As the sports industry moves towards normal operations, several trends developed during the shutdown. This month we will take a look at those items and view how motorsports may be part of this growth.

The continued evolution of sports business model continues to blur the lines between professionals and amateurs. The growth of social media and expansion of non-traditional media channels presented challenges and opportunities.

The ability to harness the use of these platforms has brought power to athletes as individuals. Traditionally it has been through the form of league media events or agency press releases. 

Now, their voices are being heard – unfiltered and directly accessible to the world.   Speaking out on social issues and being part of activism is accepted as part of who they really are.

Motorsports has participated on multiple paths – drivers were responsible to their team, sponsors, and fans.  This applied at all levels for both professional and amateurs drivers.  They would address each audience being respective of their place as invested stakeholders supporting racing.

Amateur sports, specifically the collegiate system is undergoing rapid transformation.  Basically, the athletes were not being compensated while being part of structure where media dollars flowed thru to their academic institutions.  The historical system relied on scholarships to minimal expense reimbursement to reward students. 

No longer, they will be allowed to pursue commercial opportunities.  How much money will be generated is uncertain and navigating the new landscape will be challenging.

There is no consistency on how this is moving forward.  Federal legislation does not exist and states are enacting different laws.   Uniform guidelines is critical to providing oversight in complex areas that are ever changing.

Name, image and likeness or “NIL” makes up the legal concept of “right of publicity.”

Athletes will be able to earn money from their NIL from several areas: lessons, camp, and clinics; product endorsements; and fundraising.

Race car drivers already have the right to generate income in similar ways.  They may enter into a personal services agreement with a sponsor or make social media posts for a specific brand.

The marketplace with a new set of entrants as amatuer athletes have the ability to generate commercial revenue.  What direction will licensing fees and royalty rates trend affecting their earning potential – no one is quite sure.

Over the last year during the pandemic, consumers’ ability to spend disposable income on sports, events, races, games, travel, dining out and other in-person experiences declined.  Many chose to spend on hobbies to fill the entertainment void. As a result, the market for collectibles — from sports cards to sports cars — has surged.  

This lead to growth in another area of sports finance topic called Non Fungible Tokens, or “NFT”.

These are digital assets that can range from images to songs to videos to tweets.  They are verified through blockchain technology or a chain of digital ownership records.

Owning NFTs allows individuals to claim exclusive ownership over these items. They can offer a way to monetize digital goods by authenticating their scarcity.  In many transactions, NFTs don’t represent the actual asset itself, but solely a record of ownership.

Motorsports is beginning to be explore the sports NFT landscape. They are willing to embrace this trend can monetize a growing market and use NFTs to engage a new, tech-savvy generation of fans.

The Aston Martin F1 team was among the first racing organizations to participate in the NFT.  They collaborated with partner to issue a set of limited items to commemorate the return of Aston Martin to motorsports.

McLaren Racing is partnering with Tezos to launch a blockchain platform which will be available across it series including Formula One, IndyCar and esports. Fans will be able to participate via team, driver and sponsor digitized memorabilia.

Nascar driver Landon Cassill announced a sponsorship deal with the cryptocurrency firm Litecoin.  The deal is at market rates but payment will be made in the form of digital assets.

The technical aspects of the business of sports is changing rapidly.  Motorsports is all about speed and is doing its part to stay in the race.