V8 Supercars Australia – Why the teams lose money
V8 Supercars (Supercars Australia) teams lose money according to Paul Morris and Russell Ingall on their Enforcer and the Dude TV show.
In this article we look at the fundamental reason as to why teams competing in the Supercars championship lose money and suggest some solutions using the Toyota 5 Whys method.
Teams lose money competing in the Supercars championship
Why?
Sponsorship money insufficient to cover costs
Prize money not enough
Why 2?
Audience numbers insufficient
Why 3?
Not entertaining enough
Not available to enough people, Free to air TV in Australia only shows some races, subscription channels show full calendar, expensive online product for live races only (Kayo).
Time of races not conclusive to live race coverage around the world.
Not enough news coverage of series worldwide
Why 4?
V8 Supercars demand too much money for TV rights. Around 32 million AUD per year for Australian limited free to air rights
Rules, regulations not suited to good racing
V8 Supercars inflexible with timing of races
Why 5?
V8 Supercars want to maximise their income
The track side sponsorship is insufficient
The Result
The result of all these factors is the championship organisers making the money with the teams losing money.
This is not a sustainable business model. Without the teams there is no race series.
Why do teams compete?
There are two reasons why teams compete in a racing championship.
1.They do it for the love of the sport – This can only be done if the cost of competing in the championship is low.
This is dependent on the owner driver having enough money
2. The teams can make money for their owners ie naming sponsorship of the team eg Penske or the team makes money from sponsor revenue.
This is dependent on the exposure that the teams and the race series get.
V8 Supercars is firmly in the second category.
Teams compete in the Australian Supercars Championship to make money for their title sponsor or for the companies that advertise on the team’s cars.
For sponsorship to be successful there needs to be enough people watching and caring about the sport.
If the teams are losing money the series is not popular enough to support the cost of competing.
Working our way backwards through the Five Whys
Why 5
The Supercars championship has got its priorities backwards. Yes they are in it to make money but they can only make money if there are teams competing in the series and teams will only compete if the can make money or at least break even. Australian Supercars making money cannot be the top priority.
Why 4
The sport needs to be in front of more people, the money the championships asks for TV rights has to fall. For example in the UK it is not possible to see the Supercar championship on TV.
Yes you could argue that the sponsors of the Supercar teams do not benefit from their sponsors being shown in the UK because they are based in Australia.
But the TV channels who broadcast sports in the UK can make money from showing the races, their problem must be that the money the Supercars Championship is asking is too much to allow them to breakeven with advertising during the races.
The pricing for the TV rights is obviously not being set correctly by the Supercars championship. There are many dedicated sports channels in the UK which are subscription based and many free to air channels.
All of these channels cannot be wrong regarding what price Supercars needs to be charging in order for the championship to be broadcast in the UK.
With regards to the cars. Supercars is following the same formula of every failing tin top championship in the world. Going to single supplier gearboxes, engines, chassis etc etc. If it is not working for countless other championships (DTM, Super GT, NASCAR) it is not going to work for Supercars.
There was a set of rules and regulations that created massive interest from fans because it was relevant and relatable it was called Group A.
If V8 Supercars Australia is really interested in bringing the costs down, making the rule book smaller and re-sparking the interest of fans, they could do a lot worse than revert to the Group A regulations. Real cars which people can go out and buy (granted in limited numbers) instead of a silhouette formula which bears no relation to what you buy in the shop.
Why 3
Let us suppose the Supercars Championship does not care about the series being shown outside of Australia. Looking at the stingy highlights of the races on YouTube, the race circuits are not exactly bursting at the seams when it comes to spectators so whatever the Supercars Championship is doing to promote the series is not working and is going in the wrong direction.
Limited live races on free to air TV with the rest of the programme being aired on subscription based TV channels is not conducive to getting a massive audience.
Either the V8 Supercars Australia championship has to take into consideration the audience that a TV channel brings and not only the price they need to pay or start doing something with internet eg publishing the full races after the event has been run a la NASCAR.
Supercars has an online streaming service available at the moment. Obviously it is not bringing in enough viewers, I have not used the service so I can’t comment on its quality. What I can say about Kayo is that they offer two plans, Basic and Premium, however their website does not say what the difference is between the two packages, if the rest of the service is as confusing as this, it would go someway to explaining to low Supercars viewership.
Why 2
The bottom line is Supercars needs to make their product more available to public.
NASCAR has a similar business model ie TV channels paying for rights to air the races. We can also see that the crowds visiting NASCAR races is steadily decreasing, their last race at Indianapolis being an prime example.
NASCAR is changing, they now publish the full race on YouTube around five days after the race. This has roughly doubled the rate of their subscriber growth, and the same rate of growth can be seen with the number of views.
And of course, YouTube is paying NASCAR advertising, between 11k and 186k a year, a drop in the ocean in the grand scheme of things but it is still early days for NASCAR’s presence on YouTube.
Why 1
When the audience figures increase, so will the sponsorship money.
The fault of low figures rest not only with Supercars Australia as a race series organiser but with the teams and the drivers.
The teams are not utilising the internet to promote themselves and their sponsors. Shell V-Power Racing, one of the biggest, if not the biggest team in Supercars has a YouTube channel, but it has less than 700 subscribers and it is not hard to see why. Short videos, interviews with drivers, the same stuff you see on TV.
There is so much fascinating content that a race team could put on YouTube, not just the teams at the front of the field but any team. Driver de briefs, engineer interviews, engineering meetings, fly on the wall team meetings at the factory, a day in the life with a mechanic, reality type TV show at the factories, videos showing mechanics changing parts on the car, videos showing developments on the car, parts or setup, the list goes on and on.
The same thing goes with the drivers, arguably anything they do as part of their work should be made into vlogging material, if they want to show some of their personal life fine but everyone can understand it being off limits, but while their on the clock, there should be content being made, either by the driver or the camera being used by the team. The possibilities are endless.
Not only does a big subscriber base give the team income, unlike other social media platforms which pays the content creators nothing, eg Facebook, Instagram, the sponsors of the team are getting massively more publicity and in reality, more publicity than they probably get during a race weekend.
We could see the video content becoming a bigger driver of a teams revenue than the racing activities.
Yes the Supercars championship has got it priorities backward ie wanting money first and foremost instead of nurturing the thing that is providing the money but the teams and the drivers are not realising anywhere near their full attention-getting potential.
In short the answer for the series is more viewers. To get more viewers the series needs to be more accessible and the cars need to be based on actual cars people can buy in the showroom.
