MONEY is always a major talking point in professional sport, but the Coronavirus pandemic has shifted it from being a compelling subplot to the main activity – the competition itself – to the headline act.
Across the globe, major sports are scrambling to ensure they emerge the other side with enough cash to actually return to competition when the current situation is over.
Motorsport is far from immune, either; Supercars, Australian Racing Group and Governing body Motorsport Australia itself have all placed at least some staff on leave, or stood them down entirely, in order to protect their finances and save jobs for when the world rights itself.
The biggest question for motorsport will be how it slowly comes back to life in what is likely to be a vastly different-looking world, and how it funds that return.
Supercars are the biggest financial influence in Australian Motorsport and also the most complex.
The championship is unique in Australian Motorsport in that, like the AFL, NRL and Cricket, a substantial portion of their income comes from fees paid for their media rights – in this case, by Fox Sports and Channel 10.
This income underpins the financial viability of the category, helps to fund the teams Racing Entitlement Contract (REC) payments to teams and helps draw in and maintain sponsors.
So like the footy codes, it’s important for Supercars to race even if the initial rounds back have to be run behind closed doors, because going racing means a TV product and a TV product means income for the championship to continue operating.
However, while running TV-only events will likely be a key part to Supercars’ return, it also means the business model of staging events will need to shift as well, at least in the short term.
At the moment events are either self-promoted by Supercars, or put on by third-party organisers who pay Supercars to be on their event, and (ideally) profit by attracting a crowd and corporates as a result.
This will have to change if mass gatherings are not permitted, with the likely outcome being that Supercars instead dry-hires a given circuit and puts on a ‘bare bones’ event – for TV only – which will engineer a significant cost saving for all involved.
The advantage is that compared to the major ball sports, Motorsport without crowds will hardly damage the TV product.
While watching Aussie Rules games in a soulless, empty stadium was eerie and significantly altered the experience, watching racing cars at a circuit with no crowd will not change much at all – just crank up the microphones and away you go.
It’s a huge bonus for Motorsport and gives our game an advantageous position when it comes to coming back from the current shutdown.
There will be pain in losing attendance at circuits, at multiple levels and it is highly unlikely that the major street circuit events – which require a long lead time and must have crowds and corporates in attendance to be financially viable – will go ahead this year.
However, the cost of staging an event will also will also drop dramatically which, if it is done correctly, can potentially limit the financial damage to the sport and get them back on track at the same time.
Unlike the AFL, NRL, A-League and even Cricket, Supercars – and by extension their teams – revenue is significantly less influenced by attendance numbers which should give them a leg up in comparison, assuming crowd-less sporting events are the immediate future of sport in Australia.
Outside of Supercars rounds the business model is somewhat different, meaning different outcomes to how it rebounds from the current crisis.
Broadly, championships racing on the Shannons Motorsport Australia series (including TCR and S5000), and indeed the series itself, operate on what is defined as a ‘User Pays’ system – where categories pay to be on the program (and receive associated benefits like TV) and then charge competitors an entry fee to race. The model is reasonably simple, and the financial model is not anywhere near as dependant on TV or gate revenue to offset costs.
Likewise, attendance at these events is generally a bonus; the cream on top, if you like.
The benefit here is that the health of Australia’s second-tier categories is not anywhere nearly as dependent on TV and attendance, meaning a return to racing should ideally be simpler to engineer for those categories.
The biggest problem is that no one knows how the economic downturn will hurt the competitors themselves.
A vast majority of Australia’s categories rely on owner-driver competitors racing on a tight budget, or more wealthy amateur racers using a weekend away at the circuit as their game of golf.
For both parties, returning to spending frivolous cash on driving cars may not be an easy thing.
The budget racers may be struggling financially through this crisis, either having being laid off or stood down from their jobs.
Meanwhile, the wealthy among us may have been forced to stand down workers, or even potentially retrench staff to ensure their business survives.
Generally, there is a risk many will abstain from going car racing so soon after making people unemployed – it’s not a good look.
This is one of the few things that won’t be known until entries are opened for the first event back; how many people can still afford to turn up and actually go racing?
It’s one of many questions that the sport faces on it’s inevitable return.
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