Lin Jarvis: MotoGP Must Look to Asia, South America for Growth

One subject has dominated the past three years of MotoGP, and indeed all of motorcycle racing. Despite some thrilling racing, technical innovation and both fascinating and tragic stories, the main topic of conversation among those involved in motorcycle racing has been how to cut costs. A raft of new regulations have been introduced, and even more radical changes are currently under discussion for the next few years.

At the official presentation of Yamaha's 2012 MotoGP campaign, Yamaha Racing Managing Director Lin Jarvis spoke to MotoMatters.com about the need for MotoGP to shift its focus, from just tinkering with the technical regulations to trying to expand its audience base and generate more income, taking advantage of new media and a more international audience to tap into new markets and more potential sponsors. "The technical regulations are very, very important, and bringing costs down is very important," Jarvis told us. "But the other thing is how to increase the popularity of the sport, and increase the revenue. Just saving costs is still shrinking."

Jarvis made it clear that he believes MotoGP's future lies beyond its traditional heartland in Europe, and beyond the existing revenue streams it has relied on, mainly income from TV contracts in Europe and Spanish and Italian sponsors. "We have to take the championship to different geographical locations, different media, different revenue streams. That's something people are not touching on enough. [Cost-cutting rule changes] are all very well, we can do that technically, but don't forget the revenue," the Yamaha boss emphasized.

In Jarvis' opinion, the problem was that concentrating the series in Southern Europe had left it too vulnerable to the financial crisis. "This year, we've got four races in Spain, one in Portugal and two in Italy. That's seven races of an eighteen-race championship in countries in deep recession." In the past fifteen or so years, the championship had relied too heavily on Southern Europe, Jarvis suggested, and with the economies in those countries in a parlous economic state, generating income from those countries had become much more complicated. "If you look at Repsol, it's mainly about the Spanish market, and you could say the same about [Spanish telecommunications company] Movistar in the past, about [Spanish insurer] Mapfre, you could make a long, long list of them. Even Fiat, though it was a global company, the sponsorship was mainly about Italy," Jarvis explained. "We followed that path because it was sustaining the sport, but the global financial crisis meant it suddenly creaked to an end."

The solution, Jarvis said, was to look further afield for sponsorship. "We have to change, we have to go elsewhere. Look at our sponsors now, ENEOS is Nippon Oil, from Japan, Semakin Di Depan is Asian, Yamalube is about global sales." That also meant evaluating the current places the series races in and trying to break into new markets. "For example, why are we racing in Qatar? We've been racing there for 8 years, but how many Qatari sponsors are there in the series? I see Qatar doing a lot of other things, with soccer, with the World Cup, with other sports, so why have we not been able to convert that major benefit of staging the first race into something more substantial? It's great, but it hasn't brought us any more investment."

The key markets that MotoGP has to be aiming at are the emerging economies around the globe, Jarvis told MotoMatters.com. "We need to be in Brazil, we need to be in India - we would really like to be in India. We should be in Indonesia, these are very important places. We need to maintain our foothold in major European markets, but we can do that with fewer races in Spain."

The revenue side of motorcycle racing was crucial, the Yamaha boss maintained. "The biggest problem this sport has today is money," Jarvis said. "We have to improve the attractiveness of the sport for the long term. That's absolutely critical." In the past, the manufacturers had neglected the revenue and marketing side of the sport and worried too much about the technical rules, he opined. "The MSMA, because it's primarily an engineering-based organization, has focused on technical regulations, and more recently on bringing costs down. But we need to improve the marketing side." Both Jarvis and HRC Communications and Marketing Director Livio Suppo had backgrounds in marketing, and both men believe that adding revenue and marketing value to the sport is a key aim for the future. "For example, Suzuki and Kawasaki left the sport because they were unable to make the sport valuable enough for their business. They finally pulled out because it was costing too much and not generating enough income or purpose for their key markets."

Those key markets are outside of Europe. "We believe the real potential is definitely in the Southeast Asian zone," Jarvis commented. "I saw the GDP figures of countries like the Philippines, Indonesia, Thailand, Vietnam, and they are amazing. This is where Dorna and the manufacturers could do a lot more, because we are doing almost nothing there."

Part of the opportunity that lies in in Southeast Asia is shifting patterns of spending, Jarvis explained. "I think in the past, we only sold small motorcycles in these countries, but that is changing. We sold millions of small motorcycles, but people want more now, they want the latest technology, the best they can get. There's a definite shift." This, Jarvis explained, is why Yamaha were not overly concerned about the lack of a title sponsor for the Yamaha Factory Racing team. "Our main goal is not to make money or promote other brands," Jarvis had told the media earlier, "the main reason for the Yamaha Factory Racing team to exist is to promote Yamaha's expertise and Yamaha's spirit of challenge to fans around the world. Hence the fact that everything [in the team, hospitality and garages] is very heavily Yamaha branded."

"We DO have a title sponsor," Jarvis told MotoMatters.com later that evening. "We have a title sponsor, and it's us. We are our own title sponsor. We are not in this sport to make money, we are present here as manufacturers to promote our brand around the world." Yamaha's 50th anniversary celebrations had been a prime example of what could be achieved, Jarvis said. "The 50th anniversary said a lot last year, because it was the visualization of why we've been here for the past 50 years."

The anniversary had had a definite impact on sales, as well. "I think we made 12 different race replica models of various different shapes and sizes, from scooters to R1s, and they've been very, very successful. Clothing and merchandizing was also very successful. That 50th anniversary worked very well for us," Jarvis concluded.

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i still cant believe they didnt sign up Indian grandprix. Yamaha and Honda have a strong hold in the market. Although they dont sell R1 and CBR600RR, they do sell tons and tons of R15, R125, CBR250. I thought motoGP would sign up for a race after WSBK signed up for one in 2013. Too bad they still didnt.

yes, MotoGP needs to be in new markets but these are the questions that need to be answered - what tracks are going to be used, who is going to promote the race, who is willing to pay the sanction fees for a number of years? I think Spain takes a bad rap for having 4 races. If they have the tracks, promoters, and people willing to pay the sanction fee when others don't than why not have the races there? Is it Spain's fault that they have these things in place already? Dorna is in the business of making money selling sanction fees. I'm sure they will gladly go to new areas if they have the answer to the questions of what track, who is promoting the race, and who is paying the sanction fee for a number of years. Dorna isn't going to a new track in a new country for just 1 year - it has to be a multi year agreement. If the manufacturers want to go to places like India and Brazil so bad than why don't they put up the money to have the races there and maybe lease out the promoting rights to the event?

re: "Is it Spain's fault that they have these things in place already?"

here's an even better question RD. is it Spain's fault that their citizenry have the requisite "valuing mentality" (in regards to motorbikes), that other 1st world countries only pay lip service to?

re: "Dorna is in the business of making money selling sanction fees. I'm sure they will gladly go to new areas if they have the answer to the questions of what track, who is promoting the race, and who is paying the sanction fee for a number of years."

(ngs1 presses the "EZ button")

the answer is... EVERYONE.

Excellent article and intersting chat with Lin. He is being very pragmatic.

@RDawg, the issue is exactly as you describe it: Dorna will go to markets who will pay the sanctioning fees. Those markets are those where the promoters can sell tickets.

But the teams want exposure in markets where they or their title sponsors can sell products. Those aren't always the same…

Perhaps they should do some revenue sharing both ways to align interests better.

re: "Perhaps they should do some revenue sharing both ways to align interests better."

Q: which comes first revenue or expenses?

A: expenses.

or rather i say expenses in the form of investment. before they share dime $1 of revenue, they FIRST have to cease the detrimental activity of individually trying to "socialize losses" while "privatizing gains". everyone's RISK AVERSE.

as we've already experienced with china and turkey (lest we forget), just because a region is classified as "3rd world" or "an emerging market", i doesn't gaurantee a take rate for "MotoCRT". that means all this talk of expanding to new markets is "lip service" until everyone who stands to GAIN from the success...? first collectively SHARES in the financial costs/expenses/investment associated with sustaining these new events until such time they are profitable (or not profitable as someone mentioned).

so the secret to success here is they have to do some RISK SHARING "multiple" ways to align interests better.

South East Asia has been growing rapidly since their financial crisis of the late nineties. Given the proliferation of small motorcycles throughout the region there is a very captive audience with a tangible motorcycle link. I think I'd be safe in saying their viewing figures are pretty hot too. But Eurocentric (perhaps short sighted and arrogant too) Dorna has been too slow to move here. Least not since the 2008 GFC and now the Euro debt crisis of the last couple of years.

South America. I don't know how much or otherwise they are bike fiends. But the big economies of Brazil and particularly Argentina are starting to wobble a bit right now.

Whilst it's good to hear of the efforts Yamaha are making in Asia I also think Jarvis is hiding behind his own brand sponsorship line somewhat. Are Casey and Dani riding Repsols or Hondas? I'm sure Jarvis wouldn't turn EUR10m down if such a sponsor walked through his door.

Nostro makes some good points. Asia and South America while still emerging and having positive growth are not unaffected by the WFC. Figures are not as buoyant as they were. Of course markets there can be of value to MotoGP but, like football, the sport has it's roots in Europe and I can't see this fundamental changing any time soon, despite the wishes of Yamaha and a Honda.

Also, Jarvis holds up Yamalube and Semakin di Depan as examples of the way forward but they are Yamaha FFS!
He says that FIAT, a multi-national twice the size of Yamaha..musical instruments and all, was all about Italy?
He fails to mention Petronas and possibly three races in America?

"..the need for MotoGP to shift its focus, from just tinkering with the technical regulations to trying to expand its audience base and generate more income.."

Is a lot easier said than done Lin, and strikes me as a way to divert attention from the MSMA's contribution to MotoGPs current plight.
As a spectacle it is dull to all but the committed. The spurious trickle down benefits of expensive electronics is spoiling the show.
Most bikes don't need them and most riders don't want to ride a bike to be looked after by their nanny-state, molly-coddling interference.
The reason we love bikes is the freedom and sense of self determination it brings, 180 degrees away from the corporate bullshit that is being thrust down our throats 24/7.
How about listening to your customers for once?

Jarvis can go and do his marketing thing wherever he likes but, until the show improves with more emphasis placed on the rider making the difference in controlling the excess of power over grip equation, he's got very little to sell.

Yes, there are three races planned for the US, but how many are planned for Europe?

Laguna Seca and the Indianapolis Motor Speedway are about 3100km apart. The distance between Estoril and Brno is about 2400km.

re: "Yes, there are three races planned for the US, but how many are planned for Europe?"

yes, there are three races planned for the US, but for how long? damn sure not for 10 years...!? america's characterized by riches, spoils, and excess. oddly enough, these are all attributes inherent to the PROTOTYPE model. that's what they were sold on. even hollywood showed up for MotoGP. they ain't showing up for "MotoCRT".

Few consumers in the developing world have the purchasing power to afford MotoGP events. In other international motorsports, like F1, pricing is so outrageous that consumers in developed countries can barely afford to attend. As a result, the commercial rights companies sell the races to governments under the pretense that races generate foreign investment, tourism, "brand" development for the host country, thriving B2B network, etc.

MotoGP does not offer any of those things, and the only country that gets any sort of superlative accolade is Qatar, host nation of the first ever night-GP. Dorna planned and executed that event along with the promoters and the Qatari government.

It is the MSMA who are staunchly opposed to a massive circus, with a dozen manufacturers, a score of major technological partners, and fifty (or so) major sponsors and TV network representatives. The MSMA have blocked every measure to open the sport to outsiders b/c they don't want outsiders to ride on the MSMA's coattails and enjoy the benefits of the MotoGP brand. This is what happens when you let mercantile warlords (with no business sense) run anything other than a prototype manufacturing division.

If Dorna can be blamed for anything, it is Ezpeleta's stunning portrayal of Neville Chamberlain. He negotiated with the MSMA, but all he got was a pile of meaningless paperwork. Now we're at war.

Jarvis knows what it takes to sell MotoGP in emerging markets around the world. The MSMA have not made it happen. They throw money around when they need to (e.g. Laguna Seca upgrades), but for the most part they do just enough to survive. Priority #1 is keeping people away from MotoGP. Growth is just something to chat about with the reporters. A barb to chuck at Dorna to distract from the god-awful formula the MSMA have created.

Summarizing one of your points 'The MSMA does not want More manufactures in the series, major technological partners, fifty major sponsors and TV network representatives'

1.In a global recession where are these partners, fifty sponsors and TV networks coming from?
2.Why would this be a better option for their now limited marketing dollars compared to the far cheaper but vastly broader reach of social networking and old school TV/Radio/Print?
3.How is this series a better return on investment compared to a cheaper WSBK?
4.With such a small market reach why would the money not dry up in motorcycling in bad times?

I think as fan we sometimes assume that our enthusiasm could be duplicated to everyone if only the big-bad MSMA let the bikes slide around a bit. The reality of the matter is;

1.The over whelming majority of us are motorcyclist ourselves
2.Most of the people on this forum are living in developed countries where motorcyclist are the minority
3.There is a very small fringe market of non motorcyclist that watch MotoGp simply because they don't relate to it at all.
4.At the end of the day the MSMA are a big business and the racing dollars need to be justified to someone. If they aren't the manufactures report to share holders that are only looking at the bottom line and force the cuts.

IMHO at the end of the day the sport (GP/WSBK/ect) needs to get out of its comfort zone and engage markets and segments it hadn't previously and attempt to grow. This growth will not happen being comfortable with what they currently have (4 races in Spain, 7 in southern Europe)

"I think as fan we sometimes assume that our enthusiasm could be duplicated to everyone if only the big-bad MSMA let the bikes slide around a bit."

I didn't assume anything about sliding. I implied that the MSMA are running a restricted country club, and they use the technical regulations to set a standard that keeps competitors away. If the MSMA actually want MotoGP to expand revenue and media footprint outside of Europe, Dorna need to sell the show to government-supported promoters. Governments pay for races featuring Fortune 500 manufacturers and sponsors. Governments want a B2B convention to help economic development. Attracting punters with social media happens after government funding has been obtained.

The MSMA are not actually interested in growing the sport. You know what they are interested in? Keeping the 21L rule, and going line by line through various technical systems and personnel to decide who/what can be cut. Then they will get on Twitter and Facebook and pretend to grow the sport until the economy recovers. When the storm blows over, the vicious cycle can start over again. At some point, Dorna's contract will expire, and the MSMA can posture for better terms. The MSMA are just kicking the can down the road.

I'm not worried about sliding. I'm worried about the technical regulations the MSMA have written to avoid horsepower restrictions. I'm worried about the way they misuse the sport.

re: "1.The over whelming majority of us are motorcyclist ourselves"

YAHTZEE...!!!

re: "2.Most of the people on this forum are living in developed countries where motorcyclist are the minority"

YAHTZEE...!!!

re: "3.There is a very small fringe market of non motorcyclist that watch MotoGp simply because they don't relate to it at all."

YAHTZEE...!!!

Lin is great at speaking on his views as to what would solve some of MotoGP's revenue/entertainment issues. Since everybody knows so much and wants the same outcome... why hasn't it happened yet? Jarvis, Suppo, and people alike need to take all their know-how to their Corporate Officers and get things rolling. Less talk and more action! Let all the Factories (honda, yamaha, kawasaki, suzuki, ducati, bmw, aprilia, etc) sit down with Dorna and help make it happen already. Putting pride and personal agendas to the side is still a major issue for everybody. There may not be a MotoGP in the coming years.

Q: "Since everybody knows so much and wants the same outcome... why hasn't it happened yet?"

A: because everybody's standing pat looking at everybody else expecting THEM to be the first one's to take the lead. we're not lacking ideas or intelligence... we're lacking COURAGE in cooperation.

re: "There may not be a MotoGP in the coming years."

there won't be. no "may" about it. MotoCRT is not MotoGP. and MotoGP was itself an already WEAK business model who's success was almost entirely the result of the economic bubble. if warren buffet looked at MotoGP and MotoCRT, he would say BOTH models lacked "durability". in contrast, he would pump a couple mil into the "tangible relevance" of WSBK and double his money after a few years. per darwin, all living things must compete for a limited supply of food, water, space, and other necessities... and so it goes for the world of motorbikes. that is of course unless dorna and in-front smarten up and STOP competing...?

The only words I ever heard when discussing Dorna in the paddock was something like a *grouping* of *iberian* and an anagram of *watts*. I dont think there is a cosy relationship between Dorna and the teams, they just put up with each other. Dorna have their ideas and its more administrative and south european oriented, administrators never generate anything unless its for themselves. There were over 60,000 at Sepang the last 2 years, a great atmosphere at one of the best facilities in the world. Compare most of the european tracks and they come up short. Sentul was a nice circuit till Indonesia evaporated in the 97 financial crisis. The riders love to be out there. Japan should have two races not Spain. The main problem is empty stands like in China no one wants to see them, but it takes time to build it up and it may never happen in some places. Speak to Kevin, Darryl, Frankie, Mick even Foggy about being in Asia compared to Europe. The Pan Pacific Sepang/KLIA vs the Thistle at East Midlands etc ask the teams where they prefer to be post race and what the sponsors in Aisa provide them vs in say the Sachsenring. And think about the future, Dorna are putting all the money into the Spanish series not into India, Thailand, Malaysia, Mexico, etc vested interests maybe and the results are obvious, but the same money would bring bigger results in the developing world and develop the market for the future.

He puts it right on the line when he says Yamaha are in it to promote Yamaha.

Maybe they are happy in the post-Rossi era because it allows more focus on Yamaha winning as opposed to Rossi winning on a Yamaha.

It also shows how bad things are when prominent team managers are criticizing the southern europe focus of the series. If most of your teams and races are located in countries that are not growing then it is not a surprise that the series is also not growing. I wonder what the sanctioning fee spread is. Qatar likely pays the most and I'd think the Spanish races pay the least. Germany seemed to be squeezed pretty hard but the Spanish rounds seem to get gentle treatment. Why?

Chris
http://moto2-usa.blogspot.com/

I never thought about the costs being different for each round, but it wouldn't be surprising. David, any idea of what it actually costs (dollars paid to Dorna) to host a MotoGP round, and how much variation there is in the different tracks?

Good point, Dorna seems to have a very hectoring policy in matter of sanctioning fees to races outside of spain, just theories an spanish company responsible for promote the sport cannot threat persons than are compatriots than also own 4 circuits in the same country. so is better to threat a foreign country about cost and increasing that cost, in the other hand give to the spanish circuits owners more time or be more kind with them.

The whole point of the issue is than Dorna knows or ignored the fact than having too much races in the iberian peninsula has maked monotonous the series, also adding the effect of the global crysis is like another punch in the face. so dorna needs to be quick and establish races where Motorcycles are central part of the daily life.

In some way SBK are one step ahead of dorna, because they know or at least try to anticipate the problem and are trying to get races away from east and central europe, sentul circuit in indonesia, Moscow raceway in russia and that's is just the beginning but at least they are trying to do something, dorna's is reactioning slowly to the problem. India, Phillipines, China, indonesia seems to be very good places to establish circuits for motorcycle racing.

In time we will know about the results, it's too soon to say how effective these plans than dorna are doing in his series will take effect or will be simply in vain. as the series has struggled one time and another.

I'm a huge Yamah fan, but without question Jarvo asking Rossi to take a pay cut after back to back titles to pay Jorge who hadn't won anything more money when Rossi has brought the main sponsor on board personally was probably the biggest mistake he'll ever make..It's not worked out for any of them..
He was talking about yam enjoying having no sponsor 3 years ago and it puts Yamaha racing into a category of one, as every other team realises that sponsorship is the life blood of the sport..
At some stage Yamaha will have to look inward as to the problem for them having no sponsor, and to go with it no titles of any sort. It is not a result of dorna not being is certain developing countries that Yamaha have gone from winning WSBK, Motogp and the manufcturers titles all in the same year with a strong title sponsor, to not even being in wsbk and winning nothing with no sponsor. That is all down to Jarvo and Yamaha exclusively.. Will there be any Yamahas racing outside of motogp if the sponsorship debacle continues, not so sure....

If FIAT was there SOLEY because of Rossi what would happen after Rossi retired? FIAT would have left just the same. The pay cut may have stung but at the end of the day it was having a very competitive teammate with no preferential treatment from Yamaha that hurt the most. Its wildly known that when Rossi approached Duc he told them what Yamaha was willing to pay him and if they were could match that Duc had a deal.

As for Paying Jorge the same as Rossi the most promising new talent to enter MotoGp at that time was Jorge his results at that time were 3rd, 2nd, WC, 2nd I would say he was a great investment. I mean Rossi always talked about retiring at 30 then as soon as he beat Ago's records at some point in time you need to prep for that and look to the future.

One point that I don't see as being addressed in this debateis that it costs a lot more to pack the circus onto aircraft and ship it around the world, than to truck it around Europe. Obviously if the return outweighed the cost, then there's no issue, but I'd be interested to hear from anyone that might know how the returns of travelling to Malaysia, Australia, Japan, U.S. stack up against the returns from the European events.

re: "The revenue side of motorcycle racing was crucial, the Yamaha boss maintained. "The biggest problem this sport has today is money," Jarvis said. "We have to improve the attractiveness of the sport for the long term. That's absolutely critical." In the past, the manufacturers had neglected the revenue and marketing side of the sport and worried too much about the technical rules, he opined."

finally someone from on high starts speaking my language. echo away jarvis...!!!