MOTORSPORT: V8 Supercar realities laid bare
Behind closed doors V8 Supercars Australia has been paying a lot of attention to its weaknesses and threats as well as its strengths and opportunities - and we reveal what it's found
Premier category tallies its plusses and minuses
A SWOT analysis is a strategic planning method used to evaluate the strengths, weaknesses, opportunities, and threats involved in a project or in a business venture. Why mention that at the start of a motorsport column?
Because V8 Supercars Australia has done a SWOT analysis as part of its Car of the Future project. For those unfamiliar with such things there are plenty of places to go on the internet for information, but Wikipedia was sufficient for our purposes.
It told us that a SWOT analysis involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieving that objective. And that a SWOT analysis starts with defining a desired end state or objective, and that the analysis may be incorporated into a strategic planning model.
Strengths are the attributes of the person or company that are helpful to achieving the objective(s). Weaknesses are the attributes of the person or company that are harmful to achieving the objective(s). Opportunities are external conditions that are helpful to achieving the objective(s). And threats are external conditions which could do damage to the objective(s).
If the starting point of a SWOT analysis is specifying the objective of the venture or project, V8SA's clearly was to reduce the cost of building a V8 Supercar and to create regulations that might entice makes of car other than Holden Commodores and Ford Falcons to participate from 2012.
We'll come back to that in a moment, but V8SA's SWOT analysis -- which we've had the benefit of reading -- ought to be considered against the background of what it reckons is its sport's annual "economy". And "economy" of $426 million, it reckons. This is, kind of, the V8 Supercar equivalent of Australia's gross domestic product, or GDP.
V8SA breaks its $426 million for last year down into six categories. Here they are, with the values V8SA claims for each:
V8SC turnover $110 million
Teams racing turnover $73 million
Teams merchandise turnover $24 million
Non-V8SC event turnover $118 million
Television advertising revenue $30 million
Government support $71 million
These numbers, according to V8SA, do not include "event regional economic benefits", "sponsor-team leveraging", and "other media and merchandising".
Now we all know that V8 Supercars is a big sport -- certainly the biggest motorsport category in Australia. However, these numbers are startling. Perhaps a little (maybe a lot) too startling. We wonder if there isn't a bit, perhaps quite a bit, of the old double-counting in all of this. But let's just take a quick look at the numbers as they are.
Firstly, it looks very odd that 27.7 per cent of the V8 Supercar "economy" -- or $118 million -- is "Non-V8SC event turnover". That's the biggest item of the six, and it's a non-event turnover! Bigger than the $110 million "turnover"! Almost five times the merchandise sales of the teams!
Government support of $71 million represents 16.66 per cent of the V8 Supercar "economy". Now that's an astronomical figure, and equally an astronomical percentage -- although the figure is believable for last year, which saw the new Townsville and Sydney street races run for the first time.
Those two events involved a lot of government money upfront in construction and infrastructure costs. Those two events may have accounted, by our guess, for as much as $45-50 million of the $71 million. Which would still mean more than $20 million of other government funding -- i.e. taxpayer monies -- going into V8 Supercar racing.
And most of that into street races, which have to be set up every year, rather than permanent venues which can be used all year round for many forms of motorsport. Anyway, that's the V8 Supercar "economy".
Now to the SWOT analysis. These exercises are obviously valuable, as they make the parties concerned focus on, as we mentioned earlier, their strengths and their weaknesses and the opportunities as well as the threats.
The V8 Supercar SWOT rightly identifies lots of strengths -- including great product; Ford v. Holden culture ... ingrained in our heritage; strong local appeal; the quality of teams; the local TV package and strong TV ratings -- especially for Bathurst; that the sport's organisers are strategically strong and visionary; that there is a strong developing brand; a dedicated spectator/supporter base; and that it is a truly national sport. So lots of plusses that are well known and acknowledged.
The second column of the SWOT analysis, the weaknesses, reveals -- or to us confirms -- many of the points that we have raised here over several years now and which are not generally, certainly not publicly, acknowledged by V8SA.
A few excerpts from that second column of the SWOT analysis, the weaknesses V8 Supercar sees in itself: TV ratings decreasing 9 per cent - 2008; V8SCA relationship with Ford, Holden, and Bigpond; middle management inability to service requirements (of platform sponsors); lack of fundamental business approach to key decision-making; poor NSW, specifically Sydney, market acceptance; environmental plan -- vehicle emissions not politically correct and not perceived green; dispute over IP of Ford/Holden cars; and reliance on government funding.
None of these are things we ever hear or read of V8 Supercar executive chairman Tony Cochrane 'fessing up to in interviews.
The TV slide is something we have reported on here over a long time now. For example, at the end of 2008. More recently we have tracked the TV numbers for the early rounds of this season -- in the Middle East and Adelaide -- and they have not been flattering. We'll be keen to see how the New Zealand round at Hamilton fares this weekend.
Incidentally, Hamilton's Waikato Times newspaper reported on Saturday that the event organisers there "are still waiting for ticket sales to accelerate". The paper's report said that "ticket sales for the third running of the annual event have picked up after a slow Easter and so far 11,170 tickets have sold for the three-day event between Friday and Sunday. Between 25,000 and 30,000 tickets were sold last year. The Flexipass tickets have sold out and some of the more popular grandstands are also filling up ... there is still plenty of room on the Silver Stadium Stand ... ITM400 Hamilton organiser Steve Vuleta urged people to hurry and buy tickets ... he expected another 10,000 tickets to be sold in the week leading to the event" -- i.e., this week. The
Many of the opportunities listed in the third column of the SWOT analysis are well known and have been talked about for years. Interesting, and more so pleasing, to see though is that Newcastle, the second largest city in Australia's most populous state, is specifically mentioned. It is precisely the kind of place that ought to have a round of the country's major national motor racing championship.
Another opportunity listed is to reduce the number of franchises -- to 26-28 cars. Perhaps no surprise there, although we reckon the fields ought to be a bit bigger than that -- and certainly V8SA needs to find the right balance for Bathurst, where a field of that order or low 30s is too thin for a 1000km race and all-day telecast.
Perhaps the most interesting entry in the opportunities column is the second last: "Explore potential revenue streams and business opportunities outside our mainstream initiatives -- e.g. 2-litre series".
How ironic, in light of the bitter 5-litre v. 2-litre war of the late 1990s that the 5-litre, V8 Supercar brigade won so comprehensively that it now feels some need to consider a 2-litre series on its undercard!
And so to the fourth and final column of the SWOT analysis -- the threats.
Here are a few V8SA sees: manufacturer support/relationships, company policy and policy changes; platform sponsor support/policy changes -- e.g. alcohol advertising restrictions; landscape changes -- rival sports, e.g. new soccer competition -- Hyundai backing; TEGA (Touring Car Entrants Group of Australia) team implosion "infighting"; cost escalations of the series; SEL (Sports & Entertainment Ltd, 25 per cent owner of V8 Supercars Australia) position/shareholding/future plan; potential crowd problems at Bathurst; collapse of iconic or foundation teams through escalation of costs leading to destablisation of the category; longevity of "V8 build" by traditional makers; and Ford and Holden parent company liquidity and viability.
This fourth and final column is refreshingly frank. Not that V8SA is volunteering much of this frankness, as this analysis has not been made freely available.
Aussies on pace in America but without podiums
A good but not a great weekend for the Aussies racing in the major American championships.
Will Power was fourth in the Indy Racing League round at Barber Motorsports Park in Alabama and Ryan Briscoe sixth -- both of them racing for Team Penske, whose other driver, Brazilian Helio Castroneves, won this third race of the series ahead of New Zealander Scott Dixon.
Power, who won the opening two rounds, still has a big lead in the championship -- 136 points to Castroneves' 104, while Briscoe is sixth on 79, while Dario Franchitti is third on 94, Justin Wilson has 85 and Dixon 80. The fourth round of the series is this weekend at Long Beach, California.
Marcos Ambrose was 11th for the third time this season at the seventh round of NASCAR's Sprint Cup at Phoenix International Raceway, where Ryan Newman notched the 14th victory of his Cup career, ending the dominance of Hendrick Motorsports there and taking the chequered flag ahead of Jeff Gordon, Jimmie Johnson, Mark Martin and Juan Pablo Montoya -- the first five drivers all with Chevrolet power. Johnson, champion the past four years, extended his lead in the series to 36 points over Matt Kenseth (Ford), 1073 to 1037, while Greg Biffle (Ford) is third on 981.
Ambrose (Toyota), who started fourth at Phoenix, jumped five places in the standings to 24th on 673 points -- 400 behind Johnson. Ambrose is the highest placed driver in the series without a top 10 finish this season, while David Reutimann (Toyota) -- who is two points behind him -- has had a top five and a top 10 finish, and Kasey Kahne (Ford) -- who trails Ambrose by seven points -- has had one top five and two top 10 finishes. This weekend's Sprint Cup round is at Texas Motor Speedway.
The Formula One world championship resumes this week with its fourth round in Shanghai, China. The governing Federation Internationale de l'Autmobile (FIA) has written to teams warning them against using "any self-levelling damper system" that adjusts a car's suspension and ride eight -- a move seen as directed at Red Bull Racing.
However, RBR team principal Christian Horner says his team has nothing to worry about with the RB6 cars of German Sebastian Vettel and Australian Mark Webber.
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