Funding A1GP

[Go-Pakistan]

According to the info in the press, motoring and otherwise, A1GP has been financed with US$250m with expected profit after 3 yrs.

It would be interesting to know the finance structure of teams if anyone has some knowledge.

What was the franchise fee payable by the participating country teams?

Do the teams receive a percentage of the gate money?

Are drivers bringing funding to the teams as is usual in motor racing or franchise holder responsible for their own sponsorship?

[Russfeld]

There isnt any sponsorship, and who on earth paid this 250mil? Perhaps the catty whispers of it being a 'tax efficient' series arent so wide of the mark.

While potentially slanderous, the logic behind it isnt so far gone.

[Go-Pakistan]

the US$250m was raised by the sheik to pay for the development of the car, the series promotion and advertising, hiring of circuits etc.

many of the cars are carrying sponsorship!

[ale16]

Perhaps no drivers are bringing money to the teams as well. So far it looks like a professional series for drivers, which would be great, but it is hard to understand when you see the most expensive teams of the world in the grid (ASM, Carlin, Rosberg and others). Where the money comes from? TV rights?

[Kicking-back]

People underestimate the wealth of the Maktoums.

Sheik Maktoum Hasher Maktoum al Maktoum could pay for the whole thing himself out of loose change if he so wished.

[Roninho]

The franchise of the netherlands is bought by img, a very big international marketing/sports company. Jan Lammers (the dutch manager) reported that img comes up with the money to run the team and they hope to make that back from sponsorship and i assume race purses (a race winner earns $1million) & tv-money, etc.

[mbathshah]

Not sure how the business model works. It is being said that most of tickets at the Speedway were given away free and the attendance was being way over hyped. Also the viewing figues appear to be only between 5-10% of those being commanded by F1 based on Global TV figures. Also the racing is not particularly exciting with all of the technical problems the series has had. Finally very few big name drivers have entered the series and that has not helped. Any idea how much the franchises cost? I heard that each country pays a different amount based on population/wealth etc

[Kicking-back]

TV viewing figures and technical problems - people flagging these up should remember the series has only run 2 rounds, not 50 years.

[ensign14]

One wonders whether Dubai has received $250m of advertising through the series' publicity? Remember the UAE is positioning itself for a post-oil world and being the epicentre of technology/a racing series is not necessarily a bad move.

[ale16]

this in an interesting point, ensign!

[Kicking-back]

Absolutely.

I was in Dubai last month and the area "DubaiLand" they're developing around the Autodrome is spectacular.

A motorsport themepark is also being built.

Also A1GP has lots of links with Fly Emirates - the airline, which is owned, of course, by the Maktoum family.

[Just Do It!]

Apparently the New Zealand franchise cost either $5-7 million but that has been reported to be the price in NZ dollars, US dollars, and Euros.....

....and speculation in NZ says that one of the two Kiwi drivers may well be on a part-payment or contra-type deal....dunno about the truth in it though.

[Just Do It!]

Originally Posted by Kicking-back

People underestimate the wealth of the Maktoums.

Sheik Maktoum Hasher Maktoum al Maktoum could pay for the whole thing himself out of loose change if he so wished.

You are right. Apparently he put the series together with some loose change he found behind the couch

[Roninho]

http://www.sportingnews.com/yourturn...ic.php?t=19283,

Teixeira said the startup cost of the series, including the first season, was about $500 million. F1 has 10 teams and it costs several billion dollars each year to run. The Ferrari team alone has an annual budget estimated at $400 million.

A1 franchises are priced based on the population and wealth of the country. The most expensive franchises cost $50 million and the least expensive $15 million.

"We would be very, very fortunate if we broke even in year one," Teixeira said. "But by year three we should be making a nice profit."

[mbathshah]

Surely you can't be serious. Who on earth has paid $50 million for a franchise? How will any franchise holder get this kind of money back?

[Go-Pakistan]

I guess it's USA that has paid this fee, but if the series really takes off and the team does well, they may make a lot in prize money, sponsorship and merchandising. (still ot sure if the teams get a percentage of gate money...anyone know?)

[Roninho]

actually i'm thinking of china. Or india. Mega-markets that will be very interesting for sponsors. Example: The DTM-demo race in china attracted a main sponsor paying an amount of +- 5 or 6 million euro. The $50 million nr. seems bizar, but the guy in the article is talking about $15 million minimum fee. If i had the money and could chose between $15 million for ireland or holland or $50 million for china i'd pick China.

[Asa]

I just don't think any team can affprd to pay US$10 million (US$250 million / 25 teams) for the franchise, particularly teams like Pakistan, Lebanon, Indonesia...etc, which has very little motorsport history or culture.

I think the fee varies from country to country.

[Go-Pakistan]

It's not the countries that are buying the franchise, it's business people from those countries that are buying the franchise, all these countries you have mentioned have hundreds if not thousands of people who have this sort of money or can raise this money from banks, particularly with the excellent business plan presented by the A1 management team.....US$10m is not a lot in the business world.

[mbathshah]

Japan were absent from Estoril and according to Autosport they have hit funding problems through a lack of sponsorship. I think that this is pretty scary so early on in the season and especially from a country with so much motorsport heritage and financial clout. Could this be the beginning of th end of A1GP?

[Russfeld]

Originally Posted by Go-Pakistan

...particularly with the excellent business plan presented by the A1 management team...

What excellent business plan? Where's all the sponsorship?

[ensign14]

Originally Posted by mbathshah

Could this be the beginning of th end of A1GP?

They've still got more cars than F1, GP2, IRL and Champcar.

[mbathshah]

With all due respect you can't compare A1GP to those other series. I watched the race at Estoril and quite frankly it was like watching wacky races. I have never seen such poor driving standards in a series labelled with so much hype. On the issue of lack of funding I think even Minardi's budget is probably more than all the A1 GP teams put together so the number of cars on the grid is not that important - feel the quality not the width I say!

[Go-Pakistan]

Originally Posted by Russfeld

What excellent business plan? Where's all the sponsorship?

Brands Hatch Weekend attendance 50-80,000 (depending on which news report you read),

Global race series

Huge crowds anticipated particularly in malaysia, china, indonesia, brazil

Vast new markets for sponsors

motor racing now brought to countries with little or no history in the sport.

winter employment and business generated for a summer season industry.

Formula 1 has been going for 50 years and look at USA race this year.....a joke.

A1GP has been going less than 50 days ! ....give it a chance.

[Kicking-back]

Simple fact is Sheik Maktoum could fund this forever entirely by himself if he so wished.