Racing’s Second Revolution - Part 5: The Objections That Will Define (Or Crush) Motorsport’s Next Business Model
The first four parts of the Racing’s Second Revolution series outlined the need for a dramatic change in the motorsport financing business model, all the way to tangible examples of how racing teams of all sizes can make this a reality:
The sponsorship model has been in use in some form or another almost since Formula 1’s inception, and as imperfect as it is, it’s safe.
But is it really safer in the long-term?
Arguably not, because not doing anything is itself a choice, without the benefit of having a say in the potential consequences.
Ultimately, if anything derails Racing’s Second Revolution it won’t be technical factors, since everything we’ve talked about so far rests on well-known business fundamentals.
In this fifth and final installment of the Racing’s Second Revolution series, we’ll cover the aspect of any great change initiative that is never talked about directly until it’s too late, yet has the potential to derail new ideas from the start: resistance.
The main risk is nothing more complex than skepticism, and while resistance usually takes many forms, it tends to come across only under the guise of practicality.
Below are nine of the most common objections, all valid on the surface, yet entirely surmountable in practice.
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In less than 500 words.
1. “You’re underestimating how dependent we are on sponsorship cash flow.”
This proposal for a new motorsport business model does not underestimate the current dependency on sponsor cash flow.
In fact, that entrenched sponsor cash flow is an enormous source of risk for race teams in the current paradigm, and it is exactly why Vaucher Analytics proposes a Second Revolution in motorsport financing.
Today, without sponsorship, the vast majority (perhaps all) racing teams would not make it to the starting line. That has been true for decades and it will likely be the case for years to come.
This new model proposes an alternate way of thinking, but the reality is that any industry shift takes time, especially when the current way of doing things feels institutionalized.
Certainly, anyone who has spent time dialing for racing dollars will agree that in an ideal world, sponsorship would be purely optional, but practically speaking this is about creating compounding secondary income that gradually reduces exposure to sponsor volatility.
The goal is gradual diversification, not immediate replacement.
A simple reallocation over time, for instance, sponsorship dropping from 80% to 70% of total income, is how resilience begins.
2. “You make this sound cheaper and easier than it is.”
Talk is cheap, yes.
Actually building product lines, pop-ups, or licensing programs requires investment and talent, that is not cheap at all.
Today, many teams just don’t have the resources to take on the Second Revolution of motorsport financing.
The only counter to this is full transparency: yes, it’s expensive, but so are sponsorship sales that take forever to close and cost a fortune to deliver, yielding very little in terms of usable cash.
In its most de-risked form, this is a capital reallocation argument, not an additional cost.
You’re redirecting budget from rented visibility to owned assets, starting small and then building up over time.
3. “Who’s supposed to run all this?”
Outside of major motorsports organizations with PR, legal and marketing departments, teams are built around engineers, mechanics, and logistics experts, not brand operators.
That’s fair (and let’s be honest, an F1 team’s marketing department is already stretched thin just keeping their piece of the travelling circus going).
Again, the way forward is to start small with low risk experiments that can scale up; as revenues grow, so can team size.
Looking to identify the next generation of leaders in your organization?
Ask them to pitch you a way to replace consistently 5% of your team’s seasonal sponsorship revenue (margin after delivery costs, if you want to be really ambitious) and go from there.
4. “There’s no proof this works.”
Unfortunately, it’s usually those with the most pull in an organization who are the most reticent to try new things, but this is a completely understandable objection: who wants to stick their neck out for a totally unproven concept or idea?
The subtlety here is defining what ‘works’ actually means.; what exactly does success look like?
This goes back to my problem-solving “North Star”, borrowed from The Seven Habits of Highly Effective People”: “Start with the end in mind”.
In the long-term, success would mean more money coming in, independent from sponsor commitments, but in the shorter term, stepping stones to that point could be activating certain numbers of a certain demographic at offline events, or introducing a capsule merchandise line to get exposure in various media outlets.
From this angle, there are absolutely cases where this has been done. Granted, actual results for these campaigns will be kept private by their owners, but one has to assume that they wouldn’t have been initiated in the first place if there wasn’t a solid basis.
For instance:
Red Bull, which started out as an energy drink company but is now a lifestyle brand, of which racing is only a part (think about how Red Bull was marketed in the early 2000’s and how much a part of club culture the drink was).
Pierre Gasly, who enjoys golf and just introduced a capsule collection under the Bogey Gang name.
Lancia x Akimbo, a collaboration between a car brand whose glory days are behind it and a very niche clothing brand. The result was a sell out.
So, the proof is there, it’s just that the case studies are fragmented and it will take time before they become more numerous, thus consolidating the consensus that there are alternative ways forward besides sponsors.
In other words, now is the time to gain “first mover” advantage!
5. “The Concorde Agreement and IP rules make this impossible.”
This objection is very specific to F1 but it could be generalized to other motorsports series, and the crux is that teams can’t unilaterally use and monetize certain assets and IP.
Vaucher Analytics is not a legal firm, however the go-ahead assumption is that while there certainly would be legal obstacles to surmount in any type of effort to create more owned IP, they would not be deal-breakers.
Teams can’t use F1 assets or likenesses freely, but they don’t have to to prove out a concept.
The assumed way forward is to create universes inspired by, not reproducing, team identity, evoking a brand essence rather than sticking strictly to brand identity.
Over the long-run this could actually be beneficial for teams because if they can get fans to associate with an aesthetic or emotional identity (what one target demographic might call “vibes”) rather than specific drivers or cars, the potential is far more open to commercialize a broader range of products and experiences.
6. “What if sponsors don’t like it?”
This is another completely understandable objection: if sponsors are paying (perhaps substantially) for you to endorse their products now, why would they want to pursue that relationship with you if they realize you are trying to replace them as soon as you can?
Again, it’s unlikely that agreements are so ironclad that teams can’t pursue their own initiatives and in the present, if a team and/or driver is providing a return on a sponsor’s investment, why would the sponsor abandon that return all of a sudden?
Furthermore, owned IP produces stronger fan engagement, richer data, and deeper storytelling, all of which make sponsorship more valuable for brands, not less.
7. “This will take too long to pay off.”
This isn’t so much an objection as it is a statement of fact, no different from a racing team starting from the bottom of the pack with the goal of moving to the top of the grid with an almost inevitable stop in the midfield.
Unlike on the race track, speed is not the focus here; chasing speed in developing owned assets could actually be detrimental to the end goal of reducing sponsor dependence.
The timeline and results will vary depending on level of investment and just plain luck (via timing or a beneficial viral post), but for any organization attempting to make themselves more independent, a representative timeline would be as follows:
Year 1: Storytelling and limited-run products and experiences to test the market
Years 2–3: Leveraging those successes to build owned communities and invaluable data sets
Year 4+: Diversified portfolio of team assets leading to a measurable reduction in sponsor dependency
8. “You’re romanticizing culture.”
Many of the “older guard” who have spent their lives only in racing, see culture, lifestyle, and storytelling as fluff that distracts from performance (think back to the commentary that Lewis Hamilton received early in his career when he dared to express himself via his interest in fashion).
There’s no other way to say it other than this is an outdated take.
Racing itself is a culture, and it only becomes more interesting and rich as it becomes infused with other areas that fans old and new appreciate: music, art, sports, and the list goes on.
Perhaps counter-intuitively, the more racing evolves away from just what’s happening on track, the more it has the potential to become sustainable, which will then lead to more and better on-track action.
Even if your organization is satisfied with the status quo of being a rolling billboard, culture is what makes your team appealing to sponsors: the more you embrace culture, the more you make yourself attractive to sponsors looking to tap into it themselves.
9. “This is all brand talk, where’s the fan in all of this?”
Actually, the Vaucher Analytics Motorsport Relevance Pyramid is built for fans.
Everything on the pyramid is built around them, around delivering things that make them fall even more in love with racing and perhaps you as a driver or your racing team.
The “ubuquity” layer is the most concentrated expression of this fan devotion.
Teams and drivers become ubiquitous by creating meaningful daily touchpoints, ownership opportunities, and emotional participation.
The stronger the fan connection, the more leverage the team gains in every negotiation in the short term, and the more they control their destiny in the long term.
“It always seems impossible until it’s done”
Quoting Nelson Mandela in the context of motorsport seems borderline indulgent, but it’s the perfect quote to usher in Racing’s Second Revolution, and it perfectly exemplifies values that have been displayed on-track since the earliest days of racing.
Reducing fatalities to near-zero on a race track seemed impossible at the dawn of the motor age, yet racing did it.
Pushing a car beyond 200 mph at the Indy 500 seemed impossible, until Tom Sneva and his team did it.
And on and on.
As with any new idea, the early objections will far outweigh the efforts to try new things; these objections are valid but entirely surmountable.
Eventually, teams will act, not debate, and the results will speak for themselves.
Racing’s Second Revolution will then be truly underway.
Are you ready to optimize your motorsport potential?
At Vaucher Analytics, we help race teams and manufacturers turn racing ability into brand capital.
If you’re serious about making your motorsport team or series matter beyond the podium, let’s talk.
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Main image credit: Jack Plant via Unsplash