The Government of the Isle of Man Department for Economic Development
TT World Series Feasibility Study
May 2012
DOCUMENT CONTROL
Amendment History Version Date File Reference Author Remarks/Changes No. 1 01-05-12 IoMTTWorldSeries-Draft SCM Draft Report
Sign-off List Name Position Date Remarks Angus Buchanan Director 01-05-12 Signature
Distribution List Name Organisation Date Colin Kniverton Isle of Man Department for Economic Development 01-05-12 Paul Phillips Isle of Man Department for Economic Development 01-05-12
Government of the Isle of Man TT World Series Feasibility Study
CONTENTS
EXECUTIVE SUMMARY i 1 INTRODUCTION & BACKGROUND ...... 1 1.1 Our Brief ...... 1 1.2 Background to the Isle of Man TT Race ...... 1 1.3 Project structure ...... 2
2 THE ISLE OF MAN TT AND THE PROPOSED WORLD SERIES ...... 4 2.1 Introduction ...... 4 2.2 The Essence of the TT and the opportunity ...... 4 2.3 Distance of courses ...... 6 2.4 Number of riders ...... 7 2.5 Race calendar ...... 7 2.6 Duration of each round ...... 7 2.7 Categories and classes ...... 8 2.8 Time trials versus mass starts ...... 8 2.9 Number of rounds in the series ...... 8 2.10 Course requirements ...... 8 2.11 Safety considerations ...... 9 2.12 Key markets and preferred locations ...... 9 2.13 Team, manufacturer and competitor involvement ...... 10 2.14 Summary ...... 10
3 DELIVERY MODEL ...... 11 3.1 Introduction ...... 11 3.2 General considerations ...... 11 3.3 Organisational structure ...... 12 3.4 Governance ...... 14 3.5 Intellectual property rights ...... 14 3.6 Broadcast rights and responsibilities...... 15 3.7 Commercial rights ...... 16 3.8 Selection of host venues ...... 19 3.9 Marketing and promotion ...... 20 4 POTENTIAL VENUES ...... 21 4.1 Introduction ...... 21 4.2 Existing events ...... 21 4.3 Long-list of targets ...... 22 4.4 Summary of results ...... 23 5 IMPACT & BENEFITS OF THE WORLD SERIES ...... 24 5.1 Introduction ...... 24 5.2 Economic impact ...... 24 5.3 Methodology ...... 25 5.4 Stages 1-3 - spectator numbers ...... 25 5.5 Stages 4-6 - other attendee numbers ...... 27 5.6 Stage 7 - leakages ...... 29 5.7 Stage 8 – organiser expenditure ...... 29 5.8 Other benefits ...... 31
Government of the Isle of Man TT World Series Feasibility Study
6 FINANCIAL MODEL ...... 33 6.1 Introduction ...... 33 6.2 Income estimation ...... 34 6.3 Expenditure estimation ...... 36 6.4 Summary of income and expenditure ...... 39
7 RISK ANALYSIS AND MITIGATION ...... 40 7.1 Introduction ...... 40 7.2 Identification of risks ...... 40 7.3 Summary of key risks and mitigation measures ...... 40 8 NEXT STEPS & IMPLEMENTATION PLAN ...... 43 8.1 Introduction ...... 43 8.2 Outline implementation plan ...... 43 8.3 Legal and accounting ...... 43 8.4 Staffing ...... 43 8.5 Business plan and budgeting ...... 44 8.6 Brand and marketing ...... 44 8.7 Commercial ...... 44 8.8 Team liaison ...... 44 8.9 Race management ...... 45 8.10 Summary ...... 45
9 CONCUSIONS AND RECOMMENDATIONS ...... 46 9.1 Introduction ...... 46 9.2 Feasibility of establishing a World Series ...... 46 9.3 Benefits to the Isle of Man ...... 48 9.4 Underlying assumptions and risks ...... 48 9.5 Implementation ...... 49
APPENDIX A: SAMPLE CONSULTEE QUESTIONNAIRE ...... II APPENDIX B: LIST OF CONSULTEES...... I APPENDIX C: SUMMARY OF CONSULTATION ...... IV APPENDIX D: SPC ORGANISATIONAL STRUCTURE ...... VIII APPENDIX E: ECONOMIC IMPACT MODEL ...... XIV APPENDIX F: FINANCIAL MODEL ...... 15
Government of the Isle of Man TT World Series Feasibility Study
EXECUTIVE SUMMARY
Our Brief
1. In November 2011, the Isle of Man Government (the Government) appointed The Sports Consultancy (TSC) to conduct a feasibility study (the Study) into the formation of a TT- branded World Series (World Series) of motorcycle road races.
2. The purpose of the study is to assess the feasibility of creating a World Series around the Isle of Man Tourist Trophy Race (the TT), which takes place in late May and early June each year. In particular, the Government wants to understand if the establishment of a Series can: support the ongoing development of the TT support the development of the Isle of Man economically through increased exposure in key markets support the Isle of Man’s strategy for tourism growth.
3. In recent years, the popularity and exposure of the TT has grown steadily and it is seen as a good time to be exploring these three areas. The study provides recommendations on a wide range of issues including: intellectual property rights availability of suitable venues commercial contracts and income opportunities marketing and promotion team, manufacturer and competitor involvement logistics safety and risk management.
Background to the Isle of Man TT Race
4. The TT is held over two weeks in May and June. From 1949 to 1976, it was a round in the FIM Motorcycle Grand Prix World Championship before safety concerns led to that designation being transferred to the United Kingdom (as the British Grand Prix) for the 1977 season. From then until 1990, the TT became part of the TT Formula 1 Championship, since which time it has been a standalone event. Since 1989, the race has been owned and developed as the Isle of Man TT Festival by Isle of Man Government (firstly through the Department of Tourism, now the Department of Economic Development).
5. The event is run in a time-trial format on public roads, which are closed for the duration by the provisions of an Act of Tynwald (the parliament of the Isle of Man). There are nine separate races within the TT festival: Superbike TT Supersport TT (two races) Superstock TT Senior TT Sidecar (two races) TT Zero (clean emissions) Lightweight (introduced for 2012).
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6. It was first held in May 1907 and was called the International Auto-Cycle Tourist Trophy and was held over ten laps of the St John's Short Course (15 miles 1,470 yards). The overall winner was Charlie Collier who, riding a Matchless motorcycle, finished in a time of 4 hours, 8 minutes and 8 seconds at an average race speed of 38.21 mph. In 1911, the event moved to the Snaefell Mountain Course, which is 37 miles, 1,291 yards (37.733 miles) long. Although some modifications have been made to the course over the past century, it is still in use today.
Project structure
7. The structure of the report has been governed by the need to establish the concept for a World Series and to test the financial and other implications in order to address the three questions outlined above. It is shown in Figure 2.
Figure 1: Project structure Document Review & Consultation
Event Concept
Delivery Model
Potential Venues
Economic Impact Financial Model
Risk Analysis
Implementation Plan
Conclusion and Recommendations
8. This study has been underpinned by consultation with a wide range of partners and stakeholders. The aim of the consultation was to inform key decisions relating particularly to: the format of the TT and developments that have taken place in recent years the concept and format for the Series the delivery model and the proposed governance structure the event financial model budget and economic impact assessment a risk analysis and next steps.
9. The findings and recommendations have been based on four key areas: feasibility of establishing a World Series benefits to the Isle of Man underlying assumptions and risk implementation.
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Feasibility of establishing a World Series
10. Following the extensive consultation and analysis, it would appear that the establishment of a Series based around the TT is an achievable aim based on the following considerations: series concept: amongst all of our consultees, there was a broad consensus on what the format for the Series, including considerations of course type and length, classes of bikes, number of riders, event timing, number of rounds, etc (see Table 1 below) event timing: there is a clear gap in the motorcycling calendar (October-May) which the Series could occupy (particularly in its early years when it is becoming established) teams and riders: there is unanimous interest from existing TT riders in the concept of a Series and, more importantly, many of the existing teams have also expressed an interest and are comfortable with the proposed arrangements host venues: at this stage, ten venues/cities have indicated that they would be interested in exploring hosting a round of the Series further economic impact: each round of the series should be sufficiently attractive in economic impact terms to encourage hosts to contribute to the costs of staging as well as a paying a hosting fee to the SRH financial: the financial model developed for the Series indicates that reaching a break- even position for the Government within a five-year period should be achievable and, if successful, there is the potential to exceed this position.
Table 1: Summary of event concept SUBJECT CONCLUSION Number of events 4-5 + the IOM TT Duration of event: 4 days – • Practice days 2 practice days with qualification (safety) • Event days 2 race days (but how many races can there be in one day?) Classes: • Number 2-3 classes • Types Superbike, Superstock, Supersport Riders: 20-30 – 20 fixed for all WS events and 10 wild cards per event Format: • Length of course 5-6 miles • Mass start or time trial Mass starts where possible but time trial if the circuit demands. Flexible. Type of course (Road or Track) Road only Calendar: • Frequency 3 weeks between events. • Season November-May
11. Furthermore, a delivery model for the series has been set out that shows how the Series could be managed. The SRH (i.e. the Government) should establish a SPC to control the Series and would enter into hosting contracts with cities or venues for each round of the Series. Ideally, the management of the TT would also be incorporated into this body.
12. The SRH would apportion rights and responsibilities between itself and the (local) Organisers as set out in Table 2.
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Table 2: Split of rights between the SRH and Organisers GLOBAL (i.e. Government) NATIONAL (i.e. Organisers) Responsibilities Rights Responsibilities Rights Race Director has control Global Local organisation and National over all races in Series Sponsorship management of race in Sponsorship through application of race accordance with host city Right to grant certain handbook contract and race handbook sponsorship rights nationally Broadcast Coverage of the Broadcast Rights Hospitality Hospitality Series centrally controlled Ownership of all Obligation to run hospitality Right to take all rights to the Series programme revenues from hospitality Merchandising for the Licensing Royalty from any Series All rights to licence race specific the brand merchandise Logistics (managed Spectator centrally for the Series but Revenues with costs contributed by the Rights to revenues teams) from ticketing, concessions, food and beverage etc for the race Global Marketing Ownership of all IP National Marketing Use of IP Responsibility to market and Responsibility to market and Right to use the promote the Series globally promote the race nationally brand nationally
Team and rider liaison
13. Consultation was undertaken with potential host venues and, in principle, they found the arrangement set out above acceptable.
14. Based on these considerations (and mentioned above), both an economic impact assessment and headline financial model for the series have been developed. The former has estimated that each round of the series could be worth circa £16.9 million to the host city in direct economic impact and the value of the Series could be circa £86 million.
15. The headline financial model – based on the split of rights and responsibilities outlined above - has indicated that the Series could be viable for the Government. A summary of this model is shown Table 3.
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Table 3: Summary of income and expenditure for the World Series REDACTED
Benefits to the Isle of Man
16. The second part of study was consider whether the Series could support the ongoing development of the TT and the Government’s strategy for economic and tourism development.
17. For the TT, it is clear that there has been a significant improvement in awareness and exposure of the event over the past six years. However, long-term aspirations will always be constrained by it being a one-off event and by the difficulty of accommodating greater numbers of spectators on the island. Therefore, the development of a Series around the TT is potentially a very good means by which its reach can be expanded. In addition, providing a package of races should be more attractive to teams and sponsors and so may improve the financial sustainability of the TT itself (as a separate consideration from the Series).
18. The Series would also present opportunities to the Government in terms of its strategy for economic and tourism growth. The TT is already covered in a number of the Government’s target markets (including Europe, North America, South America and the Middle East). Expanding the level of coverage through a Series and live broadcasting should not only strengthen exposure in and links with those areas, but also aid expansion into other target markets.
19. In addition, by owning and managing the Series (through the SPC), the Government will establish a direct relationship with five other cities/areas around the world. Ideally, these would be in their target areas and will act as another means of raising awareness and exposure of the Isle of Man internationally.
Underlying assumptions and risks
20. The feasibility study has been based on a series of assumptions at all stages of the process. Of these, some are fundamental to the likely success of the Series and they are as follows:
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to ensure the anticipated level of exposure and to enable the estimated revenue to be achieved, the Series should be broadcast live as widely as possible (and in all the key markets) the Government as SRH should establish a SPC to manage the series (and to limit its liability) the SPC must retain the key rights outlined above relating to global sponsorship, television rights, global marketing and merchandising host venues should be located in the Government’s target markets and (in the early years as a minimum) in the strong television markets.
21. Based on this, the key risks that would need to be carefully managed throughout the establishment of the Series relate to delivering live coverage of the Series and securing the appropriate partners (sponsors, host venues, teams, etc).
Implementation
22. If and once a decision is taken by the Government to proceed with establishing the Series, we estimate that there would be circa two years required to undertake all necessary preparatory work. Therefore, assuming a decision in the middle of 2012, the earliest realistic start for the Series would be autumn 2014.
23. In terms of implementation, it will cover the following areas: legal and accounting (including creation of the SPC) staffing budgeting and business planning branding and marketing team liaison race management host venue procurement.
24. The Implementation Plan should be structured such that they are key milestones at which the Government would take a decision whether to proceed to the next stage. This would ensure that its potential liabilities would be minimised.
25. Finally, a general observation that emerged from our consultation was that it was a good time for the Government to be considering the development of the Series. Besides helping the ongoing development of the TT and delivering benefits to the Isle of Man, it is also perceived that interest in other motorcycling series (particularly BSB and WSB) is starting to decline and there is a space in the motorcycling calendar that this Series could fill.
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1 INTRODUCTION & BACKGROUND
1.1 Our Brief
1.1.1 In November 2011, the Isle of Man Government (the Government) appointed The Sports Consultancy (TSC) to conduct a feasibility study (the Study) into the formation of a TT- branded World Series (World Series) of motorcycle road races.
1.1.2 The purpose of the study is to assess the feasibility of creating a World Series around the Isle of Man Tourist Trophy Race (the TT), which takes place in late May and early June each year. In particular, the Government wants to understand if the establishment of a Series can: support the ongoing development of the TT support the development of the Isle of Man economically through increased exposure in key markets support the Isle of Man’s strategy for tourism growth.
1.1.3 In recent years, the popularity and exposure of the TT has grown steadily and it is seen as a good time to be exploring these three areas.
1.1.4 The study provides recommendations on a wide range of issues including: intellectual property rights availability of suitable venues commercial contracts and income opportunities marketing and promotion team, manufacturer and competitor involvement logistics safety and risk management.
1.2 Background to the Isle of Man TT Race
1.2.1 The TT is held over two weeks in May and June. From 1949 to 1976, it was a round in the FIM Motorcycle Grand Prix World Championship before safety concerns led to that designation being transferred to the United Kingdom (as the British Grand Prix) for the 1977 season. From then until 1990, the TT became part of the TT Formula 1 Championship, since which time it has been a standalone event. Since 1989, the race has been owned and developed as the Isle of Man TT Festival by Isle of Man Government (firstly through the Department of Tourism, now the Department of Economic Development).
1.2.2 The event is run in a time-trial format on public roads, which are closed for the duration by the provisions of an Act of Tynwald (the parliament of the Isle of Man). There are nine separate races within the TT festival: Superbike TT Supersport TT (two races) Superstock TT Senior TT Sidecar (two races) TT Zero (clean emissions) Lightweight (introduced for 2012).
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1.2.3 It was first held in May 1907 and was called the International Auto-Cycle Tourist Trophy and was held over ten laps of the St John's Short Course (15 miles 1,470 yards). The overall winner was Charlie Collier who, riding a Matchless motorcycle, finished in a time of 4 hours, 8 minutes and 8 seconds at an average race speed of 38.21 mph. In 1911, the event moved to the Snaefell Mountain Course, which is 37 miles, 1,291 yards (37.733 miles) long. Although some modifications have been made to the course over the past century, it is still in use today.
1.3 Project structure
1.3.1 The structure of the report has been governed by the need to establish the concept for a World Series and to test the financial and other implications in order to address the three questions outlined above. It is shown in Figure 2. Figure 2: Project structure Document Review & Consultation
Event Concept
Delivery Model
Potential Venues
Economic Impact Financial Model
Risk Analysis
Implementation Plan
Conclusion and Recommendations
1.3.2 This study has been underpinned by consultation with a wide range of partners and stakeholders. The aim of the consultation was to inform key decisions relating particularly to: the format of the TT and developments that have taken place in recent years the concept and format for the Series the delivery model and the proposed governance structure the event financial model budget and economic impact assessment a risk analysis and next steps.
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1.3.3 The consultees include: representatives from the Government representatives from the TT organisation (a department of the Government) teams & manufacturers riders (current and retired) other race meeting organisers journalists travel & logistics companies marketing consultants potential host venues.
1.3.4 Consultation was conducted via a combination of face-to-face meetings, telephone interviews and e-mail questionnaires.
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2 THE ISLE OF MAN TT AND THE PROPOSED WORLD SERIES
2.1 Introduction
2.1.1 In order for a Series based on the TT to be successful, it is imperative that the underlying nature of the TT and what makes it a success is fully understood. Therefore, this section covers two themes: an explanation of the TT and gives it its status in the motorcycling calendar the proposed format of the Series based on the essence of the TT outlined above and consultation undertaken with a range of partners.
2.1.2 As well as consultation, the concept fir the Series has been informed by TSC’s experience of developing and delivering similar global events. The findings and proposals set out form the basis of the assumptions in the remainder of the report.
2.2 The Essence of the TT and the opportunity
2.2.1 The TT occupies a unique place in the opinions of many involved in motorcycling. As veteran commentator, Murray Walker, has stated:
“In terms of stature, history, spectacle and human endeavour, the TT is still right up there among the greats of motor sporting events.”
Figure 3: Isle of Man TT course
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2.2.2 It is the characteristics of the race that give it its status, in particular the length (37 miles, 1,291 yards) and challenging nature of the course and the fact that it is on public roads. Additionally, there is the inherent danger, which is a result of the high speeds achieved on very narrow, twisting streets, roads and lanes, which are flanked by stone walls and even buildings. Although this could be seen by something that would adversely impact its popularity, this is not the case and it helps to ensure that it is regarded as one of the sport’s ultimate challenges.
2.2.3 However, the Government has been proactive in addressing concerns about safety. Prior to the 2011 races, a comprehensive review of the Mountain Course led to increased investment in safety measures and £60,000 was invested in more Recticel fencing. This saw approximately 2,000 straw bales replaced and was another stage in an overall investment of more than £350,000 in Recticel since 2006.
2.2.4 Besides the course itself, the history of the race and the accessibility of the riders to the spectators are things that contribute to the race’s popularity with motorcycling fans.
2.2.5 There are two key reasons why it is an opportune time to be considering the development of a Series: following a decline in the coverage from 1990, when the Formula TT Championship folded, until 2005, there has been a significant increase in the popularity of the event aided by increased investment by the Government there is a general feeling (supported by much of our consultation) that interest in Moto GP, World Superbikes (WSB) and British Superbikes (BSB) is falling and that motorcycle fans, teams, riders and senior administrators in the sport are seeking alternatives.
2.2.6 It has been suggested that a Series could provide such an alternative. However, to achieve this, the format would have to ensure that the essence of the TT described above was retained, rather than it being a copy of either MotoGP or WSB. Many of our consultees referred to the “essence” of the TT, which can be summarised in the following points: motorcycling sport in its purest form excitement, triumph, glory, exhilaration, disappointment and despair “real” – real roads, real men, real racing long and challenging road track skill, bravery and concentration of riders accessibility of the riders – “working class heroes” festival is a large part of road races racing “on the edge”.
2.2.7 The purpose of our initial consultation was to ascertain the most appropriate format for the Series. As part of this, it was recognised that elements of the TT would be extremely difficult to replicate elsewhere, e.g. the length of the course. Nevertheless, to create a successful series, it must adhere to the fundamental characteristics of the TT.
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2.2.8 The results of the consultation are set out in the following paragraphs. It focused on the following areas: distance of the courses number of riders in the series race calendar duration of each round categories and classes time trial versus mass start number of rounds in the series course requirements venues requirements health and safety key markets and preferred locations team, manufacturer and competitor involvement.
2.2.9 Consultees included: the Government riders team principals motorcycling journalists the Auto-Cycle Union (ACU) production and sponsorship agencies logistics companies.
2.2.10 A sample of the questionnaires used to conduct the interviews can be found in Appendix A.
2.3 Distance of courses
2.3.1 The IoM circuit is 37¾ miles long, with riders competing over between three and six laps, (150 miles to 226 miles) depending on the category of the race. This endurance aspect of the race is important. However, it is accepted that there are few place that could offer a suitable course of this length and that there are also logistical issues such as delivering television coverage (particularly live) over this length. A long course also incurs greater costs for the organiser, particularly in relation to course safety, stewarding security and marshalling.
2.3.2 A shorter circuit provides greater opportunity for spectators to see more of the event and increases the ability of hosts to reduce hosting costs and increase revenue from ticket sales in spectator facilities. A circuit of 5-6 miles was widely recommended as the distance needed to differentiate the races from circuit events while replicating the substance of the TT. As a comparison, the other existing road courses are of a similar length, e.g.: Ulster GP (Dundrod) – 7.4 miles North West 200 (The Triangle) – 8.2 miles.
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2.4 Number of riders
2.4.1 There is a consensus that there should be a core group of between 15 and 20 riders who compete in all rounds of the Series, particularly during early years. The riders that form the core group should initially be selected based on performance in the TT. This would provide a focussed number of top riders and teams while keeping the cost of the Series to a more manageable level. In addition, there should be up to ten local wildcard/local entries for each race. This would help generate local interest and to help develop the format in those countries. This would take the total number of riders for each race to 30. To ensure competitiveness, wildcard riders would need to qualify and be within, for example, 10% of the fastest lap time from the core group riders.
2.5 Race calendar
2.5.1 Currently, there is a window in the racing calendar between October and April. The series could fit into this gap, which would avoid clashes with existing series, (primarily BSB). If the Series were to start in late October, it could operate on a three-weeks-off, one-week-on basis within this gap, which would also allow sufficient time for moving between events and for rider and teams to prepare fully, whilst maintain the momentum and interest. However, it should be noted that some consultees stated that as the Series becomes established, it would be likely that some riders who take part in existing track series would be likely to choose a road racing series over them. If this is the case, the Series would be able to define its own calendar, as opposed to having to fit around other events.
2.5.2 From the manufacturers’ perspective, they tend to release new bikes in February, with extensive testing during March and April. Although this could be problematic for some of them, others see it as an opportunity to launch and showcase new models during the Series, thus making it more interesting as these models could have an impact on performance and overall standings.
2.5.3 Generally, the Series should follow dry, warm, weather to provide the best possible conditions for racing. Given the proposed season, it would be ideal for the Series to take place in the southern hemisphere, southern Europe, or the southern/central United States to avoid disruption. However, this should also be balanced against other considerations, such as the commitment of host venues and presence in the strongest television markets for motorcycling.
2.6 Duration of each round
2.6.1 The duration of each round should be four days. This allows for two days of practice with qualification (depending on the course and complexity) and two days for racing. Host venues may well decide to host a wider festival around the event to maximise the financial benefits and this would be a matter for them to decide.
2.6.2 The duration of each race will depend largely on the class of racing but to retain the endurance element of the Isle of Man TT this should be at least one hour, possibly longer for some of the classes.
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2.7 Categories and classes
2.7.1 Three main classes of racing have been identified for the Series, based on the existing Isle of Man TT classifications. These are: Superbike Superstock Supersport.
2.7.2 One of the benefits of including these classes is that many of the teams and riders will compete in all three classes, leading to significant financial economies. The possibility of creating a more open classification, encouraging different manufacturers to take part in the series should also be considered. This could have wider commercial benefits as it would attract a wider range of team and a broader fan base and may be an appropriate consideration for once the Series is established.
2.7.3 As an example, electric bikes are becoming increasingly popular and the Series could provide a platform for teams and manufacturers to showcase developments (e.g. along the lines of the TT Zero class). A programme of supporting events should be developed by each host venue as appropriate.
2.8 Time trials versus mass starts
2.8.1 Time trials are a necessity on the Snaefell course due to its narrowness and tight corners. Generally, on a long course, time trials are appropriate as a mass start would mean spectators would only get an occasional glimpse of the riders as the field passes their position once every 15 to 20 minutes. However, on a shorter course of 5-6 miles, mass starts are more appropriate and would be better from a spectator’s perspective. The format for each race is likely to be determined by the length and nature of each course and there was no over-riding preference from consultees. The safety aspects of a mass start would also need to be considered, depending on the layout of each track.
2.9 Number of rounds in the series
2.9.1 The majority of consultees were of the opinion that the number of rounds in the Series should initially be five, plus the TT. They were unanimous that the TT should act as the season finale and pinnacle event. The number of events is partly dictated by the need to fit in with other event calendars and the logistics and time requirements associated with moving from one event to the next. However, if the Series were to succeed, it is anticipated that the number of rounds would increase in line with demand from teams, riders, spectators, broadcasters and sponsors.
2.10 Course requirements
2.10.1 Consultees were asked whether the course should be road only or could take place on circuits. Unsurprisingly, the consensus was that it should take place on road course as without this characteristic, it would become no more than an imitation of WSB or BSB. However, many agreed that a combination of part of the lap in an enclosed circuit and part on open roads would be an acceptable hybrid solution. This would enable the host venue to utilise existing circuit infrastructure (e.g. pits, paddock, parking, transport links) while retaining the essence of the TT.
2.10.2 In addition to the need for a suitable course, there are a number of important considerations that potential venues would need to be able to offer. Some of these could be provided as part of existing built facilities or through provision of event specific overlay:
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spectator facilities pit facilities spectator seating hospitality facilities hotel accommodation event security and stewarding health and safety medical facilities marketing and promotion ticketing transport accessibility (proximity to international airports, etc)
2.10.3 These issues would be addressed through the host venue agreements and would be the responsibility of the local organisers (see Section 3).
2.11 Safety considerations
2.11.1 Danger is inherent to the TT. The Snaefell Mountain Course is perhaps the most challenging in motorcycling and since the start of the TT in 1907, there have been approaching 240 fatal accidents (an average of more than two per year).
2.11.2 While ensuring the highest possible safety standard are met, consultees were agreed that to be successful the Series would have to retain and incorporate some of the danger of the TT. Balancing safety with retaining the essence of the TT will be one of the biggest challenges for the Series.
2.11.3 The use of courses which utilise parts of existing circuits would certainly help mitigate the risk of accidents and injury to competitors, officials and spectators as these circuits would be subject to existing health and safety standards and controls. The open road elements of the courses would need to be carefully considered and all possible measures taken to mitigate the risks. This may require capital investment by some host venues to upgrade roads and to install appropriate safety measures.
2.12 Key markets and preferred locations
2.12.1 The aspiration is to establish a Series which is not only international in flavour, but also is hosted by countries with a genuine appetite for it. In addition, the Government is keen to use the Series as a platform for promoting economic links and developing the Isle of Man as a tourist destination.
2.12.2 Manufacturers and sponsors are keen for the event to be taken to markets where they can maximise the benefits for their brands. Finally, for the Series to be a success, television exposure in the biggest motorcycling markets is vital, particularly in its early years.
2.12.3 On this basis, the following have been identified as key target areas (and have been ranked in order of priority):
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Europe – Germany, Belgium, Ireland & eastern European countries Middle East – Dubai, Abu Dhabi & Oman Asia – China & India America – USA, Canada & South America South Africa Australasia – Australia & New Zealand.
2.13 Team, manufacturer and competitor involvement
2.13.1 The teams consulted all want to be involved in the Series; however, it must be affordable for them. Manufacturers are interested in competing in certain territories that are likely to be most beneficial from the perspective of sales and marketing. This includes emerging economies where there is greater potential for growth in sales as people move up from bicycles and scooters to higher performance bikes. All teams we spoke with are interested in the prospect of the Series and can see many benefits as long as it is affordable for them.
2.13.2 For the riders, the Series is an enticing opportunity as it would provide a competitive structure to road racing that does not currently exist. To many of them, winning the TT is the pinnacle of their sport. Financial reward is a motivation for some of them, but others would be happy to do it for the “buzz” and to indulge their passion for the discipline. The Series would need to fit around existing competition schedules to ensure that riders and teams can continue to meet their other obligations (particularly in the short term) within the sport.
2.13.3 It is clear that there is significant interest from teams and riders in taking part in the Series but securing their involvement will be largely dependent on making it financially viable and attractive for them to do so.
2.14 Summary
2.14.1 A summary of the findings is shown in Table 4 below.
Table 4: Summary of proposed World Series format SUBJECT CONCLUSION Number of events 4-5 + the IOM TT Duration of event: 4 days – • Practice days 2 practice days with qualification (safety) • Event days 2 race days (but how many races can there be in one day?) Classes: • Number 2-3 classes • Types Superbike, Superstock, Supersport Riders: 20-30 – 20 fixed for all WS events and 10 wild cards per event Format: • Length of course 5-6 miles • Mass start or time trial Mass starts where possible but time trial if the circuit demands. Flexible. Type of course (Road or Track) Road only Calendar: • Frequency 3 weeks between events. • Season November-May
2.14.2 Further detail on the consultation can be found in Appendix C.
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3 DELIVERY MODEL
3.1 Introduction
3.1.1 In the previous section, the concept for the Series was considered and established. In this section, that concept is taken forward and developed into delivery model for the Series. This will set out an overall structure for the operation and management of the series and will cover the following areas: rights and responsibilities organisational structure governance intellectual property broadcasting commercial rights host venue selection marketing and promotion.
3.1.2 The setting out of the proposed the delivery model will also enable consideration of the following stages of the feasibility study: venue selection economic impact headline financial model implementation plan risk analysis.
3.1.3 The findings from these sections will enable an overall assessment of the feasibility of establishing the Series.
3.2 General considerations
3.2.1 Hosting rights fees, sponsorship and broadcast are the three key areas of revenue for the rights holder of any major sporting event. Until the Series becomes firmly established, the hosting rights fee is likely to be the most substantial; however, once it has reached that point, broadcast and sponsorship revenues should increase.
3.2.2 Therefore, there are certain principles that have informed the delivery model for the Series in order to ensure that the costs and benefits are applied in such a way that: gives sufficient benefit to the host city to justify a hosting rights fee represents an acceptable proposition to the organisers in terms of costs and benefits generates sufficient revenues for the Government.
3.2.3 The first principle is that there should be a clear delineation between the global Series and the constituent rounds in terms of who takes responsibility for certain functions and who takes the benefits derived from them. This would apply to the exploitation of the commercial rights and the marketing and promotion of the Series. The only exception is broadcast, which is discussed in more detail in paragraph 3.6 below.
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3.2.4 Our view is that the delivery model that would best achieve success for the Series involves the Government keeping overall control of the Series while granting the right (and obligation) to host rounds to a number of organisers or promoters (“Organisers”). We recognise that the Government has a structure in place currently for the Isle of Man TT and we would recommend that the same body is responsible for organising the TT and for managing the Series. More detail on this structure is set out in paragraph 3.3 below.
3.2.5 As consideration for the right to host a race, each Organiser should pay a hosting rights fee. The nature of this fee is such that it will ordinarily be paid by the public sector and is justified by the benefit brought to the city/region/country by the event (in particular compelling economic impact, broadcast offering and media value and the strength of the brand partnership). As a general rule, a hosting rights fee can be between 10% and 50% of the measured economic impact of an event. The Organiser will be responsible for the operational costs of hosting the race and will have certain commercial rights and benefits to exploit (as set out below) which are intended to cover these costs. Capital expenditure (on infrastructure) is not taken into account as this tends to come from a separate public sector budget and is a benefit for the host city.
3.2.6 Table 5 demonstrates the global/national delineation proposed by summarising the split of rights and responsibilities between the Series Rights Holder (SRH) – i.e. the Government - and the Organisers.
Table 5: Split of rights between SRH and Organisers GLOBAL (i.e. Government) NATIONAL (i.e. Organisers) Responsibilities Rights Responsibilities Rights Race Director has control Global Local organisation and National over all races in Series Sponsorship management of race in Sponsorship through application of race accordance with host city Right to grant certain handbook contract and race handbook sponsorship rights nationally Broadcast Coverage of the Broadcast Rights Hospitality Hospitality Series centrally controlled Ownership of all Obligation to run hospitality Right to take all rights to the Series programme revenues from hospitality Merchandising for the Licensing Royalty from any Series All rights to licence race specific the brand merchandise Logistics (managed Spectator centrally for the Series but Revenues with costs contributed by the Rights to revenues teams) from ticketing, concessions, food and beverage etc for the race Global Marketing Ownership of all IP National Marketing Use of IP Responsibility to market and Responsibility to market and Right to use the promote the Series globally promote the race nationally brand nationally Team and rider liaison
3.3 Organisational structure
3.3.1 We would recommend that the Government establishes a special purpose company (“SPC”) to act as the rights holder and governing authority for the Series and the TT. The SRH should: own all of the rights in and to the Series carry out the central functions in relation to global and overall management of the Series carry out the organisation of the Isle of Man TT currently managed by the Government.
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3.3.2 The main benefit of this approach is to secure any profit or loss from the Series and the TT in the SPC and to protect the Government from any potential liabilities or litigation resulting from the Series and/or the TT. All contracts in respect of the Series would be made with the SPC (possibly backed by the Government in the early years) and current contracts would be, so far as is possible, assigned to the SPC. By creating the SPC, the Government would relinquish all responsibilities in respect of the Series and the TT, therefore, protecting itself against any liabilities associated it. All intellectual property and rights in the Series and the TT would also be assigned to and would vest in the SPC.
3.3.3 In order for the Government to retain some influence and control over the development and management of the Series and the TT, it would have a representative on the SPC Board of the SPC. It would also be possible for the Government to allow investment from a commercial investor to fund the initial development of the Series. The downsides of this approach are that it is less attractive for a potential Organiser to pay a hosting rights fee where some of that fee is being paid to shareholders instead of being invested back into the Series.
3.3.4 The relationship between the SRH and the Organiser will be governed by a host city contract (the “Host City Contract”) which will govern the obligations of the parties as well as the grant of rights from the SRH and the Organiser. This contract may also be signed by the public sector (local, regional or national government) in relation to certain public sector functions that will be required (such as road closures, safety, visas, customs etc) and the national governing body in relation to the rules and regulations that will apply to the race.
3.3.5 A diagram setting out the envisaged overall organisational structure is set out in Appendix D. In general, event and race management functions should be carried out by the Organiser (with support and guarantees provided by the public sector where necessary); however, a number of top level functions should be retained by the SRH to ensure the success of the Series. The SRH should, therefore, be responsible for the following areas: race direction: a Race Director would be responsible for ensuring that each race is organised in accordance with the rules and regulations established for the Series and to the required standard. The Race Director would possibly be supported by a central Technical Director and Medical Director broadcasting: organising the host broadcast production for the Series and the sale and distribution of broadcast rights global marketing and communications: central marketing, press and public relations of the Series and quality control of the Organisers’ marketing and use of the Series brand in relation to the races team/rider liaison: an agreement between the SRH and teams around conditions of entry for latter teams (and/or riders where appropriate) logistics: central organisation of the transportation of equipment and motorcycles to the races commercial rights: the sale and exploitation of the global series rights.
3.3.6 These functions can either be undertaken by employees of SRH or with appropriate agency support (in particular in the case of broadcast, marketing and communications and commercial). The SRH should maintain overall control of these functions to ensure consistency and uniformity in the standards across the Series in terms of racing, broadcasting and event organisation, all of which will be fundamental to its success. This will be achieved principally by the control of the Race Director over the course, racing and safety standards of each race.
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3.3.7 Broadly, the Organiser shall remain responsible for all event and race management functions, including: appointing the Clerk and Deputy Clerk of the Course and all other race functions (excluding those provided by the SRH) appointing the secretary of the race, including retirements, race office staff and welfare officer press and communications national/local marketing commercial, including ticketing, local sponsorship and hospitality rider services, including travel and accommodation chief paddock marshal and all paddock staff.
3.3.8 A further area of responsibility that should be passed on to the Organiser is insurance for the race and all ancillary event risks. The SRH should maintain insurance for the risks associated with its areas of responsibility, but the cost of insuring against the risks of each event, including public liability and professional indemnity, should be a cost of the Organiser.
3.4 Governance
3.4.1 As an international series, the Series will not be governed by a single national governing body. In addition, it is unlikely that the Fédération Internationale de Motocyclisme (FIM) would sanction the Series as it does not do so for the TT (and has not done so since 1977).
3.4.2 The Series would therefore have to operate outside the FIM’s control and, as a consequence, it is likely that the title of the Series may have to avoid the use of the words “international” and “world”.
3.4.3 Therefore, the SRH should set a standard for the races (set out in a race handbook) that is applied and adhered to by each organiser and enforced by the Race Director. The Race Director would visit and inspect each course prior to the race and ensure that it is homologated with the Series standards.
3.4.4 As the national governing body of each territory in which a race is held will ultimately be responsible for approving a course and a race in its territory, it is our view that the SRH should seek co-operation and assistance from each relevant national governing body as well as seeking a waiver of the relevant national governing body’s standards in favour of the Series standards. This relationship would be governed by the Host City Contract.
3.5 Intellectual property rights
3.5.1 The SRH shall own and retain the rights to all of the intellectual property associated with the series including all logos and other marks, mascots and branding. These rights can be licensed to Organisers with the ability for them to pass these rights on to the sponsors of the races under strict conditions governed by the Host City Contract. All trademarks for the Series must be registered and protected in any country in which they will be used, in particular all countries in which races will take place.
3.5.2 The Isle of Man is a party to the Rome Convention (dealing with Community Trademarks in the EU) and is a member of the Madrid Protocol (dealing with international trademark registration) through the auspices of the UK. Therefore, provided that the trademarks to be registered are sufficiently unique, the SRH will be entitled to register its marks both in the EU and internationally.
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3.5.3 The SRH should register the name, logo, domain name and any other unique marks of the Series in the EU and in any other countries in which races for the Series will take place. Protection in the EU can be achieved through a Community Trademark registration. The cost of making a Community Trademark application would be (in addition to a £15 handling fee): €1,050 (or €900 for an electronic application) for an application with up to three classes of goods or services €150 for each extra class.
3.5.4 Registration in specified countries internationally (provided that they are members of the Protocol) can be achieved through the Madrid system of international trademark registration which requires a single application. The cost of making an application would be (in addition to a £40 handling fee): a basic fee of 653 Swiss Francs (or 903 Swiss Francs if the trademark mark is in colour) either a standard designation fee of 73 Swiss Francs, or an individual designation fee for each designated country - the amount is fixed by the country concerned a supplementary fee of 73 Swiss Francs for each class of goods and services in which the mark is to be registered (the first two classes will be registered at no extra cost).
3.5.5 These costs would be in addition to fees for specialist legal work in relation to the registration of trademarks which could be in the region of £5,000 to £10,000.
3.5.6 “TT” is a common abbreviation and as the word mark “TT” has been registered individually and as part of other marks for various purposes in many countries (e.g. Audi TT), it is important that the SRH ensures that the name of the Series is distinctive and unique to avoid any potential challenges.
3.6 Broadcast rights and responsibilities
3.6.1 It is our view that the SRH should retain both responsibility for the broadcast production and the ability to distribute and monetise all broadcast rights to the Series most likely through a third party agency. The SRH may consider dealing with broadcast production in-house in later years. The revenue raised will initially cover the production costs and labour generally but has the potential to make profit for the SRH in future years. Operating the broadcast of the Series in this way is optimum for the following reasons: the SRH, most likely through its agency, can maintain the standards of the broadcast product in terms of consistency, quality and guaranteed delivery. The quality of broadcast feed provided will be uniform for all races the SRH will also be able to sell the Series commercial rights with greater certainty over the ability of the broadcast coverage to deliver particular rights and benefits for sponsors by retaining these rights, there will be a revenue stream for the SRH which can be reinvested into the broadcast coverage and distribution for the Series.
3.6.2 It would be possible to make each Organiser responsible for delivering broadcast quality live feed of its own race in exchange for national broadcast rights. However, there are a number of potential problems with this approach:
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the base assumption is that coverage of the Series races will be live to promote and support the Series and to provide maximum revenue for the Government, the Organisers and the commercial partners. It is therefore more important to ensure the quality and consistency of the coverage technical expertise, equipment and standards will vary from country to country meaning that the SRH will not be able to be sure that the broadcast product delivered will correspond to the standard required. there is a greater potential to monetise the broadcast rights if all rights are able to be sold by the SRH’s agent as a single package to all races in the Series.
3.7 Commercial rights
3.7.1 The SRH will own all of the commercial rights. Certain of these rights should be assigned to Organisers for them to sell to local sponsors and otherwise receive revenues. Table 6 sets out the various commercial rights and which party we believe should be entitled to exploit them. Sponsorship rights are dealt with in more detail below.
Table 6: Split of commercial rights between the SRH and Organisers Commercial Right SRH Organiser
Global sponsorship rights including some advertising space at the venue
National sponsorship rights including some advertising space at the venue
Broadcast Rights
Licensing and Merchandising rights
Ticketing
Hospitality
Concessions (including food and beverage and pouring rights)
Image Rights for Riders
3.7.2 In general, Organisers and local and regional governments will become significant stakeholders in their races and the Series through their investment and the hosting rights fee. Therefore, it is important that both the local stakeholders and the SRH have the opportunity to exploit some of the commercial rights to enable them to derive some benefit from the race and the Series. As mentioned, the clearest way to apportion the commercial rights is to assign each Organiser the national rights in respect of its race and for the SRH to retain the global rights.
3.7.3 Each Organiser should have the opportunity to achieve a commercial return to offset the costs of hosting a race. Certain rights, in terms of destination marketing and fan engagement, should also be granted to the local or national government to encourage investment from them.
3.7.4 The sponsorship structure that we believe is most appropriate for the Series, in terms of preserving value for both the SRH and the race organisers is set out in Figure 4.
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Figure 4: Sponsorship structure
• SERIES PRESENTING/TITLE PARTNER SERIES RIGHTS HOLDER 1 • Top tier: overall presenting partner/title of the Series with top- level global marketing and promotional rights.
1 per race ROUND ORGANISERS • RACE PRESENTING PARTNER (6 for • Second tier: with local marketing rights. Series) • GLOBAL SPONSORS SERIES RIGHTS HOLDER • Upper Third tier: with global rights including 50% 6 of the advertising space (other than presenting partner space) at each race. 5/6 per race • LOCAL RACE SPONSORS ROUND ORGANISERS • Lower Third Tier: with local rights including 50% of the advertising space (other than (30 for Series) presenting partner space) at each race. • GLOBAL SUPPLIERS • Providing goods/services to Series SERIES RIGHTS HOLDER Multiple Rights Holder or for all races. • Low-level global name fame rights
• LOCAL SUPPLIERS ROUND ORGANISERS Multiple • Low-level local name fame rights.
3.7.5 The SRH should retain the right to appoint the presenting or title partner of the Series and the global Series sponsors. The organiser of each race should have the right to appoint a presenting partner for the race as well as some local race sponsors and local suppliers. The global Series sponsors and the local race sponsors for each race will share rights to backdrop and signage on an equal share.
3.7.6 It is a priority that the SRH has the opportunity to cover its expenditure and ultimately make a profit from the Series through the sale of commercial rights; therefore, it is important that the SRH retains some valuable global rights, including the most valuable Series presenting/title partner package. The SRH should also aim to control certain of its more lucrative and long- standing commercial relationships by controlling certain rights.
3.7.7 The SRH’s initial strategy should be to upsell Series packages to the existing TT sponsors; for example, it would be ideal to have Monster as the title partner of the Series as well as of the TT. While the title/presenting partner of the Series and the TT do not have to be the same, as the latter is the flagship race of the Series, having the same partner would be optimum in terms of branding and exposure for that partner.
3.7.8 Some TT sponsors only have UK interests and would remain local sponsors. The SRH should intend to sell into new Series sponsors as well, in particular, to cover off areas of significant operating cost that can be covered as value in kind in a sponsorship deal (e.g. flights, accommodation, logistics).
3.7.9 In terms of sponsorship revenues, it is almost impossible to predict the revenues that the SRH can make as they are heavily dependent on the broadcast coverage afforded to the Series. Based on the current revenues made in respect of the TT1 and our understanding and knowledge of the market, we have estimated some low, median and high figures for the sponsorship potential of the Series. They are set out in Table 7.
1 Redacted
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Table 7: Indicative sponsorship revenues Low Median High
Title £500,000 £750,000 £1million
Global Sponsors £75,000 £100,000 £125,000
TOTAL (1 title and 6 global £950,000 £1,350,000 £1,750,000 sponsors)
3.7.10 As mentioned the SRH will pass the majority of hosting costs to Organisers, Organisers must have the opportunity to exploit certain commercial rights. The sale of the presenting partnership for the race (which will carry significant rights but be subject to the rights of the overall Series presenting/title partner) and local race sponsorships will enable them to recoup some of their costs and allow local businesses to support and market the race in each territory.
3.7.11 As well as sponsorship, the SRH may engage certain global suppliers. These suppliers will fit into two categories: those who provide goods or services to the SRH to cover some of its costs (e.g. legal, accounting, insurance) those who provide goods/services for all of the races in the Series.
3.7.12 Local suppliers will provide goods/services to a single race. All of them will have very low level rights to use a designation and the Series/race branding.
3.7.13 The SRH should retain rights to licensing the Series brand and taking revenue from the Series merchandise. This is important in terms of maintaining consistency and uniformity in relation to the brand. A royalty can be given to the Organiser for any merchandise sold with a composite logo or host city reference.
3.7.14 Revenue from hospitality should be retained by the Organiser in return for placing an obligation on the Organiser to construct and manage hospitality facilities at the race. The Organiser would be responsible for selling and marketing the hospitality and takes the risk on any loss made. The SRH should ensure that a sufficient number of tickets are available to its global sponsors at cost price.
3.7.15 Rights to all ticket revenue and associated spectator income should be granted to the Organiser. The benefits of these rights will vary greatly depending on the type and layout of the race circuit and the measures taken by the Organiser to exploit these rights. This is also part of the economic impact for the city on which the hosting rights fee is based.
3.7.16 Finally, we would recommend that the SRH controls the relationship with the teams and riders through the team/rider liaison. This will include drafting and signing the terms and conditions of entry into the Series. Through these terms and conditions, the teams and riders will assign and licence certain of their image rights to the SRH which can then be passed on to the Organisers. In particular, the SRH should ensure that it has full and perpetual rights to use any images of the riders from the races, prize presentations and marketing events.
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3.8 Selection of host venues
3.8.1 In order to leverage the best value from host cities and organisers to support the Series, we would recommend using a competitive tender system to allow potential organisers to bid to host a race. This is particularly beneficial in this situation as there are few street circuits in the world that are currently hosting motorcycle, or even motorsport, events. By opening the tender up to cities in certain target countries, we will allow cities to be part of the process without having a traditional street circuit in place.
3.8.2 There is increasing pressure on public and private sector bodies seeking to host events to demonstrate the benefit that these events can bring to their cities, regions and countries. As the Series is a new event, a sophisticated and professional tender process will enable the SRH to: present its vision of the Series based on the essence of the TT enhance the value of the Series as a new property by demonstrating the professionalism of the SRH increase the level of differentiation offered by the Series against other available sporting events.
3.8.3 We would recommend a standardised process gradually giving potential hosts more information about the Series and simultaneously requesting more commitment from them. This will give the SRH an opportunity to demonstrate clearly and credibly the range of benefits that hosting a race in the Series can bring. It will also gradually draw in the private and public sectors ensuring an appropriate level of commitment from both. The key steps of the process with timescales are set out in Table 8.
Table 8: Host venue procurement timetable Step Timescale
Initial Phase: Target database creation and gauging interest from a 2-3 months wide group of target hosts by requesting expressions of interest.
Applicant Phase: Giving more information to interested cities and 6 weeks getting information from them through a bid guide and questionnaire (which asks for basic information about their capabilities to host the race).
Candidate Phase: Narrow down the applicants through their 3 months questionnaire responses. Send contractual documentation to shortlisted candidates. We would also carry out site visits and host a symposium for candidates.
Decision Phase: Evaluating candidates’ final bids and allocation hosting rights to 5 cities.
Total time requirement: Minimum 8 months
3.8.4 This process will allow the SRH to create and communicate a compelling proposition, including economic impact and commercial rights and benefits (as set out above) as well as associative, infrastructure, tourism and legacy benefits. The process will maintain competition between the various interested parties to raise the best possible hosting rights fee (which the SRH will need to receive to cover its costs and to keep costs low for the teams) and strong and robust guarantees from local government.
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3.8.5 The aim should be to get Organisers to commit for periods of three to five years. This will minimise the number of times a process has to be run and also enables greater capital investment for the host cities.
3.8.6 Running a competitive, fair and transparent process such as this will cost the Government approximately £120,000 to 150,000, plus a commission on the final hosting rights fees received. However, by creating a high level of demand and competition for the right to host a race, the Government would be maximising hosting rights fees and therefore lowering costs and increasing profit for the SRH.
3.8.7 Our estimate of the revenue potential from hosting rights fees is discussed in Section 7. Potential host venues are covered in more detail in Section 4.
3.9 Marketing and promotion
3.9.1 While each race will carry out national marketing and promotion of the race in its own territory, the SRH should be responsible for the marketing of the Series globally. As the Government has certain aims relating to the marketing of the Isle of Man as a tourism and business destination, it is important that the SRH has control over the central marketing and the central message for the Series.
3.9.2 In terms of expenditure, the SRH can spend as much or as little as is available on marketing. In the first year, we would expect some of the Government’s existing marketing budget to be invested in the promotion of the Series. However, as a minimum, the SRH will need to spend a certain amount creating the toolkit needed by Organisers to market and promote the races. This will include: creating the brand for the Series which will require agency support creating a set of brand guidelines setting out exactly how the Series brand can be used by Organisers, the public sector and sponsors of the Series and each race: creating composite logo collateral including a lock-up for use by each Organiser to ensure that the identity of the Series is uniform throughout creating some template advertising concepts with advice for use by Organisers.
3.9.3 The SRH should maintain control of the Organiser’s marketing and promotion through the Host City Contract. Organisers should commit to a minimum level of marketing spend relevant to the particular territory. Further, all marketing and communications should be highly regulated for quality by ensuring the collateral governing the use of the Series brand is used by the Organisers through a robust approvals process.
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4 POTENTIAL VENUES
4.1 Introduction
4.1.1 Having established a potential format and delivery model for Series, the next stage is to consider potential host cities/areas. As outlined in Section 2, a number of broad target areas were identified by consultees: Europe – Germany, Belgium, Ireland & eastern European countries Middle East – Dubai, Abu Dhabi & Oman Asia – China & India America – USA, Canada & South America South Africa Australasia – Australia & New Zealand.
4.1.2 A soft market testing exercise was undertaken with a range of venues/cities that were suggested by our consultation and from TSC’s contacts. In addition, a small number of potential hosts approached us directly having been made aware that this study was being undertaken.
4.1.3 At this stage, it is too early to be able to able to identify the exact venues that could be used. As the concept is in its infancy and a decision to progress it will only be made on the basis of the findings of this study, venues will not commit themselves yet. However, the purpose of the exercise was to test current interest. If a decision is taken to progress from the findings of this study, one of the next steps would be to undertake a formal host venue procurement exercise as discussed in Section 3.
4.1.4 Key venue considerations that would form part of this process would include the following: location transport accessibility (proximity to international airports etc) experience of similar events spectator facilities pit facilities spectator seating hospitality facilities proximity of and supply of hotel accommodation event security and stewarding health and safety medical facilities marketing and promotion ticketing.
4.2 Existing events
4.2.1 As part of the consultation in Section 2, the riders and teams were asked to name existing venues/events at which they have competed that they feel would be suitable for the Series. The responses were relatively uniform and included existing road events such as: the North West 200 the Ulster Grand Prix the Macau Grand Prix.
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4.2.2 However, following consultation with the Government, it was agreed not to consider these for inclusion in the Series. It was felt that there would be logistical difficulties of including existing races into the Series and the proximity of them to the Isle of Man would not be in line with the aim for the Series to be international in its reach.
4.3 Long-list of targets
4.3.1 As outlined above, a long-list of targets was established using feedback from the consultation process, TSC’s contacts with city authorities and direct contact made by potential hosts. Each target was provided with a summary of the event and series of key questions. At this stage, we were not seeking formal expressions of interest. The target list included both host cities and existing circuits. As outlined in the consultation, it was highlighted that the Series should take place on road courses. However, it was also agreed that it would be acceptable for each round to be start and finish within a circuit (to be able to take advantage of existing infrastructure, e.g. spectator seating, pits, etc) so long as the majority of it was on roads. Therefore, both cities and existing circuits were included
4.3.2 The venue targets were as follows: National and Local Government Oman Singapore Western Australia - Australia Auckland - New Zealand Cape Town – South Africa Durban – South Africa Hong Kong – China. Circuits Autodromo Dino e Enzo Ferrari Imola - Italy Ciudad del Motor de Aragón - Spain Autodromo do Algarve - Portugal Sepang - Malaysia Abu Dhabi – United Arab Emirates Sachsenring - Germany Pukekohe Park Raceway – New Zealand Kyalami – South Africa Long Beach - USA Daytona - USA Nürburgring - Germany Mumbai - India Interlagos – Brazil.
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4.4 Summary of results
4.4.1 In total, ten responses were received and a summary of the results is shown in Table 9.
Table 9: Summary of venue soft market testing
Country Region/City/Circuit Region Comments REDACTED
UAE Abu Dhabi Middle East
Oman Oman Middle East
Germany Nürburgring Europe
Australia Western Australia Australasia
New Auckland Australasia Zealand
China Hong Kong Far East
Singapore Singapore Far East
South Africa Cape Town Africa
South Africa Kyalami, Africa Johannesburg
Brazil Interlagos South America
4.4.2 As can be seen from the above, even at this early stage, there appears to be interest in hosting a round of the Series from a spread of locations across the globe, including the Middle East, Far East, Europe, Africa, Australasia and South America. If a decision is taken to process with developing the Series, further engagement with potential hosts would be one of the first steps.
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5 IMPACT & BENEFITS OF THE WORLD SERIES
5.1 Introduction
5.1.1 In the next two sections, the likely economic and other impacts and a headline financial model for the Series are considered. The economic impact is considered first because (as outlined in Section 3) it will have a bearing on the level of hosting fees that venues are prepared to pay. In simple terms, the greater the economic impact (in terms of additional spending generated by visitors to the event), the greater the hosting fee.
5.1.2 It is important to highlight at the outset of these two sections that the analysis provided can only be a guide because the venues for each of the rounds has not been determined. In order to be able to complete the analysis, we have assumed the following broad locations for rounds of the series: one in Europe one in the Middle/Far East one in South Africa one in North America one in South America.
5.1.3 These reflect the target areas set out in Section 2. Although this still leaves uncertainty (e.g. in terms of venue capacities, venue locations, likely attendances, etc), it does provide a framework to be able to make an assessment of both the economic impact and income and costs associated with the series.
5.2 Economic impact
5.2.1 In simple terms, the economic impact of an event is the total amount of additional expenditure generated within a defined area (the host economy) as a direct consequence of staging an event. For most, spending by visitors in the host economy (and, in particular, on accommodation) is the biggest factor in generating economic impact. However, other areas, such as spending by the event organisers must also be considered.
5.2.2 An economic impact analysis seeks to estimate the net change in a host economy, i.e. measurement of the likely cash inflows and outflows and the net change.
5.2.3 In addition to the direct impacts discussed above, economic studies can also consider secondary effects, such as indirect or “ripple” through the re-circulation of the initial spectator spend and induced, which relate to increases in employment and household income through the economic activity generated by the event.
5.2.4 In order to determine these indirect and induced effects, a multiplier factor is usually applied to the direct impact; however, there has been much debate around the appropriateness of the size and type of multipliers used in other economic impact studies. For this reason, the focus of this section is on the likely direct economic impacts of the Series.
5.2.5 The estimation of the direct impact has been based on the eventIMPACTS methodology (and associated calculator), which has been developed by a number of partners (including UK Sport, Visit Britain and the London Development Agency) and has been approved by the Department for Culture, Media and Sport. Given the over-optimistic assessment of economic impact in some previous studies, the model and calculator have been designed to provide a conservative position.
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5.3 Methodology
5.3.1 As outlined above, the economic impact assessment has been based on five assumed locations for the rounds of the Series. Based on these, an average economic impact for a round of the series will be estimated. The analysis has also been informed by previous studies into motorsports events, including:
Economic Impact Assessment of the 2011 Isle of Man TT (Isle of Man Treasury)
Economic Impact Assessment for the 2004 British Motorcycle Grand Prix at Donington Park (SQW)
An Economic Impact Study of Round 15 of the World Rally Championship 2007 (University of Ulster).
5.3.2 The first stage of the analysis of economic impact is to define the host economy, i.e. the area of focus for the impact. For each round of the Series, it will be the host city in question (rather than the country as a whole) because visitors are likely to be attending for the purpose of watching the event and will confine themselves to that area.
5.3.3 With the host economy defined, the stages for estimating the economic impact were as follows:
stage 1 - calculate eligible spectator numbers
stage 2 - apply spectator spending patterns (for accommodation)
stage 3 - calculate other spectator spend (non-accommodation)
stage 4 - calculate other attendees (VIPs, athletes, coaches, &c.)
stage 5 - apply attendee spending patterns (for accommodation)
stage 6 - calculate other attendees spend (non-accommodation)
stage 7 - estimate leakages
stage 8 - calculate organiser spending in the host economy.
5.3.4 Completing these stages identified the direct economic impact. For all of the following calculations, further detail can be found in Appendix E.
5.4 Stages 1-3 - spectator numbers
5.4.1 The total number of spectators that will attend a round of the series will be dependent on a number of factors, including venue capacity, popularity of motorsports, ease of access, timing, etc. Given that there is not an existing series, we have assumed a similar level of individual visitors as for the TT itself, i.e. circa 32,000. This is a conservative estimate as the number of visitors is limited by accessibility to the island and accommodation available. Available attendance data for other similar road motorcycling events supports this as a realistic and achievable target, as shown below:
North West 200: 150,000 individual spectators over seven days
Ulster Grand Prix: 25,000 individual spectators over six days
Macau Grand Prix: 65,000 individual spectators over four days.
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5.4.2 The assumptions made for the split of their origin and typical lengths of stay were informed by the Isle of Man TT Economic Impact Study and are shown in Table 10.
Table 10: Spectator origin and length of stay Origin: Host country 20% Outside host country 80% 0%
Average length of stay (days): Host country 2 Outside host country 5
5.4.3 Based on the assumption that 50% spectators from the host country would be resident in the host economy (i.e. the host city) and therefore would not be staying in hotels, the estimated total of event visitors was circa 47,000, including those from the host country.
5.4.4 The next stage was to classify these event-specific spectators into those who were commercial visitors (i.e. stayed in hotels), those who were non-commercial (i.e. stayed with friends or family) and those who were day visitors. The assumed split and numbers in each category are shown in Table 11.
Table 11: Type of event-specific spectators Commercial stayers 90% 42,120 Non Commercial stayers 10% 4,680 Day visitors 0% 0
5.4.5 With the event-specific spectators identified, the process moved on to stage 2 in which spending profiles for accommodation were applied to estimate the accommodation revenue. In stage 1, the average number of days spent in the host economy was calculated from the split of spectators by destination and the output was 3.8 days. Therefore, it was assumed that, on average, spectators would spend three nights in the host economy.
5.4.6 Based on the average cost of accommodation from the Isle of Man TT Economic Impact Study (£21 per night), the total spectator spend on accommodation was circa £2.7 million.
5.4.7 Stage 3 estimated the other spend (i.e. that not related to accommodation) for the event- specific spectators. The assumptions used are shown in Table 12.
Table 12: Event-specific spectators’ non-accommodation spend Lunch: £15.00 Dinner: £25.00 Travel: £10.00 Gifts: £0.00 Other: £0.00 Total: £50.00
5.4.8 These assumptions generated a non-accommodation spend of £9.0 million. Combined with the accommodation spending identified above, the total event-specific spectator spend was estimated to be £12.8 million.
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5.5 Stages 4-6 - other attendee numbers
5.5.1 In Stage 4, the focus moved from the spectators to the other people who would be attending. In total, it was estimated that there would be nearly 3,400 and the breakdown is shown in Table 13. Again, these are based on available data from the TT. Table 13: Other attendees Competitors: 30 Coaches, team officials, &c: 150 Officials: 100 VIPs: 1,150 Sponsors: 125 Media: 300 Volunteers: 1,500 Total: 3,355
5.5.2 Following this, assumptions were made as to the average number of days each group was likely to spend at the WAC and the proportion of them that would reside in the host economy. These are shown in Table 14. Table 14: Other attendees’ attendance and origin Competitors: 6 180 Competitors: 33% 10 Coaches, team officials, &c: 6 900 Coaches, team officials, &c: 33% 50 Officials: 6 600 Officials: 50% 50 VIPs: 5 5,750 Sponsors: 5 625 VIPs: 20% 230 Media: 5 1,500 Sponsors: 50% 63 Volunteers: 4 5,250 Media: 25% 75 14,805 Volunteers: 75% 1,125 Average days attended: 4.4
5.5.3 These assumptions produced a total number of non-local attendees or 1,750. As with spectators, they were then separated into commercial, non-commercial and day visitors on the basis outlined in Table 15.
Table 15: Type of other attendees Non Commercial Total Commercial Day visitors stayers stayers Competitors: 20 100% 0% 0% Coaches, team officials, &c: 100 100% 0% 0% Officials: 50 100% 0% 0% VIPs: 920 100% 0% 0% Sponsors: 62 100% 0% 0% Media: 225 100% 0% 0% Volunteers: 375 10% 90% 0% Total: 1,752 1,415 338 0
5.5.4 With the number and split of attendees derived, in stage 5, typical lengths of stay and accommodation spending patterns for each group were applied. The parameters used for the commercial visitors are shown in Table 16.
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Table 16: Typical lengths of stay for attendees Commercial Total bed Bed nights stayers nights Competitors: 20 6 120 Coaches, team officials, &c: 100 6 600 Officials: 50 6 300 VIPs: 920 5 4,600 Sponsors: 62 5 310 Media: 225 5 1,125 Volunteers: 38 4 131 1,415 7,186 Average bed nights: 5.1
5.5.5 The accommodation spending assumptions are shown in Table 17. The rates applied are those used in the financial model (see Section 7).
Table 17: Accommodation spending assumptions for attendees Competitors: £100 £2,000 Coaches, team officials, &c: £100 £10,000 Officials: £100 £5,000 VIPs: £100 £92,000 Sponsors: £100 £6,200 Media: £100 £22,500 Volunteers: £50 £1,875 £139,575 Average cost per night: £99
5.5.6 Using all of these parameters, the attendee accommodation spend was estimated to be £710,000.
5.5.7 In Stage 6, the other element of attendee spending – that which is not related to accommodation – was estimated. The assumptions used are shown in Table 18.
Table 18: Non-accommodation spending assumptions for attendees
Daily Lunch Dinner Travel Gifts Other spend Competitors: £0.00 £0.00 £0.00 £0.00 £50.00 £50.00 Coaches, team officials, &c: £0.00 £0.00 £0.00 £0.00 £50.00 £50.00 Officials: £0.00 £0.00 £0.00 £0.00 £50.00 £50.00 VIPs: £0.00 £0.00 £0.00 £0.00 £50.00 £50.00 Sponsors: £0.00 £0.00 £0.00 £0.00 £50.00 £50.00 Media: £0.00 £0.00 £0.00 £0.00 £50.00 £50.00 Volunteers: £0.00 £0.00 £0.00 £0.00 £20.00 £20.00
5.5.8 These assumptions generated a total spending on non-accommodation items by attendees of £340,000. Combined with the accommodation spending, the total was £1.05 million.
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5.6 Stage 7 - leakages
5.6.1 Stage 7 assessed the extent of the spending by spectators and attendees that would not be with local vendors. It was assumed that there would be no leakage here, i.e. that all of the spending would take place in the host city because visitors would be there solely to watch the event.
5.7 Stage 8 – organiser expenditure
5.7.1 The final stage (8) assessed the level of spending by the host SPC/body. The purpose was to estimate the proportion that would be spent in the host economy. The level of spending was estimated by reviewing the costs to the Government of staging the TT and based on a range of assumptions related to the split of responsibility between the SRH and the local Organiser outlined in Section 4.
5.7.2 The estimated net level of expenditure in the host economy by the local organiser was £327,000 (see Appendix C), out of a total net cost of £468,000.
5.7.3 Following Stages 1-8, an estimation of the direct economic impact could be provided and it is shown in Table 19.
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Table 19: Direct economic impact VISITOR SPEND - SPECTATORS Stage 1 - Calculate Eligible Spectator Numbers 1 Total Spectator Admissions 200,000 2 Average number of days attended 3.8 3 Number of unique spectators 52,000 4 % of spectators resident in the host economy 10% 5 Number of non-local spectators 46,800 6 % of non-local spectators who are casual visitors 0% 7 Number of event specific spectators 46,800 8 Commercial stayers 42,120 9 Non Commercial stayers 4,680 10 Day visitors 0 Stage 2 - Apply Spectator Spending Patterns 11 Number of commercial stayers 42,120 12 Average number of nights spent in the host economy 3.0 13 Number of commercial bed nights 126,360 14 Average cost per bed-night (per person) £30 15 Revenue for accommodation sector £3,790,800 Stage 3 - Calculate Other Spectator Spend 16 Total number of event specific visitors 46,800 17 Average number of days attended 3.8 18 Day visits generated 180,000 19 Average daily spend on non-accommodation items £50 20 Non-accommodation spectator spend £9,000,000 TOTAL SPECTATOR SPEND £12,790,800
VISITOR SPEND - ATTENDEES (COMPETITORS, OFFICIALS, VIPS, MEDIA ETC) Stage 4 - Calculate Eligible Attendee Numbers 21 Total Attendees 3,355 22 Average number of days attended 4.4 23 % of Attendees resident in the host economy 48% 24 Number of non-local attendees 1,752 25 Commercial stayers 1,415 26 Non Commercial stayers 338 27 Day visitors 0 Stage 5 - Apply Attendee Spending Patterns 28 Number of commercial stayers 1,415 29 Average number of nights spent in the host economy 5.1 30 Number of commercial bed nights 7,186 31 Average cost per bed-night (per person) £99 32 Accommodation attendee spend £709,099 Stage 6 - Calculate Other Attendee Spend 33 Total number of non-local attendees 1,752 34 Average number of days attended 4.4 35 Day visits generated 7,731 36 Average daily spend on non-accommodation items £44 37 Non-accommodation attendee spend £336,919 TOTAL ATTENDEE SPEND £1,046,018
Stage 7 - DIRECT LEAKAGES 38 Spectator and Attendee Spending with Non-local Vendors £0
Stage 8 - ORGANISER SPENDING 39 Organiser spend in Host Economy -£140,982
CALCULATE DIRECT ECONOMIC IMPACT Total Spectator Spending £12,790,800 Total Attendee Spending £1,046,018 Deduct Direct Leakages £0 Event Organiser Spending -£140,982
DIRECT ECONOMIC IMPACT £13,695,836
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5.7.4 Therefore, the total estimated direct economic impact of a round of the Series was estimated to be £13.7 million (at 2012 prices). Using the same model and data from the 2011 Isle of Man TT Economic Impact Study, the direct economic impact of the TT itself was estimated to be £17.3 million. Based on these, the total direct economic impact of the series is presented in Table 20. Table 20: Total estimated economic impact of the series Round Estimated No. of Total estimated economic rounds economic impact impact (£’000) (£’000)
World Series Round 13,695 5 68,475
Isle of Man TT 17,300 1 17,300
Total 85,775
5.8 Other benefits
5.8.1 As well as economic benefit to both the Isle of Man and host venues through the hosting of rounds, the Series will have wider benefits for the Isle of Man itself and this is one of the key motivations for this study. The benefits would be in two areas:
for the TT
for the Government.
5.8.2 In particular, the benefits to the TT and Government will be as a result of increased exposure (television and media) created by the Series. To set this in context:
the TT is broadcast (highlights) in 80 countries generated 325 hours of coverage (2011)
there is a global television audience of 15.9 million (2011)
the TT brand receives global exposure equivalent to almost £5 million of advertising value (£400,000 of which is within the UK) based on an independent analysis of the television coverage by TNS Sport
a further £3.5 million globally (£1.5 million in the UK) was generated in press coverage (2011)
broadcasters taking TT highlights include the Discovery Channel (USA); Channel Ten (Australia); TVE (Spain); Rai (Italy); Abu Dhabi TV (UAE); Sport Five (Czech Republic); ViaSat (Scandinavia); Channel 4 (Finland); Band Sport and ESPN (Brazil); Germany (Sport1); and Sub Saharan Africa (SuperSport).
5.8.3 These data show that the TT now has a firm base in levels of media exposure. However, as a one-off annual event and given the constraints of the island geographically and in terms of accommodation, there will always be a limit as to how much further it can expand in its current format.
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5.8.4 Becoming a part of a Series – in particular if linked to live broadcasting of the TT and the Series – would be a means of increasing the coverage of the event from a single two-week period once a year to one week every month plus the two week TT period in May and June.
5.8.5 For the TT, this should act as a means of:
heightening the awareness of the Series within the motorcycling community and wider sporting world
increasing the attractiveness of the event to teams (and riders) who currently do not enter
increasing the attractiveness of the event to sponsors and partners.
5.8.6 Although, as outlined above, attracting a significant number of additional spectators to the TT will continue to be problematic, all of the above factors should contribute to a more sustainable TT and, in financial terms, reduce the cost of it to the Government (which is currently circa £3,000,000 per year).
5.8.7 For the Government, the information provided above shows that there is already exposure of the event in several of its keys markets, including:
the Middle East (Abu Dhabi)
the USA
Europe (Spain, Italy, Czech Republic, Scandinavia)
South America (Brazil).
5.8.8 However, the exposure is based on highlights programmes of a one-off event. Translating this to live coverage of a Series should not only increase the level of exposure in those areas that already take the TT, it should also encourage television companies in other areas to become involved.
5.8.9 To put the figures above into context, WSB (which is based on live coverage of 13 rounds in three continents) generates the following television and media exposure:
coverage in 173 countries (and 44% of Europe)
worldwide television audience of two billion
nearly 2,800 hours of television coverage generating a media return of US$700 million (circa £450 million)
5.8.10 MotoGP, which is based on 18 rounds, generates an average television audience per round of 300 million.
5.8.11 Although it is unlikely that the Series would achieve the exposure levels set out above (particularly in the early years), the fact that there is such a greater difference between them and those for the TT indicates that a well presented and managed series with live television coverage ought to generate significant additional coverage for the Isle of Man both for the duration of the TT itself and across the year (by providing a series of races).
5.8.12 In addition, as there is already coverage of the TT in a number of the Government’s target markets, it is clear that there is a strong basis on which to develop coverage of the Series.
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6 FINANCIAL MODEL
6.1 Introduction
6.1.1 In this section, the headline financial model for the Series is presented. Its purpose is to identify the likely cost to the Government of establishing and running the Series. In undertaking the analysis, the primary aim has been to understand if a Series can be financially sustainable for the Government (i.e. can it cover its costs). Therefore, particularly on the income side, a conservative position has been adopted in all assumptions and calculations.
6.1.2 As with the economic impact assessment, it is based on a series of assumptions because the location of the rounds and the origin of the teams is as yet unknown. To recap, the assumed venues from the economic impact assessment are: one in Europe one in the Middle/Far East one in South Africa one in North America one in South America.
6.1.3 Additionally, the following assumptions have also been used as a basis: all income and costs associated with the TT itself will be excluded from the financial analysis an SPC would be established by the Government to manage the Series as the Rights Holder. television coverage would be live in the key markets.
6.1.4 In reality, it is likely that the TT would be absorbed into the SPC and there would be potential savings from operational efficiencies. However, in the interests of providing a clear and conservative analysis of the financial position of the Series, the TT has been excluded.
6.1.5 Finally, the split of responsibilities between the SRH and the local Organisers outlined in Section 4 is fundamental to the analysis as it dictates the costs that the Rights Holder has to bear and the income it will receive. To recap, a summary of this split is shown in Table 21.
6.1.6 The full financial model can be found in Appendix F.
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Table 21: Split of responsibilities between SRH and Local Organisers GLOBAL (i.e. Government) NATIONAL (i.e. Organisers) Responsibilities Rights Responsibilities Rights Race Director has control Global Local organisation and National over all races in Series Sponsorship management of race in Sponsorship through application of race accordance with host city Right to grant certain handbook contract and race handbook sponsorship rights nationally Broadcast Coverage of the Broadcast Rights Hospitality Hospitality Series centrally controlled Ownership of all Obligation to run hospitality Right to take all rights to the Series programme revenues from hospitality Merchandising for the Licensing Royalty from any Series All rights to licence race specific the brand merchandise Logistics (managed Spectator centrally for the Series but Revenues with costs contributed by the Rights to revenues teams) from ticketing, concessions, food and beverage etc for the race Global Marketing Ownership of all IP National Marketing Use of IP Responsibility to market and Responsibility to market and Right to use the promote the Series globally promote the race nationally brand nationally Team and rider liaison
6.2 Income estimation
6.2.1 Based on Table 21, the main areas of income for the SRH will be: global sponsorship rights broadcasting rights licensing and merchandising rights.
6.2.2 In addition, the SPC will receive a hosting fee from each of the rounds.
Global sponsorship rights
6.2.3 Income to the SPC from global sponsorship is discussed in detail in Section 4. Table 22 summarises the potential income from the packages that the SRH would own. In order to present a conservative position, the model is based on the Low estimate.
Table 22: Summary of global sponsorship revenue estimates Low Median High
Title £500,000 £750,000 £1 million
Global Sponsors £75,000 £100,000 £125,000
TOTAL (1 title and 6 global £950,000 £1,350,000 £1,750,000 sponsors)
6.2.4 As a comparison, the current gross annual revenues from sponsorship for the TT itself are circa based on television highlights only. It should also be remembered that the figures presented above are gross and agency fees will be taken into account in the expenditure estimations.
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Broadcasting rights
6.2.5 The value of broadcasting rights – as with sponsorship – will be governed to a large extent by whether the Series is broadcast live or as highlights. At present, based on highlights, the TT generates television revenues of per annum. In estimating the potential gross television revenues for a Series, the following have been taken into account: typically, the value of live television coverage rights are between eight and ten times those of highlights the Series will include five rounds besides the TT rounds will be staged in the most appropriate markets for the key television audience (e.g. Europe, North America, South Africa) the coverage will be available on the terrestrial/free-to-air service to maximise viewer numbers.
6.2.6 Based on these considerations, the financial model has included a gross television rights income of circa per annum. However, there will be costs associated with this income, namely host broadcaster and agency fees and these will be taken into account in the expenditure estimations.
Merchandising and licensing
6.2.7 At present, the Government receives per annum from licensing the TT brand. This is based on a contractual arrangement whereby it takes a percentage of revenue generated by the licensee. The level of revenue that could be generated from a Series will be dependent to a large extent on the exposure of the event through television and the media. However, it should be possible to increase the level of revenue significantly, although for the purposes of the financial model, a doubling to has been assumed.
6.2.8 In addition, the SRH should consider the relative merits of continuing under a similar arrangement to now (i.e. the licensing rights are passed to a third party) or retaining the responsibility itself and, therefore, retaining the revenue. This was discussed further in Section 3.
Hosting fee
6.2.9 The final source of income for the SRH will be from fees paid by the hosts of each of the rounds. Although the level of fee that can be expected will vary between the rounds (and the hot cities/venues involved) and they are likely to be less in the early years of the series as it establishes itself, the principle of them is an accepted practice. This has been supported by our consultation with venues.
6.2.10 The value of a major event to a host is typically dictated by its economic impact, i.e. the level of additional spending that is directly attributable to it. As a guide, hosts look for a return in the ratio of 10 to 1 based on the economic impact compared to the total costs of staging the event.
6.2.11 The costs that a host will have to cover will be: staging the event contribution to team accommodation and logistics costs event hosting fee.
6.2.12 Given that the direct economic impact of a round of the Series has been estimated to be £13.65 million, the total costs that a host could realistically be expected to bear would be £1,365,000.
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6.2.13 Using the net cost to the Government of hosting the TT and the split of responsibilities between the SRH and the Organiser set out in Table 21 above, the estimated net cost of staging a round of the series is circa £468,000, of which a net figure of £327,000 would spent in the host economy. This figure has already been included in the economic impact calculation as described in paragraph 5.7. Further details can be found in Appendix D.
6.2.14 In addition, the estimated total contribution the host venues will be expected to make to the teams’ transport and logistics costs is £2,560,000. This equates to £488,000 per venue. Further details can be found in Appendix E.
6.2.15 Taking these figures into account, an estimate of the average hosting fee can be made and it is set out in Table 23.
Table 23: Hosting fee calculation Estimated economic impact (£’000) 13,650
Net cost of hosting event (£’000) 468 (included in the above figure)
Contribution to logistics costs (£’000) 488
Potential hosting fee (based on a 877 10:1 ratio) (£’000)
6.2.16 Therefore, the average potential hosting fee is circa £877,000. As before, for the purposes of the financial model, we have assumed a conservative level, with a figure of £500,000 per host. A hosting fee of £900,000 per host should be regarded as an upper-end target that may be achievable in later years (once the Series is established).
6.3 Expenditure estimation
6.3.1 As with income, the analysis of expenditure associated with the event was based on the split of responsibilities outlined in Table 21. In broad terms, the Rights Holder is responsible for the overall management of the Series, while the local Organisers are responsible for staging the individual rounds. Based on this, the areas of expenditure are as follows: one-off/start-up costs SPC costs race team subsidies host broadcaster logistics agency commissions.
One-off/start-up costs
6.3.2 One-off costs relates to the development and establishment of the Series. They will be incurred before its commencement and before any revenue is generated. They are likely to cover the following areas:
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development of detailed business plan and budgeting for SRH’s SPC registration and creation of the SPC recruitment of key staff legal and accountancy costs taxation advice trade mark registration development of host venue contracts creation of Series name and brand development of marketing plan PR costs associated with series launch host venue procurement team liaison and in-principle commitments development of race manual and rules and race management plan.
6.3.3 In total, the start-up costs have been estimated at £300,000 and will be spread over two years. Further details can be found in Appendix F and Section 8 (implementation plan).
SPC costs
6.3.4 The SPC costs are those that are related to the overall management of the series once it is established and cover the following areas: staffing costs office rental costs office administration costs staff travel and accommodation costs insurance costs.
6.3.5 As outlined earlier, for the purposes of the model, it has been assumed that the existing TT will continue to function as a separate entity. In reality, there would be benefits to absorbing it within the new company, not only from an operational point of view, but also because there would be potential savings in terms of staffing and administration costs.
6.3.6 The SPC has been based on the following staffing posts: Chief Executive Officer Commercial Director Chief Operating Officer Marketing Director Marketing Assistant Safety & Technical Director Race Director Deputy Race Director Team Liaison Logistics Manager Medical Officer Administration Officer HR Manager.
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6.3.7 Based on these assumptions, the cost of the SPC per annum is circa Further details can be found in Appendix F.
Race team subsidies
6.3.8 In the division of responsibilities, the cost of transporting riders and support teams to the venues and accommodating them will be shared between the SRH and the local organisers. It will be the SRH’s responsibility to arrange transport and accommodation; however, they will recoup some of this cost through the contractual arrangement with the host venues, as described in the Hosting Fee section above.
6.3.9 The race team subsidies will cover the cost of accommodation, flights and internal transport for each round plus rider payment/prize money. In total, it has been estimated at £1,580,000 per annum for the five rounds, of which 50% will be covered by the hosts. Further details can be found in Appendix F.
Host broadcaster costs
6.3.10 The proposed model is that the SRH will retain all television and media rights. As part of this, the cost of securing the host broadcaster also will remain with the SRH. An alternative would be to pass the responsibility for finding a host broadcaster down to the local organisers (as well as a percentage of the television revenue); however, this option carries with it greater risks in terms of quality and consistency of the output as well as a greater co-ordinating burden on the Rights Holder.
6.3.11 In addition, as outlined earlier, the financial model is based on producing live television coverage, which although more costly, will generate greater television and sponsorship revenue.
6.3.12 In our consultation with North One, an estimate for producing live coverage for the Ulster Grand Prix has been provided, which is approximately . The course for this event is similar in length to the type of course envisaged for the Series and therefore has been used as a basis. Therefore, as five rounds will have to be covered, the total cost has been estimated at taking into account that there may economies of scale for a single company covering five rounds, but also allowing for a contingency. Further details can be found in Appendix F.
Logistics costs
6.3.13 As with the race team subsidies, the cost of transporting the teams’ equipment to the five rounds has been estimated. The total logistics costs will be dependent on a number of key variables, including: the amount of equipment to be transported by the teams the location of the teams the location of the venues used and whether there is sufficient time to transport it by sea, rather than air whether the teams require their equipment to be returned between rounds or if it can be moved from one venue to the next import duties and taxes for the destination countries.
6.3.14 For the purposes of this analysis, we have used the assumed locations outlined at the start of this section and that equipment will have to be moved by air. If these were the locations, there might be sufficient time to transport it by sea, which would be cheaper; however, for the sake of prudence we have assumed the more expensive option.
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6.3.15 We have also assumed that all teams would be based in the United Kingdom, which is likely to be the case at the outset, although this could change as the series develops. We have also assumed a limit of three bikes per rider (to reflect the three classes).
6.3.16 Finally, we have assumed that teams would not require access to their equipment between the rounds, so it can be moved from one venue to the next. Consultation with the teams has indicated that they would be comfortable with this arrangement.
6.3.17 In order to estimate the costs, we consulted with a specialist logistics company as well as the teams. This underlined that estimating costs at this stage was a difficult process; however, it was considered that a single aeroplane (jumbo jet) would be sufficient to transport all equipment, providing that sufficient restrictions were placed on the teams. As a comparison, for MotoGP, two aeroplanes are used and for the Macau Grand Prix it is one.
6.3.18 On this basis, it was estimated that the total cost of logistics for a season, including import duty and taxes would be circa . In practice, it could be that a logistics partner were appointed as one of the series’ suppliers, which could reduce the cost.
Agency commissions
6.3.19 The final area of cost for the SRH is commissions paid to agencies. This will primarily relate to sponsorship and television rights (and could be covered by a single agency). A commission of on the revenues related to each have been included in the financial model, which is the same as the current arrangement for the TT. This gives a total agency commission of
6.4 Summary of income and expenditure
6.4.1 Table 24 presents a summary of the income and expenditure for the Series based on the assumptions and analysis set out above. As well as a base position, the figure have been projected over a seven year period as follows: year -1 (start-up) 2012-13 year 0 (start-up) 2013-14 year 1 2014-15 year 2 2015-16 year 3 2016-17 year 4 2017-18 year 5 2018-19
6.4.2 The start-up costs identified above have been split across year -1 and year 0, recognising that they represent a one-off commitment to establish the Series.
6.4.3 The remainder of the income and expenditure has then been projected across years 1 to 5. For years 1 and 2, the income has been reduced to reflect that revenues are likely to be less in the early years as the series establishes itself. The projections have been reduced by 75% and 90% respectively. Apart from those expenditure lines that are directly related to income (e.g. agency commissions), expenditure has been maintained at its full level.
6.4.4 The net cost of the TT (2011 figures) has been included as a separate item outside of the Series figures.
6.4.5 Finally, no inflation has been included in the model and the figures are at 2012 prices.
6.4.6 The full model can be found in Appendix F.
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Table 24: Summary of income and expenditure for the World Series
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7 RISK ANALYSIS AND MITIGATION
7.1 Introduction
7.1.1 The analysis undertaken during this study has identified a range of issues and risks that may affect the development and delivery of the Series, assuming and once a decision is taken to proceed with it. As part of any decision to proceed, it is important that the key risks are identified and carefully managed (both in terms of their likelihood of their happening and their impact if they do).
7.2 Identification of risks
7.2.1 The risk analysis has involved the following stages: identification of the key risks evaluation of the probability of each risk occurring on a scale of 1-5 (with 1 being the lowest probability and 5 being the highest) evaluation of the impact of each risk if it happens on a scale of 1-5 (with 1 being the lowest impact and 5 the highest) development of an overall risk score based on the probability and impact of each one occurring categorisation of the risks based on their score into high (red), medium (amber) and low (green) we also summarised the actions that could be taken to mitigate each risk.
7.2.2 For the overall risk, the maximum that could be scored is 25 (i.e. probability of 5 multiplied by impact of 5). The categorisation of the scale of each risk was based on the following scores: Risk score of 16 and above: high risk (red) Risk score of 9 and above: medium risk (amber) Risk score of less than 9: low risk (green).
7.2.3 The risks have also been grouped into the following categories: teams & riders host venues sponsors & media political/governing body operational.
7.3 Summary of key risks and mitigation measures
7.3.1 The risk register is shown in Table 25. At this stage, the focus has been on the risks associated with establishing the series; however, as the process develops, it should evolve and will include an increased number of operational risks.
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Table 25: Risk register for the World Series ID Risk Owner Risk Status Risk Category Risk Description Consequence Likelihood Impact Mitigating Actions x Prob x Imp (A x B) 1.1 IoM Gov Open Host venues Lack of interest from host venues No venues at which to stage series 2 5 Early consultation with potential hosts and 10 regardless of interest from teams continued promotion of the concept to generate and riders interest. Undertake venue selection and procurement process at an early stage in the implementation to identify venues 1.2 IoM Gov Open Host venues Reputational damage of selecting Venues in the wrong time zones or 2 4 Ensure through the host selection process that 8 the wrong venues providing courses that do not the venues are aware of and are selected on the adhere to the TT concept adversely basis of the key criteria for the series (which has impacting the image and viability of been established through the consultation) the series 1.3 IoM Gov Open Operational Reputational risk to the series and Sponsors, spectators, 3 4 The dangers are inherent to the TT (and the series) 12 Government from death or injury to broadcasters, etc, lose interest in and are part of its attraction. Ensure that safety riders series due to dangers associated standards are high and maintained and that any with it incidents are managed carefully to minimise the negative impact 1.4 IoM Gov Open Operational Competition from other The series is unable to establish a 2 4 Careful planning to series to ensure (at the outset) 8 events/calendar congestion position for itself in the it does not conflict with existing events/series and motorcycling calendar, thus team/rider commitments constraining its visibility and interest in it 1.5 IoM Gov Open Operational Series/event/rider insurance Lack of interest from venues in the 3 4 Prompt engagement with venues to agree split of 12 becomes unaffordable for organiser series/unaffordability of series to responsibilities for insurance and investigation by or for host cities Organising Company the Government to assess insurance options 1.6 IoM Gov Open Operational Global economic climate declines, Financial basis for the series is 2 5 Prompt engagement with venues and sponsors 10 thus negatively impacting ability to weakened, potentially making it and establishment of separate Organising secure hosting fees and/or unviable for the Government Company sponsorship fees 1.7 IoM Gov Open Political/ World Superbikes, British A rival series attracted sponsors, 1 5 Prompt development of series and securing of key 5 Governing Body Superbikes, or MotoGP launch venues, riders, and interest away sponsors, venues, etc to ensure that series is their own road racing series (or one- from the series, thus undermining established as quickly as possible. Ongoing off events) its viability promotion and development of the series to ensure interest is maintained 1.8 IoM Gov Open Political/ FIM refuses to sanction the use of Series cannot be named "Isle of 3 1 Identification of alternative name that reflects the 3 Governing Body "World" with series title Man TT World Series" or similar global/international nature of the series 1.9 IoM Gov Open Political/ Political change on the Isle of Man Lack of support for the series from 3 4 Establishment of specific and viable organising 12 Governing Body leading to a change in priorities and the Government undermines the company to manage the series commitment to the series series' viability
1.10 IoM Gov Open Political/ Opposition to the series from the Potential sponsors, broadcasters, 2 4 Careful planning to series to ensure (at the outset) 8 Governing Body FIM or representatives of other riders and supporters of the series it does not conflict with existing events/series and motorcycling series (e.g. MotoGP, are prevented from being involved team/rider commitments World Superbikes) due to commitments to other events 1.11 IoM Gov Open Sponsors & Lack of interest from broadcasters Lower visibility of series, which 2 4 Regular promotion of and publicity for the series to 8 media and media would adversely impact the ensure that interest is maintained and developed attractiveness of it to sponsors and spectators, thus undermining the financial model for the series 1.12 IoM Gov Open Sponsors & Lack of interest from sponsors Financial basis for the series is 2 4 Prompt engagement with existing TT sponsors to 8 media weakened, potentially making it test interest in the series and prompt unviable for the Government implementation of a sponsor tender process to secure partners 1.13 IoM Gov Open Sponsors & Unable to secure live broadcasting Restriction on potential income 2 4 Prompt engagement with potential broadcasters to 8 media of series from sponsors and television test viability of live broadcasting for the series. rights, thus undermining financial viability of series 1.14 IoM Gov Open Teams & riders Lack of interest from No demand for the World Series 2 5 Early consultation with manufacturers/teams 10 manufacturers/teams (started) and continued engagement to ensure format and arrangements for series are broadly acceptable to them
1.15 IoM Gov Open Teams & riders Lack of interest from riders No demand for the World Series 2 5 Rider involvement will be governed by team 10 interest, so Risk 1.1 applies here
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7.3.2 At this stage, there are no risks that fall into the red category, i.e. risks of the highest level based on probability and impact. As this is an early stage of the process, this is not unexpected. However, if a decision is taken to proceed with the implementation of the Series, there are a number of the risks that could increase and there is a need to ensure that they are all carefully managed. In particular, this category would include risks relating to the availability of teams, riders, sponsors and a broadcast partner.
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8 NEXT STEPS & IMPLEMENTATION PLAN
8.1 Introduction
8.1.1 This study has investigated the feasibility of developing a World Series based around the TT. In order to take this concept to implementation, there are a number of tasks/workstreams that need to be taken forward.
8.1.2 If the Government takes a decision to proceed with the development of a series, these tasks should form the basis of the implementation plan and, more importantly, should be structured so that there are a series of milestones, at which points a decision can be taken as to whether to move onto the implementation phase. This is an important because it will still give the Government the ability to withdraw from the process or put it on hold should a stage not achieve the necessary output, e.g. the host venue procurement does not yield the necessary venues. This approach will limit the Government’s liability in developing the concept.
8.2 Outline implementation plan
8.2.1 Within the outline implementation plan, a number of key dates have been identified based on the assumption that a decision is taking to develop the concept further in June 2012 (i.e. after the 2012 TT). The dates are as follows: September 2012: commencement of work on developing the Series September 2012-January 2013: all necessary formation, planning and implementation takes place, e.g. establishment of SPC, recruitment of key staff February 2013-September 2013: host city procurement October 2013-October 2014: first season planning and preparation October 2014: commencement of the first season.
8.2.2 Further detail on the key stages is set out in the following paragraphs. The costs associated with each of the stages have been included in the financial model presented in Section 7.
8.3 Legal and accounting
8.3.1 The first stage once a decision has been taken to progress the series would be to establish the SPC as a legal entity. This will ensure that there is a specific body to manage the development of the series (and the series itself once established) and will limit the Government’s liability. The agency costs associated with this stage would cover the following areas: formation of the SPC taxation advice office lease employment contracts for senior personnel trade mark registration creation of host venue contracts.
8.4 Staffing
8.4.1 Associated with the establishment of the SPC is the recruitment of senior personnel commences. As set out in the financial model in Section 7, the SPC has been based on a staffing structure of 13. The senior personnel who should be recruited as a first priority include the Race Director, Marketing Director and Commercial Director.
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8.4.2 In the interim, it has been assumed that the TT & Motorsport Development Manager assumes an interim role to manage the SPC through transition. However, if recruitment commenced in June 2012 and based on three months to identify potential candidates and three months for notice periods, the senior personnel could be in place by the start of 2013.
8.4.3 The estimated cost for the above two stages is £50,000.
8.5 Business plan and budgeting
8.5.1 The third element of the implementation costs relates to the creation of a detailed business and budgeting for the Series. This would start in conjunction with the establishment of the SPC and carry on through the implementation period, being updated as other areas develop, e.g. appointment of sponsors, host venues, etc.
8.5.2 The estimated total costs for this service over a two year period would be £60,000.
8.6 Brand and marketing
8.6.1 The final item in the initial implementation period is branding and marketing. It will be important to establish the name and brand for the series as soon as possible as it will assist with the selling of the concept to the relevant interested parties, e.g. sponsors, teams, television companies, etc. In addition, it will be important to develop a marketing plan to cover the implementation and launch of the series and to assess the public relations requirements around the launch.
8.6.2 As with the budgeting, these tasks will take place on an ongoing basis throughout implementation and the estimated agency costs would be £40,000.
8.7 Commercial
8.7.1 Commercial considerations will be the focus of the period from the start of 2013 until the launch of the series and will cover the following areas: host venue procurement – establish process, create documentation for expression of interest, applicant and candidate phases development of sponsorship structures and first-stage discussions (in order that host venue relationship is understood for host venue contract) overview broadcast and production plan (in order that host venue relationship is understood for host venue contract) first discussions with key sponsors and partners, e.g. logistics, broadcastings, etc.
8.7.2 The estimated agency costs associated with this phase are £150,000 excluding any commissions, which have been included separately in the financial model.
8.8 Team liaison
8.8.1 In the final quarter of 2013 (i.e. circa one year before series commencement), it will be important to seek in principle commitments from teams and riders. As these two groups are fundamental to the viability of the series, it will be important to secure them in good time. Associated with this, it will be important to liaise with the FIM and relevant national governing bodies to deal with any issues or conflicts that need to be resolved. These tasks would be undertaken by the SPC.
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8.9 Race management
8.9.1 The final part of the implementation phase will be to develop the Race Manual. This document will be required to define the framework and rules within which the series will operate. These details will be also important to venues and national governing bodies during the host venue procurement as they will set out the requirements on the hosts in terms of race management. It is possible that the documentation could be based on that which exists for the TT and could be developed in consultation with the ACU.
8.9.2 Estimated agency costs associated with this phase will be £50,000.
8.10 Summary
8.10.1 Outlined above are the key stages for the implementation of the series. It will be important that any plan is structured so that there are milestones at which progress can be assessed and a decision to continue further can be made. This will ensure that the liability on the Government is managed and risks are minimised. In total, the implementation costs have been estimated to be £300,000 and have been included in the financial model set out in Section 7.
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9 CONCUSIONS AND RECOMMENDATIONS
9.1 Introduction
9.1.1 The aim of this study was assess the feasibility of the Government developing a World Series based around the Isle of Man TT and to understand if it would: support the ongoing development of the TT support the development of the Isle of Man economically through increased exposure in key markets support the Isle of Man's strategy for tourism growth.
9.2 Feasibility of establishing a World Series
9.2.1 Following the extensive consultation and analysis, it would appear that the establishment of a Series based around the TT is an achievable aim based on the following considerations: series concept: amongst all of our consultees, there was a broad consensus on what the format for the Series, including considerations of course type and length, classes of bikes, number of riders, event timing, number of rounds, etc (see Table 26 below) event timing: there is a clear gap in the motorcycling calendar (October-May) which the Series could occupy (particularly in its early years when it is becoming established) teams and riders: there is unanimous interest from existing TT riders in the concept of a Series and, more importantly, many of the existing teams have also expressed an interest and are comfortable with the proposed arrangements host venues: at this stage, ten venues/cities have indicated that they would be interested in exploring hosting a round of the Series further economic impact: each round of the series should be sufficiently attractive in economic impact terms to encourage hosts to contribute to the costs of staging as well as a paying a hosting fee to the SRH financial: the financial model developed for the Series indicates that reaching a break- even position for the Government within a five-year period should be achievable and, if successful, there is the potential to exceed this position.
Table 26: Summary of event concept SUBJECT CONCLUSION Number of events 4-5 + the IOM TT Duration of event: 4 days – • Practice days 2 practice days with qualification (safety) • Event days 2 race days (but how many races can there be in one day?) Classes: • Number 2-3 classes • Types Superbike, Superstock, Supersport Riders: 20-30 – 20 fixed for all WS events and 10 wild cards per event Format: • Length of course 5-6 miles • Mass start or time trial Mass starts where possible but time trial if the circuit demands. Flexible. Type of course (Road or Track) Road only Calendar: • Frequency 3 weeks between events. • Season November-May
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9.2.2 Furthermore, a delivery model for the series has been set out that shows how the Series could be managed. The SRH (i.e. the Government) should establish a SPC to control the Series and would enter into hosting contracts with cities or venues for each round of the Series. Ideally, the management of the TT would also be incorporated into this body.
9.2.3 The SRH would apportion rights and responsibilities between itself and the (local) Organisers as set out in Table 27.
Table 27: Split of rights between the SRH and Organisers GLOBAL (i.e. Government) NATIONAL (i.e. Organisers) Responsibilities Rights Responsibilities Rights Race Director has control Global Local organisation and National over all races in Series Sponsorship management of race in Sponsorship through application of race accordance with host city Right to grant certain handbook contract and race handbook sponsorship rights nationally Broadcast Coverage of the Broadcast Rights Hospitality Hospitality Series centrally controlled Ownership of all Obligation to run hospitality Right to take all rights to the Series programme revenues from hospitality Merchandising for the Licensing Royalty from any Series All rights to licence race specific the brand merchandise Logistics (managed Spectator centrally for the Series but Revenues with costs contributed by the Rights to revenues teams) from ticketing, concessions, food and beverage etc for the race Global Marketing Ownership of all IP National Marketing Use of IP Responsibility to market and Responsibility to market and Right to use the promote the Series globally promote the race nationally brand nationally Team and rider liaison
9.2.4 Consultation was undertaken with potential host venues and, in principle, they found the arrangement set out above acceptable.
9.2.5 Based on these considerations (and mentioned above), both an economic impact assessment and headline financial model for the series have been developed. The former has estimated that each round of the series could be worth circa £16.9 million to the host city in direct economic impact and the value of the Series could be circa £86 million.
9.2.6 The headline financial model – based on the split of rights and responsibilities outlined above - has indicated that the Series could be viable for the Government. A summary of this model is shown Table 28.
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Table 28: Summary of income and expenditure for the World Series REDACTED
9.3 Benefits to the Isle of Man
9.3.1 The second part of study was consider whether the Series could support the ongoing development of the TT and the Government’s strategy for economic and tourism development.
9.3.2 For the TT, it is clear that there has been a significant improvement in awareness and exposure of the event over the past six years. However, long-term aspirations will always be constrained by it being a one-off event and by the difficulty of accommodating greater numbers of spectators on the island. Therefore, the development of a Series around the TT is potentially a very good means by which its reach can be expanded. In addition, providing a package of races should be more attractive to teams and sponsors and so may improve the financial sustainability of the TT itself (as a separate consideration from the Series).
9.3.3 The Series would also present opportunities to the Government in terms of its strategy for economic and tourism growth. The TT is already covered in a number of the Government’s target markets (including Europe, North America, South America and the Middle East). Expanding the level of coverage through a Series and live broadcasting should not only strengthen exposure in and links with those areas, but also aid expansion into other target markets.
9.3.4 In addition, by owning and managing the Series (through the SPC), the Government will establish a direct relationship with five other cities/areas around the world. Ideally, these would be in their target areas and will act as another means of raising awareness and exposure of the Isle of Man internationally.
9.4 Underlying assumptions and risks
9.4.1 The feasibility study has been based on a series of assumptions at all stages of the process. Of these, some are fundamental to the likely success of the Series and they are as follows:
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to ensure the anticipated level of exposure and to enable the estimated revenue to be achieved, the Series should be broadcast live as widely as possible (and in all the key markets) the Government as SRH should establish a SPC to manage the series (and to limit its liability) the SPC must retain the key rights outlined above relating to global sponsorship, television rights, global marketing and merchandising host venues should be located in the Government’s target markets and (in the early years as a minimum) in the strong television markets.
9.4.2 Based on this, the key risks that would need to be carefully managed throughout the establishment of the Series relate to delivering live coverage of the Series and securing the appropriate partners (sponsors, host venues, teams, etc).
9.5 Implementation
9.5.1 If and once a decision is taken by the Government to proceed with establishing the Series, we estimate that there would be circa two years required to undertake all necessary preparatory work. Therefore, assuming a decision in the middle of 2012, the earliest realistic start for the Series would be autumn 2014.
9.5.2 In terms of implementation, it will cover the following areas: legal and accounting (including creation of the SPC) staffing budgeting and business planning branding and marketing team liaison race management host venue procurement.
9.5.3 The Implementation Plan should be structured such that they are key milestones at which the Government would take a decision whether to proceed to the next stage. This would ensure that its potential liabilities would be minimised.
9.5.4 Finally, a general observation that emerged from our consultation was that it was a good time for the Government to be considering the development of the Series. Besides helping the ongoing development of the TT and delivering benefits to the Isle of Man, it is also perceived that interest in other motorcycling series (particularly BSB and WSB) is starting to decline and there is a space in the motorcycling calendar that this Series could fill.
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APPENDICES
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APPENDIX A: SAMPLE CONSULTEE QUESTIONNAIRE
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Question No Questions Answers (please add in the column below)
Our initial view is that the world series would work initially with perhaps 4-5 events (with the 1 Isle of Man TT being one of the events). How many events do you think there should there be in the world series?
We initially feel that leaving 2-3 weeks in between each event is sensible. 2 How long do you think there should there be in between each event? (e.g. to allow for recovery, travel time, etc)
We understand that October to March are quiet periods for road racers and would intend that the world series would finish with the Isle of Man TT 3 in May/June. What months do you think would be appropriate for the world series, to fit in with existing racing calendars?
What other racing commitments do you have 4 between October and June each year?
How much practice time do riders need at each 5 event circuit before racing?
World series races could take place over a long weekend (e.g. Friday to Sunday) or over a week 6 long Festival. Which do you think would be more appropriate for world series events?
Government of the Isle of Man TT World Series Feasibility Study
Question No Questions Answers (please add in the column below)
We think that a series of 3 classes would be affordable and sustainable for riders and host circuits. Do you agree? 7 What are the race classes that you think should be included at each event? (Please list each class)
What is your view on the format of the races in the world series? 8 In particular, should the format be a time trial (as with the TT) or could some of the events include mass starts?
Due to the limited number of available road circuits, do you think a world series could be 9 successful using road courses only or a mix of road courses and track?
Are there any specific courses, circuits or 10 venues that you think should be included in a world series? (Please list them)
Other comments. If you have any other 11 comments that you would like us to consider please provide these here.
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APPENDIX B: LIST OF CONSULTEES – DETAILS REDACTED
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Name Role/Position
IOM TT Organisation
Teams, Riders & Manufacturers
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Name Role/Position
Miscellaneous
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APPENDIX C: SUMMARY OF CONSULTATION
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APPENDIX D: SPC ORGANISATIONAL STRUCTURE
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Draft Organisational Structure for TT World Series
National Governing Isle of Man DED* Event Organiser Body (?)
Event Management Clerk of the Race Director* Chief Steward Functions Course*
Press Sponsorship/Rights Officer/Marketing Deputy Clerk of Secretary of the Technical Chief Paddock Broadcast & HB Team/Rider Liaison Logistics Event Staff Stewards Agency and the Course* Race Director* Marshall Communications
Race Office Staff, Chief Technical Paddock Start Line Team Controller Team Retirements, Staff Officer Management (G4S) Welfare Officer Press Officer/Marketing and Communications, Commercial (Ticketing, Hospitality), Medical Director Race Control Chief Time Keeper Technical Officers Travel/Accommod ation, Volunteers
Chief Medical Police, Fire, Chief Marshall Course Inspection Officer Officers, Incident Ambulance Officer, Despatchers, Aviation Liaison Officer, Official Drivers
Travelling Marshalls
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APPENDIX E: ECONOMIC IMPACT MODEL
REDACTED
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APPENDIX F: FINANCIAL MODEL
REDACTED
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