A Prospectus On The State Of Sport From 10 Industry InsidersGot money? If so, how about ponying up several billion so we can have a decent season of racing? Cutbacks have hit everywhere, some justified, some disguised as an excuse to gracefully back out from a record of racing failure, and some just to take a break to see how it all plays out in a few years. Even the most bloated budgets in motorsport, Formula One and NASCAR, have felt the pain. We asked some of the key participants, both in the foreground and the background in this business, on their view of the current status of sport.
Scott Atherton is president and CEO of the Panoz Motor Sports Group, which includes the American Le Mans Series.
EC: Due to the withdrawal of Audi, one of the most progressive manufacturers in showcasing new technology, how will the series respond for the upcoming season and continue to be on the cutting edge that separates the ALMS from other race series?
SA: These are certainly challenging times for anyone around the automotive or motorsports industry. But we are confident that our platform of innovative, relevant technology coupled with an aggressive agenda by our auto manufacturers to develop alternative fuel technology and efficiencies positions us to weather the storm better than anyone. The ALMS is coming off its most successful year ever, and with the addition of BMW Rahal Letterman, a stalwart new LMP1 effort by Acura's de Ferran Motorsports, and Patron Highcroft Racing, along with Mazda's two-car Dyson effort, there will be plenty on the track and off to keep fans excited.
David Bull Publishing specializes in titles involving all aspects of motorsport. He keeps track of marketing trends and the constant changes in the sport.
EC: As budgets are trimmed for professional racing and club racing takes a hit, people tend to stay closer to home and go see a film or an amusement attraction. Since your titles are motorsport-related, does your business increase or follow the trends of the major publishing houses and re-sellers? How will the cutbacks in motorsport affect DBP?
DB: Certainly we're affected by the economy; having had our best year in 2007 we've ended with an off year in 2008. How much my business follows the trends of traditional trade publishing is difficult to say. My sense is that because I specialize in motorsports books, many of which are fairly expensive, my niche offers a small bit of protection compared to the large New York houses that publish thousands of books on every conceivable subject. We're not dependent on the book trade, which has steadily reduced the floor space it allots to racing books, and the specificity of my titles means that the customers who want them are apt to buy them because they have information they need or desire. Cutbacks in racing shouldn't have much of a direct impact because within my niche I think my titles are diversified enough--biographies, racing histories, and photography books, as well as motorcycle titles. The poor economy is a much greater business concern, though from my perspective as a motorsports fan it's worrying to see what's happening in racing.
When the season is over and the rules change, where do the winning cars go--the Audis, Porsches, and Aston Martins? Museums, manufacturer displays, the show circuit, and private collections. Here, a highly placed collector offers his take on the values on the historic race car market.
Q: There's only so much of whatever is considered the pinnacle of quality whether it's art, property, or cars--this has been true in the past but today seems considerably different. What are the drawbacks and opportunities you see in the immediate future?
A: Things really haven't changed, in that top quality of any particular collectable is always in rare supply. Surely more "great" cars exist today than at any previous time, but then again, the proportion of great stuff to everything else out there probably remains relatively static, and of course there have never been more collectors and money chasing the best things than today. As for the current crisis, as with all major shifts in a market environment, not only do price swings occur, but perhaps even more importantly many things that would never normally come available do just that. So it's the combination of lower prices (in times of crisis) and the availability of truly prized examples that makes for opportunity, and the prospects for collectors to add or lose the jewels of the crown.
Paul Ritchie is the president of Porsche Motorsport North America. All current activities involving the GT3 are run through his office.
EC: In economic downturns, racing tends to return to its roots, meaning more interest in GT. This has been true of Porsche in the past, the 917 gave us the 911RSR, GT1 to 996 GT3, etc. Will this pattern repeat itself or is the market to diverse?
PR: The loss of the RS Spyder in American racing for 2009 was coincident with the current economic issues. Customers from last year decided to move on before the economy crashed, and as there are no new RS Spyder teams we find ourselves totally focused on GT racing.
We're not seeing re-distribution of the prototype teams into GT racing. They are moving to other manufacturers or other series for a number of different reasons. This year will definitely be a GT year as there will be increased competition with new OEMs entering in the ALMS. The newly sponsored Patron GT3 Challenge and Grand Am GT will see the majority of GT3 Cup racing this year with entries made up from a mixture of previous models and not all-new 2009 cars. So, overall, we see another strong year for Porsche while working with the challenges of a weak economy.
Tony Dowe has competed in almost every top form of motorsport, including F1. He has managed several teams in the ALMS and is a top-rate technical director.
EC: You've seen economic downward trends in racing before, as you've been in everything from F1 to sports cars. How will this one turn out and what has been the immediate impact for you as a team manager and director?
TD: I have honestly never seen such a lack of money or sponsorship as we are now seeing. It could just be that some people are taking the opportunity to jump ship at this point in time because it suits them to blame the current economy, but I don't think so. The problem in sports car racing is that there's really very little in the way of real commercial sponsorship. It's only factory teams or factory assisted teams that have real sponsorship situations. Most revenue for private sports car teams is derived from gentlemen race car drivers. That makes the investment one of "discretionary spending." Gentlemen drivers don't have to race; they can stay at home and be with the family, they can save money and invest in their businesses, and so on. This is the real problem in the ALMS, for example.
The withdrawal of factory teams leaves the series to be supported by independent, private teams. These teams can't provide any TV revenue support as has been done in the past by the factory teams that have now been lost. If we look at the series, post-Sebring, we will have a very small grid comprised of a majority of GT2 cars. Will the TV show GT2 racing? Doubtful, if 2008 was anything to go by. How will it turn out? Well, how long do you want to wait? The immediate impact? Tafel Racing won't be racing in 2009.
Vanessa Weikart is an important part of the ALMS as a private contractor; Vanessa's Hospitality provides services to a number of the top teams. Her clients have included Ferrari, Aston Martin, Maserati, and Porsche. To get "fed up," one has to have a credential to get in to Vanessa's, whether it's at Sebring or Le Mans.
EC: Did you have any advance feeling that the 2009 season was going to be a difficult one? When a team comes to you with a much tighter budget, how do you adjust and still give the team a first class hospitality experience?
VW: I am very surprised at the obvious "surprise effect" this whole economic situation seems to have on many people... How could they not see it coming?
Already last year during the 12 Hours of Sebring I sensed a change in the availability of funds as we watched teams who regularly ordered all their meals with us, start doing their own thing (i.e., pizza and burgers) for the first few days and then came on board for the full service later in the week when their time no longer allowed them to lose some crew member to cooking duties. There were also questions like, "What if we skip breakfast with you, what will that do to our bottom line?" My reply was, "I'll work with you as best as I can." It brought back memories of 1988 in the DTM. That was the first year I had to improvise and came up with the unheard-of plan to offer catering for more than one team or manufacturer in one joint hospitality tent as opposed to everyone having their own private space. (That year went well until the three teams sharing the tent all crashed in the first turn at Hockenheim but that's a whole other story.)
Unfortunately, my impressions of the luring downturn did not improve since the Sebring. In previous years, many teams used up their "lunch money" before I sent out their invoice, but they usually paid up in a timely fashion. This wasn't so for 2008.
Michael Knauthe operates a major freight forwarding operation near Atlanta. MSK and Kroll have been responsible for the shipping of most of the major team cars and parts from Europe to the USA. His reply was sent as a text message on his phone as he decided to go ahead with a sea cruise--hopefully to improve his mood.
EC: How does the pullout of the majors like Porsche and Audi affect your logistics for the rest of the series? With less to ship, do the higher costs get passed on to the smaller teams who don't ship as much? Are there fewer priority shipments?
MK: I'm sitting in the sun having a tropical drink and I have to think about work? Thanks, that sucks. With less to ship logistics will get more expensive for the teams. A special truck to a racetrack in the middle of nowhere costs the same whether the load is 10 or 1,000 kg. Also, the special personal service at every racetrack will suffer and be cut back as budgets tighten in this economy. I need to make money, but our service is first. It will affect everybody, including MSK.
Johannes van Overbeek has been with the Northern California-based Flying Lizard Motorsports team since its inception. One of his personal highlights was capturing the Porsche Cup title in 2007.
EC: You are a championship team with a very high standard, however the GT cars are always overshadowed by the prototypes. In past economic downturns, this has favored the lower classes simply on budget alone for more exposure. Do you feel that TV and the series should focus more on the private teams that are the backbone of the sport, especially during this financial crisis?
JVO: TV should focus on the best racing, whether it's in GT2 or P1 or P2, factory team or private. In the end, if racing is going to be successful, it's about entertaining the fans at the track and at home. People want action from their motor racing--passing, bumping, and dive-bomb passes. The last lap of the 2007 12 Hours of Sebring in GT2 is an example of TV being focused on the best racing. That last-lap battle between the Flying Lizard Porsche and the Risi Ferrari has roughly 100,000 views on YouTube. The fans ate it up then and are still having it as leftovers long after the race ended. Looking at the current list of participants in all of the ALMS classes, it appears that the GT2 class will be the hotbed of excitement in 2009. Wouldn't it be nice if the P cars complained that they weren't getting enough airtime for a change?
Duncan Dayton is the mover, shaker, and owner of Patron Highcroft Racing and surprised the racing world when he signed with Acura as part of its factory program for ALMS. The team quickly became a force in 2007 and throughout 2008 challenged the Penske Porsche Spyders right down to the wire.
EC: After a season of intense competition where you challenged not only Porsche but also Audi for the top spot on the podium, how difficult will 2009 be for Acura without that rivalry?
DD: Having to raise the game last season against Penske helped us prepare in the off season for going head-to-head against Audi. They would have pushed us, we would have pushed them, and it would have been great for the sport. We're disappointed that we won't have that opportunity against Audi except for their one race at Sebring. One aspect of Audi not competing this season is that not as much money will be spent on car development on a race-by-race basis. We had to last season to keep up with the Porsches. With the current situation, lack of development in order to save money will probably be good for everybody. Beyond that, the Chinese word for crisis is the same for opportunity, and if you can get the pedal down, you can be that much further ahead. It's a golden chance for Acura, for Patron Highcroft, and for the ALMS when everyone comes back.
Rich Walton is co-owner of Jerry Woods Enterprises, an independent Porsche facility in Campbell, Calif.
EC: How has the current economic slow-down affected your business? When did you first feel that something was going to happen and how does the immediate future look?
RW: We're fortunate that we are a diversified shop and have a fairly solid customer base. A tightening economy usually hits the standard services and people stretch it out by another couple of thousand miles, especially on the majors that involve belts, axles, etc. However our club racing clientele is going strong, as for many this is a serious hobby and they budget accordingly for each season in advance. Within that sport, the signs are obvious early on if the money is drying up. You have to have a car that is properly prepared and going racing with a car that isn't will cost considerably more at a later date simply from abuse and neglect.
There's so much information out there that most can figure out what they can and cannot do. The trick is not to be overextended in any area.