ON TRACK WITH ‘CRENNO’: The Business of Motorsport is Twice as Tough as the Business of Business

One of my favourite topics when I get the chance to have a good quality yarn to business associates in the sports industry is to talk about the difference between working in sports business versus general corporate business.

My sporting reference points with executives who have experience on both sides include AFL club presidents, board members, CEOs, marketing chiefs, golf administrators, lawyers, motor sport CEOs and more.

All agree with my theory that conducting a sports business is at least twice as hard, tough and demanding as conducting a regular or non-sporting enterprise.

I have a great base for drawing comparisons, having run the HSV Car business for 20 years and in parallel, also conducting the business affairs of the HRT Racing Team for 15 of those 20. I can confidently say that HSV was a ‘breeze’ to run compared to the constant ‘tornados’ that ripped through HRT over this sustained period.

Let me elaborate.

Our HSV car and HRT racing businesses achieved peak success in 2002 (just prior to the Walkinshaw collapse). The racing arm was close to a $10.1m business, whilst our HSV car operations was a business 10 times bigger in financial turnover, and in staff, approximately four times larger, with 258 people compared to the racing business with 58.

Motor sport not only demanded twice my time, but 10 times more callouts to deal with headaches, disputes, legal squabbles and all forms of constant protective strategies to counter the attacks from competition and even the governing body themselves.

There have to be some reasons for these added levels of toughness and demands to run a successful motor sport business versus a car business or, even more broadly, for the chairman of any AFL club versus, his chairman role of an external successful business.
These are my strongly held beliefs on why…

Firstly, motor sport is the toughest of all the elite sports, be it football, cricket, golf or tennis because it involves the team, the athlete and the complex mechanical object.

The mix of these three elements to extract peak competitive performance has a massive multiplying effect on the product/game that ultimately plays out in the sports arena. There are of course other sports that have a reliance on some third element e.g. the horse in horse racing, the golf clubs in golf, the racquet in tennis, the bicycle in cycling, however nothing approaches the complexity of assembling hundreds of moving parts and components to build a race car.

Likewise, the talents of the people required in a race team to ‘create’ the machinery verses other sports, is in my mind, far more complex and demanding.

My next strongly held belief surrounds the scoreboard.

In sport the scoreboard is omnipotent. It’s in your face every second of the game or the race and then following that whether you win, lose or draw every facet and statistic is analysed in fine detail. The media covering sport is incredibly competitive and they are relentless in their desire to create a headline that has an edge of controversy to sell more newspapers or attract more viewers. Compare the readership levels of a newspaper’s business section versus a sport section as well as the location of these respective stories in the dailies.

Just think for one moment about the level of TV programming dedicated to sport versus business. It must be at a ratio of 100:1. It’s all because the results on the sports scoreboard are front and centre constantly, morning, noon and night, 24/7.

Conversely, the business affairs and results/scoreboard of BHP (for example) would only be referenced twice a year at reporting time, versus every day for the full season when a team’s results are subject to scrutiny, even during training.

The scoreboard microscope in sport creates far greater stakeholder pressure for the executives in charge of the club, team, coaches and the athletes than it does for the CEO, the finance director and other key executives of a private or publicly-listed regular business.

‘Scoreboard pressure’ undoubtedly is my number one reason why sport business is much tougher and demanding than regular corporate business.

Another factor is the fan base and the demands they place on their team for results, versus what the shareholders demand from the CEO of a regular business enterprise.

The fan pays $100 a year to the club for a membership and has 100 strong opinions at the end of each week after every game or race on how the club or team should perform. Meanwhile, the shareholder of a public company may invest over $100k but have virtually no voice in how it operates.

The casualties and loss of jobs in sport with coaches and CEOs as a consequence of fans and fanaticism, versus shareholder pressure on a board in regular business does not bear comparison.

Even off the track or sporting arena, if a high-profile sporting CEO got booked for exceeding .05 there would be media frenzy for a month and sponsors would threaten to withdraw funding from the club. Whereas in most cases, if a high-profile business executive did the same thing, it would not rate a mention in the media.

The stakes have risen even higher in the past three years with the advent of social media.

Anyone on the street now has their own platform to tell the world what they think through Facebook, Twitter, Instagram and YouTube.

Every race team, every driver, every football club and footballer strive to boost their followers as social media builds brand equity (and smashes it if used inappropriately). But the number of eyeballs that look at their iPhones and computers nonstop for 15 hours a day can’t get enough of it. It also means social media has made the sports scoreboard so much larger than previously and not just in the results each week, but also on social and behavioural grounds. Again, this scrutiny is so minimal in the business world.

My final strongly held belief surrounds the pressure the governing body applies in sport.

Let’s take motorsport and the elite end of V8 Supercars. They are placed in charge of conducting the sport in a professional, ethical manner by establishing the standards and guiding principles for the teams to follow. Yet, the governing body also has a sales team in the market place competing vigorously against all the teams in the sport for corporate sponsorship.

It is the same in Football, Cricket and NRL. That’s the definition of ‘tough’ when in sport as you seek to recruit more customers; the governing body are in the same market at the same time trying to achieve the same end. In business you don’t get that double whammy effect as you work hard at winning customers.

The compensatory aspect of working in sport however is the constant adrenalin rush, the massive passion factor and the fact that all your gut-wrenching efforts and preparation to compete kick in every week when the flag drops or the siren signals the start of the game.

Corporate business cannot match that buzz.

So despite my strongly held belief that the sports business is at least twice as tough and demanding as the general business world, I can’t recall too many, if any, wanting to bail out of the role they enjoy so much in sport.

And whilst I don’t have any hard stats, all my contacts with up-and-coming young men and women show that there is a massive interest from the next generation in being employed in the sports industry. But their block and tackling capabilities need to be well-honed before stepping up – a lot earlier than if, for instance, they decided on a career in the bank!

The business of sport is not for the faint hearted. The scoreboard allows no place for anyone to hide.

John Crennan
Motorsport Contributor

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