WHEN CAR-MAKERS SNEEZED, RACING CAUGHT PNEUMONIA

Leading motor sport journalist, Mark (‘Foges’) Fogarty, in early August wrote a most insightful article in Auto Action magazine about sponsorship in motor racing. The premise of his critique was summed up in the introduction as “AA’s pernicious pundit remembers a time when big brand names were all over the leading cars”.

Foges has always been one for thought-provoking commentaries but this one was particularly pertinent and resonated with me, as from my perspective, the highest priority, by a mile, is the need for major improvements in the commercialisation and attraction of more money to the sport and teams. “There was a time when motor racing was awash with the biggest commercial brands in the world in the ’70s and motor racing was neck and neck with the VFL (now AFL) in terms of big-name sponsorships,” he wrote.

He went on to classify today’s team sponsors by various investment levels, saying that Shell and Red Bull are clearly the largest investors and big names in Supercars, with a fair way back to the likes of Supercheap, Monster, Castrol and Mobil (noting that they only commit to a pittance of their glory days in the ’80s, ’90s and early 2000s). He then outlines the bottom level contributors, who tend to be motor sport enthusiast/related party companies.

Foges makes the point that unless you are a very top team you don’t get the big money any more, and that Supercars bosses need to go back 20 years plus another decade to realise how big the sport used to be. His final observation: “There was a time when big name brands would fall over racing. Now, unfortunately, they’re just over it.”

I don’t think it’s over, but I do think most teams have been far too slow to adjust and reset sponsorship mining techniques. The commercial operations are most often the orphans in the team’s structure.

It’s worth diving deeper into fearless Fogarty’s article, as seldom does anyone in the motor sport media room have either the courage or capability to venture into the commercial aspects of this sport/series.

Let’s first look at the teams’ combined results this year and test Mark’s theory that unless you are a top team you won’t be in the big money. Or put another way, unless you bring in the big sponsors there is no way you will be a top team.

The Teams Combined Performance results to date in 2019 are listed below. The number on the right-hand side indicates my assessment of the sponsorship dollar rankings of these teams in the top eight (or 16 cars):

  1. DJRTP Shell V-Power 4,383pts. No. 2
  2. Triple Eight Red Bull HRT 3,576pts. No. 1
  3. Tickford Supercheap Auto 3,231pts. No. 3
  4. Erebus Penrite 3,085pts. No. 7
  5. Tickford Monster 3,043pts. No. 4
  6. BJR Freightliner 2,698pts. No. 8
  7. Mobil 2,279pts. No. 5
  8. Kelly Racing Castrol 2,256pts. No. 6

My guess is Red Bull Racing would have the largest external sponsorship and have an enormous advantage over every other team in the competition, with my estimate of around a $2.5m top-up per year from Holden. No other team in the series receives any cash sponsorship from Holden, Ford or Nissan. But certainly, the Shell and Red Bull deals make Mark’s assessment spot-on that the serious money sponsorships sit with these two teams, and the results clearly reflect that. Then so on down the ladder, where performances would seem reasonably commensurate with the guesstimated sponsor income rankings.

The more compelling issue Mark Fogarty’s article raises is why have the big names ‘walked’? There is no doubt in my mind as to why…it’s the knock-on effect of the car companies’ dramatic pullback from the sport in both dollar terms and key car company executives’ motorsport passion factor. In the 20-25 years period Foges touched on, I would estimate the Holden and Ford investment levels in the teams and the sport generally would have gone from $15-$20m a year to around $3m annually today. (Originally, their commitments included cash sponsorship, bodyshells, parts, Dealer activations, hospitality, displays and advertising.)

When Holden and Ford (and Nissan) were fully immersed in the sport and contributing these big dollars, you could be sure the same amount again (taking it to $30-$40m) would come into the teams/sport with the high-powered contacts and influence the key executives of the car companies had in the corridors of power in corporate Australia. The persuasiveness of the CEO or Marketing Director of Holden, Ford or Nissan going to speak on behalf of or with teams to their equivalents at the likes of a CUB or Dulux was palpable.

Although sponsorship procurement was not part of my role at HSV/HRT, it somehow kept landing on my desk. My analysis of the sponsorships I was involved in over this 25-year period validated my belief that when Ford and Holden sales commenced to sneeze the sport caught pneumonia, and all the associated excitement and enthusiasm of all those connected quickly declined. This was most evident with the respective Dealer organisations when Dealer Principals and their Sales teams were in attendance at races, and on the Monday after a race the showroom and service department would be abuzz with the staff excitingly analysing the results, not to mention these same areas in the dealership full of race posters and driver point-of-sale material.

My review highlighted, however, that if you are well-connected and genuinely understand how big companies tick, and you know how to conduct yourself appropriately on the top floor where all the mahogany offices are located, you can attract big names and big dollars to the sport.

The 42 companies I was involved with in sponsorship deals over this period generated well in excess of $100m, with nine of them (or 20 per cent) being big companies signing on for annual amounts from $1 -$3m.

From these experiences, I note below my five key ‘starting point’ factors in attracting healthy sponsorships. Naturally, in many cases, there were multiple reasons for the deal getting started, but I have isolated the one primary motivator that made it happen.

  1. High level connections and/or introductions through Holden or other active networking channels. This generated 35 percent of the 42 deals done, and over $60 million in sponsorship value.
  2. Business leveraging, where as a consequence of involvement with Holden or our HSV operations, opportunities arose to develop and create reciprocal B2B and B2C business partnerships. This represented 35 percent of the deals done and 16 percent of the value.
  3. Opportunistic presentations as a consequence of an established sponsor in the sport seeking greener pastures, or the team’s ability to offer superior business solutions. Fifteen per cent of the deals done and 15 per cent of the total value.
  4. Company executives fanatical with motor sport and living the dream of team ownership. Ten per cent of the deals and seven per cent of the total value.
  5. Working on a hunch and making a cold call. This occurred with two big-name companies and resulted in significant multi-million dollar sponsorships. Five per cent of the deals done and seven per cent of the value.

Given the compelling experiences above where the greatest sponsorship opportunities all started with items 1 and 2, the sport must recognise the realities of the commercial skills in the teams and the sport. As far as attracting sponsorship, there appears to be plenty of ‘rabbit catchers’ but a paucity of experienced ‘elephant hunters’.

HRT’s 1990 Foundation Sponsors – Holden Dealers, Castrol, Telstra Mobile Net, Dunlop, Australian Airlines, Dulux and Park Royal Hotels.

Negative flow on for the sport and Mark’s point on losing big brand names is the introducton of a disproportionate number of pay drivers who struggle but bring sponsors who are generally ‘low glow’ brands.

We offer two recommendations to address the priority of introducing more big names and big money to the sport:

  • All teams must campaign to get their car brand’s Head Office totally re-engaged in the sport and make racing their No.1 sports marketing initiative, involving all staff and Dealers. While everyone acknowledges allocating extra marketing dollars for motor sport is impractical given the low volumes and market shares currently, there is still plenty of ‘moving and shaking’ that can be done to assist teams to open doors with corporate Australia and lift their income streams and marketing appeal if Holden and Ford are prepared to allocate considerably more time and energy to racing. Monthly marketing strategy meetings coordinated by the individual car companies with the teams, who run their cars, is an initiative that teams should urgently press for.
  • Supercars appear to have been little help commercially with proactive assistance to teams. Additionally, they are in the marketplace as a fierce competitor to the teams, trying to write sponsorship business for themselves. Instead of calling the odd Commercial Managers meeting, the Series needs to introduce a monthly Teams Marketing and Commercial Strategy Group. The two team owners on the Supercars Board may have a good feel for the racing side of the business and make very worthy contributions to the operational side of the business, but their experience in ‘elephant hunting’, high-level negotiations and a deep understanding of corporate affairs, cultures and networking is a question mark?

The Supercars Board should include have at least one Team representative with a proven record of success in high level business development corporate deal making. It is essential Supercars introduces a Commercial Strategy Group and attracts some high-powered external talent to also sit with the team owners to address the issues Mark Fogarty has identified.

Maybe the recent introduction of John Borghetti to the mix will see a shift from the Board’s current negative priority around cost-saving games to a far more positive and enlightening scenario of creating a fresh approach to helping teams lift their income-producing potential.

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