Power and passion

Like any ambitious national organisation, sporting bodies are always looking to increase their reach and their markets by going overseas.

But it’s as hard for sporting bodies get a boot in overseas as it is for companies – sports markets are generally jealously guarded and each nation often has its own version of a particular sport and isn’t interested in opening the gates to other codes.

Witness the way that Australia’s two main codes each jealously guard their own territory – neither the AFL or the NRL want to lose supporters, and the revenue they represent, to the other.

However, the prize for going global is immense.

Soccer is probably the most global sport and revenue for its international body, FIFA, passed $US1 billion for the first time last year, thanks to the World Cup in South Africa, while the combined revenue for the top 20 teams in the world surpassed €4 billion ($5.4 billion) this year, according to research by Deloitte. Most of the revenue comes from marketing and broadcast deals, which is why it’s important to have as many spectators as possible.

It’s against this background that the Australian motor racing brand V8 Supercars Australia is continuing its overseas expansion with a move into the US to attract more vehicle manufacturers and increase its television audience. In early July it announced it would hold a V8 race weekend in Austin, Texas, in 2013, making it the fifth international venue to host an event after New Zealand, China, Bahrain and Abu Dhabi.

A cash injection for this expansion came from Archer Capital after it bought a 60 per cent stake in the business in May, valuing the motor sport at an estimated $300 million. The deal required founding V8 Supercar investor Sports & Entertainment Ltd (SEL) to sell its 25 per cent stake to the private equity house. V8 Supercar management also took an undisclosed stake.

The sport’s push into international markets echoes formula one’s international expansion under the management of British sports entrepreneur Bernie Ecclestone.

Ecclestone has dramatically increased formula one’s presence outside its traditional European heartland and into Asian and Middle Eastern markets. Since 2000, formula one has opened up a range of markets east of Turkey, including Bahrain, Abu Dhabi, India, Singapore, Malaysia, South Korea and China.

F1 has built its brand from European roots into a truly global market, with large TV and trackside audiences in new places, including Bahrain, Abu Dhabi, India and Singapore. The revenue from the sport’s commercial rights is expected to exceed $US3 billion by 2016.

V8 Supercars Australia board member and former racing driver Mark Skaife confirms that V8 Supercars, which at present is a competition between two manufacturers, General Motors Holden and Ford, wants to follow in the wheel tracks of the formula one juggernaut.

“International expansion is an important step in terms of us being the pre-eminent touring car product in this part of the world,” Skaife says. “Other than Japan, none of the Asian communities, for instance, are mature motor racing countries.”

To prepare for global expansion, V8 Supercar’s governing body, Fédération Internationale de l’Automobile (FIA) has upgraded the V8 Supercars championship to an international racing category. Up to six new international race meets can be added to existing race schedules under the FIA determination.

V8 Supercars chairman Tony Cochrane says as many as three new international race meetings will be added to the calendar from 2013.

V8 Supercars is planning to hook on to the formula one circus and cash in on the large television and trackside audiences.

“There are going to be areas in that region of the world where they will require more product than just formula one or MotoGP,” says Skaife. It also plans to race in new destinations that will miss out on the formula one party because of the high cost of hosting such an event. “Some Asian countries have got racetracks or are building circuits that haven’t been able to host formula one race meetings because of the cost.”

Skaife stepped out of the driver’s seat in 2008 as the most successful driver in V8 Supercar history, surpassing the late Peter Brock’s record of 37 championship round victories.

He won five touring car championships and five prestigious Bathurst 1000 races.

He is the one who will spearhead the introduction of a standardised V8 Supercar, to be funded through an injection of cash from Archer Capital (see story, above).

The new standardised vehicle will attract at least one other manufacturer – and perhaps more – into the competition when it moves offshore, according to Archer Capital director Andrew Gray.

The international expansion is timed with the renegotiation of V8 Supercars’ lucrative TV rights deal, which is now held by Seven West Media, owner of the Seven TV network.

Seven West’s six-year, $168 million contract for the free-to-air TV rights to V8 races expires in December 2012.

Speaking at a function in May this year, V8 Supercars’ Cochrane made clear his intention to get the best media deal possible for the sport, which generates the fourth-largest television audience of any sport in Australia.

“In Australia today, sport is god on TV,” he said. “As one of the major sports in the country, we will be ... very, very aggressive about our media rights going forward on all platforms, not just free-to-air TV.”

In terms of his investment, Gray is confident that the sport will deliver strong financial growth as it expands into international markets and renegotiates its television rights.

“I would see double-digit growth in terms of the output of the business,” he says.

BRW

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