So You Want To Go GT3 Racing? What are the costs!!

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So You Want To Go GT3 Racing? What are the costs!!

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Post by erwin greven »

So You Want To Go GT3 Racing?

DSC delves into the costs involved in going racing

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Motorsport has never been a cheap endeavour, and it never will be.

Era to era, the quality of cars that go head-to-head has been on an upward curve, but the cost has too in many places. With the state of the global post-COVID economy still unclear, the future of the sport, and in DSC’s case, sportscar racing specifically, has never been so uncertain.

With factory money set to be spent even more carefully and cautiously than before the pandemic (just take a look at Audi, Porsche and Bentley’s movements in the past few months), the task of sustaining the sheer numbers involved in the sport in the coming years is likely to fall to the privateer teams and gentlemen drivers. There will be casualties along the way, some more high profile than others. Grids may well become smaller and the amount spent on going racing by wealthy individuals in some areas will shrink.

From LMP1 all the way down to cup cars and club-level racing, it looks likely that everyone will feel the pinch in some way, shape, or form.

But to truly understand the cost of racing, and the ins and outs of getting cars on a grid, you have to either work in the sport or spend hours grilling people who do. So DSC has spent a considerable chunk of time speaking to teams, drivers, engineers and OEM representatives to get a taste of just how tough life will be once we go back racing. In exchange for some blunt, honest truths and figures, all will remain anonymous.

Because working out the cost of racing and the challenges ahead is such a broad topic, with countless variables, DSC has decided to focus solely on the GT3 platform. GT3 is global, and supported by major manufacturers and small private teams alike in huge numbers. It is also in the news right now as the GTE marketplace on a factory level has taken a further hit this month with Porsche announcing a withdrawal from IMSA, leaving many wondering what top-level GT racing will look like beyond 2020. It is therefore a very relevant case study – but this is not a series intended to show GT3 in an unfavourable light compared to other available options.

However, an important point to make before going any further is this: The cost of racing is an extremely complex topic, which has almost infinite variables. The figures used in this piece are from people involved directly, but are not definitive. Could you do any of this with a smaller or bigger budget? Certainly. Therefore, this piece, naturally, can only provide ‘ballpark’ figures – all are absolutely accurate but, as the saying goes, ‘other budget levels are available’.

Pick a car, any car

The combined length of the interviews taped for this piece exceeded 15 hours and the biggest takeaway from this writer is that it feels like a miracle that any racing programme anywhere in the world comes together, let alone hundreds to fill grids around the world.

It will come as no surprise that the sheer list of things you must factor in and consider when budgeting for a GT3 programme is staggering, and all the items come with a substantial cost attached.

Let’s start with the cars themselves.

Just the base cost of the various GT3 models available varies wildly, with the VAG group products on the lower end of the spectrum and produced in higher numbers (340-400 thousands Euros) and Italy’s most iconic marque selling cars at a substantially higher price (650 thousand Euros, 700 in full battle spec).

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“When you’re paying to race in something like GT3, you’re paying to race what you want,” a team owner explained. “Any time you aren’t paying to race what you want is when you are presented with a package that’s too cheap to say ‘no’ to, or too competitive. At that point you don’t worry about which badge is on the front.

“But 80 percent of the time you’re racing a Porsche because you want to, or a McLaren. You race a Ferrari because all you heard about was the ‘Prancing Horse’ when you were young and you want to be a part of that racing heritage. Some like Nissan GT-Rs or Honda NSX’s because they’ve used them on the PlayStation. And they’re every bit as good as the other cars.

“And here’s the thing. If you take the amount of money you spend as X, no matter what variable of car you are driving, to do well and to run it properly is still a multiple of X, whether you race with a mass market manufacturer or niche one. To get this right is never cheap.”

To race with certain manufacturers isn’t cheap either, “sometimes you feel like you are paying for the brand more than the car,” a team owner said. “Because brand X has more heritage, they know they can charge more than brand Y because people will pay whatever fee they charge just to race with brand X.”

Don’t let the base price fool you either, as kitting out a GT3 car to full endurance spec (with number panels, a quick fill tank, traction control settings, and TPMS systems) from its state off the production line can add an extra 50-70 thousand pounds (54,871-76,838 Euros) to the price.

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That’s before you get into the spares needed. Teams can easily end up spending 100s of thousands of Euros on a spares package each season.

“It can cost 200 thousand pounds (219,000 Euros) to buy a proper spares package, a proper one,” a UK-based team owner told DSC. “For two, three days testing in another country without manufacturer support, and you want to be able to continue if you have a big off, you need to spend big. It means if you want to start a two-car team, with a decent spares pack, it’s over a million easily, before you’ve bought anything beyond just cars and spares.”

“Even in a one car team,” another team manager added, “you might find it more cost effective to buy a second car just to use as spares.”

There’s also a further financial hit when an ‘evo-package’ is released, as most left over spares from the out-going spec car can’t be carried over and have to be written off.

“The 488 has had two evo packages, one in 2018 and one in 2020,” a driver told DSC. “The new one is 70 grand, and this is for a formula that’s balanced with BoP, so there’s technically no advantage. But the problem is that you have to run the newest car, because they will make the older cars slower.

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“If a gentleman driver bought a brand new car for 650k (714,000 Euros) in 2019, did a years running he would now have to spend 70k (76,800 Euros) on a upgrade which you almost have no choice but do.”

This is where politics come into play, if you don’t buy the evo kit, it’s highly unlikely you will be able to get the results you want because manufacturers don’t want older-spec cars beating the new ones. “If you do win with an out of date car, then the paddock will complain,” an experienced driver pointed out.

Then to make matters worse, sometimes the ‘evo’ kits don’t have the desired effect in terms of performance and drivability.

“I wouldn’t mind after a few years upgrading,” one European team owner said, “but the last evo actually made the car slower, harder to drive, before we got to BoP. What a waste…”

Evo kits are generally thought of as a means to generate money for manufacturers, more than they are to make the cars more competitive. They are all part of what one manufacturer representative called: “a product lifecycle strategy.”

Beyond that you have to consider the difference in running cost, which varies from car to car too and is extremely hard to put an exact price on. This is in part because each car uses completely different sets of parts (with different life spans) and because manufacturers have become tactical in the way they come to a figure in order to attract customers.

From the conversations conducted in the process of writing this feature, the current Aston Martin Vantage is believed to be around 12-14 pounds (13-15 Euros) per kilometre to run, whereas the Ferrari for example is believed to be around double that. Some teams think it’s 30-35 Pounds (32-38 Euros) per kilometre. But other teams think it’s higher.

“30 Pounds (32 Euros) per kilometre? No chance! The real figure is 39…” One Ferrari team owner told DSC.

The Audi R8 and Lamborghini Huracan is supposedly 12 Pounds (13 Euros) a kilometre, while the McLaren 720S GT3 is around that figure too. But it often comes down to how you calculate running cost. A former manufacturer representative put the figure at 16 Pounds (17 Euros) per km for the McLaren, but a team manager who budgeted a (global) 720S GT3 programme last year put the figure at 36 Pounds (39 Euros).

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“Most teams look at running cost per kilometre just for the car, but if you add in logistics cost, it’s a huge number,” the head of a manufacturer customer racing programme said. “If you look at Audi, they’ve got it made. They have their car at around 12-13 Euros a kilometre. If you look at the McLaren, it’s 15-16 pounds, so almost 20 Euros per kilometre.

“But there’s fluctuation because it depends on what is included in the figure. As a manufacturer, I don’t care how much fuel or tyres you throw at a car per kilometre. What some brands quote is just what it costs to keep on top of the life schedule of the car. The target for us was about 14 pounds a kilometre, but it came out at almost 16. Manufacturers will always try and give you a range to persuade you to buy their car, but in reality it’s always the top end. If someone says 20-25 Pounds a kilometre (27 Euros), it’s going to be 25.”

“Running costs really are mind-blowing,” a current factory driver adds. “Think of it this way. You are at Silverstone Grand Prix, you do an out lap just to make sure the car is ok, that lap is about 200 Euros for an upper end GT3 car. Just that two minutes, and that doesn’t include tyres, fuel, staff, logistics.”

Choosing a car is just the beginning. If you are starting from scratch there is a laundry list of equipment you need to run the car from a garage (wheel guns are 6-7 thousand pounds apiece, a fuel bowser costs about 8 grand). Just buying a single race truck can set you back a quarter of a million pounds if you want a good one.

“To equip yourself properly is so expensive, but it boils down to your client really,” a team owner explains. “You have people, and we’re not talking young Silvers, we’re talking your average gentlemen driver from mid 30s to 60s. Whether you have a 35-year-old, or 60-year-old, some want to nail it every time and want to be the best they can be. They want to win.

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“Similarly you have people who want to go racing and want it to be enjoyable, and use it as a way to let loose. Some are just happy to be a part of it. If you’re in the second category it’s a different level of spend. That means you don’t need the lightest set of wheels, the quickest wheel guns. You don’t need tons of data logging and sensors because you use a basic set up and go.

“But when you want to chase a win, it’s exponentially more expensive. Even in GT3, you need more equipment, technology. You need better everything and that’s what’s unique about the sport. It takes a village to make a car quick, it’s not one component, it’s a synergy between inanimate and animate objects. It has to be seamless.

“You don’t need a 1000 Pound tennis racket to win Wimbledon, you don’t need Air Jordans to play basketball and be good. It’s nice to have but in racing, you have to have better equipment. If you want to be faster in the pits it helps to have a Formula One grade wheel gun. ”

Staff costs too can be high. Some teams pay their ‘weekend warrior’ mechanics lower amounts like 15 thousand pounds a season, while others told DSC that they are spending closer to the 50 thousand mark. You can’t get away with only a few members of staff either. One UK-based team which races both nationally and internationally with GT3 cars told DSC that it spends around 830 thousand pounds a year on staff, with just seven guys full time, the rest drafted in to help out at the track.

Before you get to paying the entry fees and running costs of the car too, you’ll need some sort of workshop to store and maintain your car(s) during in the gaps between races, which even if you only need a small space could still cost you under a 100 thousand Pounds (110,000 Euros) a year. “That’s without kitting it out either, we spent around 20 thousand Pounds (22,000 Euros) on equipment for the workshop, which isn’t really used for any sort of manufacturing, only maintenance,” a team owner said.

If you choose to, you may also find yourself spending a small fortune on insurance costs on top of all this. And insurance is a huge source of frustration for teams. Multiple team owners told DSC it’s such a huge expense for such a minimal gain, that it’s almost not worth paying for.

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“You use motorsport insurance, they’re special brokers. There’s four or five mainstream brokers. And it is petrifying,” a team owner reveals.

“We do storage and transit insurance, which covers everything in the workshop, the freight, transport. That’s general, it’s not cheap but not ridiculous. 8 thousand (Pounds, or 8,700 Euros), 12 thousand (Pounds, or 13,200 Euros) a year?

“Then comes on track. You don’t have to insure a car on track, though most do. The problem is the levels of cover you get. If it’s a 500 grand (549,000 Euros) car you’d struggle to insure 250 grand (274,700 Euros) for racing. You can never insure the whole value, unless you take out multiple policies but that’s extremely complicated.

“So, for example, you insure a British GT car, you choose to insure 150 to 175 thousand Pounds (164,700-192,000 Euros) of it. That will come with a 25 thousand (Pounds, or 27,400 Euros) excess. So if I write it off and it’s covered for 150, I only get 125 (thousand Pounds, or 137,000 Euros) back. Any more damage on top I pay.

“You can insure for fire too, which is separate and an extra cost. This is all done from the team budget, it’s part of it. It’s so crazy it’s almost worth not paying insurance. For 150 grand’s worth of cover for British GT, seven races, you’re looking at paying a premium of 40 thousand (Pounds, or 43,800 Euros), maybe more.

“So by the time you’ve taken off the 40 off 150, and the 25 (thousand Pound, or 27,400 Euro) excess, it is only 85 thousand (Pounds, or 93,300 Euros) saved in a big accident. And it also goes up in between accidents. Most of your dings and scratches aren’t covered because they’re under the excess. It’s just to cover you for big whacks. Our team in 10 years has only once ever had a crash over the insured amount. And there’s no liability, so if someone from another team puts your car in the wall, you’re still the one that has to pay the bill.

“It’s not like road cars.”


Now you've chosen a GT3 car, it's time to decide where to race it...

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Now lets focus on choosing where to race, and the costs involved in tackling national and international championships.

Planes, Trains And Automobiles

Once you have sourced staff, bought all the equipment you need and decided which car you want to take racing, it’s time to look at where to race, and that’s an incredibly complex choice. This, unsurprisingly, has major implications on budgets, as travel costs and entry fees vary wildly. Changing series, especially if you’re entering more high-profile races, can quickly increase your annual budget significantly.

Budgeting for a gentleman driver is a hard task, because there are so many options and variables beyond simply running a car.

Want to race nationally? It’s simpler and cheaper. Across Europe? At least there’s no freight involved. Cross continent? It’s far more complicated, especially if you want to mix and match events and series across a calendar year.

A British GT team’s budget in GT3 is around 400 thousand pounds per car. A leading team in the championship told DSC that from that budget it looks to generate 30 thousand pounds profit per car.

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It’s a competitive environment, with the teams all in a ‘race to the bottom’ when it comes to pricing to attract the most sought after gentlemen drivers. This has its issues and is a source of frustration for one team owner.

“It’s a competitive market. In British GT this year it seemed like everyone wants to go with whoever has the cheapest deal, it doesn’t seem to matter anymore whether the team has won races or titles,” a team owner told DSC.

“You look at how single seaters works, with Carlin, Fortec, those experienced teams racing up front, they can charge a lot more because they do a good job and they know that prospective drivers will pay more for results. The level has gone up too high, when compared to the level of profit you can take from racing in these championships. You now need so much more resources to be competitive. It’s out of control really.”

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The moment you think about racing internationally, budgets begin to skyrocket. This is due to everything from entry fees to travel costs being higher. You could spend a measly four thousand pounds a weekend on hotels for staff at a British GT race, five to six thousand pounds a weekend on food and about 12 thousand pounds a year on fuel. Without the worry of paying for flights and crossings, the cost beyond running the cars doesn’t extend too much further than that.

But once you move beyond national championships, the difference in cost is huge. For a crew of 12 guys to race in World Challenge Europe, you’ll spend in the region of 20 thousand pounds on travelling to and from the events, 20 thousand on hotels, 50 to 60 thousand on food. The entry fee is also something to consider, it’s around 23 and a half thousand pounds for British GT. If you converted your GT3 car to GTE spec and decided to take on the European Le Mans Series, the price is 74 thousand.

It means the difference in overall budget for a two-car team racing in UK compared to European wide is stark. 400 thousand pounds for a British GT season with a factory pro in the car with you, compared to 720 thousand pounds for a World Challenge Europe Endurance season with the Spa 24 Hours included.

And if you wanted to go one step further and race in the IGTC all year round, it’s another story.

“We ran the budget (in the past 12 months) for British GT, Blancpain and the Intercontinental championship.” Said a team owner. “In terms of a car we hadn’t narrowed that down. But Blancpain looked around 800 thousand Euros for the endurance rounds, without testing. You could easily spend 1.2 million to do that properly, especially if you want to do a proper endurance test ahead of Spa. British GT looked at half a million euros. For Intercontinental, 1.2 million euros is where we were at.

“You don’t make a lot of money. Think about it, you can turnover over a million as a small team by running two cars in a national championship and only make 60 thousand pounds? You could make that money, but lose it in an argument about whose fault it was when a gearbox exploded and threw one of your drivers into a wall.”

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But not all National championships are created equal, the IMSA WeatherTech SportsCar Championship is extremely expensive for a privateer team, because there is so much track time meaning the wear and tear costs on a car are understandably higher.

“Entry level GTD, just the sprint rounds? You’re looking at a couple of million dollars,” said a team owner, who like others DSC spoke to, then revealed that for full season, you need around five million dollars.

“Where do you even start with GTD? It’s crazy,” they said. “The travel is one thing, but to cover three seasons worth of racing when comparing it to ELMS, means you’re paying so much more.

“If you’re paying 40 euros a kilometre for your car (depending on how you come to a cost per kilometre), the cost is therefore so much higher when your season includes four long endurance races on tough tracks, and sprint rounds too as opposed to eight short races. You’ve got a 24, a 12, a 10, and a 6 hour races, plus shorter rounds, you do three times the mileage than you do in something like the ELMS.

“In a year in ELMS, you’ll do 24 hours of running across the race weekends, you do that just in Daytona if you do IMSA. Same with British GT, it’s nowhere close. I don’t know how they get cars on the grid…”

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Racing in Asia too is a completely different prospect. With no need for a race truck, teams live out of shipping containers. With air freight extremely pricey, always significantly more than the equivalent trip by sea freight, but with the same vagaries surrounding customs clearance in certain markets, shipping cars and equipment to events has become the norm. (Though these issues are by no means exclusive to Asia) This means racing in multiple championships likely requires double the resources because each team’s car and equipment spends most of its time in season being shipped to and from races.

“Sometimes the costs spiral,” one Asian team manager told DSC. “I remember one year it went bananas, with the price rising like 70% compared to the year before. There seemed to be no logic to it, no way to forecast far in advance, which is a real challenge when you try to budget for a gentleman driver.”

Sea freight, which according to a team boss, generally costs 5-7 thousand US dollars per way, per container in Asia, isn’t always reliable either. It’s not unknown to turn up at an event only to find there are delays to your shipments arriving.

“Freight companies don’t guarantee your freight actually getting to the destination,” another team owner said. “In Suzuka, one time we arrived and our freight had left with plenty of time, but got offloaded in Singapore and they didn’t realise it got lost – they only realised when the shipment arrived at Suzuka without our car. So who pays the cost of getting the car to the track now? You have to pay more to get shipped as a priority, even though it wasn’t your mistake.”

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And with the general cost of both travel and race programmes gradually increasing over time, this has reduced the field of potential gentlemen drivers when it comes to GT3 racing.

“The problem is,” a factory driver told DSC. “only the extremely wealthy can do it now. The guy I raced with early in my career, who was a marketing director and board member of a major company. He was probably worth 10 million pounds. He could go GT3 racing in the early days, now he couldn’t even consider it. Not a chance he could do it.

“Only extremely wealthy can afford to do it now. There’s still demand for it, but it’s a different sort of demand, from different sorts of people.”

And the more expensive and complex it is to run in your chosen championship, the more the budgets vary team to team. As a paying driver reading the small print is vital, you can get caught out easily by hidden costs when signing with a team that’s selling you the idea of a programme at a cost lower than most teams.

“When you budget for an amateur driver, it’s all about what you count. Somebody might quote 300 grand, someone else then might quote 600, for the same series, in the same class with the same car,” a team owner said. “The driver may then ask: ‘why are you charging this much more?’

“You have to ask what the line items are, the driver might only be paying for the car, the entry fee, picking up the tyre bill, but have no testing. The 600 grand one might have literally everything in there with no catch.

“Someone might think they’ve got a good deal in British GT because they’ve been quoted 300 grand. But by the end of the season he’ll have paid 600 and they will be pissed off because they have been told 300. They won’t stay with that team, I can guarantee that, I’ve seen it countless times.

“Teams that are open about what it will actually cost, and show you how the price comes to what it does, do better in the long run. Throwing little extra costs here and there during a season at a paying driver is rife, and the wrong way to go about it.”

The manufacturers' perspective

Now let us look at the costs involved for the manufacturers.

Boardroom games

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Over the other side of the fence, things are seldom easier when it comes to customer racing. For teams and drivers, the balance between controlling cost and staying competitive is a fine one. For manufacturers, it’s a similar battle.

The GT3 marketplace in the past decade has grown significantly, with more manufacturers coming forward, and existing marques updating their products more frequently with new models or the introduction of evo-kits.

It’s made it tough for newer manufacturers into the marketplace such as Honda, and Lexus, as well as the more boutique names such as McLaren, Callaway and Bentley who can’t (or by design, don’t) produce cars in the same level of volume as the more mainstream makes.

The business case for customer racing in GT3 is an intriguing one. Just how do you make money, and how much value does a brand get for such an effort?

It’s not a simple answer. But let’s start with drumming up enthusiasm to get a customer racing programme off the ground, before we move onto the costs involved and value beyond selling race cars.

“Think about it this way,” an industry insider told DSC, when asked to explain the difficulty in convincing automotive-focused staff at a major manufacturer that serious investment is required to make a customer racing programme work.

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“At a sales and marketing conference every quarter we will talk about results and PR will talk about what things look like in the media. But I have to try and explain to automotive people that a road car very rarely spends any time at the limit of its operation. It’s probably sat down there at the bottom five percentile of its potential. A race car meanwhile will spend almost every second at its limit. You are always pushing. So the job of a race car is to basically prolong the time between incidents, because inevitably stuff will fail.”

Operating a customer racing division is a hard task, made harder because generating profit, even with ‘the perfect car’, is incredibly difficult.

The level of investment required to ensure your product is good enough to attract a strong customer base comes is significant, especially as you’ll likely need to spend millions in developing the car (anywhere from 3.4 million to more than 10 million was quoted by manufacturers when asked about development costs) before you can even think about selling it and producing spares.

In business terms, developing and selling race cars is a very different prospect to road cars. But there are plenty of different ways to go about it. It’s not simply – develop, make, sell and service all to the highest volume possible and repeat.

“Our company will categorise manufacturers into three areas,” he continued.

“We’ll start with German makes, they probably are the market leaders. What they offer is almost like Amazon, it’s as much about product delivery and a logistics service as it is about the racing and the product.

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“We then have the category for ultra specialist and non-commercial customer racing marques like Acura, Lexus, and Bentley back in the day, when they were not looking to sell cars.

“The other category is the luxury brands, genuine thoroughbred road cars where the pedigree is racing and the business model surrounds it, like McLaren, Aston Martin, Ferrari. In that instance it’s about utilising deep pockets like the more mainstream brands, but instead drive enthusiasm from the customers.”

So where do you price a car? We’ll get to that. First you have to forecast how many cars you will sell over a model’s lifespan. If you’re a manufacturer with a long history of customer racing at various levels, it’s easier to start a GT3 project, if you’re completely new to the GT racing scene or have been a way a long time, then prying customers away from your competitors will be tough.

“Look at the WRTs, who run Audis as a commercial operation, they run it well, and are with Audi because it works,” a manufacturer source said. “Whereas a team like maybe Balfe Motorsport, race with McLaren and are very loyal to the brand.” They won’t be easily persuaded to move to a new brand.

There are real politics at play too, as manufacturers attempt to get teams onboard and generate profit. Anything from helping with manufacturer fees in IMSA, to spares discounts, the promise of pro drivers and even giving away free cars (yes, one manufacturer source did tell DSC that it tried incredibly hard once to nail a team down, only to find out another manufacturer “kept throwing free cars at them”) come into play when trying to attract the more sought after teams in the business.

“There are strategies in play,” the head of a GT3 and GT4 manufacturer said. “It’s similar to what BMW used to do at dealers. You see a great ticket price on a 3 Series, and go ‘that’s great I’ll have one of those!’ But then you find out there’s more to it: do you want a stereo, electric windows? Suddenly it becomes expensive, there are teams and manufacturers that do that.

“Brand value comes into it too.” Put simply: Are you a brand like Ferrari? Then you can afford to charge more.

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Customer service is also a factor in getting teams on board, they need faith that they will be looked after if things go wrong. It’s an expensive, but vital element of running a successful customer racing programme. If it lapses then you can and will lose teams in droves, especially because it’s a BoP-governed formula and they may in some cases be paying a premium for your brand’s model in the first place.

Teams that have been around a while know what to expect from a major manufacturer. In some instances a bad experience with either the car or the people behind the scenes can go a long way in an outfit choosing to take its business elsewhere.

“We basically quite GT3 racing because we had bad experiences with two manufacturers,” a team owner of a former GT3 team told DSC.

The more customers you have, the more stock and inventory you need to have in reserve to service teams. This is another cost to factor in when working out what price point to go with for your car. A smaller manufacturer in terms of sales numbers such as McLaren or Bentley may only need 5-10 million pounds of spares travelling around in the back of trucks or in shipping containers, but if you’re a mainstream GT3 marque like Audi, naturally, you’ll need more inventory available to send to race tracks around the world.

“For a big manufacturer, I wouldn’t even want to hazard a guess, but I would say you’re talking 15-20 million pounds.” A factory driver said.

You also need to work out whether you ‘need’ to make money from this endeavour. Do you need to sell 50 cars and make money, or just run a select few cars in key markets and justify it all as a marketing exercise.

“When we price up cars and parts, it’s a balance. Customers have to be happy to pay the premium to represent the brand they choose. They’ll pay less if there are more out there, and more if it’s a boutique brand.

“And for us it wasn’t easy to choose where to price our car and parts at,” a manufacturer boss said. “Honestly, at best we just wanted the whole operation to break even. It would be great to make money, not hundreds of thousands, or millions, just turning any sort of profit would make the board happy.

“We reckon we were getting about 20 million dollars a year marketing value from having a GT3 programme. That’s not shown on any paper, and it doesn’t get much recognition, but my job was to find a marketing budget of 10 million, gain marketing benefits and turn a profit.”

So how do you calculate marketing value and come away with a figure? How can you tell if a GT3 programme is justifiable as a branding exercise if the act of selling and servicing customer cars isn’t profitable? Do good results lead to road car sales? Does being involved in a major championship like the Intercontinental GT Challenge or IMSA WeatherTech SportsCar Championship drive sales of customer cars?

The answer, as you’d expect, is that it is extremely hard to quantify just how much value you can place in having customer cars racing around the world. But that doesn’t stop marques trying to come up with an answer to the questions above…

Take the IMSA manufacturers fee for example, which each marque must pay to allow customers to race whether it has 1, 5, 10 or 15 cars on the grid. It is 800 thousand Dollars a year for the Sprint races and 1.2 million for the full season (a third of this, DSC is told, goes to IMSA, a third goes to the TV coverage and a third must be used by a manufacturer to activate its products at events). You may think it’s a no-brainer to get that paid up and allow customers to put cars on the grid, but the figures sometimes don’t add up.

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The head of a manufacturer which has no full-season cars on the grid said: “I don’t feel like we should spend 800 thousand dollars a year on the fee. I believe we should have a presence in that championship, but you’re effectively paying a big marketing fee, and are you getting enough value from that?

“Do we think it will sell road cars? Yes or no? If it’s yes then we would do it, it’s the same when we consider taking cars to Geneva or Goodwood. But, for instance, for me to generate the 800 thousand dollars required to spend on that, just for a partial season programme to get a few cars on the grid, is impossible. You will never make the money back.”

What about the value of having cars racing in championships that don’t come with a substantial cost to manufacturers, such as World Challenge the IGTC?

“It’s so hard to work out. Let’s compare to LMP1, back in the day. Say you are Audi, and you’re spending 150 million a year to do Le Mans and the WEC, so eight races or so. You can then turn that on its head, because even if you’re spending 30 million a year to do customer racing globally, as Audi, you’ve got a presence at the Spa 24 Hours, Bathurst, you can do Daytona, Sebring, all of these things. Suddenly that’s value in comparison isn’t it, especially as customers are racing and winning on your behalf?

“So if a small manufacturer is getting 20 million Euros of value, then a big one like Audi is getting 40 million. The way that sponsorship and all this is justified, is that companies produce marketing reports. And while they have to be taken with a pinch of salt, they are important.

“They put a metric to it, and it is logical. They go through all of the cost to advertise at a sporting event. So say the Spa 24 Hours, if you were a company that wanted to sponsor it, and put billboards all around the circuit, there’s a cost to that, it could be 200 grand.

“So what these companies do is analyse the footage of the race, the exposure, the commentary when they discuss your cars. They’ll track all the mentions, name drops, the times the car is spent on screen, and they even put a quality value to that too, so that a car on fire in a wall doesn’t get the same value as a car crossing the line to win a race.

“They’ll say: ‘during Spa you got 38 minutes of marketing value’. If you wanted to pay for 38 minutes of advertising, it would have cost, say 450 thousand euros, so that’s your value for that race. The only thing is you can’t control the marketing message, you can’t guarantee that your brand will look good if there are cars on track. Things may go wrong.”

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So having looked at the costs involved, and the potential value of setting up a programme, if you sign off a GT3 programme, where do you price your car?

“It’s about how many do you plan to sell, can you cover the costs of doing that, do you see marketing benefits, is it worth the aggravation because of the number of spares you’ll have to produce. And the lifecycle of a car is challenging to predict,” said an industry source.

“Sometimes regulations can change without warning, like new crash regulations, you can’t predict them. But you still need to dive in, and ensure you make cars and ensure that every car you sell has a good stock of spares behind it. The day that you retire a model, you inevitably end up with a wealth of redundant stock that you have to write off your balance sheet. It’s a real challenge. There is no right or wrong answer. It’s a headache.”

Beyond that when do you decide to create an evo-kit for your car? Do you need one? And will such a change be palatable for your customer base? The basis for the changes, despite it being a BoP formula which in theory prevents performance gains through spending more on development, stems from road car strategies.

“So with a road car, if it’s a sports car, you’ll launch it, then in two years time you’ll launch a new model with more horsepower, racing seats and a wing on the back of it,” a manufacturer head said. “What that does is as the sales curve starts to diminish you have a ‘special sales action’ to boost sales, you encourage people to buy the same car again or upgrade their car because some new tech has been piled in. Evo kits in GT3 exist with every manufacturer for the same reason.

“Technically though, in GT3, you can turn up with your wife’s VW Golf and if it’s homologated, they’ll give you enough weight reductions and increase the power so much that it can produce the same lap times as the other cars out there. Because of this, Evo kits are not used for performance gains, even if they are marketed that way. It’s just a way to change things up and generate sales.

“Manufacturers are always having to come up with new initiatives to explain themselves and justify a promise that things will be better next year, because if you go to any paddock and ask teams about their cars all they’ll tell you is how s*it they are, and why the car, or BoP, is preventing them from winning.”

Yet there are drawbacks to success. You may think that manufacturers want to have their cars winning every race, every weekend, but the reality is they don’t.

BoP (which this writer happens to feel is a necessary evil at its core) and the issues it brings has created a situation where the factories involved hope their cars don’t claim standout results outside of the big marquee races. This is because the likelihood is that your car will get pegged back so much as a result of the success that new customers may steer clear and existing ones may be enticed to look elsewhere to gain an advantage.

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“The worst thing as a manufacturer that you can have, is a good year,” a manufacturer source said. “If you have a good year, you’re pretty much guaranteed to have a shit year the following year. The BoP is supposed to be fair, but really it is never quite fair.

“One year a car may win everything, and then the following year be off the pace and struggle to get anywhere near podiums in major championships.”


The cost of Covid...

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The penultimate instalment of DSC’s ‘cost of racing’ feature series has arrived. Today’s focus is the impact of the global pandemic, which has put motorsport on hold for the past few months.

As we go back racing around the world, there are so many questions yet to be answered. Will grid sizes in the major championships remain strong? Will the championship organisers take a significant hit? Will cross border/continental travel become more expensive? Will we see a decline in gentlemen drivers willing to spend big on programmes? How will manufacturers react in the medium term if budgets are squeezed? And will privateer teams be able to ensure their businesses are sustainable?

With so much financial uncertainty in most areas of industry going forward, the amount of money spent in motorsport is going to become more and more of a talking point with each passing month until the global economy recovers to anything close to pre-COVID levels.

Right now there are simply no definitive answers to what motorsport will look like in 1, 2, 3, 5 or 10 years time, though a selection of the group interviewed for this project were keen to share their thoughts and feelings with DSC. (In line with the other pieces in this series, everyone handed a platform to have their say will remain anonymous)

Here’s what they had to say:

So, where do we go from here?

Team owner A: “I think every situation for teams and gentleman drivers will be different. You’ll find that one person has their company evaporate and won’t be able to go racing, and one guy has found that his sector is doing well.

“I think there’s naturally going to be a drop in amateur drivers funding teams, plenty will be hit hard. I do know two or three people who are busier than ever and can’t wait to get back racing because they’ve already paid for their racing season before the pandemic. I also think there’s a bigger picture.

“Let’s say GT4, you can take that as a middle formula. There will be some people in that that can’t afford to do it anymore. So you can argue that grid will get smaller. Then you could argue though that are some people in the class above, in GT3, that can’t afford to do GT3 anymore but can afford to go racing. So they may drop down into those places. You could go right down to things like the TOCA package and Ginetta’s series, there’s someone who might have wanted to do Porsche Carrera Cup that now that can’t afford it now, but is separate to stay racing and drops into the Ginetta Super Cup or something. That can happen anywhere.

“Certainly the series that will lose out the most are the most expensive ones that require big investments. Who knows if that is right or wrong? But the people in LMP2 who can’t afford the WEC, will they do ELMS now?

“As small percentage of people will be wiped out, you won’t see them again and a larger percentage of people will struggle to afford the series they thought they would do, so will find something cheaper. But there will be a small percentage that say: ‘what crisis? I’ve never made so much money’ and invest more. I just worry for expensive championships with small numbers in big ticket classes, if you lose a few LMP1s from WEC and a couple of DPis from IMSA and before long you haven’t really got a class anymore. If the manufacturers that have been propping up GTE and GT3 are not selling any road cars then they will pull the plug on investment for a while.

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“If you can’t imagine any manufacturer thinking that this is a great time to start a new project, and you can’t imagine a board room prepared to invest millions, then you know that those with the ideas will be shown the door. And they will be followed in by someone looking to extend a current programme or project, and they’ll have to fight to keep things going the way they were. It could get scary.”

Team owner B: “I think things like the WEC won’t change, because those involved are high worth. I don’t think it’ll effect them. The only thing is manufacturers. Will they spend that much money if they have to lay off people? I do think your Carrera Cup level, GT4 level, family money, you’ll lose people from them. Because the businesses behind the people who bankroll those may have had to let a lot of people go, so it wouldn’t look good spending money on racing.

“We’ll have to work with it, we will go back racing again, with crowds, but we’ll just have to see who is left when we get there.”

Team owner C: “Where do we go from here? Wow. What a question…

“Well what I would say is that if I was racing in Asia predominantly right now, I’d be worried. What worries me when I look at the situation, is between the definitive end of this virus, which will come, between that and the resumption of what we consider ‘normal’ is going to be a fair amount of time. For international travel to go back to where it was will take time.

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“Most are ready to go racing at the drop of a hat, but for the situation to become palatable again, for some will take time. And between now and then, there’s no revenue coming in.

“We will have to see if the economic return is U shaped, and we won’t know how long a recovery will take. We need to be realistic, a lot of investment is needed, going racing is not something you take lightly. For many a return will be cautious.

“It’s going to be interesting. Will we see, for instance, a growth in participation of the one-make cup series, because it’s cheaper and more low key? I am a pessimist at the best of times, maybe a realist. I just hope the people who pay the bills don’t see motorsport as unnecessary going forward and get interested in new hobbies that are cheaper. Because right now manufacturers can’t sell cars, so once the current commitments are up in terms of factory motorsport, getting people to commit to new cars, championships, programmes, is going to be tough. So much is spent in advance that we may not see the effect for a year or two.”

Team Owner D: “I don’t see the manufacturer dollar being around to be able to run pro entries in the numbers they have been recently.

“But I think the gentleman driver side of things is going to be alright. All the gentlemen I do dealings with still want to drive. Whether or not they want to drive this year is up in the air, but they would still want to roll over to 2021 and race then.

“Many had already paid for a season before this started. And when you talk to them, they want to get out of the house and do something fun. I know people who have been going testing almost for the sake of it because they’ve been so bored.

“There are plenty of guys around that from this situation will make money. And there are lots that will lose money but there will be a lot of new money around too which will filter through and enter the sport.

“The one thing this might do is get rid of the saturation of championships around the world. I’ve believe the FIA sanction 303 categories a year, and 89 international series. If you took an average of 20 cars on the grid, which is about what people get on average, it works out at 6060 cars operating. Then if you went to an average spend of 100 grand, which is nearly nothing, I mean you could burn through that in club racing easily. That’s still 600 million Euros.

“They say there’s no money in racing, but there is more being poured in right now now than ever before.”

Manufacturer representative: “This is a good question! The strategy I think should be employed is this:

“Look at the turnover (for the customer racing arm at said marque) we have, it’s XX million a year, it carries its own profit and loss accounts. All of us on the board are accountable for what we spend and generate, and we generated XX million last year.

“A third of that is head-count, personnel costs, we have over 100 people working on customer racing and a third of those are working in production. So the first thing I would do is remove most of the production team, not making them redundant, but redeploying them into automotive development or working on the production line. They don’t need to be laid off.

“The reason for this is that I don’t see a lot of new race car sales happening. So the best thing to do is to trim overheads and focus on helping the second hand motorsport market and allow it to flourish.

“From my experience, if we sell a GT3 car at between 400-500 thousand pounds, by the time we’ve covered the cost of the parts of that car and the proportions of design and development costs that go into it, there’s no money in it, you make a loss on every car. Where you do make money is by halting the production of cars. We need to collectively stop trying to get them out of the door and just sell spares to teams, help them race.

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“At that point, if the cost of staying in business because you’ve redeployed your production staff, and you focus on helping sustain old business, then you’re winning. That’s the best thing for a manufacturer to do.

“It’s a real challenge for a manufacturer though. I’ll give you an example: customer support engineers are so hard to find and keep hold of. Because you don’t have the money to spend, you can’t afford to bring in one on the salary an F1 team could, so most engineers you end up with in GT racing, especially in customer support, are kids that have come out of university, earning their stripes. They are A: are hungry and ambitious, they want to go racing in Formula One or at Le Mans, and you can’t afford to pay them money to retain them, so you end up with a permanent churn of young engineers coming through, getting experience then moving on.

“And that’s one example. There can be such a turnover of staff at significant levels and that’s hard to navigate during a time like this. However, I guess the good thing in an economic downturn is that they are low cost to keep on and are less likely to move on because there are not as many opportunities elsewhere.

“Another issue is going to be teams that are currently suffering from finance payments on cars that they can’t race or may not be able to race for a while. At Lamborghini, for instance if you buy a GT3 car you go through Volkswagen finance. But the hardest thing is with anything in finance, whether you are buying a Citroen Saxo or a Bugatti Veyron, is what it is secured against, what assets. Whether it’s personal liability, or whatever. The problem is that a race car is a very dangerous thing to secure financing for, because if you chuck it at a wall hard enough, it’s worth nothing. And right now the market has dropped, people aren’t buying cars in the same numbers, so they’re suddenly worth less.

“A good example is what I can draw from my experience in selling GT4 cars. If I sell one at between 150-200 thousand pounds ex works, and we know that no matter how old they get they never drop below a hundred grand in value, because it’s not like a road car that you run into the ground, it’s always getting new parts. You see GT4 cars change hands north of 100 grand on the second hand market regularly.

“If you think of that, if you buy it at the full price, the residual is amazing, but it’s always supply in demand. How much demand for second hand race cars is there now? Lots of customer teams will have taken a risk, and if they need to sell a car now, or they always planned to sell their car this year, they’re going to take a hit. The price of race cars has gone through the floor now, who is going to buy one?

“It’s a bad climate.”



After taking a look from every angle, it's time to get a budget together


On a budget…

So we’ve looked at the cost of cars and equipment, travel, the manufacturers’ perspective and shared thoughts and feelings on the sport beyond Covid, now it’s time to put all we’ve learned together and give an example budget.

The number of things to take into consideration when putting a budget, and for that reason it’s impossible to cover every potential angle, so let’s take a specific example of a budget you’d present to a customer.

Here’s what you’d be spending if you bought (to illustrate this particular example) a Porsche GT3 car, got staff onboard, all the equipment and entered the Spa 24 Hours in the pro-am ranks for arguably the most significant and important GT3 race in the world. As with the other four parts to this, the figures are merely an example, you could spend a whole lot more on this, or trim the budget in places. A pinch of salt must be taken!

Remember too that the Porsche is neither the cheapest, nor the most expensive GT3 option available.

Car: €510,000
(Porsche 911 GT3 R in race-ready spec)

Car livery: €3,500

Car tearoffs: €800

Car consumables: €3,000
(Nitrogen, Oils, Compression Sprays etc)

Spares package: €50,000
(includes basics – front & rear bodywork)

Tyres: €58,740
(Covers 30 sets)

Car set up equipment: €20,000

Wheel nut sockets: €32,500
(You need five)

Computer station: €20,000

Fuel Bowser: €8,000

Radio equipment and fees: €15,000
(includes headsets, earpieces, looms, repeater stations, antenna towers)

Tyre tent: €7,000

Laptops: €4,000
(Two laptops)

Garage tool stations: €7100
(You’ll need for of every tool)

Wheel Guns: €32,500
(Includes four (for garage and pitlane) plus a spare)

Fuel Dump Churn: €7,000
(Includes two)

Electronic Pit Board: €8,000

Crew firesuits, helmets and underwear: €20,000
(For 11 crew members)

Driver suits: €6,000
(A suit each for three drivers)

Team merchandise: €4,000
(Team branded clothing)

Food: €7,200
(For entire staff, breakfast, lunch, dinner + snacks at €90 per person per day)

Fuel for the race car: €16,401
(Measured at €497 per hour of running x 33)

Rental cars: €1,747.30
(Includes cars and a passenger van for crew)

Race truck: €250,000

Staff wages: €34,000
(For a team manager, crew chief, team coordinator, 2 x engineers, lead mechanic, 2 x mechanics, 2 x tyre technicians)

Travel: €2,400
(Includes fuel, tolls, parking charges, bank fees, any visas)

Hotels: €8,000
(eight rooms for the event)

Entry fee: €19,500

Circuit internet: €500

Telemetry rental: €500

Data logger: €1,000

Insurance: €28,000


Doc/Physio: €2,500
(Five days, at €500 per day)

Driver wages: €60,000
(for two pro drivers)

Total: €1,285,288

As an aside, if you wanted to buy your way in and race with an existing team, using all their equipment, it’ll cost €350,000-€400,000



Message from the Editor – We’ve presented these pieces for several reasons: To educate and inform, to clarify with facts where urban myths have sometimes prevailed, and to remind everybody of the scope and scale of this business, the contribution it makes to the economy, and the challenges it now faces.

Every single figure collated and discussed by Stephen in what I, and very many of you, have seen as an exceptional piece of work, has been drawn from those directly involved in putting together programmes on national, continental and global levels. No editorialising or pontificating – just facts.

It’s very important to understand why we selected to run these articles on GT3 racing only – It was NOT to send a salvo at the class, it was simply because GT3 is everywhere, there are therefore opportunities for direct, and directly relevant, comparisons in more or less every marketplace.

The issues revealed here are just as relevant in other forms of racing and in every other class in endurance racing.

The final message is to the rulemakers and to race, series and championship organisers.

The sport stands with the biggest series of challenges in generations facing it. The automotive industry was in the process of fundamental change even before COVID-19 and the challenges that the virus has thrown in everyone’s path have made the situation very significantly more challenging.

We are not in a position where everybody can ‘plug and play’ to restart where we left off – We have already lost some friends and colleagues from the sport and there is a real risk that many others may follow in what almost all in the business expect to be a very difficult 2021.

Now is the time for significant progress in key areas: cost control, customer focus and, two-way communication with those whose endeavours and finance make this all happen. Real progress needs to be made in those areas immediately.

It’s important to build the stage and dress the set – now let’s pull together to help the players to put on the show.


Source:
part 1
part 2
part 3
part 4
part 5
Brian Redman: "Mr. Fangio, how do you come so fast?" "More throttle, less brakes...."
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#2

Post by PTRACER »

That is a ridiculous amount of money. I don't see how it could cost that much per lap even in testing, EXCLUDING tyres, fuel and staff. When I tested my old race car, it was fuel only + the entrance fee to the circuit. I could drive around all day for under 200 Euros.
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Post by erwin greven »

Added part 4
Brian Redman: "Mr. Fangio, how do you come so fast?" "More throttle, less brakes...."
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Post by erwin greven »

Added the final part.
Brian Redman: "Mr. Fangio, how do you come so fast?" "More throttle, less brakes...."
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Post by MonteCristo »

One must have a tyre tent.

Crazy money though. Thanks for sharing :).
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Post by jimclark »

Oh shucks....'got to go to the bank. Thought I had enuff in my change jar......
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#7

Post by Everso Biggyballies »

Hehehehhe, some big numbers there for sure. Crazy money

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