Business of Speed
The Money Behind the Motorsports Industry
By: Tim Frost
Date: June 2017

We are pleased to introduce a new feature to SPEED SPORT – “The Business of Speed”. This column will look at the financials aspects of the industry. Whether it’s on the track, passing through pit lane, worked on in the race shop, or negotiated in the board room, we will attempt to cover it all.

This month we will look at an important variable affecting a company’s decision to be involved in motorsports. In addition we will look at the automobile value equation away from the track.

Sponsor Loyalty:

Race fans are among the most supportive in all forms of sports. This dedication is appealing to companies because they anticipate consumer spending on their respective products and brands.

There are various metrics that benchmark the fans action towards a sponsor. One traditional benchmark is revenue from product sales. This may include promotional activation in the local market surrounding a major race. The move towards digital is focusing efforts towards social media platforms. Quantifying results from digital is still evolving – posts, views, likes, shares and clicks are the most recognizable.

Research data compiled by Turnkey Sports & Entertainment / Sports Business Journal offers valuable insights. Online surveys are conducted with respondents who considered themselves “avid” or “casual” fans.

Compiled over the last decade, historical trends can be identified. The results supported the belief that Nascar “official” category sponsors had the highest level of recognition. These entities typically spend significant amounts to create awareness.

The soft drink (Coca Cola) and insurance (Nationwide) categories posted strong results with multi-level spending on the sanctioning body, event and team levels.

Companies transition with their level of involvement with Nascar. For example, 2016 was the last year for Sprint as title sponsor for the Cup series. It is reasonable to assume their level of recognition will taper in the near future. In the automotive category, the exit of Dodge and the entrance of Toyota presented diverging lines.

Sponsor Loyalty – 2016 – Nascar

Category / Company Percent
Soda – (Coca-Cola) 54.8%
Auto – (Chevy) 38.8%
Beer – (Coors Light) 29.8%
Wireless – (Sprint) 47.3%
Insurance – (Nationwide) 36.0%

Source: Turnkey Sports & Entertainment – Sports Business Journal
Collector Car Auctions:

The off-season presents many options to check into different aspects of the automotive lifestyle. Typically held in the warmer locales of Florida and Arizona, collector car auctions fill the void on a cold winter night.

Race cars typically represent a small subset of the entire auction inventory. Many times are they are sold off or purchased to benefit charitable purposes. The philanthropic mission is a winning equation for all.

Collector cars play an important part in the racing industry. Vintage racing is among the fastest growing segments in participatory form of motorsports. Event calendars are solid and car counts are expanding. Many races are now incorporating auctions as part of their race weekend activities.

Car shows are everywhere – from city streets to fairgrounds to race tracks. The larger race tracks have established events that last several days and attract as many spectators as the largest race.

The overall results from the largest auctions in early 2017 are amazing. Data presented by Victory Lane Magazine / Rick Carey indicated a total of 2,300 cars or 73% were sold for almost $220.0 million. This median price was $104,500 and the average of $267,600 lifted by a sale of almost $8.0 million.
Collector Car Auctions – Spring 2017

Event Cars – Sold / Offered / % Average Median Total
Mecum – Kissimmee 1,960/2,663/73.6% $43,340 $27,500 $84,945,775
Worldwide – Scottsdale 64/82/78.1% $178,718 $104,500 $11,437,969
Bonhams – Scottsdale 86/106/81.1% $422,494 $90,750 $36,334,520
RM – Arizona 142/160/88.8% $378,248 $121,000 $53,711,250
Gooding – Scottsdale 106/126/84.1% $315,047 $148,500 $33,395,000
Total: 2,300 / 3,137 / 73.3% $267,569 $104,500 $219,824,514

Source: Victory Lane Magazine / Rick Carey