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BW Businessworld

Racing Number

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How to make a motorsports championship work? Seven out of 10 motor sporting ventures fail; to make their business look eco-friendly, several auto manufacturers have deserted the sport; and, in India, cricket soaks up marketing investment.

Then what made Machdar Motorsports plan the i1 Super Series, an Indian motor racing event set to flag-off in mid-December? Robin Webb, a veteran of motorsport championships and the series coordinator for i1, says there are lessons to be picked up from the failures. "In motorsports, it is natural to make the car your starting point. But here they have made the business the starting point," he says. The argument: the car can be changed if it does not meet the requirements, as long as the business fundamentals are rock solid.

And the choice of the car, Radical SR3 in this case, helps in getting the right amount of savings. An SR3 costs roughly $100,000 (about Rs 45 lakh), while a car that is geared to F1 levels could cost at least $400,000 (about Rs 1.8 crore). So if 20 such cars are required for a season of the i1 super series (18 drivers plus two back-up cars), using Radical SR3 cars will cost the teams a total of Rs 9 crore. They would have to pay four times more if they chose race cars fit for the F1 circuit.

Another focus point is lesser manpower — a Radical SR3 can do with one attendant per car as opposed to 4-12 people per car that are used in other championships. This is also because the i1 Super Series will have a shorter race of 45 minutes, compared to an F1 race that can go beyond even two hours. A shorter race means savings on fuel and tyres — no tyre replacements or refuelling will be permitted in the middle of the race. On the flip side, a shorter race also means lesser time for commercials during live telecast.

The series also has a single-make format — all the cars will be of one make, configuration and technical specifications. This will not only ensure maximum display of a driver's skill, but that teams do not have to bust the bank to invest in R&D and over-engineering their team cars for superior performance.

Also, as Anjana Reddy, promoter of the series, points out, Machdar plans to plug-and-play into the existing infrastructure. That means no additional costs incurred on building infrastructure. Among the seven venues for the inaugural season, two will be in India (Delhi and Chennai) and the rest will be across Asia. Machdar even plans to get the players under a central contract, so that team owners do not end up paying too high a price for them.

Each team owner will have to make an initial investment of Rs 22.5 crore (about $5 million), an additional investment of Rs 9 crore (about $2 million) in the first year and Rs 4.5 crore in subsequent years. Teams who keep within budget are expected to break even in the fourth year.

This means a total investment of Rs 365 crore in the first three years from nine teams. If revenues are split 60:40 between team owners and Machdar, the i1 Super Series will need an average of Rs 200 crore a year in revenues to recover its investments after three years. The roadmap seems well planned. But the race could be very different.

(This story was published in Businessworld Issue Dated 05-09-2011)