Question About the Business of Racing
08-06-2008, 12:20 PM
#16
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Auberlein and Hand can't do a 10 second interview without turning it into a commercial for Ruby Tuesday. They're definitely getting their money's worth. Kind of NASCAR-ish, but if it works, more power to them. Somehow, I can't see some of the European/Latin American drivers becoming shameless pitchmen.
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08-06-2008, 12:26 PM
#17
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There are other things that a race team brings in to support itself as well. Drivers for example may have thier own personal sponsors which help foot the bill.
A "new" technique some race teams use to bring in income is the "driver test day" where they find relatively talented amatuer drivers and let them "test" for a position with the team for a fee, usually 3-5k. Its a win-win for the team, because they make a decent amount of cash- say, 30k- and might actually find a decent driver candidate for a relatively low output- say 10k for the day, including track rental, gas, tires, crew wages, etc.
There are other things that a race team brings in to support itself as well. Drivers for example may have thier own personal sponsors which help foot the bill.
A "new" technique some race teams use to bring in income is the "driver test day" where they find relatively talented amatuer drivers and let them "test" for a position with the team for a fee, usually 3-5k. Its a win-win for the team, because they make a decent amount of cash- say, 30k- and might actually find a decent driver candidate for a relatively low output- say 10k for the day, including track rental, gas, tires, crew wages, etc.
08-06-2008, 12:26 PM
#18
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Nope not at all, but deductive reasoning would suggest that. The team was founded in 2003 by Seth Neiman. Clearly he has an interest in racing/driving since he is one of the drivers. Okay so then let's assume he didn't start the team just for entertainment and he wanted to run a new business/return a profit. Most of the drivers that are racing (or have) with the team are pro's and not paying for their ride (Bergmeister, Henzler, Law, Pilet, Overbeek). So then we go to the sponsor/parter page on there website to find the money, since they are barely visible on the racecars (up to this point I wasn't even aware who their "major" sponsors were). So we find only 4 sponsors. First is Michelin who is clearly not funding the team, simply providing tires. Then we go to Troy Lee Designs a smaller motorcycle fashion company, I doubt they are funding very much of the team. So that leaves us with the two major sponsors, Shoretel and ESilicion, a quick search on google returns the fact Seth Neiman (a super rich venture capitalist) is on the board of directors of both and also is a large share holder/founding member of each. Now that would lead me to believe either he is funding the team completely and he figures he might as well get some sponsorship opportunities out it, or he can pull strings at the company (or is just plain incharge) and is having them fund his hobby. Now could the organization as a whole be breaking even, possibly, but the real question is the team owner returning a profit, I HIGHLY doubt Seth Neiman is making money on the operation, although that is 100% speculation.
She obviously doesn't know how fast I am
The reason is that if I set up a marketing business around my club race car (soon, very soon) then it must turn a profit in what the IRS considers a reasonable amount of time. I think the rule is 2 of the last 5 years or it's a hobby not a business and their are tax implications.
Flying Lizard has to be showing some sort of profit as an ongoing concern or else it is the owner's hobby and he's got the cash to play all he wants answering really to no one. Either way, the guy has a race team.
08-06-2008, 12:27 PM
#19
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I've always been curious about this as well. I've worked in advertising and am astonished that teams can make enough money to support a season of ALMS racing with tiny stickers on the sides of the car. The exposure is negligible on TV and the client/party tent at the races cant be worth that much in the grand scheme.
I can understand why Ruby Tuesday is in it when Auberlen and Hand do a direct plug 3-4 times per race, but is it really worth the couple hundred g's (pure speculation, no idea how much they pay) for a plug on SPEED channel for a race MAYBE aired live, more likely Monday at 3pm?
Serious questions. Can anyone give a real broad but plausible balance sheet for ANY big timer team?
I can understand why Ruby Tuesday is in it when Auberlen and Hand do a direct plug 3-4 times per race, but is it really worth the couple hundred g's (pure speculation, no idea how much they pay) for a plug on SPEED channel for a race MAYBE aired live, more likely Monday at 3pm?
Serious questions. Can anyone give a real broad but plausible balance sheet for ANY big timer team?
08-06-2008, 12:55 PM
#20
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Aren't most teams in the lower divisions (ALMS, Rolex, Koni, etc) just teams formed by rich guys who want to drive so they spend the money to form a team and get a professional co-driver so they can compete?
Seems pretty simple to me.
Seems pretty simple to me.
08-06-2008, 12:59 PM
#21
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With a few exceptions (Manufacturers, teams that actually make money off pay for your riders, and teams with real sponsors) that about sums it up.
08-06-2008, 01:42 PM
#23
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Bingo!
Nope not at all, but deductive reasoning would suggest that. The team was founded in 2003 by Seth Neiman. Clearly he has an interest in racing/driving since he is one of the drivers. Okay so then let's assume he didn't start the team just for entertainment and he wanted to run a new business/return a profit. Most of the drivers that are racing (or have) with the team are pro's and not paying for their ride (Bergmeister, Henzler, Law, Pilet, Overbeek). So then we go to the sponsor/parter page on there website to find the money, since they are barely visible on the racecars (up to this point I wasn't even aware who their "major" sponsors were). So we find only 4 sponsors. First is Michelin who is clearly not funding the team, simply providing tires. Then we go to Troy Lee Designs a smaller motorcycle fashion company, I doubt they are funding very much of the team. So that leaves us with the two major sponsors, Shoretel and ESilicion, a quick search on google returns the fact Seth Neiman (a super rich venture capitalist) is on the board of directors of both and also is a large share holder/founding member of each. Now that would lead me to believe either he is funding the team completely and he figures he might as well get some sponsorship opportunities out it, or he can pull strings at the company (or is just plain incharge) and is having them fund his hobby. Now could the organization as a whole be breaking even, possibly, but the real question is the team owner returning a profit, I HIGHLY doubt Seth Neiman is making money on the operation, although that is 100% speculation.
08-06-2008, 02:45 PM
#24
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I don't know about the rest of you but I would truly love to be in his position. The thought of being able to afford the best in everything and to run a first class operation without having to worry about financing would be phenomenal.
08-06-2008, 02:50 PM
#25
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Back when i was drag racing i had a sponsor and even though he did very well with his business he still pursued sponsors to help him. The little stickers on the side of the car are contigency stickers (they were for us) that usually pay if you win or have a good finish.
I do know that like someone mentioned above that some of these teams are built from people who love the hobby,sport or whatever you call it and have the money to move into the big leagues. I knew plenty of people that started out in sportsman drag racing and moved up to the pros because it was their hobby, not that they were looking to make money from it.
This is not to say that some do start off as a hobby and turn around and make it into a business. But like any business you need to invest some money into it and i dont think you could start a team based on sponsor money alone. You could probably fund a season from the sponsors after you have made the initial investment.
The only way to make a million in racing is to start with 2 million.
I do know that like someone mentioned above that some of these teams are built from people who love the hobby,sport or whatever you call it and have the money to move into the big leagues. I knew plenty of people that started out in sportsman drag racing and moved up to the pros because it was their hobby, not that they were looking to make money from it.
This is not to say that some do start off as a hobby and turn around and make it into a business. But like any business you need to invest some money into it and i dont think you could start a team based on sponsor money alone. You could probably fund a season from the sponsors after you have made the initial investment.
The only way to make a million in racing is to start with 2 million.
08-06-2008, 02:54 PM
#26
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If i can not own a high caliber team, i will just fund a team for myself and my son if he decides to race.
08-06-2008, 04:07 PM
#28
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08-06-2008, 04:18 PM
#29
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What do the different classes pay for finishes? I've never seen a breakdown of winnings like you can find in Nascar. For instance, you win/place/show in DP, GT, or Koni- what are the prize money and contingencies?
08-06-2008, 04:32 PM
#30
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They had 7 Porsches in the GT class at Daytona this year finishing 2nd. 3rd. and 4th. They do a very professional job in the league of FL and their clients pay handsomely for the privledge.....