Dragon's Den - More Harm Than Good?

[glenquagmire]

If anyone saw Dragon's Den last night, kart racer Rob Hall was asking for £50,000 in exchange for 40% of future earnings from motorsport. After some questioning, Hall and his dad revealed that earnings only come from F1 and that more money would be needed (quoted 0.5m for F3 and £1.5m for GP2) in future.

While you can understand their intention, and the rich guys said it was a good pitch and initially sounded a good idea, will it hinder drivers in obtaining sponsorship in future? If a company has seen the show and knows that more and more money will be needed in future, will it put them off investing early on? Or is it mainly parents' money anyway so it won't make a difference?

Nothing against Rob, of course, and hopefully he will achieve his ambition.

[EvilPumpkin]

Interesting one - it really depends on how you pitch your team. The majority of teams looking for financing would be looking for sponsorship, which is basically money in return for advertising as opposed to looking for a monetary payback.

On that basis, provided the team is getting enough public coverage (circuit and TV) to give reasonable exposure to their sponsor and the sponsor feels that they're getting value for money, that's really all that's necessary. They can pull out at any point (subject to contract) if they feel that they're not getting the return - but it's not a monetary return in the first place.

I don't know if motorsport has ever really been seen as a money making venture from a turnover point of view?

[terence]

Perhaps you should ask Bernie?

[Ian Sowman]

Originally Posted by glenquagmire

While you can understand their intention, and the rich guys said it was a good pitch and initially sounded a good idea, will it hinder drivers in obtaining sponsorship in future? If a company has seen the show and knows that more and more money will be needed in future, will it put them off investing early on? Or is it mainly parents' money anyway so it won't make a difference?

If any company was going to get into that kind of deal they would of course do the due diligence first, unless they had more money than sense.

I admire Rob for going into the Den for what was always going to be a big fat no from the 'Dragons'. He is an extremely personable guy and a more than reasonable racing driver - though it is always hard to tell how good anyone competing in club racing is due to the myriad variables. From his pitch, you would think he is better than he actually is but then it is all about bigging yourself up in there. I'd probably have suggested doing a few things differently, but in the end it wouldn't have made any difference to the end result.

As it happens, his TV appearance may well help Rob somewhat - he has drawn attention to himself quite successfully.

Lastly, traditional (and pure) sponsorship at anything other than the top levels of motorsport very rarely makes any commercial sense.

[Flavio Galtieri]

I found it impossible not to empathise with the father who was acting in what he believed was the best interests of his son's career. The boy clearly has talent, as have so many underfunded young men, and it is perfectly natural to want your offspring to fulfil their potential. It is a very real human instinct and keeps you awake at nights searching for the answer.

Motor racing is such a cruel sport in so many ways.

Raising the funds necessary for anything other than club racing in single seaters is all but impossible for normal families. Even at that level the struggle can be immense.

The problem is that in Europe there is no series where sponsorship is a viable, cost effective, option for fund raising.

Formula Palmer Audi comes closest, with around 10 - 15% of the cost of participating returned in real value to a sponsor through TV ratings, magazine coverage and spectators at the event. You can try and rank this up at the track with other promotional activities, corporate entertaining and so on but will still fall short of more conventional competitive media.

With British FF Duratec £100k may get you on the grid but you probably aren't going to win anything no matter how talented the driver. It's simply not enough and currently the spectator figures don't come close to FPA. So it really is a difficult, if not impossible sell.

So what do you need? Either an Entrepreneur who likes the driver and LOVES motor racing and becomes your Patron or a completely different business model.

Has the appearance on Dragons' Den done more harm than good?

Of course not.

[Alex K]

But again, it is not true that earnings come only from Formula 1! There're many professional championships with professional teams, he can earn money in Le Mans series, GTs, TCCs... Ofc it won't be millions of pounds, but can earn for good living.

[Flavio Galtieri]

Yes but the question was is it a realistic investment proposition? - how much does it cost to get there and what is the risk/reward?

I agree that BTCC is the most saleable series domestically at the moment. The package is really very attractive. The problem is the size of the "down payment" getting the driver to that point and whether a competitive return could be earned by an investor in a reasonable time period.

[50-SIX]

Originally Posted by Flavio Galtieri

With British FF Duratec £100k may get you on the grid but you probably aren't going to win anything no matter how talented the driver. It's simply not enough and currently the spectator figures don't come close to FPA. So it really is a difficult, if not impossible sell.

If you have £100k, and you are quick you will easily get a seat with any of the top UKFF teams. I know drivers that have got into a top team for far less. If you turn up in Jan with £100k in your pocket and you are quick in testing there would be a queue forming to sign you up.

[50-SIX]

If they Have £50k already, my advice would be arrange some tests after the season is over, and negotiate with teams once they have seen your speed. If they have a well backed driver signed up already, you may just get into a drive for cheaper than you think.

[johntt]

I'm not sure it did him any good.

The figures quoted by the father were correct but presented in a misleading way.

He would probably spend 2 years in FFord = £100,000
2 years in F3 = £1 million (£500k per season)
2 years in Gp2 = £3 million (£1.5 million per season)
Then F1
Assuming he gets there

Also I was interested at the lack of information. He had been in FFord in 2006. What results did he get? Why did he go down the ladder to the Castle Combe FFord Championship? Lack of money or lack of results?

[Russfeld]

He'd have to have a lengthy and successful F1 career to return even 40% of pre-tax earnings and cover the pre-F1 budgets. And it's next to impossible to garuntee someone would even get to their first season of F1, let alone past it, even with a winning CV.

In other words, they tried this with Giorgio Pantano.

[ensign14]

Originally Posted by Flavio Galtieri

Yes but the question was is it a realistic investment proposition? - how much does it cost to get there and what is the risk/reward?

I saw somewhere it cost McLaren £2m to get Hamilton to F1 standard. His first season performance would probably have cost around £10m on the "open market" and he was on £300k or so. So if you have a genius driver it's worth the risk.

Red Bull obviously doing something similar as well.

[Triple J Motorsport]

I don't think it's done the sport any good not sure it's harmed much it either though. Might have put off a sponsor or two? who knows?

Might put people off clubFF too? (they may think it costs tens of thousands)

Don't know the guy or anything about him but if they have money (which they clearly do) surely he should have been winning at Combe if he's going to be F1 material?

[ivanalesi]

When it's being aired in the UK, why on earth he should "aim for F1"? Aim to become professional, much much more people would buy this! It's not like the public haven't heard of BTCC, A1, Le Mans or Indy Car. Be reasonable, for F1 it's always quite a bit question of luck!
If he was from a country with no motorsport tradition, then play the "I'm going to F1", they buy it 100%! But for the UK or Italy, it will simply almost never work!

Btw, GP2 and FBMW have the potential to become worthy investment, especially GP2 till last year had build a lot of momentum. Lewis boosted the profile a lot. Of course they scraped Eurosport, so they need again TV coverage everywhere in Europe! 1.5 mln and you get massive crowds, trully international viewership...

[Triple J Motorsport]

Originally Posted by ensign14

I saw somewhere it cost McLaren £2m to get Hamilton to F1 standard. His first season performance would probably have cost around £10m on the "open market" and he was on £300k or so. So if you have a genius driver it's worth the risk.

Red Bull obviously doing something similar as well.

Agreed but look at Anthony Davidson no drive mega driver...


IRO Combe drivers going up the ladder Matt Rivett should have gone on the show a few years ago

...great driver and engineer seriously lacking cash

[Mr.Jingles]

Originally Posted by johntt

Also I was interested at the lack of information. He had been in FFord in 2006. What results did he get? Why did he go down the ladder to the Castle Combe FFord Championship? Lack of money or lack of results?

http://www.britishformulaford.co.uk/...hamp-final.pdf

Shows him as Joint 19th for the year - however to be fair to him he is a better driver than that initially suggests, at least he is now!... for an example of what I mean, see this qualifying & race combo back in May:

http://www.tsl-timing.com/ccrc/2008/81968.pdf

I think the pitch could have been done better possibly - but you just don't know what has been cut for broadcast (everyone has an angle!). Both Josh and Felix are as fast (or faster), got further up the ladder, only to come back again. It happens to alot of talented drivers so the pitch was always going to be tough and (very likely) unwinnable.

Still, gotta respect him for trying?

[wannab-aracer]

I think you have to say fairplay to the Hall family at chancing there luck in the Den. As a business proposal though I think its quite laughable. No disrespect to Robert Hall but with the greatest respect the chances of Robert making it to F1 are close to nil.

A bit harsh some might say, But considering the proven talent that is already in F3 and GP2 at the same age or even younger than Robert, you have to agree it's a hell of a long shot.

The idea of asking outright for sponsorship may have been a better bet considering how excited Peter Jones was at the thought of tieing this in with his red letter days. Then with Mr Jones on board who knows what doors may have opened ?

I can't see the Dragons Den experience doing Robert any harm, it can only help raise his profile and good luck to him!

http://www.bbc.co.uk/dragonsden/epis...terview1.shtml


ps. I'm pretty good at football, can anyone back me for just 20k to go and train in Brazil and when I sign for Man United you can have......

[MagnetON]

The mere fact that he's gone from a "Who?" to someone that has his own thread in at least one large motorsport forum (and I'm sure many others!) This will not have done him any harm. I also wouldn't be surprised if some form of Red Letter Days sponsorship appears on the car at some point.

[wannab-aracer]

Totally agree MagnetON

[EvilPumpkin]

you also have to figure that if he got a Dragon on board, he'd have a much better chance of bypassing some of the "traditional" rungs of the ladder. The circles that those guys move in, there's a pretty good chance of getting a test drive or moving sideways into one of the teams. Who you know does count for quite a bit in terms of getting opportunities. You can have all the talent in the world, but it does you no good if no-one answers the door when you're knocking. Those kind of contacts get you the invitation.

Also the potential to gain more sponsors from affiliated companies and get introduduce to other potential corporate giants would be greatly increased with one or more of those guys backing you.

I say fair play to them for trying - at least they're thinking "out of the box" - and that alone might make them more attractive to potential sponsors.

[johntt]

Originally Posted by wannab-aracer

A bit harsh some might say, But considering the proven talent that is already in F3 and GP2 at the same age or even younger than Robert, you have to agree it's a hell of a long shot.

Thats like saying anyone over 19 should be ignored because Vettel was in F1 when he was 19.

Different drivers will arrive at different ages, Hamilton was 22 when he made his F1 debut, Alonso was ~20, Montoya was 26. Damon Hill was 32, Nigel Mansell was 27.

[SimonY]

I've thought about someone trying this for a while. This might have been a successful pitch if he was a talented F3 level driver. 'I have 200k, I need 200k' - a good season could see a move directly to F1, or certainly to be taken under the wing of an F1 team. A shame that this one-off opportunity was wasted on a reasonable club-level driver with unrealistic ambitions, because we certainly won't see a Dragon's Den backed driver now!

And one other thing - if you wanted to win National Formula Ford would you not be on the phone to Jamun or JTR?! (As good as Swift Cooper may be)

[MagnetON]

Originally Posted by SimonY

A shame that this one-off opportunity was wasted on a reasonable club-level driver with unrealistic ambitions, because we certainly won't see a Dragon's Den backed driver now!

Would never have seen one anyway no matter who the driver was, on the show these guys are looking for a hard business idea not one that has so many variables like racing.

If ANYONE went in there with a pitch where it's "Invest 50K now, if we're lucky this year then we'll be in a position to have to find 500K the year after, and 1.5M the year after that, oh, and in those years we will probably have to further dillute the equity of a company that has ONE asset that could be wiped out in seconds and if we're really lucky we may see a return on the investment" they wouldn't stand a chance.

As EP said, fair play to them for thinking outside the box and giving it a try.

[Alex K]

SimonY, club-level driver can become ladder level driver if he finds money to compete, so what he's considered as club level guy and is not known by common race F3 insiders? Had an idea, has his sights on own goalshe wants to achieve and fights for it. Dragon's Den is definitely better idea than Big Brother appearance done by other, non-club level driver.

Good luck to Rob, I fight for backing to one of the best East European young drivers, and I know how tough it is in credit crunch days to secure sponsorship, we also think about Dancing with Stars, TV shows, etc. to survive. So I know what's he coming through.

[courageous]

Supprised nobody has mentioned it already - Justin Wilson did pretty much the same thing to break into F1 (albeit without TV cameras, but everyone knew that the Minardi seat was his if he could find the backers for Justin Wilson PLC).

Wilson won FPA which got him a prize drive in F3000, I think his 2nd year in F3000 was largely paid for by Palmer too - then F1 Minardi, Jaguar and on to the good 'ol USA.