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Designing tracks for emerging markets

A Formula 1 Grand Prix undoubtedly brings international exposure to the host country, generates a level of new economic impact during a new venue’s construction and around the period of the event, and exposes the sport to media, corporations and potential fans in the region. But in an emerging market, does a Formula 1 super-event help encourage the development of a viable, ongoing, local motorsport industry that will help sustain the venue and warrant its construction and operating costs during the remaining 360 days of the year? And what happens when an F1 race is either unavailable or too expensive for that area? What else can a new developer look at to develop his market?

The new track owner has to develop a whole range of business activities, each of which must contribute to revenues, and each of which must be coordinated with one another to create a critical mass of activity that becomes the self-sustaining lifeblood of the venue. The race facility itself has to be designed to service these multiple business activities in a cost-effective, operationally efficient and coordinated manner.

To begin with, localized racing will generate ongoing revenues through practice and testing, local sponsorship activities, and local spectator interest, which is why a new facility in a new market must take the lead in developing its own, home-circuit based race series.

These car, motorcycle and kart races should not be targeted at professionals, but need to be entry-level, low-cost and ultimately fun events that draw new competitors into the sport. Rules must be flexible and drawn up to meet the local market and not imposed from on high by international or even national sanctioning bodies. Events should be run professionally, so as to set quality standards for presentation and spectator entertainment, and in order to justify local sponsorship for both the venue and the participants.

Ultimately, these series will grow into substantial, self-sustaining programs that will deliver their best competitors into national and international racing, while continuing to attract new participants.

Again, it is the track owners who must find a source for these new, entry-level participants in a way that generates positives revenues for his track. The track operator must therefore create his own programs to attract the early enthusiast and to grow his interest from spectating to participating in recreational driving activities, and from non-competitive driving through into club-level racing.

This can be achieved by operating track-managed recreational motorsport programs such as track days that encourage non-racing enthusiasts to the sport. By operating high-performance driving schools and clinics, and by creating specific racing school programs, recreational enthusiasts are lead into actual racing.

 

A parallel program should focus around a kart track. This should not only be a profit generator in its own right as a recreational amenity for the general public, but a track-based racing program that will generate future car racers. Equally as important, a kart program can be used to interest and attract corporate customers to the facility, which will lead to more competitors, more sponsorship, and more revenue for the facility.

The track operator must also recognize the importance of the social side of the business. Motorsport will always attract enthusiasm but this must be nurtured, directed and promoted to the financial benefit of the track. The developer must therefore develop programs that attract these enthusiasts, most of whom will have only a partial interest in participating in competitive events. But they will be car or motorcycle fans and once hooked into the sport, they will remain loyal for years to come.

The track owner should create specific programs to attract these enthusiasts, provide them with advantageous access to the track’s events, and perhaps establish a privileged-access club program and generally encourage them to use the facility as much as possible.

Finally, the new track owner must recognize the huge potential that is inherent in corporate activities. A facility that has a kart track, a driving school, a racetrack designed to be run in two layouts, a substantial paddock or driving pad, and a clubhouse/corporate events facility will have the potential to generate significant and high profit revenues through corporate event programs. While these customers may not be committed race fans, the unique programs, high levels of exhilaration, and sheer entertainment value of motorsport-based activities will create memorable entertainment for the customer’s clients. A strong corporate events program will make the well-designed race complex an important part of the local commercial world, exposing it to new customers, new opportunities, and new revenues over the years.

The new track owner lies at the epicenter of the racing world, and what is good for the track is almost always good for the business of the sport. Consequently the new track owner must be ready to take the lead in establishing and developing his regional racing community and in integrating it into a viable and cohesive national program. This is a crucial responsibility that will define his ability to profit from his investment.

His ability to develop his business will be defined by the race facility that he builds because – unless the track he builds is specifically designed to accommodate these many different business activities, to generate competitor and fan interest, and to warrant corporate support – it cannot succeed.

A national or regional level facility that can provide a base for this level of business need not be a high-cost, super-image facility. It can be built at a reasonable cost and operated at practical levels that warrant a sensible level of investment. Designed specifically to meet local market potential and with construction phased to meet market growth, this level of facility will provide the basis for sustained growth and has every potential to be a long-term market success.

The future of racing in developing markets does not necessarily lie in expensive, glamorous facilities that cannot justify their long-term existence. It lies in the construction of regional and national level tracks that lead the way in developing entry-level and national standard racing in countries where the sport is new.

These tracks have the responsibility of being profitable over the long term, to nurture the sport and its supporting industry, and to generate enthusiasm for racing. It is at these tracks that the culture of racing will be created, where new spectators will be attracted to the sport, and where sponsors will be shown the value of investing in drivers, teams, tracks and events.

 

Alan Wilson is a principal in the firm of Wilson Sahara Inc, based in Utah, USA.

 

 

 

 

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