As a more militant attitude towards money consumes the British public, there is a call for far greater transparency in all things related to business so why should motorsport be any different?
It shouldn’t, however, this will be the first time in history that the funding of motorsport becomes anything more than vaguely translucent. There have been countless attempts to accurately report the inflows and outflows of money, but with such powerful forces binding this high-speed world together, it is doubtful that we will ever fully know the truth.
So the question is – how will this industry, so dependent on commercial sponsorship continue to grow whilst firms rein in their marketing budgets and cannot be seen to spend cash on corporate entertainment (a.k.a. having fun trackside) whilst they’re making people redundant on the shop floor?
The truth is that it’s a poorly put together sponsorship deal that relies on a return based solely on corporate hospitality and garish car liveries. Most sponsorship deals are two to three year commitments, and those will likely be honoured regardless of the economic doom and gloom we face.
Relate this specifically to financial services and the message is very clear – take on the multi-million pound accounts of a Formula One team and you can afford to offset a lot of cash against a sponsorship deal in cleverly devised tax breaks. There is nothing illegal about these and many other business methods. Creative accounting has a whole battalion of unusual finance types ready to exercise their skills to maximise benefit to all, however, the ethics of such are up to the reader to decide.
Despite the changing economic climate, the money is still there funding the teams and paying the wage bills. But the ostentatious displays of corporate branding and glamorous hospitality will be tempered for a while... after all, we’re all still waiting for our shares in a certain British bank.
As with every recession, there are winners and losers. The same applies in British motorsport funding and if there’s ever been a time to keep ahead of your opponents off the track, it is now.
Failure to heed the warnings highlighted by many marketing and advertising agencies in 2008 has led to the demise of many sponsorship reliant activities – not least of all motor racing. For example, since the end of last season, many established British Touring Car teams have been scratching around for testing budgets and those less prepared have shut up shop altogether this year.
Many smaller, leaner, commercial and club operations are coming up trumps, and there are three main reasons why – cost savings, trickle-down, innovation and persistence.
Take the new SEAT Supercopa UK racing series, refusing to be beaten by the withdrawal of the manufacturer from supporting the championship, competitors are now challenging for the 2009 title as part of a well put together independent race series at much lower costs. The sacrifice of leaving the prestigious TOCA package has not been felt by many.
More surprisingly, where the big international players are losing out in the corporate funding stakes, domestic outfits are the benefactors of trickle-down. In overt attempts to engage with the UK consumer and gain patriotic favour, businesses are turning to spend at home. Corporate funds which might previously have been allocated to bit-part sponsorship of global events go a lot further on our little island.
Necessity is the mother of invention – isn’t that what they say? This is the third way in which we will see domestic motor racing prosper this season and for many to come.
YourRacingCar.com
(YRC) – cards on the table - YRC is my outfit but this is not about self-promotion, there is a point to be made. With some enthusiastic support, we set about establishing a fan club to fund a season’s racing in the Michelin Ginetta G50 Cup. Paying a small subscription to ‘buy into’ a racing team is certainly not a new concept, but giving the concept commercial viability whilst retaining a charitable element has been really well received by racing supporters from all interest areas.
For Club racers there have been some movements forward too. Aspiring drivers are looking at round by round funding options, reducing the costs to any given sponsor and giving them a chance to focus on just one weekend’s exposure rather than a full season’s commitment. The extra effort required to leverage eight or more deals in the year is proving worth it for those with the time to target local companies.
I see this new era much like the travel industry – this year the Bahamas might see a slump in visitors where I firmly predict that domestic travel will prosper with the more picturesque areas of the UK over-run with home-grown tourists – motorsport is much the same. Don’t sit in on a sunny day and watch the F1 TV coverage, stick on that recorder, jump in the car and get to your nearest track or come along to the British Touring Car Championship to watch British built cars battling on British soil for a British Crown … 350,000 other fans can’t be wrong!
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