FredC

Got that from someone i know well who is a key stakeholder in the Montreal F1 GP... When there is real TV coverage for a series (decent tv rights licensing revenues for the series owners), typically teams get a cut, then people working for the teams tend to get paid. And in this system, teams that want to do well for their sponsors or to get sponsors tend to pay well for top talent in crew and drivers. No or limited TV coverage means no money.... unless you find a sponsor for products/services that cater to amateur racers or other wealthy members of the paddock, and whose profit comes from margin on individual transactions instead of volume ( business jets VS gelato). According to him, revenues sources for teams depending on series:

Profitable teams in aggregate:
F1: tv rights, sponsorship, merchandising
Nascar Nextel: same
Nationwide/Trucks: sponsorship, merchandising

Unprofitable teams in aggregate (racing for the love of racing):
Indy: sponsorship, paid drivers
ALMS: sponsorship (only factory teams make enough this way), paid drivers (exceptions exist)
Rolex / Grandam: sponsorship if any, paid drivers (exceptions), rent a ride
All others.... take a guess.

C.J. Ichiban

well in my field of expertise...I've been privy to lots of union info on revenues are generated and shared in major sports...

but since we're talking specifically racing:

Revenue streams:

*Fans spend money to watch "events"
--in racing- this is from ticket sales, and cable TV shares, and network TV ratings.

example: Speed Channel has mostly nascar because advertisers want it that way. ALMS, rolex, etc type stuff is much better programming than Pinks, or those crappy yeehaw rountables, but risi competizione or GMG or Farnbacher Loles doesn't pay as much as Target, Wal-Mart, or various boner pill companies do for commercial space.

*Fans buy "merchandise" and "licensed products"

---those Dale Jr t-shirts and Alonso hats, all the way down to pit passes, earphones to listen to the race, and even licensed video games (such as nascar, F1, WRC, Gran Turismo, Forza, etc)

*Track-side parking, concessions, camping, etc funds all get thrown in the "revenue" pot as well.

*Advertisers pay teams, TV stations, Tracks etc to place their signage and commercial applications everywhere.

*Naming rights to a series, track, event, etc are enormous.

---Do you think it's called "mazda raceway laguna seca" because all those complaining residents picked it out of a hat or because Mazda paid 40 million bucks for that?

*Internet advertising

--go to the websites of all these tracks, or the teams, or the series. They've got web ads for driving schools, parts, tires, all sorts of crap on there. those people are paying for wheels to turn too!

Revenue Sharing

basically- who gets what, and how much do they get what they get when the get it, and who gets the most...


>penske and other dealership owners basically take certain costs on the chin initially for the race on sunday sell on monday factor. He had a nice bio in American Driver magazine IIRC that talked about his mega empire of 150 or more dealerships. No doubt he can annex some of the cost as an advertising budget- he's got dealerships in multiple countries too.

>Each series signs a contract with NBC, Speed, Etc for the rights to air the races. NBC pays a few million bucks to ALMS to air the so and so grandprix of anytown usa. The racing series then splits that money as it sees fit (usually the winners get the most cash, eh?) in order to field the most competitive and therefore most marketable race. This is pretty similar to UFC paying Rampage Jackson an appearance fee- what would ALMS be without Audi or Porsche?

>Sponsors want to win, therefore they try and pay for the best car/driver. Tide loves it when Jeff Gordon wins a race, and stands on their huge left turning billboard with a bunch of orange juice or gatorade flying all over the place. Usually the best drivers cost the most money...so this is where their salary comes in. Of course the Team Owner decides how much he wants to pay the crew chief, fuel dude, etc. Team Owners will have a budget of X dollars (or XXmillion) based on either what the Manufacturer (Audi is said to spend +10million bucks per race on the R10) or his own pockets allow for.

>Drivers get endorsement deals, and appearance fees just like athletes without cars. Tony stewart gets a pretty good amount of cash from his home depot commercials, and I'm sure those SAG checks of 38 bucks per airing per market help too. That's right, a commercial "actor" gets paid for every major market that the commercial is shown in. So nationally televised gigs are basically 50k-2million bucks just on residual fees.

>Sales of licensed products go into a large slush pool that is cut up per driver/team on a per appearance basis...so if you start all the LEFTCAR races, you get the maximum basis for that series revenue pool. Obviously, some forms of racing draw more product sales- Formula 2000 or whatever doesn't sell PS3 video games...but nascar does.

>Ticket sales are mostly a boon to the track, but just like touring bands, the concert promoter and series promotors gets an incentive based kickback based on how many tickets over X-amount are sold. How much does it cost to see F1? NASCAR? INDY? a **** ton I'm assuming.


>Any time the series gets paid, the drivers get paid. Depending on how good it's bargained- in baseball we get a good portion of MLB product sales but basically get more when someone's name is on the t-shirt. I've never seen anyone wearing a nascar shirt that was just a nascar logo though, so I'm not sure how that works out for racing explicitly.

>Car-Product Companies such as Michelin, Pirelli, BBS, etc benefit from those of us track addicts who use their products based on who uses what in the series. Enthusiasts are the reason why MSPC tires are an arm and a leg- we wouldn't buy them if they totally sucked...and they're good tires (relatively) because of the development that michelin gets out of them by testing new compounds in racing conditions every weekend.

>Manufacturers such as audi, Porsche, Mazda, BMW are multi-multi multi billion per year sellers. Their products are waaaaay more visible on race tracks, and we buy their street cars because they're developed based on what technology works to improve the breed.

>Individual drivers make decent money as instructors...which is a good way to kill time in between races or during the offseason...and more than anything else- it's better than nothing!


So in a nutshell, if the race is on tv- everyone makes money back...it might not be enough to offset the cost of racing, but some comes in. Sponsors pay a lot to everyone, and ticket sales are expensive. The fans, viewers and eventually customers pay everyone indirectly. Winners get really big checks.

if the race isn't on tv- you get some prize money and sponsorship dough when you win, if you don't you're not getting much back other than "support". owners lose way more than they gain at this level.

race911

Great summation! Now on first glance I would have said you did this on your off day (as I'm watching the A's blow an early lead). But I see you guys are dealing with that juggernaut of the Orioles.........

C.J. Ichiban

yeah we had an early game...so it's back to the computer!

DrJupeman

This is exactly NOT how I was told it works by the VP of Marketing for CBS (recall ALMS was on CBS last year). ALMS paid the network for the air time. ALMS then needs to find advertising on their own to help pay for being on TV. Obviously they hope to get more advertising revenue than it costs to pay CBS for the time.

According to CBS, only truly major sporting events are paid-for by the network: think NCAA Finals, Super Bowl, World Series, maybe one or two tennis tournaments (US Open), etc...

C.J. Ichiban

really well charlie that sounds weird...every other major sports series is paid by the channels/networks.

monday night football is on espn because they paid more than fox, cbs or nbc would. baseball gets paid roughly a billion or so from the networks- but at least that much.

lawjdc

Still not as expensive as bottled water.

amaist

MNF is a huge major event. Of course the networks are going to toss large sums at the league for the right to show it.

Motorsports other than NASCAR (and Indy 500) are very minor events in the United States. The networks can probably make more money showing infomercials than if they actually paid for the rights.

If Indycars didn't have the idiotic split they'd be getting decent TV money, too. And I am sure that if we didn't have the whole GrandAm ALMS business those guys would be doing better. Most people don't care enough to tell which is which.

Veloce Raptor

Yup, ALMS, Grand Am, and Speed World Challenge all pay something for air time, I think.

SeaCay

Exactly what I heard this weekend from an in-the-know person.

1AS

I think the money mostly gets turned into noise. The amount of profit on gas, tires, burgers and parking is trivial compared to the amount spent in total. On the big events, the TV station makes the most money, followed by the track owners/promoters. A few drivers make a ton, and most of those are in NASCAR. I don't think most team owners get rich racing. They got rich in other areas, and hope to use their fame and talent to make a few bucks. Mostly, the money goes to the people who make the show go on- from the folks selling the beers and burgers, to those who will be cleaning up later, fixing the cars, and driving them to the next event. And of course, fixing and changing all those parts. AS

race911

Someone here has to have knowledge of the CART deal on buying time from back in the days when they were public. I remember it being pretty big news in Autoweek, or someplace. What happened after Kalkwhatever, Forsythe, et al bought the carcass, I have no idea.

#11 WCGT GT3RSR

Other than NASCAR and F1 all motorsports aired in the US buy airtime. World Challenge, ALMS, Grand Am, CART/ Champ Car, and even IRL all pay the networks. Years back the 500 was paid for their programing but nowadays even that event writes a check. The series can recoup some of their money by selling commercial spots however network time buys still lose money.

A.Wayne

Not true for other major motorsports , the ALMS , yes as their draw is weak, So yes i can see them paying for their air time as did Cart in the end. In the good old days of cart it was not so and with the indy 500 as leverage the tv money was good.

race911

I wanted to make the distinction of CART as a public company, it was all out on the table what they had to pay. I recall it being some interesting number!

(Just looked, no one has picked up the ticker symbol "MPH"?)