It’s a well-worn phrase that the easiest way to make a small fortune from motor racing is to start with a large one. Today it’s never been more true.
The business of racing cars is a tougher financial challenge than ever and two high-profile teams have recently turned to an unusual source to bankroll their efforts – the public. Both the Caterham F1 team and the fledgling Brabham sports car squad are using crowdfunding schemes to generate cash; but both in very different circumstances.
Caterham – a team on the brink
The Caterham F1 team went into administration in October 2014 and has missed the recent US and Brazilian grands prix.
Caterham’s administrators’ attempts to find a buyer for the team have so far been unsuccessful, and in an effort to get the team’s cars back on the grid for the final race of the season at Abu Dhabi a webpage has been set up under the heading ‘Let’s crowdfund Caterham’s return to the Abu Dhabi Grand Prix.’
The site (which can be found here) invites fans to support the team either through a one-off cash donation or by buying merchandise and souvenirs. There’ s clearly been some serious rummaging through cupboards at the team’s Leafield headquarters because items for sale range from earplugs and team clothing to gearbox casings, front wings and former drivers’ race suits.
£15 for a Caterham branded lanyard and ticket holder does smack of desperation, but the project has made significant progress. With just under a day remaining at the time of writing they’re more than halfway to their ultimate target of £2,350,000.
There has been plenty of talk about the disparity between the amount of revenue creamed off the top of F1 by its commercial owners (reportedly $1.5bn a year) and the knife-edge financial existence of the majority of its teams. Gerard Lopez, owner of the Lotus F1 team, has described Caterham’s crowdfunding effort as ‘sad’ for the sport and ‘disastrous’ from an ethical point of view.
Project Brabham – pioneering the formula
Project Brabham is a racing team using crowdfunding for a very different purpose – to get onto the grid in the first place.
Founded by David Brabham, son of Sir Jack (the only man to win an F1 World Championship racing for his own team in his own car), the team aims to compete in sports car endurance racing, although it hasn’t ruled out setting its sights on the grand prix grid further in the future.
Fans are invited to donate on a sliding scale, from a simple £1 donation to a £10k VIP package with lifetime access to the team and circuit tuition from David Brabham, himself an ex-F1 racer and Le Mans winner. The team aims to enter the LMP2 class of next year’s World Endurance Championship, including Le Mans, with hopes to graduate to the top LMP1 class (against the likes of Audi and Porsche) within four years. Project Brabham’s crowdfunding page can be found here.
The real significance of Project Brabham as a case study is that its plan has worked – so far, at least. This week the team passed its initial crowdfunding target of £250k. What’s more, it was halfway to that point after just four days.
It’s a business model that’s sure to have raised a few eyebrows within the motorsport world. We shouldn’t bet against Project Brabham being the last team aiming to get off the ground with the public’s help – but we should hope that fewer teams will be forced to use the same method to survive.