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Sep 19, 2013 at 03:48 PM
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Racing in Recession. Will it Thrive or Even Survive this Crisis? Print
Written by Tony Dowe   
Aug 04, 2011 at 06:10 PM

We received this article this morning before world markets fell so precipitously. If racing has been in a recession, what next if there's no upturn in sight? What's next if the business environment for racing gets worse, not better?-Editor-

Much like America, sports car racing is broke, or very nearly so.

In whichever series you support the signs have been there for some time that people were spending money they didn’t have. Manufacturers in particular have been reined in by accounting departments and boards needing to squeeze more from a their Dollars, Euros, and Yen.

Some series have done a better job than others in disguising the racing recession, with more spec series, merging of classes; you know the deal by now.

They have all put on a brave front and some have done a lot of hard work towards keeping things going in a forward direction. Rules have changed, not always in ways that improved the racing, and there have been a lot of waivers thrown around to ensure that the few manufacturer dollars left continue to flow to the sanction body. You should not be surprised by this, the gnomes at our favorite series want to eat as much as the rest of us.

Sports Car racing can’t depend on further cost constraints in the year ahead; it’s already on the basement floor. There is not going to be any sudden return to “the good old days.” Racing is always behind the curve when it comes to a financial slow down. And it’s still behind when the economy starts back up.

It makes sense – if you want to remain in the business of racing – to adapt to the times. The most important factor in this process is – and has been – to reduce the costs.

Clearly this “recession” has been with us for some time. I had a meeting with the head of one of the series at the end of 2008 and my first question was “how are you going to put some money into the pockets of the teams that support you?” After a very long silence I tried again, and this time I asked the question “Ok, so how are you going to reduce the costs that teams incur racing in your series?” The silence was not quite as long, but long enough to convince me that this guy was completely out of touch with the reality of what was going on in the industry. He is still there…and still missing the point!

In that particular series the money flow has continued towards the series owner and the return to the “stakeholders” has slowed to a fraction of what it used to be. By now that the remaining teams realize “stakeholder” is just another way of saying “revenue source”

When it comes to business Don Panoz is one smart guy, but honestly, he is completely out of touch when it comes to racing. I suspect that a lot of the derision heaped on Scotty Atherton should be directed at the Don. Mr. Atherton is really the nodding dog of the deal, unless you want to talk about “green racing”. Scott obviously felt that this was a great “bandwagon” to which to hitch his star, and it did not cost Don anything, which is always good, but neither was it done in a meaningful way that might help series participants.

The only entity to make out on this deal was the ALMS (which collected various fees from suppliers and from sponsors of its various “green initiatives”; it did little for competitors and nothing fans.

The same must be said for the current media buy. I suspect that the Don reads the fan web sites and takes much of what he thinks he knows about racing from these sources. So, when a few – ten, perhaps – fans were banging on about video streaming being the future of race viewing and how cheap it would be, he jumped on that bandwagon, mostly because it fit how much he wanted to spend. One big point he missed was that this form of viewing was not what sponsors and manufactures wanted. But when did that ever stop those guys?

Another area in which the series has taken money from the competitor and put it into its own coffers is the “franchising” of products such as fuel and tires.  The pricing of fuel has gone skyward, in no small measure because the fuel company has to pay a very large fee for the privilege to sell its product. This “fee” is passed on to the competitor, and the same applies to the tire companies, in fact to any series’ supplier. This practice applies to both series, so I’m not picking on anyone in particular here. It used to be that after 8 hours of the Daytona 24 hour race you got your fuel for free. Not anymore!

So teams that choose to participate are “dumbing down,” staying in hotels further and further from tracks. (Did I say nearby hotels were gouging?) They’re only replacing parts that must be replaced, employing minimal full time staff, adding more fly-in guys – all of which contributes to the recession (depression?) we have today in the racing industry.

So when “fans” start banging on about Grand Am racing and “prototurtles” they are missing one very big point, there is a quite high level of cost containment around that series, which is what teams need in this economy.

And has this cost control damaged the racing? No, the racing is good, close and good makes for a worthwhile event if you travel any distance.

Sure, the cars look a bit strange with such a big greenhouse, but changes are coming; now if they would only give them more HP and a better exhaust sound that sounded like “Fast” then they might attract some more fans of sports car racing. But I digress.
 
Grand Am could finish the ALMS off right now if it so choose. How? Simple, increase the team’s prize fund by a factor of 2! But what we are seeing is death by a thousand self-inflicted cuts! I laugh at the “hardcore” internet “fans” that bang on about the ALMS “technology.” Do they know how much technology is in a LMPC or GTC? Those cars are “spec” cars, built to a price and included in a series so everyone can be in “the show” and allow the series to continue topping off its bank account.

The few LMP 1’s that are racing, a very old Aston and even older Lolas, are far from cutting edge. The only truly new technology you will see is at Sebring and Road Atlanta’s Petit Le Mans, because Audi and Peugeot will turn up with cars twice a year (maybe). Is that what it all comes down to?

So, here is the message is for the American Le Mans Series: Fix your business plan to include the teams. Become American; because the guys in Le Mans don’t care about you any more, you were a stepping stone to the WEC. Tailor the cost of competing to suit the levels of funding available.

Oh dear, I think I just gave you the Grand Am plan.

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