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How did teams finance themselves before commercial sponsorship deals?


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#1 onepablo

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Posted 13 June 2007 - 19:27

Hello all,
I was just curious how teams managed to pay their bills in the days before the the Lotus-Gold Leaf deal changed the way F1 financed itself. Did they receive sponsorship moneys from the gas/oil companies? Or were they receiving aid from the auto manufacturers?
Thanks.

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#2 Doug Nye

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Posted 13 June 2007 - 19:40

Different strokes for different folks - in 1959 Cooper became World Champion backed by £10,000 from BP Oil. Team Lotus was backed by Esso. BRM was backed by Shell who paid more for BRM's participation in combustion research programmes since the team were also engine manufacturers.

But the teams also depended to a large degree upon appearance, start and prize money from race promoters around the world, which is why they were eager to tackle so many races of such varying significance during each season. A non-racing weekend was an earning opportunity missed.

Technical sponsors - e.g. Ferodo brake linings/pads, Lockheed hydraulics, Dunlop tyres, maybe Castrol oil - also paid success bonuses to entrants using their products. Dunlop - and Goodyear, Firestone, Pirelli - also offered exclusive contract retainer fees to various teams, in return the team concerned often assisting the tyre manufacturer's test programme.

In 1950 when Alfa Romeo returned to GP racing after a year's sabbatical they did so thanks to funds provided by a consortium of their major distributors and dealers - which helped defray the company's costs. Vanwall was to some extent self funded by Tony Vandervell wherever a workable tax loss ploy presented itself. BRM's losses were also absorbed quietly by team owner Sir Alfred Owen and his family industrial group. Concerns such as Cooper, Lotus and Brabham also helped support their works racing teams through customer sales of production racing cars which they also manufactured.

And then the bullshit and nicotine began...

DCN

#3 FLB

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Posted 13 June 2007 - 20:00

The Scuderia Ferrari was first set-up as a way for wealthy privateers to have someone take care of their cars. You'd buy a car (ideally from Enzo), give him some money and he'd make sure you'd have a prepared car to race. With the money you'd given him, he'd hire a quick driver just to show how good his team and his cars were. At one point, the Ingeniere was able to convince Alfa Romeo to take care of their Grand Prix business for them, for the love of Italy (i.e. State money).

#4 alansart

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Posted 13 June 2007 - 20:15

Originally posted by Doug Nye
But the teams also depended to a large degree upon appearance, start and prize money from race promoters around the world, which is why they were eager to tackle so many races of such varying significance during each season. A non-racing weekend was an earning opportunity missed.
DCN


But where did the start money come from - these days it's almost unheard of (for UK club racing).

#5 Sharman

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Posted 13 June 2007 - 21:04

'fraid I don't follow your argument Marc. What is the correlation between WW2 and tobacco advertising?

#6 macoran

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Posted 13 June 2007 - 21:47

I have deleted my posts as apparantly my "Dutch" way of getting across to people
was not successful.
I'll try better next time...

#7 Ray Bell

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Posted 13 June 2007 - 22:01

Originally posted by alansart
But where did the start money come from - these days it's almost unheard of (for UK club racing).


Race organisers were also promoters... and they wanted good drivers to attract good crowds...

Stirling Moss put on a good show, so he got good starting money wherever he went, for instance.

As a partial clue to the nuts and bolts of it, I understand that the International drivers in the Tasman races got something in the vicinity of £1,000 per race. Special appearances would have given them more... for instance, Graham Hill's one-off drive of the F2 Lotus at Warwick Farm in 1967 during the series undoubtedly cost Geoff Sykes a lot more than that.

When things were getting 'hot' in the racing, I have no doubt that drivers that were putting up a strong performance could ask for more as they were getting publicity that would help bring a few more patrons through the gate.

I feel sure that Mike Argetsinger addressed the matter of the change of this system, as it evolved when Watkins Glen increased their prizemoney levels dramatically in the mid to late sixties, in a thread several years ago.

#8 Roger Clark

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Posted 13 June 2007 - 22:11

Originally posted by Doug Nye
in 1959 Cooper became World Champion backed by £10,000 from BP Oil.

Esso surely?

#9 Glengavel

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Posted 13 June 2007 - 22:15

Would Hesketh have been the last 'private' team in F1, then? Although ISTR Ken Tyrrell's team were without a primary sponsor at one point in the late 80s...

#10 scheivlak

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Posted 13 June 2007 - 22:20

Originally posted by Ray Bell


Race organisers were also promoters... and they wanted good drivers to attract good crowds...

Stirling Moss put on a good show, so he got good starting money wherever he went, for instance.

Exactly - just like chess players (and maybe, say, golf or tennis professionals as well) in those days.

#11 Graham Gauld

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Posted 14 June 2007 - 05:54

Old Doug " The end is Nye" summed up the situation perfectly. Remember also that the drivers usually had personal contracts with the major oil and component manufacturers. Having just finished writing Cliff Allison's biography, his entry into Lotus was paid for by Esso who also supported Lotus. However, the Allison family garage in Brough was an Esso station and this also helped.
Regarding promotors you must remember that many of the British circuits - and here I speak of Britain - were on old airfields owned by farmers who would rent out the circuit for a few hundred pounds and sometimes not even that. Today, with custom-built circuits whose increasing costs need to be amortised, you are talking thousands. Imagine, then, you have a motor club and want to rent such a circuit for a race meeting. Even if you are quoted a ridiculous £2000 and you manage to get 200 entries that accounts for £10 per competitor on the entry fee alone never mind all the other costs involved. Also club motor racing does not attract spectators these days so where is your income coming from ? Sponsors.
In earlier years you could almost guarantee a good spectator turnout of at least 10,000 to 15,000 spectators which, even at £1 for entry, gave you a fair income particularly when your circuit hire was, perhaps, £500.
My colleague Hugh McCaig and I took over the franchise to run motor racing at Ingliston back in 1983 and we ran it for eleven years but each years the costs went up and the spectators went down and we pulled out of it and when Tom Brown took over the franchise after us he struggled but it was never going to be financially viable. ( As an amusing aside to the cost of running race meetings. Ingliston was the permanent site of the Royal Highland Show once a year - cows, sheep, horses and that sort of thing, and we used to receive a bill from the Highland Society for three or four thousand pounds simply to reseed the grass on the edges of the track which had been dug up by drivers taking short cuts across the corners. To any competitors who came to Ingliston and had their teeth rattled on our tank trap track edging ; that was the reason.

#12 Ross Stonefeld

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Posted 14 June 2007 - 05:58

What was 1,000pounds back in the Tasman days worth now? I think if you win a British F3 race tomorrow you'll get something paltry like 2,500 against your 500,000 budget.

#13 Ray Bell

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Posted 14 June 2007 - 07:17

It's about ten times that now, Ross...

Going by a wages comparison with today. Very roughly.

#14 mctshirt

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Posted 14 June 2007 - 07:29

From the pen of Peter Greenslade in the NZ Sports Digest following the 1960 NZIGP at Ardmore:

"Moss came to Ardmore to win, even though what the New Zealand Grand Prix organisation gave him to start would provide a young married couple with a smallish bungalow.
A first prize of 1000 pounds is worth having in any man's language, and Moss has never appeared indifferent when it comes to L.s.d."

#15 RAP

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Posted 14 June 2007 - 07:32

Based on the UK retail price index the factor to multiply a mid 1960 price by to get 2007 value is approximatly 14 ie £1000 start money is worth about £14000 today.

#16 Ray Bell

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Posted 14 June 2007 - 07:44

Originally posted by mctshirt
From the pen of Peter Greenslade in the NZ Sports Digest following the 1960 NZIGP at Ardmore:

"Moss came to Ardmore to win, even though what the New Zealand Grand Prix organisation gave him to start would provide a young married couple with a smallish bungalow.
A first prize of £1,000 is worth having in any man's language, and Moss has never appeared indifferent when it comes to £.s.d."


So Moss' starting money was perhaps £2,000 for that event? I think that might be about the range, perhaps £1,500 to £2,000?

Remember, it's the starting money that made it happen those days, not the prizemoney. I think Ross isn't quite grasping this concept.

#17 David McKinney

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Posted 14 June 2007 - 08:40

Originally posted by Ray Bell
Remember, it's the starting money that made it happen those days, not the prizemoney.

Only partly true, Ray. Moss would have been there for the starting-money, and any prizemoney would have been a bonus.
But for lesser mortals, on perhaps £250 or £500 starting money, the first prize would be an enormous attraction. That £1000 for first place was said at the time to be one of the richest prizes in the world - better than for any world championship F1 round except the French GP.

#18 Vitesse2

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Posted 14 June 2007 - 09:12

Originally posted by Ross Stonefeld
What was 1,000pounds back in the Tasman days worth now?

Depends whether you're talking British, New Zealand or Australian pounds!

In 1965 for example, the UK and NZ pounds were worth pretty much the same against the US dollar , but the Australian pound was quite a bit stronger:

Australia, 1965
1965 A£ 0.449 Australian Pound

New Zealand, 1965
1965 NZ£ 0.361245575 New Zealand Pounds

United Kingdom, 1965
1965 £ 0.3576537911 British Pound

That means one US dollar was worth about 8/11 Australian, 7/3 New Zealand, 7/2 UK

Source: EH.com

#19 roadmap

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Posted 14 June 2007 - 09:17

Reading an old copy of the Enzo Ferrari biograghy at the moment and he claims to be the first car manufacturer to have private sponsorship . Traditionaly at that time the big sponsorship donaters were governments who used the successes on the track for national pride or to boost their standing. Countries today tend to promote through building racetracks as they dont have the technology to compete and someone we all know is very quick to take their money to promote their tracks . Due to the huge finance concerned a few private sponsors are awarded worldwide tv coverage to show their banners and the large part of them have nothing to do with the sport.

The smaller engineering companies who are the backbone cannot afford for their banners to be placed around the circuit and have to settle for a 3x2 sticker on a car if they can afford £1m or so.

There are still a few countries who through their state owned oil concerns still sponsor.

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#20 GeoffE

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Posted 14 June 2007 - 10:30

Originally posted by Vitesse2

Depends whether you're talking British, New Zealand or Australian pounds!

In 1965 for example, the UK and NZ pounds were worth pretty much the same against the US dollar , but the Australian pound was quite a bit stronger:

Australia, 1965
1965 A£ 0.449 Australian Pound

New Zealand, 1965
1965 NZ£ 0.361245575 New Zealand Pounds

United Kingdom, 1965
1965 £ 0.3576537911 British Pound

That means one US dollar was worth about 8/11 Australian, 7/3 New Zealand, 7/2 UK


I think this means the Aussie pound was actually weaker than UK and NZ.

#21 Ray Bell

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Posted 14 June 2007 - 11:01

Indeed... the Kiwi dollar has slumped considerably since that time...

Originally posted by David McKinney
Only partly true, Ray. Moss would have been there for the starting-money, and any prizemoney would have been a bonus.
But for lesser mortals, on perhaps £250 or £500 starting money, the first prize would be an enormous attraction.....


The only bit they could actually count on, David, was the starting money...

More so the others, of course, but Moss also looked to earning more than the others from his endeavours, while for most simply covering costs was the aim of the game.

I think we should also point out that racing costs have risen out of all proportion with the monetary changes. There is much more goes into a racing car today, more technology, more people involved, more in tyres (remember that Clark used one set of tyres for about four races back in either '62 or '63), more in testing, more in everything.

#22 HDonaldCapps

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Posted 14 June 2007 - 14:43

I have always thought that this is, perhaps, the one of the top two or three topics that is most often ignored when viewing the period in the question. It gets touched upon here and there, but since it seems to amost inevitably cross over into the "political" arena, the discussion is never gets started or drifts off into the realm of fantasy and nostalgia....

As Doug and Graham point out, the finances of the racing world were radicaly different on the Isle and the Continent from they are today. Several books either hint at or give glimpses of this side of things, but few seem to take it on as a major topic. While we might speak glibly of starting money and the other subsidies involved in supporting racing, at the time this was rarely mentioned or explained. Too political.

On this side of The Pond, it was literally all over the map since the AAA/USAC and NASCAR and IMCA/etc. operated in generally the same way, while the SCCA was in its own galaxy. The American teams were not all that different in usually living hand-to-mouth, race-to-race, with "appearance money" playing a role along with prize money and accessory monies. Along with the all too few "sportsmen" willing to have a small fortune after spending a large fortune on racing.

#23 MrMacca

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Posted 14 June 2007 - 14:57

Regarding Ferrari before the Fiat deal in 1969; apart from the trade money from Shell, etc. I wonder whether Italian industry supported him? Dragoni, the infamous team manager until 1966, was apparently in chemicals (rather than having been put into some chemicals - much better!), and there was an inner sanctum of 'friends' who seemingly influenced Enzo - they tried to have Surtees sacked at Spa in 1966 with false rumours that he had copied the P3 plans to Lola; and when Surtees confronted Enzo after the Le Mans row, it seems he said some things which Surtees still won't reveal, to the effect that he was between a rock and a hard place.

Paul M

#24 Ross Stonefeld

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Posted 14 June 2007 - 15:19

I understand the concept of starting money perfectly fine. However I appreciate and thank you for your concern. It doesn't exist these days so the only comparison in promoter funds year to year is from post-race monies. Hell, you have to pay them money to show up now!

#25 alansart

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Posted 14 June 2007 - 16:55

Originally posted by Ross Stonefeld
I understand the concept of starting money perfectly fine. However I appreciate and thank you for your concern. It doesn't exist these days so the only comparison in promoter funds year to year is from post-race monies. Hell, you have to pay them money to show up now!


That's the bit i'm trying to figure out. Where did the start money come from. Was it from sponsors, gate money or benefactors.

Compared to current climes it doesn't make sense!

#26 Graham Gauld

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Posted 14 June 2007 - 17:26

Elementary my dear Watson back then most of the race meetings were run by clubs which did not have highly paid secretaries, back up staff, offices, and a heap of electronic equipment etc. They had to pay a small fee for an RAC Steward but everyone else did things for nothing. As a result most race meetings were profitable and the racing clubs made sure they had enough money left in the kitty to pay out money to encourage people to come from afar to the next race meeting. For example Aberdeen and District Motor Club in the far north of Scotland would pay up to £250 start money for a good driver prepared to come north and that was when £250 was worth real money. The normal competitor entry fees were about £5 and Clubs still had enough money to pay out prize money. At the risk of being booed off the stage I explained an awful lot of background as to how motor racing was run and financed in the 1950's and sixties in my book on Scottish Motor Racing because what happened in Scotland was roughly the same as happened all over Britain save that the Scots had to fork out more to get drivers to come.

#27 Ray Bell

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Posted 14 June 2007 - 21:09

'In period' there was enough information about the Australian situation. Gold Star races relied on having enough Gold Star racers, these guys formed a small 'union' of their own to push the starting money higher. Especially for places like Caversham and Lowood.

#28 Doug Nye

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Posted 14 June 2007 - 21:35

Originally posted by Roger Clark
Esso surely?


White flag Roger - quite right, ergo the Esso sponsored 'Cooper Golden Book'. Brain fade...

Spooling back a little further, the regulations for the 1949 Jersey Road Race specified an entry fee of £20 per car to secure Third Party insurance for the entrant against claims up to £50,000. Each entrant whose car completed a minimum of one race lap would receive a £15 refund...hurrah!

First prize - payable to the entrant of the winning car - was £250 plus trophy; 2nd place £150 and (smaller) trophy; 3rd place £100 and (microscopic) trophy; 4th place £50; 5th place £25.

The first British driver to finish - which portrays national 'confidence', doesn't it? - would receive £100, two trophies (and a replica); 2nd British driver to finish - £50 and trophy; 3rd British driver - £25 and trophy.

When one considers that the average weekly wage of a British worker in 1949 was somewhere around £5-£6 per week, doing this a couple of times each month looks quite attractive, doesn't it...

Promoter's start and prize money payments, by the way, were commonly drawn from financial backing for the event, provided by a name sponsor - such as 'The Sunday Times' and 'The Daily Graphic' newspaper group in the case of this 1949 Jersey International Road Race.

Many Continental races were part funded by the local town or city authority to promote weekend trade, and promoters everywhere relied very heavily upon gate money receipts from the paying public.

If they wound-up with sufficient money to pay off the prize fund, their operating expenses AND emerge after race weekend with a profit then they were happy chaps and would normally be back again the following year.

There have, however, been notable disasters in which there were insufficient funds left to pay the racers after the event, and that's when the trouble often started.

The other alternative was that Alberto or Don Antonio, or Hartmuth or Jean-Francois would abscond with the cash, leaving slow-off-the-mark entrants and drivers in the lurch - finding an organiser's 'office' locked-up or otherwise deserted.

This is why razor-sharp entrants such as Frank Williams would always race lickety-split to the promoter's office to draw his start and/or prize money. And this is also why Frank almost invariably found he had been beaten to their door - by Ken Tyrrell.

Some of the promoters were tought old bastards. But several of the leading Racers were tougher still... :cool:

DCN

#29 Ray Bell

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Posted 14 June 2007 - 22:10

Originally posted by Doug Nye
.....Promoter's start and prize money payments, by the way, were commonly drawn from financial backing for the event, provided by a name sponsor - such as 'The Sunday Times' and 'The Daily Graphic' newspaper group in the case of this 1949 Jersey International Road Race.

Many Continental races were part funded by the local town or city authority to promote weekend trade, and promoters everywhere relied very heavily upon gate money receipts from the paying public.

If they wound-up with sufficient money to pay off the prize fund, their operating expenses AND emerge after race weekend with a profit then they were happy chaps and would normally be back again the following year.....


Longford being a good case in point...

They couldn't sell permanent advertising around the circuit as it was forbidden in Tassie to put up signs by any roadside. How on earth the Shell sign comes to be under the Viaduct today defies me, as it wasn't there in 1966 at least, and the race only ran two more years.

And that was their problem too. The LMRA had to fund the installation of grandstands and other setup costs each year, pay starting money, pay for ambulances on standby, insurances and everything else... and get it back from gate receipts so they could do it again the next year.

1968 it rained, so they never did it again.

#30 RAP

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Posted 15 June 2007 - 07:18

Due to the ownership of Crystal Palace by the London County Council (later Greater London Council) I had the unusual benefit of access to financial information about events there and in my book "A Record of Motor Racing at Crystal Palace" I included a section on financial matters. The LCC/GLC undertook the promotion of the majority of meetings. Typical those on Bank Holiday Monday (bikes Easter and August, cars Whitsun) made money. However, the weather mattered and a wet & cold Easter meeting was a loss-maker. The Saturday national meetings generally lost money for the promoter.

The key thing was spectator numbers and the figures show a declining trend in the late 60s/early 70s although this was partly offset by commercial sponsorship of meetings. Here are a few numbers for Whitsun meeting (all £ are approximate in today's money)

1954 attendance 32,000 profit £20,000 despite a clashing meeting at Brands Hatch, 25 miles away that was also very well attended.
1957 attendance 24,000 profit £28,000 National meeting with F2
1963 attendance 31,000, profit £43,000. Jim Clark starred on the day.
1970 23,000 profit £57,000 - top line entry in F2 race

In 1971, the last year for which I found data before its closure at the end of 1972, the Whitsun meeting made £15,000 but both the Easter and August motorcylce meetings made losses so that overall the circuit lost money. This meant that when new investment was required to keep the track open, there was no appetite for it - as the finance department report pointed out, there were no more Bank Holday dates to add meetings and therefore no prospect of new investment ever being recovered.

RAP

#31 Graham Gauld

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Posted 15 June 2007 - 07:28

Good for you RAP. I am glad this kind of information has been winkled out as it helps understand and, one might say, appreciate the job that was done in the past to ensure that Britaind had a motor racing heritage.

#32 brakedisc

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Posted 15 June 2007 - 20:41

At the risk of being booed off the stage I explained an awful lot of background as to how motor racing was run and financed in the 1950's and sixties in my book on Scottish Motor Racing because what happened in Scotland was roughly the same as happened all over Britain save that the Scots had to fork out more to get drivers to come.

They also were very slow in paying out prize money. I am still waiting on £6 from 1979. :lol:

#33 RAP

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Posted 20 March 2008 - 14:50

A bit more information on the finances pre-sponsorship. Patrice Besquet's book on the Charade circuit quotes the appearance money for th 1965 French GP

Ferrari - £2600 made up of £1600 for 2 cars plus £550 Surtees, £450 Bandini

BRM £2320 (including Hill £450, Stewart £150)

Lotus £ 2300 (including Clark £500 Spence £150) but seemingly Chapman wanted £3500

Brabham £1800 ( including Gurney £380 Hulme £150, but Brabham would have been £220)

Cooper £1610 (inc McLaren £260, Rindt £150)

Honda £1400 (Ginther £450 Bucknum £150)

Seems Ferrari knew their value !!

#34 Jerome

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Posted 21 March 2008 - 15:02

I think you can compare motorracing PRE sponsoring with the amateur tenniscircuit untill the mid sixties. You would 'officially' not win any prize money when you won a tournament, but everything was done either in little envelopes, or in gear, mysterious expenses, etc. That meant: if you were a Laver or Emerson. The rest of the players would have to rely on their national federations, and, basically charity.

But ofcourse, funding a race team is a hundred times more costly than funding even 100 tennisplayers!

Don Capps is right when he says little is written or said about the mysterious where abouts of funding in racing before major sponsorship. I think, that's because the participants in question have a good reason not to discuss this in too great a detail. The magic word is, I am afraid....




(whisper; laundering)

#35 ray b

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Posted 21 March 2008 - 15:15

in the USA for the major races cash paid was listed in newspapers
the results would say position driver team/make laps $$$$

#36 mariner

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Posted 21 March 2008 - 15:31

The info on the financials of Crystal Palace is fascinating, now I am going to ask a very dangerous question!

Today Lewis Hamilton is a sort of Jim Clark in terms of fame in Britian. 31,000 people turned up in 1963 to watch Jim lark drive ( I think ) an F2 car at the Crystal Palace meeting. Today you have to pay £30 at least to see Premier league football and it is often sold out. So 31,000*30=£930,000. Call that one milion pounds with progammmes etc.

What sort of race meeting can be put on today with One million pounds? Not F1 for sure but A1??

So

1) would 31,000 people go to , say, Brands Hatch to see Lewis Hamilton in something quick but not F1?

2) would they pay £30 like Premier League if there were several F1 stars as well as L Hamilton but not in F1 cars?

3) Let us assume that 50% of the £1M can be the race budget so the organisers could offer £20,000 per car.
Would the teams needed actually turn up for £20K including paying the driver.

4) Would the remaining £500,000 cover all the other costs including insurance medical, portable toilets, car parking staff etc. etc?

If the answer to one or more of 1) through 4) above is "no" where did it go wrong as I can remember going to John Webb's Brands Hatch and seeing Jim Clark in not one but 2 or 3 races in a non F1 meeting with lots of great racing, so somewhere it has, I think, gone wrong.

Maybe it is the likes of John Webb as a promoter that is missing?

#37 David McKinney

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Posted 21 March 2008 - 16:12

I'm sure the answers to (1) and (2) would be "yes"

#38 scheivlak

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Posted 21 March 2008 - 16:48

Originally posted by RAP
Seems Ferrari knew their value !!

Well, by the looks of it, they got less for their cars (£1600) than BRM (£1720), despite being World Champions.....

#39 HDonaldCapps

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Posted 21 March 2008 - 18:02

Originally posted by scheivlak
Well, by the looks of it, they got less for their cars (£1600) than BRM (£1720), despite being World Champions.....


I noticed that right off the bat and wondered why/how that would/could be. I don't have the F1CA schedule at hand, but it seems odd that Ferrari would be paid less than the BRM team since this was based upon the results of the previous season. Interesting information to mull over and wonder about.

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#40 RAP

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Posted 22 March 2008 - 09:33

Couple of further observations -
1. I suspect that the split of start money between drivers and cars is a bit academic - surely Ginther and Bandini weren't bigger "draws" than Gurney. I doubt the driver amount was paid directly to the driver although it might have split 50/50 all depending on the contract (or hand-shake!)

2.With regards to Mariners post. Admission to Crystal Palace was 25 pence (children 10p) Source-advert for mtg. But my recollection is that CP was always a bit cheaper than elsewhere. Admission to the Guards August Monday Internatinal at Brands was 62.5 pence. Source- advert for mtg.

To get an idea of that in todays money I have looked at the Average Earnings Index (http://www.dwp.gov.u...bstract2006.pdf) which, if I read right gives a factor of about 35 ie 25p = £8.75, 62.5p = £21.80. I have to say that 35 times seems a bit higher than my own feeling of what I earnt when I started work in the mid 60s compared to an equivalent job today so maybe I've misinterpreted the data. Also, of course judges the cost in relation to income, if you look at it in terms of expernditure the factor is lower, perhaps around 25 (because wages generally rise faster than expenditure). Which ever, it does demonstrate that in the UK at least spectator charges are higher in comparable prices than they were in the 60s. I wonder what impact that has on spectator numbers, especially given the far superior TV today.


3.Where did it all go wrong ? Like all sports motor racing began to realise its "worth" and ability to exrtract more money from the punters and from sponsors. In the Clark days I doubt anyone became a multi millionaire (allowing for inlation) from motor racing, whether driver, owner, engineer, promoter or hanger-on. Compare that to today where a lot of people make VERY good livings out of it.

#41 LOTI

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Posted 22 March 2008 - 10:30

Coming as I do from those good old days when brown envelopes were being pocketted and many an aspiring racer could live, all be it frugally, on the start money, and spend a very happy summer in Europe doing so. The hassle of the start/prize money was something the teams could either be good at or not and so when Mr E said he would deal with the whole thing for a modest precentage, you can see why most teams were pleased to give him the [in their eyes] boring job so that they could get on with what they enjoyed doing. History shows that a lot of them did very well from the deal and FOCA certainly had a bargaining tool with most of the teams signed up. It was also, of course, the beginning of the end.... or at least where we are now, as the non-championship races were not in the deal and so were the first to go. Clever old Bernie!
Loti

#42 fines

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Posted 22 March 2008 - 16:25

Originally posted by Jerome.Inen
I think you can compare motorracing PRE sponsoring with the amateur tenniscircuit untill the mid sixties. You would 'officially' not win any prize money when you won a tournament, but everything was done either in little envelopes, or in gear, mysterious expenses, etc. That meant: if you were a Laver or Emerson. The rest of the players would have to rely on their national federations, and, basically charity.

But ofcourse, funding a race team is a hundred times more costly than funding even 100 tennisplayers!

Don Capps is right when he says little is written or said about the mysterious where abouts of funding in racing before major sponsorship. I think, that's because the participants in question have a good reason not to discuss this in too great a detail. The magic word is, I am afraid....




(whisper; laundering)

I think this here is completely off track!

If you look closely enough, there is more than enough info floating about to make you understand how it worked, for every period at least from the end of WW1 to the beginning of the seventies. It is just that people don't want to look for the clues, they just have these images of crooks and gangsters, and that's easy to understand so why think for yourself?

Very few made lots of money from racing, and lots of people lost a good deal - in effect, motor racing is the perfect redistribution of money from bottom to top! A socialist nightmare, but a capitalist heaven - ever wondered why motor racing in communist countries hardly existed at all? But, bottom line is, the overwhelming majority of entrants/teams/drivers/mechanics/etc. lived "hand-to-mouth", the price for living a dream...

And, lest anybody think I wear my rose-tinted spectacles here, sure there were many crooks and gangsters involved with racing, as with any large money-turn-around business, but most of these disappeared after a very few years, and the vast majority in racing lost their money 'straight' - yes, that's right, all those crooks and gangsters sooner or later found out that "motor racing costs money", and almost all of them were not enthusiasts, willing to spend a dime or two on an expensive hobby...

#43 canon1753

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Posted 22 March 2008 - 18:19

I stumbled upon this facinating topic. As mentioned, often the money leaders in NASCAR or other series is what made it into the papers for the longest time. I suspect that (on a local level anyway) was to keep the promoters honest and to maybe get more entries if track X was paying out more than track Y.

Thanks!

#44 RAP

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Posted 22 March 2008 - 19:21

Speakimg purely from the UK perspective, it is misleading to think there was no sponsorship pre "Gold Leaf". It was just done differently. Accessory companies, particularly the petrol companies, paid retainers to leading drivers and bonuses to succesful ones for the right to advertise the success of their products. The following is a quote from Graham Capel's book on the Lotus 11 -

" Cliff Allison.. had been spotted by Reg Tanner of Esso and recommended to Colin Chapman no doubt with additional fuel sponsorship incentives! Allison's contract with Lotus as Team driver for 1956 involved no money from Lotus but he shared start money 50 : 50 and received £2000 (which was considerably more than the cost of a Lotus 11) from Esso. With an average salary for a 26 year old in 1956 being about £500 per year the Esso sponsorship was a lot of money"

I would add that there was likely to be money from tyre, plug etc firms too and races paid reasonable prize money. All in a succesful driver could hope to a least break-even on a season on National/International racing. Of course, most drivers wouldn't be that succesful and would be funding their racing from their income or business. No doubt it helped to be in the motor trade where many expenses could be treated as costs against taxable profits.

#45 Ray Bell

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Posted 22 March 2008 - 19:41

When Wal Donnely, Barry Collerson and Jim Sullivan went to Europe to run F3 in the mid-sixties, it was possible to travel all over Europe self-preparing a Brabham or Cooper and living in a van, funding it all on starting and prize money from races at small meetings and large.

I think there is some detail on this in Barry Collerson's book...

#46 Jerome

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Posted 22 March 2008 - 21:06

Fines,

I am not talking about crooks and gangsters financing motorracing. Although there are, and have been examples of that. No, I am talking about 'creative bookkeeping' by respectable firms. Look, today, in the Dutch newspapers, there was a report that Dutch multinationals almost pay no taxes... not by hiding stuff, but by using every trick in the book...

But lets not get into details of high accounting, of which I don't know much. The basic thing is: motorracing is not a profitable business. It is only possible for the winners, say McLaren and Ferrari, to make a very small profit of it. From third down, there's always a problem. A problem that can only be solved with either having good sponsors, or ... creative accounting. Or laundering, or however you want to call it.

Much is said about the prize money in the sixties, and that those made it possible for teams to race.

And lets make a very simple calculation. Say, it are the sixties I am the owner of a F3 car with parts. Lets say it cost me seven thousand pound sterling, with spare parts like an engine, wheels, and a wee transporter. I ask an up and coming driver, lets call him Jacky Stewart, and let him drive for me at the meeting at Donington. I get 500 pound starting money, of which Stewarts gets 150, him being not famous and all (yet). Suppose he wins that race. The team wins 1000 pounds sterling. I have to give Stewart another 250, which sounds reasonable. So my profit is 750 pound sterling. For that one race.

You get it? I have to win TEN races that year, in a row, to get even the cost out of my car. And then I am not talking about transport costs, laborers fees, gasoline, permits, rent for my garage, etc, etc. So a time that wins or finishes close to number one at every race, will about break even, and have money and parts to race next season. But how about the team that never wins a race? Or the team that dangles at the back end of the grid?

Motorracing is not, and never will be, a healthy businessplan. I just don't believe that the system of prize money was profitable enough to keep the circus going. I just don't believe it. I think it was possible for a driver to raise money, buy a car, and keep it running on the prize money.... But to fund a team, with mechanics, transporters, typists, engineers and soforth on prize money? I just don't believe it.

#47 fines

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Posted 22 March 2008 - 22:01

Jerome, I don't know about your world but in mine "creative accounting" (or "money laundering") IS a criminal activity, and that is exactly what my post was about: you seem to suggest that almost every competitor in racing used tricks like that to keep afloat, I say not even one per cent. This has nothing at all to do with multinational concerns getting tax exemptions from governments - let's stay just a little bit focussed here...

If you don't believe that it was possible, I suggest you take a look at primary sources, perhaps the Collerson book that Ray suggested, or the multiple stories that regularly appeared in the magazines of the time. Prize money, appearance deals, a bit of sponsorship from the trade, plus resale value, add it up and you'll find that not only one could break even, sometimes it would even put food on the table!

#48 Ray Bell

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Posted 22 March 2008 - 23:38

Perhaps Ursula can throw some light on how her father participated?

fee-nes, it is possible that 'creative accounting' could explain to taxation departments why a company which was so good at profitably doing other things can have a branch that consistently loses money.

#49 RAP

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Posted 23 March 2008 - 09:28

Chris Lambert wrote a most informative article on costs of F3 racing in Autosport 25 November 1966. I have tried to summarise it.

Cost of Brabham BT15 bought for the previous season £2000 plus £100 for a trailer, financed by Dad and personal savings. In 1965 used mainly in UK club racing. Reliability not good and few results obtained. Total outlay including these items and cost of three engine rebuilds £3000. Winter 65/66 spent £1000 on rebuild and updating by Chequered Flag.

In 1966 he ran 35 F3 races and won 10 with 5 seconds, 5 thirds and 3 fourths, racing in the UK and at the likes of Zandvoort, Zolder, Montlhery and Circuit Bugatti.

Made a 4 week Continental sortie, halving travelling costs by teaming up with Mike Keens and a double-deck trailer behind a van which they could sleep in “at a pinch” although they usually stayed in hotels. Says that a mechanic is “an absolute necessity” even though another mouth to feed. With 2 thirds, 4th and an eigth the trip just broke even.

Total costs and income for season
£
New engine, modifying car, spares 1000
Engine overhauls 300
Depreciation of car over season 500
Travel, entry fees, petrol – UK 275
Travel etc – Continental 200
Total Costs 2275

INCOME
UK Club meeting prize money 300
UK National/Int. prize & Start money 200
Continental prize & start money 200
Total 700

In ADDITION there was the cost of a full time mechanic and the fact that you can’t do F3 and hold down a full time job! There is also a mention of a contract for free fuel & oil.

#50 Jerome

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Posted 23 March 2008 - 12:14

Originally posted by fines
Jerome, I don't know about your world but in mine "creative accounting" (or "money laundering") IS a criminal activity, and that is exactly what my post was about: you seem to suggest that almost every competitor in racing used tricks like that to keep afloat.


No, the majority of competitors is not criminal. But that they do not follow the law in accounting? Unavoidable. Look, I am not talking about drugsbarons coming in with suitcases full of cash... although that happened and happens too. What I am talking about is, for example, a specialised garage in the sixties. They sell new cars, old cars, rebuilt cars... and there's a lot of cash changing hands. And there's a lot of cash the garage would not be able to explain to the tax officers. So what do you do? You sponsor a driver. by giving him parts, special fees, or even some cash... cash money gone, no harms done.

Is that criminal? No. Is it illegal? Yes it is. It is laundering. It is making money disappear from the teller and re-appear in the bookkeeping.