28 by 2008???

[GTRMagic]

The powder room based near the old Stag Hotel in Adelaide has been very busy this early in the Clipsal weekend. And not just drinking Cooper’s by the truckload…

Whispers from the powder room suggest that the TEGA titans have yet another change in store for V8Supercar teams.

It has been floated by the powdery ones that TC’s plan to reduce the number of main series cars to 32 (down from 35 at the time), has been seriously re-examined, with a directionally similar conclusion drawn & agreed.

The ‘new’ magic target number of cars in the main game field is 28!!

28 cars…!!!

To absorb 3 franchise licence slots from the market, to go from 35 cars to 32, at market prices, meant that TEGA needed to find a smallish fortune… but they went to 31, whether they intended to or not, and seemingly have designs on buying more franchise licence slots on-market.

If we look at what TEGA has already absorbed to date, there are now 4 franchise licence slots in the TEGA bank vault that were once part of racing teams. The below is a combination of what whispers the powder roomians were able to share, and careful estimates…

1x Ex-WPS Ex-Thexton Ex-Paragon L2 $400k
1x Ex-Tratt L2 $800k
1x Ex-Larkham L1 $1,500k
1x Ex-Larkham L1 $1,500k

By my maths this is a total spend by TEGA of $4.2m!!

Ultimately TEGA were too successful, having taken these 4 slots out of circulation, it leaves the current main series field with 31 active franchise licence slots participating… with 24x Level 1 and 7x Level 2’s.

I can recall an old teev and radio ad asking “Where did they get the money for that?”. The catchcry was the long gone “Mercantile Credit”… but the same question, if not the answer applies to TEGA.

Well, if the franchise licence slots live in the TEGA safe rather than out with teams, then TEGA does not have to pay franchise licence appearance/finish income to the owners of those slots. This is apparently covered by an interpretation of the Team’s Licence Agreement, which is said to be structured around 35 franchise licence slots attending each meeting.

So with 2x L2’s not having to be paid for their attendance, that means 2x ~$225k per year is not shared outside TEGA. With 2x L1’s not having to be paid for their attendance, that means 2x ~$325k per year is not shared outside TEGA. This totals $1.1m per annum (2x $225k + 2x $325k = $1.1m).

As we saw earlier, the cost of buying the franchise licence slots back on-market at full price at the time was estimated at $4.2m, which means a possible 4 year payback (when including interest it is longer than that). That is a long time to expect funds to come back..

Interesting that instead of distributing that $1.1m of unremitted appearance/finish income to the remaining shareholders of TEGA (i.e. the teams!), the money is said to be being used to pay off the debts incurred in acquiring these franchises!

Technically the it is said that the $1.1m monies are not due and payable to the other teams for as it was explained to me, under the terms of the Teams Licence Agreement, which is said to include a convoluted formula to remunerate 35 franchise licence slot holders for their attendance, regardless of actual numbers. So it does not ‘belong’ to the other teams using this lever…

…but it causes you to wonder what the team owners think of this.. for them to think that they are in a series V8SA keeps telling them is the most successful it has ever been... but for “strategic reasons” the series cannot seem to attract 35 competitive cars in the main series.

Does anyone truly understand and buy into those "strategic reasons"? A straw poll from the powdery puffs suggested that the conceptual theory sounds awfully pretty, but the execution (i.e. show me the money) sits in the dunno basket.

And we are back to the 28 cars question…

This means that there are 3 more to go…. three more teams that may not exist in their present form as TEGA allegedly buys down the number of franchises in the series.

Arguably the L2 operators are the lowest hanging fruit… smaller teams, less age in the series… presumably TEGA will target taking out 3x L2 franchise licence slots. Based on speed at the first round, these may be the two Britek licences and the PCR one.

If you assume that at around $800k a pop at market price, this is another $2.4m the TEGA titans will need to find (i.e. ultimately withhold from its shareholders) in the interests of “strategically” reducing the field’s size to their goal of 28 cars.

The powder room boys couldn’t tell me why 28 cars was better than 32, but even in their simple maths, 32 cans of Cooper’s Pale Ale is better for them than 28 cans of the same product…or 16 cans of Premium Lager and 16 cans of Pale Ale is better than 14 cans of each.

Simple gormandiser-onics when put into beer can language seems to make more sense than "strategic reasons".

Imagine for a moment being a V8Supercar franchise licence slot holder… You know two things... that the rulers of your sport want to get rid of either your franchise licence slot (and threaten your livelihood as a race team owner), or up to three of your competitors’ franchise licence slots for the same result to them…

…and arguably wants to use money that could be viewed as rightfully be yours to do it!

Which has the powder room wondering if these kinds of things get discussed at all ownership levels of the TEGA company, whether the L2 operators are consulted & invited for their comment on such issues. Or whether there is advice taken from outside the Supercar, from someone who lives in the real world, where the air isn’t particularly rare or purified, and the inhabitants don’t share rental space with Rapunzel in her ivory tower.

But I digress…

I eventually found the powder room boys (they were busy out and about getting back 5c a can for their empties so they can buy more) to ask specifically when this was all supposed to be happening... they felt that as 2008 is apparently the first year of a brand spanking new Team Licence Agreement (if the teams all agree to one of course..) this was to be the target.

Another question of course is what limit TEGA will place on the development series field. I mean it cant look too clever to have 40 cars rock up in the lites series, and only 28 in the heavy series

If indeed any of this actually happened

[Raglanparade]

Well i dont know too much about the financials of TEGA.

What revenue streams do they have to support this expenditure ?

I think 32 cars is a magic number to be honest. 28 isnt enough.

[GTRMagic]

Revenue streams are said to include:

- Television (local & international)
- Licencing rights (use of brand name)
- Sanctioning Fees (from circuits/promoters)
- Tyre sales (a cut of the Dunlop sales)
- Event management (race meetings, gala dinner etc)

[Raglanparade]

Well given the bidding war at the moment for television rights (i have heard that Channel 7 were trying, or has channel 10 secured it?) and all the other factors you have mentioned, i dare say that a couple of Million could easily be found.

How much does channel 10 pay for the rights at the moment ? does anyone have an accurate estimate ?

[GTRMagic]

Originally Posted by jasonhill9884

How much does channel 10 pay for the rights at the moment ? does anyone have an accurate estimate ?

Powder room suggests almost as much as their gathered can empties got back from the recyclers... ~$4m or so... but that would include selling the rights into China, Bahrain and this global interest TC keeps talking about

[sizzle]

If this pans out as you suggest GTR then it would really mean that VE$A is putting the boot into Bathurst. 28 cars around there would be snooze fest without the compulsory use of safety cars to keep a pack together. I wonder what the feds would think about handing over all that lovely money to build lots of spacious pit "bunkers" at the insistence of Aussie Bernie only to find them only 2 thirds full.

Or as Diffey said on todays telecast you have BAthurst but this is the real event. Or words to that effect.

I think the time when the heartland starts to revolt may be sooner rather than later.

[kmsport]

Funny, The Stag also has a large contingent of gay regulars.

[racer69]

They've set the current target to 32 cars, only problem, there is only enough interest for 31 cars. What happens, the value of each franchise goes down as there are leftovers.

If they knock it back to 28 cars allowed in, that means there is more interest than entries allowed, franchise values rise, more money comes in due to bidding wars when they come up for sale, isn't that how VESA works, $$$ first? Why not limit the field to 10 cars?


All this is becoming a joke (especially regarding Bathurst), remember when the AVESCO/V8Supercar fraternity panned the Super Tourers because they only had 27 starters in the 1997 Bathurst 1000.

[GROUPA]

Love the Mercantile Credits comment

[bathurst77]

SO because they think they cant sell 31 Franchises they are going to withdraw it to 28 to make each one worth more. Supply and demand, if the demand aint there shrink supply.

But surely a better answer would be to create demand by making the product more desirable?

I agree Mt Pan with 28 cars would be hardly worth the effort.

[retro]

Originally Posted by bathurst77

I agree Mt Pan with 28 cars would be hardly worth the effort.

Just invite another class in to make up more numbers...Kerri- hoy??

[RS500]

Hell if they are going to do that why not follow the F1's and make it a 22 car grid.

To be honest i am starting to get over the V8

[mmciau]

Originally Posted by RS500

Hell if they are going to do that why not follow the F1's and make it a 22 car grid.

To be honest i am starting to get over the V8

Never a truer set of words written!!!!!

I've been following since inception at Victoria Park. The program has become "stale and predictable".

The amenities for the peasant punter are shrinking - the miserable B's have reduced the numbers of table and chairs in "rest areas".

The grandstands in Outside Turn 8 are encroaching on the viewing of the GA punters.

There are NIL toilets for the fans on the inside of the Hairpin (Turn9)

and so it goes....


mike

[Rombles1]

What is the price/income scenario for a development series licence?

[GTRMagic]

Originally Posted by Rombles1

What is the price/income scenario for a development series licence?

Not much and not much...

.. it is said to cost around $10k for a licence, if you are a first year licenceholder, with an annual fee payable and TEGA apparently do not have a limit on the number of them available..

As for the income, my understanding is that there is performance prizemoney paid but not appearance income... and certainly not at main series rates...

[Rombles1]

So if TEGA is supposed to represent the teams, which teams does it actually represent? Should it be changed to LOTEGA (Level One Team Entrants Group Australia) to go with the revision to the AVESCO name? How does the politics work with this body, are there factions/sides/cliques within, or is it a fairly harmonious group? And how much say do the actual teams have in this series?

[GTRMagic]

A Level 2 franchise licence slot has some hand in the shaping of the category they run in, but some members of the powder room fraternity sometimes consider themselves the poor cousins of the sport... who do as much to promote and assist the growth of the category as a Level 1 franchise slot holder (sometimes more so) but receive less financial benefit as a result.

Did you listen to Panelbeaters yesterday/today? Brad Jones made an interesting point about a L1 franchise licence slot now belonging to PMM... his comment went along the lines of PMM now having a seat at the table of TEGA because it now owns a L1 franchise licence slot.

The L1's must have benefits beyond the financial remuneration, or Mr Nash and Mr Morris would not have picked them up, and in Mr Nash's case discarded a perfectly good L2 franchise licence slot in doing so...

[Robert Ryan]

All this is becoming a joke (especially regarding Bathurst), remember when the AVESCO/V8Supercar fraternity panned the Super Tourers because they only had 27 starters in the 1997 Bathurst 1000.

The "V8 Touring Cars" had 39...different era and there was no development series. Still the concern is valid over the dropping of a ranchise..should be more said about it.

[Chris - Melb]

Could the reasoning behind the 28 car limit have something to do with achieving individual pit booms for each car’s pitstop?

[Raglanparade]

I dont like the idea of individual pit booms.

Id love to see each team grouping only allocated 1 pit boom, Imagine the HRT/Toll teams sharing one pit boom, and the FPR/Britek mob sharing one pit boom.

I think we would all love to see more cars rather then less.

Why not tell the teams, you can race 3 Cars per L1 License at the enduros, but you have to share them between the 1 pit boom ?

It would make it more exciting strategy wise.

[GTRMagic]

Originally Posted by jasonhill9884

Why not tell the teams, you can race 3 Cars per L1 License at the enduros, but you have to share them between the 1 pit boom ?

It would make it more exciting strategy wise.

It would be good to have the extra cars, but the teams would likely sacrifice the 3rd car to keep the other two humming, or indeed if the 2 main drivers are sharing a car, continue to sacrifice the 2nd car as some of them do now...

[Raglanparade]

Yeah, but some of the L1 cars could afford to field a third car. HRT could for Briscoe, SBR for Seton, GRM for Ritter possibly.

It would be a way to increase the value of the Franchises.

L1 franchises can run 3 cars at Enduros

L2 can run 2 cars

and the top three Development Series finishers.

[Chris - Melb]

I can't see how having cars such as Jose Fernandez and Marcus Marshall circulating two seconds off the pace adds to the racing. But, each to their own...

However, F1, Champ Car, IRL, etc, etc seem to do well with far less than 32 cars.

[Robert Ryan]

Champ Car, IRL, etc, etc seem to do well with far less than 32 cars

Really? that is a point of issue with both openwheel groups, getting enough cars. Indy used to get 60 cars trying to get in for the 500, not now. Champcar went bankrupt and is trying to climb back up again. Because of the relatively paltry fields both the IRL/CCWS are looking to get back together.

[Boxy]

Maybe this could just be another Nascar copy. Cutting down the numbers in the main game to ultimately create 3 different series'. As someone said earlier, surely they won't have 40 odd cars in the development series and 28 in the main game??