people short of 100,000: “The fifth Grand Prix to have taken place in the Middle East was yet another blockbuster, almost drawing 100,000 fans over the weekend.” Comparing these attendance figures to the 2007 event, which saw a sell-out crowd of 90,000 people over the race weekend shows the tremendous continued success of the Bahrain F1 Grand Prix.
The 2007 90,000 attendees which brought in $10.8 million U.S. in ticket sales, along with TV rights, merchandise, food, and drink from last years Grand prix yielded a gross economic impact of U.S. $548 million dollars. Attendance was up this year by 9% – to 99,081, so based on last years ticket sale income alone, 2008 should tally up $11,890,000 dollars U.S. The BIC’s preliminary projections of an approximate 15% overall revenue increase in 2008 - to $630.2 million is not a strecth by any means. $630 million dollars U.S. is a vast amount of money for one event to generate across the region, and it is easy to see why the Bahrain Parliamentary and the Bahrain International Circuit consider this as a very important and crucial event to the country.
”The growth of popularity of Formula One and motor sport in general amongst sports fans in this region since the BIC was built is extraordinary and highly rewarding to see,” said Whitaker. “It is no less important that corporate interest is following suit, with the step-by-step increases in corporate sales that we have seen through the first four Bahrain Grands Prix, taking a huge leap for 2008. Almost every key decision maker in the Middle East business community is expected in Bahrain either as a host or a guest in one of the VIP areas, underlining what an invaluable tool for commerce motor sport can be.”
Rahal Letterman Settles With Sponsor Patron
Rahal Letterman Racing, the Indy Racing League team owned by Bobby Rahal and television host David Letterman, settled a suit with driver Scott Sharp and sponsor Patron Spirits Co. over the terms of Sharp’s contract.
The parties reached an agreement out of court, Rahal Letterman spokesman Erik Mauk said on March 24th in an e-mail. Terms of the settlement are confidential, he said. Michael R. Josephs, the Miami lawyer who represents Sharp, didn’t immediately return a call seeking comment.
The suit, filed November 2007 in federal court in Miami, alleged Sharp breached his contract with the Hilliard, Ohio- based race team by refusing to return as a driver for the 2008 season. Sharp and closely held Patron were supposed to pay $5.2 million to have Rahal Letterman field a car in 2008.
The suit sought an order barring Sharp and Patron from signing with any other race team and unspecified damages for breach of contract. Sharp filed his own lawsuit alleging Rahal Letterman breached their agreement to field a competitive Indycar team and had cut back on funding for personnel and research and development.
Sharp and his sponsor, Patron Spirits have move to the American Le Mans Series where he drives for the Highcroft Acura racing Team. Sharp is teamed up with long-time sportscar ace, David Brabham. The pair will contest the LMP2 class in a Acura ARX-01prototype.
That five million would have been about 70% to 100% of the Rahal team budget to field the IRL car for the season, as IRL team budgets vary but are estimated to be in the $5 to $9 million dollar range. The IndyCar Series is now merged with the old Champ Car Series, where Champ Car team budgets were a bit higher, somewhere in the neighborhood of $20 to $30 million dollars per season. Compare those figures with Formula One team budgets and they seem to be rather paltry.
F1 team budgets range from about $450 million dollars to a “lowly” $60 million dollars. Sharp and Patron’s $5 million dollars would almost cover the cost of a single fully equiped F1 car! That $5 million would just about pay the bill for a seasons worth of wind tunnel time! The list goes on and on, but you can readily see that the costs in Formula One Racing are enormously high. Although, cost-cutting measures are currently in place with further cost restrictions take effect in 2009, and beyond.
Spyker Cars Loss Widens on Sale of Formula One Team from 2007
Spyker Cars NV the Dutch maker of luxury sports cars, said its full-year loss widened after the company sold its unprofitable Formula One racing team in 2007. The carmaker agreed to sell its Midland Formula One team for 88 million euros or approximately $140 U.S. million to Indian billionaire Vijay Mallya and former Chief Executive Officer Michael Mol’s Strongwind group, after reporting a first-half loss on earnings. The team have since become the Force India F1 team.
The company had a nine month loss of 66.8 million euros/$106 U.S. million dollars, including a 36.1 million-euro/$57 U.S. million loss from the Midland F1 racing team, Spyker said March 3. The company said today that it expects a sharp increase in both production and sales. Spyker rose as much as 89 cents, or 14%, to 7.09 euros, and in Amsterdam trading and was up 11 percent at 6.87 euros as of the market close on March 28. The stock has gained about 69% this year.
A severe Lack of cash led Spyker NV to obtain loans of about 15.9 million euros/$25 U.S. million from
Out The Possibility of Nascar in Her Future
Part I
“The door has never been shut,” she said Friday at Kansas Speedway. “I’ve learned too well over the last six to eight years, you can’t say anything is a never. Saying never is a very strong word, and if you do enough interviews and say that word, it really lives.” Patrick, 26, had a brief flirtation with leaving Indy cars to race NASCAR in the summer of 2006 while in the final season of her contract with Rahal Letterman Racing.
If she eventually does migrate to Nascar, the economic and financial impact will be in the multi, multi millions. Patrick will bring as well as establish a massive young female fan-base, along with her many, many fans she already has. That will mean millions in merchandising, ticket sales, and TV revenues for Nascar – something they are fully aware of.
Listen to the April 25th interview with Danica: http://media.bloomberg.com/bb/avfile/Sports/Business_News/vTp2.BkKbh7E.mp3
