How to make $ in racing

These days unless you are in Nascar or F1 and maybe even the IRL, forget about it. No sponsor, does no want to be involved, unless its one of the three. If you wanted a sponsor for the ALMS or IMSA, you would need to get someone who is passionate about racing or have some serious connections with some large corporations.

 

Will, it was with you at the track in which I was told by another driver that (and I've never forgotten obviously) the best way to make a small fortune in racing is to start with a large fortune.

 

It has struck me - and somebody please set me straight if I'm wrong - that the WORST thing to be in racing is a team or car owner, if your goal is to turn a profit.

To elaborate:

- someone else makes a faster car - you lose

- series rules change adversely - you lose

- sponsors leave - you lose

- funded or sponsor friendly drivers leave - you lose

 

If you want to make $'s in racing you start out with $$$$$'s as Kenny pointed out.

Seriously though, your question is much too broad. First you need to pick a series and then a car.

A ZO6 will only be ablicable in three series here in the US:

1) Grand Am GT class (there were three running at Daytona this past weekend)
2) Speed World Challenge
3) ALMS

ALMS is currently out as it's run by the Chevy factory effort and Pratt & Miller won't sell you one of theirs. Even if you built one your looking at 500K for a car.

Grand Am GT class would be a better bet where $150,000 would most likely build you a car but your simply not going to be competitive no matter how much money you spend.

Last is Speed World Challenge were the old Z06's could be built from $80,000 up to Jeff McClures Z06 which I think cost him about $150,000 to build and make competitive.

Getting back to your sponsorship question, unless Hubbell is sponsoring it, or someone Hubbell does business with sponsors it you will never get any sponsorship for NASCAR that is meaningful. The major sponsors only care about the big established teams such as Penske, Childress, DEi, and Roush.

As far as getting sponsorship for ALMS or Grand Am it's a tough sell. Most teams in those series are run by team owners with deep pockets who have to fund the initial startup with their own money.

Think of it as any other business plan. You don't go to the bank and say I have no money will you fund my great idea. You have to have personal equity at stake or the bank figures you have nothing to loose and will simply blow the money.

Neither ALMS nor Grand Am has the following in the US to get someone to fund your entire joy ride. You will need to put up significant equity of your own. There are plenty of small sponsors who will be interested if you package everything right but these are $100,000 to $200,00 type sponsors.

Unless you have a proven track record or some mighty impressive connections to corporate america it's going to be near impossible.

There are teams out there that break even or even make some money but most are in series that pay huge prize money such as NASCAR and they get factory support from the big car makers.

However, that doesn't mean it can't be done just that it will be very hard.

Good Luck !

Regards,

Jon P. Kofod
www.flatoutracing.net

 

William, first a story --

A while back I had a client who published vanity books. His shtick was to approach a successful company like, for instance, Hubbell and promise to publish a soup-to-nuts glossy book on the company. The company's cost for the book would be.... zero. All the guy asked for was for an offical endorsement of the book. He would then turn around and hit up every major supplier for a congratutory ad. The guy made well into the 6 figures on every book.

Now, I'm not sure how this might apply to your situation. Just food for thought.

Dale

ps The guy was a dwarf from South Africa. He told me that this was part of his shtick. He'd walk right it and hop up in a chair and begin his pitch. He had close to a 100% close rate.

 

William, with respect I cannot add anything else that hasn't been noted already. If I had to do it all over again I would have never left karting. The money I would have saved not doing club racing over 6 years would have bought me a seat in a lessor series for a full season or maybe even two. If, and thats a big if I was lucky enough to land one of those $100-200k sponsors after a season or had a connection and the financial ability I now have to spend additional over and above a sponsorship of that afore mentioned amount I would rather do that then your approach to my own team. Pockets are seldom deep enough and making money as a owner is a oxymoron at best.

Seat buying is nothing new, and while I hated those that had it back then, I can't say as I blame them now.

Good Luck

 

I like Dale's thinking. It takes what I was going to suggest a step further. If you think you can deliver enough value to a sponsor that they would pay big $$ to be a part of your team, why not fund the team from your company? Getting your major suppliers involved on an "associate sponsor" basis would take some of the load off your own company.

I don't know you personally, of course. But I feel like I know who you are, you're the guy on Ferrarichat with the sweet Testarossa racecar. And I know what word is on that sweet Testarossa racecar. I don't know much about your company, other than what I read on your website. I looked because I was curious what Hubbell was. However, when I was running to home depot the other day to buy a flourescent light ballast to fix the light in my grandmother's kitchen, I was keeping my eyes peeled for "Hubbell" products. Why? Because of the exposure to your name cause its plastered on your Testarossa.

 

If Angela Fatemeh Harkness can get into NASCAR, I'm pretty sure William can.

 

William,

I bought a new Ferrari with my winnings from 04........................1:18 scale Enzo

Seriously I actually broke even last season and got some sponsorship. The winnings made up half the cost and the sponsorship covered the other half. Most of the contingency money came from the tire supplier and the series itself.

At the club racing level where I raced last season, sponsorship is usually in the form of parts assistance or some other in kind help. I was fortunate enough to know some people who own a small IT company who are Japanese import fans and like racing. I told them up front that I couldn't guarantee they'd sell any software simply having their name stuck on my car and they understood that. At most there might be a few hundred fans at the majority of races. At Nationals we had twice that and at Hyperfest (huge Import show) we had close to 4000 fans watching the race but with no TV these guys understood they weren't getting any bang for the buck.

I basically sponsored a company picnic at one of the races for them, printed up t-shirts and gave people rides in the car. I also let them use the car for display purposes at their office.

They were nice enough to sign on again this season and up their sponsorship since I won the title last season. At some stage they have agreed to provide partial sponsorship for Grand Am but the amount they are contributing will fund two or three races at most and I want at least one other major sponsor to offset the cost.

There are creative people out there who can buck the trend (as Dale's story illustrates) and find unusual ways to get sponsorship. About 1/3 rd of the people out there writing checks think it's cool to be part of a race team and expect minimal return, but the other 2/3rds scrutinize what you are spending their money on and what they expect in return.

At the end of the day if you can come out even that a major accomplishment given that most of us are not professional team owners, nor professional racers who earn our paycheck driving cool cars.

Regards,

Jon

 

Boy I wish I knew how to make money in racing. To be honest I think everyone is right, you really have to start with a large fortune to make a small one. I have been trying every avenue possible. I am young at 20 years old but even at this age I am old compared to a lot of up and coming drivers. I have karted, club raced(porsches), driven in FIA karting events internationally and so on, but could not get enough funding to drive a Zetec series. I got some but not enough and due to school constraints and a lack of my own personal funding I was not able to drive the Zetec championship season I wanted to. it has been a long time dream of mine, but the US in my opinion is not the place to make money in this sport(unless you are a NASCAR driver, which i am not). I have just learned to live with this as a hobby and do as much as it as I can possibly afford. Although I am considering selling my p-car and if the market does well buying a Radical and driving some CSR events as well as the soon to be Radical series. Good luck with whatever you attempt. I wish you well, it would be nice to see a fellow enthusiast make it. Keep us posted.

 

No offense intended, but do you know anyone who runs a race team or prep operation? A wealthy bloke with a big truck and " [rich bloke's name] Racing" on truck, suits, hats, etc. is pretty much a cliche. Racing has shown the ability to swallow up any amount of money thrown at it. How is Panoz doing, for example, with its portfolio of tracks, series, schools, constructors, etc- that would be an interesting question to have answered, as certainly that has been a well funded effort. Tom Walkinshaw?

If you run a team as a vanity business, hoping to break even, I think it could be satisfying. Below the very top levels, my impression is a team or shop owner makes money if he is completely devoted to his business, lives simply, travels all the time, has hands on knowledge (as opposed to just $$ to bring to the table), etc. There are a lot of long time, small pro operations out there, and their fortunes wax and wane with sponsors and funded drivers. I think it's a very tough world.

Again, someone correct me if I'm wrong.

Also, have you looked at the cap ex to start a first class racing operation? Hard to make that back ....

 

After you study Penske take a look at AJ's fortunes....

Despite name recognition, he has a difficult time year to year in both NASCAR and IRL.......

Of course the Conseco guys legal troubles have not helped, and I recall him warning Harrah's as they came on board that racing and gambling both can burn a lot of money!

Sponsor care is very important, as well as the meaningful product support relationships like engines and tires.

Even Ferrari did not thrive financially for many years due to the expenses the company bore building their reputation.

It's just gotten incredibly difficult for the smaller organizations to take on the DEIs and Roush Racings of the world. Must be the economies of volume they have working for them! Plan on TWO cars!! LOL!

 

Well thought out answers. I view racing as an expensive hobby, not a career, a necessity at my age. In addition, I have to think it is a hard sell to an enthusiast with funds, as he or she is likely going to want to drive. Take our mentor Rob Lay. I would not give him pure sponsor money, as I want to race with him, not watch him.Best of luck, but I think you should plan to have a mostly privateer effort, then win and build from that.

 

I've researched the money making aspects of racing and have found two that actually pay for themselves although neither appeals to me. One is a jet powered Funny car or Rail as they run exibition you get paid no matter what, maintenance is very cheap, and there is ,or was , an actual cicuit for weekly income. The other a recent driving instructor turned me on to, is Sprint cars. He, like most racers I personally know, want to road race. He is just gaining experience here until he is " discovered". On the other hand Sprint cars are supposed to be like bottled adrenaline, although extremely dangerous.

 

Just wanted to add this saying. " There is a lot of money in racing, I know because I put it there."

 

Below is a report from Joyce Julius- take a look at the TV Ratings for Grand-Am compared to ALMS:

TV exposure excels for ALMS sponsors
The American Le Mans Series proved to be one of the best associations in motorsports in 2004 according to reports from leading sports, special event and entertainment program evaluation company Joyce Julius.

Nearly 600 team, series, event and associate sponsors received mention and recognition via ALMS' comprehensive television package, totaling $98,577,050 million.

Porsche led the way with nearly $9.5 million in documented exposure via ALMS television partners CBS, NBC and Speed as the series continued to position itself as not only delivering a high value for sponsors but also becoming the one of fastest growing race series in America.

While Porsche achieved the pinnacle on the year-end team sponsorship chart, acquiring a total of $9,467,875 in television-valued exposure, a total of 22 companies associated with ALMS achieved more than $1 million of mentions. Rounding out the top five were Audi ($7,815,775), Michelin ($5,140,725), Corvette ($4,275.550) and ADT Security Services ($4,113,650).

The Top 25 team, associate, series and event sponsors in ALMS's nine races garnered $79,385,675 of exposure versus $14,994,350 for Champ Car's 14 events and a mere $7,058,055 for Grand Am's 12 events.

In addition, ALMS' network television ratings were 25% higher than IRL's network ratings (excluding the Indy 500). The Grand Am and Champ Car series have no events on network television. Cable ratings for ALMS were 50% higher than IRL's and Champ Car's cable ratings and 300% higher than Grand Am's telecasts.

 

http://www.joycejulius.com

Joyce Julius Sponsors Report

Based in Ann Arbor, MI - The leading reseach company in motorsports.

They will track your team for you and your sponsor.

They will provide the viewing time the car & team receives
They will provide the number of times and the seconds that TV & Radio talks about you and your sponsor

The will provide the number of times that you & your sponsor is mentioned in the Print Media. Clipping service also available.

The will break down each section to $$$$ amount and show what it would cost for the same exposure as straigt exposure times.

We plan on using them when we get going. Which we hope will be soon.

Bruce

 

How do you make a small fortune in Auto Racing - start with a LARGE ONE!
- Briggs Cunningham

 

There is an old addage, "How do you make a small fortune in racing?? Start with a large one". Very, very tough to do without huge wallet, luck and knowing the right people...