Hydroplane Racing’s Financial Considerations

When evaluating the options surrounding the funding for Unlimited Hydroplane Racing events, it becomes quite clear – and quickly – that there aren’t many. That shortage of funding options makes this a critical step in the process. Funding any sort of significant venture is a challenge. Pulling together “initial” funding where an activity didn’t exist before is more like a cage fight.

The title of this chapter was carefully selected. “Financial Considerations” was selected to be a bit vague on purpose. Money is a multifaceted topic and creating an initial post to simply explore “considerations” seemed like a good first step. We’re not creating a budget (yet.) We simply want to get our arms around the topic so that we can decide how to dig deeper.

As we experienced in Selecting a Race Site, there are plenty of topics to consider – even before the first dollar is invested. We’ve also seen that even when planning is well underway, the plans can require adjustments (Idaho) when the financial stars just didn’t want to line up fully.

There are many directions this topic can take and with your help, I hope we get to all of them. The purpose is to explore the importance and magnitude of this part of racing – a part that is intertwined with everything that takes place.

Consider for a moment the seemingly impossible at worst, and extremely daunting at best, task of identifying what the financial requirements would be necessary to bring a race to your locale. (Just ask Frantz.) It’s almost impossible to estimate the entire “bank” that would be necessary until we break down the requirements – and their costs – into logical groupings. (That’s just what the Boat Book is all about!)

But it gets worse.

Now think about building your team. Friends are important, but you need dollars as well. You need people who believe in the cause and have the financial chops to be a contributing team member and get others to contribute as well. You even need people who can lead the rest of the team.

But wait, there’s more!

While you begin to identify your team members, you need to be making plans for how you organize this new entity. Should you be a C Corporation, an LLC, an NPO (non-profit organization) or one of many other alphabet soup designations. Yes, at some point an attorney should be consulted so that you can keep that favorite shirt on your back.

You can see we have many, many topics to explore. Expect a number of sub-chapters this time. In this initial foray, let’s explore different approaches to sponsorships. They can be a significant source of revenue for your local community, but at what cost?


Let’s start with a simple comparison between the merits of focusing on one substantial Anchor Sponsor vs. what we’ll call a “Sponsor Base.” A Sponsor Base could be considered many smaller sponsors as the Anchor alternative. Here’s a quick look at some of the pros and cons of each approach as a “thought-provoking” list for discussion.

Advantages – Anchor Sponsor

  • Significant financial impact due to exclusive or near-exclusive billing
  • Improved opportunity for race visibility, benefitting from Anchor Sponsor celebrity
  • Potential for long-term “identity campaign” for sponsor

Advantages – Sponsor Base

  • Diversified base of support; single change not earth shattering
  • Multiple groups of supporters; virtually unique group from each sponsor
  • Potential for larger volunteer base; multiple companies participating

Disadvantages – Anchor Sponsor

  • Eggs in one basket; change leaves a big hole
  • Single, significant funder may exert micromanaging pressure for “their” race
  • Longer budgeting lead times; potential for missed opportunities

Disadvantages – Sponsor Base

  • Serving many masters; each sponsor needs TLC
  • Longer-term commitments unlikely; small business fortunes very volatile
  • Less “celebrity” from smaller sponsors; even collectively as a group

Since you are probably already forming opinions and may actually be getting heated about some of these assertions, it shows we have barely scratched the surface. That’s the beauty of the Boat Book – we can subdivide this topic any way we like.

It’s now time to weigh in on these thoughts and possibly suggest new ones. If we get too much discussion that can’t be contained here on the sponsor topic, we’ll create a new chapter. What aspect of these sponsor strategies resonate most with you? How would your opinions of the sponsor approaches shown above differ if you were a race attendee, a race team member, a driver, a vendor, or possibly an organizer?

Ready… debate!

Dave


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One thought on “Hydroplane Racing’s Financial Considerations

  • August 21, 2012 at 11:02 AM
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    I like the idea of multiple sponsors. Instead of one supporting the whole dollar, let ten put up ten cents each. Less of a huge budget for one to try and work in year to year. Plus, asking for ten thousand dollars instead of one hundred thousand might be easier to digest.

    This venue is so much more affordable to invest in than any other sport. It’s a great venue for newcomers as well for companies who have had to back out of other racing venues because of the multimillion dollar teams they have created. They grew too big too fast.

    Take our boats, for example. One can sponsor a boat for the year for about one hundred thousand to two hundred thousand, or for a weekend for a little as twenty thousand. I hardly think you could do that in NASCAR, Indy or NHRA. Looking at the whole picture, a realistic seven hundred thousand budget to put on a successful Unlimited race is chump change. You won’t get the kind of entertainment these boats provide at any other kind of race for a thirty dollar ticket.

    Spread the word, “GET ON-BOARD”, and lets get the races everywhere! If we can get more venues, we may then get more boats built.

    Frantz

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