888 not profitable?

[V8 Fireworks]

https://autoaction.com.au/2019/06/27...not-profitable

Roland Dane says:

I can tell you that last year and this year are break-even years for us. ... I’m neither willing nor able to subsidise the team for any length of time, so the team has to be able to stand up on its own two feet. The viability of the pit lane does concern me very much and it always has done.

It seems bizarre Dane is saying this when there are so many places he could cut costs, if he so wished:

• They have two A-level drivers. This is expensive. They could replace the second A-level driver with a low-paid rookie or a pay driver.
• They admit they are currently doing a "development drive". Development costs money. 888 could save money by following Kelly Racing's example and doing minimal development while racing 5-year-old cars.
• They have expensive Bathurst-winner co-drivers, instead of using cheap rookies for co-drivers.

It's utterly bizarre for 888 to complain about costs, yet make so little effort to cut costs!!??

[Driver TBA]

Victim of his own doing. Teams have spent more and more to catch up to 888 and 888 have just spent even more to stay ahead.

Now he's encountered someone who doesn't need a profitable team, just a team to break even.

Sent from my SM-G960F using Tapatalk

[snappa]

It’s interesting that Mr Dane is talking up how far behind his race team are, when they are starting negotiations for renewal of the factory and Red Bull deals. I wonder if this is including 888 Race Engineering in the not making profit piece.

[Jack65]

All the 888 haters will no doubt say Dane is just making excuses, but if what he says is correct, and I have no reason to doubt it, then the category has a big problem. If the most successful team of the last decade is struggling to balance its books, how are the rest doing?

Sure some have wealthy owners who have other sources of income to subsidise their racing activities, but there are some for whom Supercars is their primary business. Seems to be the pay tv deal coming home to roost, for all of the spin, eyeball numbers are down and that is seemingly being reflected in the amount teams can sell sponsorship for.

[Speedy400]

GTR?

The floor is yours...

[GTRMagic]

Originally Posted by Speedy400

GTR?

The floor is yours...

Supercar is doomed?

[Kingair]

Must be missing the dollars from the CL merchandise sales?

[GTRMagic]

Originally Posted by Kingair

Must be missing the dollars from the CL merchandise sales?

Merchandise was reported a few years ago as earning 888 ~$1.5m per annum. This apparently took the form of taking that as a fixed commission, while a 3rd party actually ran/runs the merchandise program.

This was also before 888 added the Caltex Vortex Lowndes program, separate to the Red Bull branded team. A reduction in Holden dealers, and lack of support/success of the Commodore nameplate may also have reduced the potential of sales thru the red lion network.

HRT (Walkinshaw-style) back in the day mixed it up every year, so that their followers would get the latest and greatest hat/shirt/flag/stubbie holder because it was new. That the RBHRT cars/merchandise is kinda the same year on year might not be helping either

[blaarg]

All roads lead to Rome, or in this case the fans.

The damage was done years ago and will be incredibly difficult to unwind, many thanks to Warbo!

[mayhem]

It's tax time, every business just breaks even around June 30.

If the Camaro comes in with Walkinshaw, it'd be another huge blow to Roland.

Wonder how the shareholders like Whincup, Dumbrell Tim Miles and Trinette Schipkie feel about these statements from Dane?

How much did the V6TT program burn?

How is the team selling all the Holden bits and bobs only breaking even?

Once again I refer back to the Fox deal done all those years ago, it might have kept the wolves from the doors, but nothing substantial has been done to address the problems that existed at that time to stop the burn of cash in the sport.

[Just Do It!]

Didn't Jamie buy Trinette's shares or something like that?

Also, did I see somewhere that the Camaro nameplate ceases to exist in 2023 or 2024?

[GTRMagic]

Racing teams do seem to spend all the dollars they can get their hands on from commercial means, and from profit on component supply.

Development continues on the next evolution of front end no doubt, and aero packages and any other ZB-specific component.... plus finding things for the ex-888 crew to do in the main or customer racing programs.

[mayhem]

Anonymous sources inside GM suggest that might be true.

But thats getting away from the trials and tribulations of Roland Dane.

[rich07]

Or maybe someone is talking down the series financially so the price is better for them and their mates come buyout time? (Shrugs)

[mayhem]

Talking down the series wont help them negotiate that upcoming TV deal.

[Compromised]

Originally Posted by mayhem

How is the team selling all the Holden bits and bobs only breaking even?

The bits and bobs are (in some cases) made by the "customers"...

[Forda]

Race teams aren't supposed to be "profitable" per se; rather their expenditure should match, or be less than, their incoming sponsorship income per annum.

888 are different in that they act as the official "factory" supplier of components and parts. The income from that, less the applicable expenditure, should be for keeps.
As should be any merchandise profits.

That the whole thing is sinking into the red is a worry, particularly given the above, plus the recent sale of the state-of-art transporter; as well as a chunk of equity in the operation, and a former race-winning chassis as well.

Sceptics might well ask: "where has all the money gone?".

[GTRMagic]

Originally Posted by rich07

Or maybe someone is talking down the series financially so the price is better for them and their mates come buyout time? (Shrugs)

Given that Archer Capital has opened a 6th investment fund, the first new issue since 2011, they dont seem to be showing signs of wanting to dump & run..

[Speedy400]

Reckon Rich07 is on the money

[UncleMurphy]

Originally Posted by Forda

That the whole thing is sinking into the red is a worry, particularly given the above, plus the recent sale of the state-of-art transporter; as well as a chunk of equity in the operation, and a former race-winning chassis as well.

Sceptics might well ask: "where has all the money gone?".

They still use their state-of-art transporter for their Super 2 team. Only reason it's not used in the main game is that it does not have enough usable storage space (the upper level lounge/briefing room).

[Jack65]

Originally Posted by Forda

Race teams aren't supposed to be "profitable" per se; rather their expenditure should match, or be less than, their incoming sponsorship income per annum.

Whether it is by being on a salary or taking a dividend, team owners need to be taking something out of the business. Sure they probably need to have a reasonably sized asset base to enter the series in the first place, but it isn't a bottomless pit for most and losses can't be sustained forever.

[TWRv12]

Originally Posted by Forda

Race teams aren't supposed to be "profitable" per se; rather their expenditure should match, or be less than, their incoming sponsorship income per annum.

".

Usually it should break even, or at worst the business model supporting the team should.

This was the main reason Larko sold up.

Surely if they are all hurting, they would vote thru cost saving measures.

[chavez]

Originally Posted by TWRv12

Surely if they are all hurting, they would vote thru cost saving measures.

I've always thought that the top teams, not just in Supercars, but other series too, always believe that they will find the necessary funding, and therefore are reluctant to adopt any kind of cost saving measure which my even up the spend across the field.

[kittle]

Every business owner will never say there business is profitable.

I don’t!

[Casper]

Originally Posted by kittle

Every business owner will never say there business is profitable.

I don’t!

I once said to my accountant if I make a profit you are fired.