With 2016 coming to an end and a new year approaching, the last 12 months of racing have provided an intense series of storylines. Watching everything from a NASCAR legend seal his status among the greatest ever, to the perennial bridesmaid finally take a sought after Formula One World Championship… and then wasting no time announcing his retirement. For the business of motorsports, however, there have been a tremendous series of storylines dominating the framework. Below are the five most intriguing business stories of the motorsport scene in 2016.
The Departure of Target in IndyCar Racing. Target has been a long-time member of the IndyCar community, dating back to 1990 when joining forces with new team Chip Ganassi Racing. From that moment on, the partnership would flourish, with Ganassi and Target being synonymous, developing a new business model for motorsport in the process, and creating a trackside product that would win the Indianapolis 500 four times, and an impressive 11 championships between IndyCar and ChampCar over a 20-year run. Despite the Ganassi organization being as strong as ever on the track, the in 2016 the announcement was made that Target would be ending its IndyCar affiliation, but still maintain their efforts with Ganassi in NASCAR. Behind the scenes, the move coincides with a management change at Target, with CEO Brian Cornell taking over in late 2014. The red flag in all of this is the inherent thin-line that IndyCar teams hold with sponsorship, unable to rely on the strength of ROI alone, and instead relying on relationships with key executives (which Ganassi had held prior), which inevitably will always change.
Unannounced NASCAR Title Sponsor. With Sprint opting to end their title sponsorship with NASCAR following their contract close in 2016, perhaps the biggest attention grabber was the premier NASCAR Cup series ending their 2016 championship without having announced the title sponsor for the future. When Nextel (eventually becoming Sprint) took over in 2004, the move had been heralded and anticipated for some time prior. While the first part of the story can be found in Sprint opting to remove themselves from the series, signaling a lack of interest during a period of stunted growth, the “delay” in a new title sponsor is perhaps the biggest item of note in the story. With a rumored asking price in the range of nine figures, it’s widely believed the process fell on relatively uninterested Fortune500 companies, with the deal eventually settling on a low eight-figure number.
Liberty Media Takeover F1. Halfway through 2016 it was rumored, and finally announced, that Liberty Media, a US-based media and entertainment distributor, would be taking over as a majority shareholder in the commercial rights to Formula One in a series of purchases rumored to total $8 billion. Comparing this to the challenges of NASCAR, unable to secure title sponsorship for less that 5% of that figure, the takeover signaled a number of key questions. Perhaps the largest, as questioned by a number of journalists, is the value in that number. Formula One, like much of the motorsport scene, has struggled to maintain growth, and if anything has undergone a lot of criticism for its repeated need to answer to shareholders by virtue of high sanctioning fees and endorsements that many believe compromises the sport. An investment that large signals a company who expects growth, and in a series where many ask how we can reduce fees and maintain the sport’s integrity, Liberty’s foresight in to the future of the most world renowned international motorsport is definitely interesting.
Audi Withdraws from WEC and LeMans Competition. Perhaps unsurprising to many, Audi’s long heralded Le Mans 24 prototype program came to a close in 2016. Taking their first victory in 2000 and taking an unprecedented 10 additional wins since, Audi’s ability to make astonishing, forward-thinking prototype race cars has been unlike any other. Developing a number of racing innovations, from completely replacable rear-housing, to turbo-diesel, to today’s modern combination of turbo-diesel and hybrid technology, the brand has been synonymous with endurance success. In the business of motorsport, the questions and reasons for Audi’s departure are far more convoluted. Within the sport, rising development costs for arguably some of the most advanced technology in the sport has become increasingly difficult to maintain. For Audi specifically, being part of the famed Volkswagen Auto Group (VAG) presented a unique financial challenge, as one of their main rivals came from the same family in the form of Porsche, effectively meaning the parent company had two major expenditures from the same family for the same product. Finally, the American “dieselgate” was likely the ultimate nail in the coffin for the fabled program. With Volkswagen, sharing the same technology with Audi, settling with the U.S. for $14.7 billion over fraudulent emissions practices, the challenge of having such a visibly expensive race program created a number of internal problems.