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Motorsport Maths

BW Online Bureau Nov 08, 2014

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[What is the right way to make a motorsports championship work? That too, in a scenario when seven out of ten motor sporting ventures fail; in a business context where in the need to make their business look eco-friendly, several auto manufacturers have deserted motor sports. And in a country where cricket soaks up most of the marketing investment coming into sports. That would have been the top-most question amongst the management of Machdar Motorsports when they plotted the strategy for the i1 Super Series, an Indian motor sport racing event that will flag-off in mid-December. Robin Webb, a veteran who's familiar with the nuts and bolts of the motor sports championships and who will be involved as the series co-ordinator with the i1, says that there are a lot of lessons to be picked up from failures all over the world. According to him, that's probably where the management of Machdar has started on the right note. "In motor sports, it is natural to make the car your starting point. But here they have made the business the starting point," he says. His argument: the car can always be changed at any future point, if it does not meet the requirements, as long as the business fundamentals are rock solid. And the choice of the car, the Radical SR3 in this case, helps in getting the right amount of savings. A SR3 roughly costs $1,00,000 (around Rs 45 lakh), while a car that's geared upto F1 levels could cost a minimum of $ 4,00,000 (approximately Rs 1.8 crore). So if twenty such cars are required for a season of the i1 super series (18 drivers plus two back-up cars), using Radical SR3 cars will cost the teams a total of Rs 9 crore, while they could have paid four times the money if they chose race cars fit for the F1 circuit. Another focus is on lesser manpower - a Radical SR3 can do with 1 attendant per car as opposed to anywhere between 4-12 people per car that are used in other championships. That's also because, the i1 series will have a shorter race of 45 minutes, compared to an F1 race that could go on for two hours and beyond. That means saving on fuel costs and tyres, as no tyre replacements or refuelling will be permitted in the middle of the race. But on the flip side, a shorter race also means there will be lesser time for airing commercials during the live telecast. <img src="/businessworld/system/files/motorsports1_mdm.jpg" alt="The Radical SR3" style="margin: 5px; float: right;" height="200" width="200">The series has been designed as a single make racing series format - all the cars used by all the teams will be of one make, one configuration and one technical specification (Radical SR3). This will ensure that driver skill would be at maximum display. Another benefit is that teams do not have to bust the bank for investing in R&D and over-engineer their team car for superior performance. Also as Anjana Reddy, promoter of the series, points out, Machdar plans to plug-and-play into the existing infrastructure for its racing season. That means no additional costs incurred on building infrastructure. Among the seven venues that will play host to the inaugural season, two will be in India - Delhi and Chennai, with the remaining five venues across Asia. Machdar even plans to get the players under a central contract, so that team owners do not end up paying through their nose. Each team owner will have to put up an initial investment of Rs 22.5 crore ($ 5 million) with an additional investment of $ two million (Rs 9 crore) in the first year and Rs 4.5 crore in the subsequent years. Teams who do not overshoot this budget are expected to break even in the fourth year. That means the nine team owners put together will be investing a total of Rs 365 crore in the first three years put together. If revenues are split in the ratio 60:40 amongst the team owners and Machdar respectively, the i1 super-series will need an average of Rs 200 crore every year in revenues to recover its investments after three years. On paper, the roadmap seems well planned. But when the race begins, it could be a different match altogether.