MotoMatters.com | Kropotkin Thinks

The expansion of the MotoGP calendar has met with resistance from a variety of quarters. While a section of MotoGP fans are enthusiastic about there being 21 races next year, up from 20 in 2022, and from 19 pre-pandemic, those inside the MotoGP paddock are largely opposed.

That includes at least some of the manufacturers. KTM bosses Hubert Trunkenpolz and Stefan Pierer were adamant that the ideal number of races on the MotoGP calendar was 18. "18 races would be ideal, 20 is the absolute maximum," Trunkenpolz told Speedweek's Günther Wiesinger.

Pierer agreed with his fellow KTM board member. "I made it very clear to Dorna boss Carmelo Ezpeleta that we as a manufacturer want a maximum of 18 grand prix," Pierer told Speedweek.

Trunkenpolz was damning of the choice of Sokol International Racetrack as a venue. "Kazakhstan makes absolutely no sense, as far as we are concerned. The Buddh International Circuit near New Delhi was a better prospect, as India is an important market for the motorcycle manufacturers.

Making money going racing

Speedweek asked Carmelo Ezpeleta for a response this criticism, and his answers reveal some of the underlying questions which Dorna's model for MotoGP is built on. The reason for adding Kazakhstan to the calendar? "There was no other promoter who would agree to host a race in July," Ezpeleta said.

No race in July would have left a five-week gap in the calendar. "We can't afford to be absent from the motorsports world for such a long period," Ezpeleta insisted. That logic would not appear to apply to WorldSBK, however, which has a six-week gap between Mandalika and Assen in March and April, and a five-week gap between Most and Magny-Cours in August and September.

More importantly, races like Kazakhstan and India will bring in more money for Dorna. "We lose money on the races in Europe," the Dorna boss claimed.

That is an interesting statement. It is also one which requires some explanation of Dorna's business model, as Ezpeleta is talking here specifically about Dorna losing money on European races, rather than the circuit or promoter running the event.

The business model

How does Dorna make money? The Spanish company has three streams of income: TV broadcasting rights; sponsorship; and sanctioning fees, the amounts which circuits pay Dorna for the right to host a race. Those three revenue streams are roughly equal, each contributing roughly a third of Dorna's overall income.

When Carmelo Ezpeleta says that European races lose money, we have to assume that he means that the hosting fee does not cover the costs that Dorna incurs to stage the race. Hosting fees vary per race, Dorna signing separate contracts with the promoter of each event. In most cases, that is the circuit itself, but for events such as Le Mans or the Sachsenring, the contract is with a promoter, who has a separate deal with the circuit to organize a race.

What does it cost to host a MotoGP race? On average, circuits pay somewhere between €5 and €8 million, depending on the event. Some races pay a lot less, and some races outside Europe pay a lot more.

Who pays what, and why?

The reasons for those differences vary with the location. The US is a very important market for Dorna and the manufacturers, and so US races generally pay less than other overseas races. Originally, Laguna Seca paid a relative pittance to Dorna for the right to hold the US round of MotoGP, because Dorna saw it as their way of getting a foot in the door of the US market. But so small was the amount paid that MotoGP was the only class to visit the Californian circuit, with the AMA making up the support classes.

Qatar, on the other hand, has a race because the person who owns the circuit wants to host a race, and Qatar wants to indulge in sportswashing. Qatar pay a lot of money to host the first race – enough to cover the transport costs for most of the flyaway races. But Qatar itself is a relatively unimportant market for both Dorna and the manufacturers. A night race makes for good spectacle, but Qatar needs MotoGP more than MotoGP needs Qatar.

Where the money goes

What does the hosting fee pay for? For a start, MotoGP teams get a set amount to cover their costs for the year, roughly €2.5 million per rider, per year. Then there's freight costs, and various other services provided. But Dorna also have a lot of people working for them, especially to help put on the TV broadcasts.

There are dozens and dozens of camera operators, and each camera operator has at least one assistant, and often two. Then there are the cable riggers, audio and video engineers, technicians and more. There are TV producers and security staff, the medical staff, helicopter pilots, and more. There's the communications staff, the admin staff, people organizing passes, writing press releases, ensuring they get sent out.

Dorna also pays IRTA a set fee, which covers the practical running of the event, as well as everyone in Race Direction. There's the FIM Stewards, the Technical Director, Race Director, and everyone overseeing and organizing the paddock.

All these people need hotel rooms to stay in, vehicles to get to the circuit in, three meals a day, and coffee to keep them going. Without them, the race doesn't happen.

The reason for races

Why does Dorna sign contracts with circuits for less than the price it costs them to run the event? Because they benefit in other ways. As with the example of Laguna Seca, Dorna may have an overwhelming interest in cracking into a particular market. The US TV market is the Holy Grail for Dorna, and one they have still failed to crack. Being present in growing markets is important too, which is why there is a focus on South America, India, Indonesia, and other parts of the Asia Pacific basin.

The factories have a say as well. It is in the interest of the manufacturers for MotoGP to be racing in important markets. Having races in India, Argentina, Indonesia, Malaysia is an important part of their marketing, and those are regions where both the factories and Dorna would like to expand. But that also means ensuring there is a race in Germany, the UK, France, some of Europe's major motorcycle markets. "With Ducati and Aprilia, we have two Italian factories who supply 12 of the 22 riders on the grid," Ezpeleta pointed out to Speedweek, when asked about Mugello.

There are also races which bring less tangible benefits. There are races with a long history, such as Assen, which are important to the championship. There are races which are important to the teams, most of whom are based in either Italy or Spain; the ability to bring sponsors to races is an important part of the business model of the teams.

And there are races which help sell the spectacle of MotoGP. Phillip Island is in a remote part of Australia, and is relatively sparsely attended. But the Australian GP always produces spectacular racing against a spectacular backdrop, and that helps sell the product to TV broadcasters. The same is true of Mugello.

The view of the track

It is important to point out here that Carmelo Ezpeleta is only speaking from the perspective of Dorna when he says there are races in Europe that do not make money for them. Whether a particular race is profitable for Dorna is not directly correlated to whether it makes money for the circuit hosting it, or the promoter organizing it.

Circuits make money through ticket sales and VIP packages. (Not from sponsorship though: the money for the event title sponsorship and signage all goes to Dorna.) Some circuits, such as Assen, Le Mans, or the Red Bull Ring, bring in massive crowds. Those races are profitable, and can survive without subsidy.

Other races are less well-attended, or have additional costs – the Sachsenring has massive crowds, but needs so much temporary infrastructure put in place for fans that it barely breaks even – and so struggle to make money on MotoGP races. Those races are often subsidized by regional or national governments, to promote the region to tourists and business – Jerez and Aragon come to mind. Staging large-scale events also generates income for those regions, from hotels, restaurants, tolls, parking fees, and other services.

Races are also good marketing for the circuits themselves. They help attract other, cheaper, but more profitable events, and they also make the circuits an attractive proposition for visitors. Being able to do a track day on a grand prix circuit adds a cachet that other circuits lack.

The future of the calendar

What does this mean for the future of the MotoGP calendar? There will always be a tension between Dorna, who want more races, and at circuits which are willing to pay a premium for the right to host a race, and the rest of the paddock. But unlike Formula 1, which has already expanded to 24 races in 2023, there are natural limits on the number of races MotoGP can have.

First, there's the contractual limit. The teams signed up to a maximum of 22 races until the end of the next five-year contract period, which ends in 2026. What's more, Ezpeleta told Speedweek, each race over 20 costs Dorna €2.5 million in extra payments to the teams through Dorna.

More significantly, there's the issue of safety. There are only a limited number of circuits capable of hosting a MotoGP race, and which have the requisite safety features to pass the necessary FIM Grade A certification. Unlike F1, MotoGP can't run street races on closed public roads.

What's more, MotoGP is caught in something of an in-between stage. Large enough to attract interest from around the world, but not enough of a marketing juggernaut to gain the sponsorship needed to stage a lot more races. Teams are already at the limit of what the can endure without making mistakes, but MotoGP doesn't generate enough revenue to pay for the staff needed to rotate crews through the season, as other series do. The money is stretched rather thin.

That is the next obstacle MotoGP faces, and not one which is easy to fix. While Dorna has been outstanding at organizing races, running them as safely as possible (though the Moto3 and World Supersport 300 classes are starting to pose problems in that respect) and in producing a world-class TV product, they have not managed to market MotoGP as well as other motorsports series have done. Potential continues to go untapped, and opportunities ungrasped. In a rapidly changing media and entertainment environment, that is the biggest challenge facing MotoGP.

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