FIM Speedway Grand Prix exclusive rights auction (2022-2031): part 1

THE Fédération Internationale de Motocyclisme (FIM) deadline to submit expressions of interest (tenders) to identify candidates interested in winning a £100+ million contract from them by becoming involved as a Promoter of “the Championship” – aka the “FIM Speedway Grand Prix World Championship, FIM Speedway World Cup & FIM Speedway of Nations And On an optional basis any other Track racing disciplines/series” – with a view to concluding a multi‐year contract (2022-2031 seasons) has now passed. Though we don’t yet know who has submitted a tender nor the specifics of their proposals, we do know the metrics the FIM tender sets out as key requirements that will form the basis upon which the FIM will assess bids (published on their website here) and award this substantial contract. Granting exclusive rights for “the Championship” is also hugely lucrative for the FIM! Historically and, if there is a bidding war, even more so in the future. Rather naively I had always expected the FIM to seriously exercise their duty of care towards federation national associations in its supervision of this exclusive “Championship” rights contract but – as the substantial negative impact of the Speedway Grand Prix championship series under BSI Speedway effectively hollowing out top level British Speedway has shown – fee payments appear to trump such considerations. And what a financial bonanza the exclusive grant of these SGP and Speedway of Nations/World Cup rights has been for both the FIM and BSI Speedway over the past two decades.

In their 2002 accounts, BSI stated their commitment to the FIM to 2021 was an incredible £26,713,953. That roughly works out as a royalty/fee of £1,405,998 per annum paid by BSI Speedway to the FIM under the terms of the contract to hold exclusive rights to the fourteen or so events that usually comprise the “Championship”. Yet, by 2017, the commitment of BSI Speedway for the next year (2018) had risen to £2,089,617. Even FIM Race Director Phil Morris would struggle to come up with an expressive enough flamboyant on track gestures to capture the enormity of such contractual payments. As context, for the latest ten year period (2008-2017) for which we have publicly available accounts the financial position BSI Speedway looks as follows:

Year                          Revenues                                  Operating Profit                   O/Profit as % of Revenues

2008                         £8,691,922                               £2,248,146                               25.86

2009                         £9,146,194                               £2,262,295                               24.73

2010                          £9,395,860                             £1,190,753                                20.34

2011                           £9,278,857                              £2,144,826                               23.11

2012                          £10,086,560                           £2,161,873                                21.43

2013                          £8,861,274                               £2,067,363                              23.33

2014                          £8,783,989                             £1,595,155                                18.16

2015                          £7,850,975                              £1,775,793                                22.62

2016                          £8,608,299                             £422,651*                                 4.91

2017                          £9,355,289                              £289,017                                   3.09

Total                         £90,059,219                            £16,877,872                             18.74

 

While we await the 2018 tablets to come down from the BSI Speedway mountain, the Hitchhiker’s Guide to the Speedway Grand Prix takes a wry look behind the scenes of 2018 series and is available here, in all good bookshops (including Waterstones) or at Amazon. Interestingly, though revenues increased in both 2016 and 2017, in their accounts BSI Speedway have chosen to show a substantial decline in operating profit due to a “new transfer pricing policy” resulting in “an increased intercompany charge”. That said, in 2016 BSI Speedway introduced new accounting procedures into their financial statements that saw a dividend* paid (I am assuming this as an inter-company payment to parent company IMG) of £3,255,882 while they still managed to report an operating profit of £422,651. Quite a stellar year! This substantial sum is higher than any reported operating profit of the previous decade. Though possibly comparing apples with oranges if we add this dividend back into the operating figures, the BSI Speedway decade adjusted margin rises back to 22.34% which is much more in line standard performance. In rough laywoman’s terms for every £4 of revenues, BSI Speedway has reported £1 operating profit in their accounts at Companies House. For example, this might means we could see my purchase of £10 Cardiff programme (editor: Nigel Pearson) as generating circa £2.50 operating profit for BSI or my £20 FIM British Speedway Grand Prix ticket generating around £5 operating profit. The fact that there is a margin as incredible as 25 per cent indicates that the contract signed by BSI Speedway was extremely advantageous to them from the get go. Any business with a 25 per cent margin is truly laughing all the way to the bank. BSI Speedway have guarded their exclusivity with some zeal and, praise where praise is due, they have subsequently developed a franchise model where gullible local, regional or national government’s with budget can pay BSI for the privilege of signing a one-sided Don King style contract that sees the franchisee effectively bear all the risk (financial and reputational) and costs. If any event messes up – and many have – then it is the franchisee and not BSI who catch the cold. Sadly, BSI’s serial UNambition when it comes to searching out and then resourcing new markets and territories has regularly seen sub-contractees – in, for example, both New Zealand and Australia – get stuffed up with all the costs to the extent that they can’t make the events financially successful so they either sustain serious losses or else hand back the keys.

What should concern the FIM more is that there has been much more rigorous “cost control” (according to the BSI Speedway company accounts) across the business since 2015. This compounds the effects of years of under-investment. Arguably if investing sensibly for the medium terms, these rentier margins of 25 per cent could have seen a short term deterioration of ten to fifteen points in order to develop new markets and audiences in the short term. The corporate nature of BSI Speedway as the subsidiary of a much larger multi-national (BSI Speedway Limited appear to have TWO parent companies IMG and their parent company WME Entertainment Parent LLC) has far from either leveraging or delivering the oft lauded global media contacts or tried and tested sports marketing expertise has left them stuck as a hamster on a treadmill delivering their budgeted revenues, margins, cost saving and expected returns. Arguably, the management worldview of BSI Speedway is predicated upon them being a hamster that roars like a hamster. That cost-control has been the case has been obvious to regular SGP fans – whether of the physically attending or armchair variety – for a substantially longer period than just from 2015 (more like from when the real knock out format of the SGP series ceased to exist). It could be argued that effectively sub-contracting  SGP entertainment-cum-presentation to Monster Energy has also been the key component factor in this cost-saving strategy as BSI Speedway have effectively saved substantial sums of marketing spend by leaving that to their valued and esteemed sponsorship partner. Monster Energy have – in turn – shown they are happy to do this heavy lifting skillfully for their own corporate and promotional ends. All this means though they have significant incumbency benefits – and start out as favourites to win the auction and beauty contest aspects of the FIM competitive bid process – going into a tender with many years company accounts boasting of cost-saving strategies and parsimoniousness in the face of difficult trading conditions is really not a good look for the relentless positivity and pragmatism required for your pitch about the decade ahead. Indeed, regular BSI bemoaning – in Private Frazer from Dad’s Army fashion – in their accounts could possibly see them morph more into Corporal Jones as the tender discussions unfold.

It is, of course, sensible to remind ourselves that if – for example – the ECB decides to sell cricket’s soul to a satellite broadcaster (& a proper one with a decent subscriber audience to boot), then UK cricket gets the money. They can choose to invest it in the grassroots or fritter it away on nonsense, that is their prerogative. In the case of British Speedway, the FIM gave away twenty year’s worth of possible revenues (or part share in said same) to a third party private company. So not only did British Speedway not see a penny but BSI Speedway – in additional to their parasitic rentier income – had no investment obligations or requirement to show any duty of care in their strategic and operational decision-making. As their interests are completely inimical to all and all British Speedway clubs, the BSPA and SCB, expanding the series from five events to ten or twelve prime weekends every summer is an easy one to make as it comes without any transactional or reputational costs to BSI Speedway. If this bastardises Friday and Saturday night speedway during the summer and on bank holidays – tough. If “top riders” and “star riders” decide to prioritise signing on for the SGP ten times (minimum) a season in the back end of beyond on a Friday afternoon, then also tough. Though not the only factor, such obligations make their decision to skip riding in Britain much easier to make. It is worth emphasizing that BSI Speedway company accounts take great pride in making ZERO charitable or political donations. In fact, BSI Speedway so guard their precious revenues that they have always refused to allow SRBF collections to take place outside the FIM British Speedway Grand Prix. This is very telling. Indeed, on Friday nights since 2018 – when BSPA Press Officer Nigel Pearson was the interview host for Nicki Pedersen and his client Tai Woffinden – and again in 2019 (this time televised SGP practice again with the BSPA Press Spokesman in attendance) have chosen to directly compete with the BSPA PL Pairs shared event traditionally held that evening at the Oak Tree Arena in Highbridge. This can only reduce the revenues raised that British Speedway clubs get to share between them.

Existing “Championship” rights holders BSI Speedway (BSI) have submitted a tender bid and while we don’t know the contents of their latest bid proposal, we are in a position to assess the current state of play as well as compare where we find ourselves in relation to what BSI originally promised and subsequently claimed they would do with the SGP with their original two decades of exclusivity. Additionally in the public domain are the statements and claims made by new BSI Speedway CEO Stephen Gould in an all-holds-barred narrow-ranging more paddling pool shallows than in-depth ‘interview’ conducted by BSI employee Paul Burbidge in the Speedway Star.

Interestingly, in the wording of its “minimum components” section it appears that the FIM wish to specifically rule out BSI Speedway continuing to hold the exclusive rights for the Speedway Grand Prix/Speedway World Cup and/or Speedway of Nations (henceforth known in the tender document as “The Championship”) from 2022 to 2031. The FIM demand as a minimum: “The Promoter will, at its own cost if necessary, use its reasonable endeavours to ensure free‐to-air television coverage of each event in the territory in which that event takes place” [my emphasis]. Given that BSI Speedway have completely failed to entice BBC, ITV or Channel 4 to the speedway world championships party this looks something a stretch to manage to get the Cardiff FIM British Speedway Grand Prix shown on UK terrestrial television from 2022 onwards. Indeed, traditionally BSI Speedway have approached the sale of television rights of “the Championship” as a two decade opportunity to either keep speedway a closely guarded secret or ensure proceedings are shown on as obscure as possible pay-per-view or subscription satellite channels where few viewers can afford or find them. On the basis of this single requirement, the BSI Speedway tender appears to fall out of the tender discussions reckoning at the first fence. Worse still, not only has BSI Speedway seen the – UK, for example – television audiences figures they did manage to get collapse precipitously, their approach to coverage in national or independent media outlets (whether print, broadcast, online or social media) has almost rendered the world championships and world cup invisible to all those without powerful microscopes.

Even within the charmed circle of the heavy breather tame specialist outlets that do cover SGP or WC/SoN events, it is hard to claim that the FIM minimum requirement of “best endeavours to enhance the Championship’s value, image and level of coverage on all media” has been achieved, let alone consistently so. Obviously, in the growth area of social media, the SGP has its own Twitter account but this appears to operate this either as a mock-heroic spoof account or as some kind of fake news experiment where events reported bear little relation to activity on the track. Of course, though we can “join the [SGP] conversation” – and are often implored to do so – for many life is too short to indulge in the speedway equivalent of talking to yourself while holding your crotch in a hurricane.

Even if we assume BSI Speedway have not fallen at the first fence, it is hard to set aside their apparent deliberate act of self-sabotage with their recent appointment of Steve Gould as their CEO to succeed Torben Olsen following his promotion to some he knows nothing about within the IMG Motorsports Division. In the pantheon of less than brilliant leaders though none matched the sledgehammer levels of self-admiration show by John Postlethwaite – Paul Bellamy and Torben Olsen were equally unafraid to regularly drink deep drafts of their own bathwater. Sadly, current/new CEO Gould would get excluded by any fair-minded referee as an act of kindness not least for requiring stabilisers on his speedway leadership bike or consistently failing to get under power. Fearlessly interviewed in the Speedway Star by BSI’s own SGP webmaster and twitter bot manqué, even with dolly drops and patsy questions Gould did not make a compelling case – let alone an accurate or modest one – for either his knowledge or future strategic vision despite hyperbolic claims about his Olympic credentials. Though it is probably asking for too much corporate self-awareness on the part of BSI Speedway but, if they expect to be taken seriously or compete against others with their tender, they probably need to immediately stop all public appearances, utterances and written comment by Gould. That said, while some critics say Gould can barely dress himself in speedway terms, he did create a stir at the Wroclaw SGP by parading round with his flies open to all and sundry. Luckily, the FIM don’t award SGP contracts on the basis of dress sense or dressing yourself, let alone Gould’s recent investigations of SGP “customer touch points” [spoiler alert: the customer “journey” has room for improvement from its current breakdown on the metaphorical hard shoulder]

Obviously, there is a lot of guff to provide to make the appropriate tender for this Jewel in the Crown of the Motorcycle firmament that the FIM deems its universe. For all who claim that the FIM or BSI Speedway have lost touch with speedway grass roots – whether its fans, riders or communities – there is little reassurance to be had from many of their tender requirements. Apparently with a straight face, the FIM demand to know, “The vision of the candidate with regard to the organisation and promotion of the Championship and, more precisely, to its marketing positioning, its promotional and commercial strategy, and ultimately its business model”. If in the Kingdom of the Blind, the one-eyed man is king, then the FIM want some free market research about the championship whose rights they own as well as some ready drafted BS filled business plans in braille while they play their own version of blindfold pin-the-management-speak-tail-on-the-corporate-speedway-donkey. Some of the more laughable requirements include: “A description of how key promotion rights will be implemented (including considerations about the media offering (Live vs non Live) and the strategy to grow the audience of the Championship (Traditional vs New Media)”

Other information requested by the FIM as part of this tender – that I will return to assess and comment upon in future blogs – includes request for details about:

<Manufacturers / Teams /Riders

<Sporting development of the Championship

<Geographical expansion of the Championship

<Sponsors – captive & non-captive

<Revenues (sources)

<Investors

<Venues (circuits, cities, events, countries)

<Temporary track/barriers construction strategy (staff, material and devices)

<Media: Identification of international media partners for the Championship/Media management strategy/TV broadcasting plan + opportunities/New media activation

<Audience: public/fans & ways to engage with the fans including social media accounts

First off, surely the FIM know by now that BSI have singly failed to find any big brand sponsors for the SGP series or other “Championship” events, let alone capture them for goodness sake? While it is probably true that BSI Speedway have pretty well held British Speedway hostage with their SGP series (“The Championship”) since its inception – while all the tame print, online and broadcast media money can buy went all Stockholm Syndrome – at least until its suicide pact really kicked in, we could kid ourselves that the grown-ups in the room at the FIM might – at some point – either ride to our rescue, contribute monies to British Speedway or question the long term strategic value of the series expansion vis-à-vis the wild claims for future development made by BSI at the time of contract signature? Sadly, this tender document confirms what the BSI Speedway accounts at Companies House also reveal, namely that while speedway speaks many languages the only one that really gets heard is financial.

Whether this is dressed up as a royalty, rights payments and sponsorship revenue splits, while speedway in Britain, Sweden and Denmark declines (or ‘thrives’ like never before if you are in denial and/or somehow on or tangentially on the BSI payroll) according to your metaphor of choice – tanks, runs on empty or out of fuel – the FIM cat has fattened in tandem with BSI Speedway’s guzzling of the cream of speedway’s present and future revenues. In reality, once all the flim-flam, hurrah words and blah blah of series development parts of the tender has primped, primed and excited the FIM assessors, it is all a question of how much dosh and gelt can be got or further mined from the still just about warm speedway body politic. This is made very clear in the tender document:

>The level of contribution offered to the FIM in terms of the exploitation of the promotion rights

>The minimum financial fee (in Swiss Francs) that can be provided by the candidate and which must be paid to the FIM at the signing of the contract

Further key financial guff states winning bidders must cross the FIM’s palm with silver (preferably lots of it):

>The Promoter is invited to make a financial offer to FIM in consideration of the grant of rights.

>The proposal should include a title sponsorship revenue split with the FIM and a contribution to the FIM Awards ceremony.

>Payment of any monies from the promoter to FIM shall take place in Swiss Francs.

In almost any competitive tender, though fine words, ambitions, plans and strategies are all part of the equation, the trump card factor is invariably always financial. So, how much money are we talking about to be the winning tender bid here? Let’s have another brief look (see above) at the existing publicly available information from BSI Speedway about their revenues, operating profits and existing payments to the FIM to make a stab at the sort of monies likely to be involved in the winning tender. Given BSI Speedway appear to have generated over £90 million in revenues and a nearly 25 per cent margin over the past decade (to 2017) by pursuing a stringently UNambitious business development strategy that leaves almost all new audiences and markets unexplored, there is clearly huge headroom left to exploit given how much BSI Speedway have historically chosen to leave unexploited upon the table. Indeed, to date BSI Speedway have been primarily farmers NOT hunters. Though I think their exploitation of gullible governmental franchisees model is canny and, arguably, innovative (albeit not good for the development of speedway generally), it is not outside the bounds of possibly for revenues to be in the range of £150-180 million over the next decade. Compound growth could take the victorious bidder some way towards such revenues, just so long as they manage or mitigate the possible poison pill of television rights contract values uncertainty and/or decline during the FIM exclusive “Championship” contract changeover/ transition period. Taking the lower bound of this anticipated range, surely the FIM should expect total (aka the mix of fixed and shared results oriented incentive bubble) annual fee payments of the winning bid to be in the £3.5-4 million per annum range?. Obviously, acknowledging that wild assumptions are often the mother of all bad misapprehensions and judgements, then the bubble advance non-refundable payment the FIM should anticipate from the winning bid must be around £10 million (at whatever Swiss Franc exchange rate applies)?

Whatever the winning figure or whomever the exclusive rights holder for the “Championship” turns out to be for 2022-2031, the FIM will decide without outside influence, discussion or appeal. Their tender document states, “According to the results of the various exchanges and discussions with the candidates, the FIM will select the candidate which, in the FIM’s sole opinion and discretion, best serves the interests of the Championship and the interests of motorcycle sport in general (Decision of the FIM Board of Directors to be held in November 2019). The FIM will not be required to give reasons for the acceptance or refusal of any particular proposal.”

Based on their award and supervision of BSI Speedway’s original 20-year exclusive contract, it is hard to take seriously let alone place any faith or credibility in the FIM claim that their corporate governance has the best interests of “motorcycle sport in general” or British Speedway in particular at heart. Indeed, the (unanswered) questions asked and observations made in the Speedway Star by the late John Berry in November 2002 still stand the test of time to remain pertinent for the good ship FIM and all who sail in her. “In short, the Grand Prix saw primarily the British promoters (but also some other nationalities) subsidising their riders’ appearances in the GP, whilst also having to do without their services from time to time. In return, they had the opportunity to stage one GP event per season. Then along came a promotions company [BSI] with no previous interest in speedway. They did a deal with the FIM whereby the FIM allegedly sold them the rights to promote the GP series. The FIM, who paid no transfer or loan fees for the use of the riders, who paid no cost for the riders to arrive in Europe from all over the world, who made no contribution to equipping or training those riders, simply ‘sold’ the right to use those riders, along with the World Championship copyright title, to people who had no connection with the sport. They also ‘rented’ them the use of speedway’s supporter base. Huge amounts of money were bandied about, suggesting a great deal had been done and the inference was that the federations would be handsomely recompensed for the use of their assets. Now I have been asking the same question since day one of the deal: what has happened to all that money? As yet, I have had no indication at all that any monies have been paid to any federation by the FIM from the monies allegedly paid for the GP rights. Maybe the FIM have even more luxurious junkets? Maybe there are more and more FIM quasi-officials who scurry around the world in their navy-blue blazers trying to look important? But so far as I am aware, no money at all has filtered back to the BSPA coffers.” And, as no answers had been forthcoming, the late John Berry then repeated in a letter to the Speedway Star in February 2003, “And again I have to ask the question that only I seem interested in. Where is all the money allegedly paid to the FIM for rights and assets that arguably were not theirs to sell? Because I see no benefits whatever finding themselves back into speedway racing.”

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