Opinion: History Repeating - With Energy Drinks, Motorcycle Racing Faces Another Tobacco Disaster
At the Barcelona round of MotoGP – or to give it its full title, the 'Gran Premi Monster Energy de Catalunya' – title sponsors Monster Energy are to unveil a new flavor of their product, called 'The Doctor', marketed around Valentino Rossi. This is not a particularly unusual event at a MotoGP weekend. Almost every race there is a presentation for one product or another, linking in with a team, or a race, or a factory. If anything, the presentation of the Monster Energy drink is even more typical than most, featuring motorcycle racing's marketing dynamite Valentino Rossi promoting an energy drink, the financial backbone of the sport.
It is also a sign of the deep trouble in which motorcycle racing finds itself. Energy drinks are slowly taking over the role which tobacco once played, funding teams, riders and races, and acting as the foundation on which much of the sport is built. Red Bull funds three MotoGP rounds, a Moto3 team and backs a handful of riders in MotoGP and World Superbikes. Monster Energy sponsors two MotoGP rounds, is the title sponsor of the Tech 3 MotoGP squad, a major backer of the factory Yamaha squad and has a squadron of other riders which it supports in both MotoGP and World Superbike paddocks. Then there's the armada of other brands: Gresini's Go & Fun (a peculiar name if ever there was one), Drive M7 backing Aspar, Rockstar backing Spanish riders, Relentless, Burn, and far too many more to mention.
Why is the massive interest in backing motorcycle racing a bad thing? Because energy drinks, like the tobacco sponsors they replace, are facing a relentless onslaught to reduce the sale and marketing of the products. A long-standing ban of the sale of Red Bull – though strangely, only Red Bull – was struck down in France in 2008. Sale of energy drinks to under-18s has been banned in Lithuania. Some states and cities in the US are considering age bans on energy drink consumption. And perhaps more significantly, the American Medical Association has been pushing for a ban on marketing energy drinks to minors, a call which resulted in leaders in the industry being called to testify in front of the Commerce, Science and Transportation Committee of the US Senate.
Whether we like it or not – and whether it's justified or not – at some point in the near future, marketing of energy drinks is going to be limited in some of the major motorcycling markets. Though an outright ban seems extremely unlikely at the moment, the initial steps are being taken towards a ban on marketing energy drinks at under 18s. That will affect all forms of motorsport, and force the companies to reconsider their strategy. Straightforward sports sponsorship is likely to be the first casualty, with a shift towards one-off events where the link is much more subtle. The record-breaking parachute jump by Felix Baumgartner is an obvious paradigm for energy drink marketing to follow, massive events like that providing both much more control and an awful lot of marketing bang for the buck.
Does this mean the end of energy drink sponsorship for MotoGP and World Superbikes? It's hard to say. What seems likely is that if the pressure from government regulators and legislators grows too great, energy drink companies will reduce their presence in traditional sports while they explore alternative avenues. Energy drink companies are full of young and smart people, always looking for the next big thing. Like the tobacco companies that came before them, they have no particular loyalty to motorcycle racing, other than the fact that part of the audience they wish to capture (young, fashion-conscious and with money to spend on trend-sensitive goods, which energy drinks – basically massively overpriced caffeinated sugar water – surely are) follow the sport.
So what is motorcycle racing in general and Dorna in particular doing to address this problem? Nothing. At the moment, the sport is in denial, hoping that legislators will not move too fast. If anything, they are making themselves even more dependent on energy drink sponsorship, with Monster and Red Bull sponsoring five MotoGP rounds between them, up from three rounds just three years ago. The focus is far too much on short-term income and not enough on building a broad, healthy, multi-industry base of sponsorship for the sport. It is, after all, easier to persuade an existing sponsor to expand their presence than it is to find new sponsors and attract new industries into backing motorcycle racing.
A repeat of the disaster which followed on the banning of tobacco sponsorship looms. Then, as now, neither teams nor organizers were prepared for the loss of tobacco sponsors, despite having ample time to go out and search for replacements. In previous years, teams had barely had to work to attract sponsors. Especially in the premier class, teams would accept proposals from various tobacco companies and accept the one which best suited their requirements. When the tobacco companies left, teams were left without the faintest idea of what it takes to attract sponsors and keep them. With no marketing expertise, the teams were left to go cap in hand to Dorna to support them. Dorna only managed to cover the loss of tobacco sponsorship thanks to the massive rise in income from TV contracts, which exploded in the early part of this millennium.
Though the energy drinks are not quite as much of a pushover as the tobacco companies once were, they are not representative of outside industry sponsors. If – or perhaps, when – the energy drinks pull back from motorcycle racing, teams and Dorna will once again flounder to find sponsors to replace them. There is little evidence of a grand marketing plan to sell the sport to industries outside of motorcycling, and no clear core concept which can be used to market the sport.
Motorcycle racing fans like to spend their time complaining about everything which Dorna does, and blaming them for almost everything that is wrong with the sport. Much of it is not their fault – most of the technical regulations were drawn up by the manufacturers, which Dorna have had to reluctantly agree to. And Dorna do not receive the credit they are due for creating a remarkable product: the TV coverage and footage of MotoGP is truly exceptional, and a wonder to behold.
If much of the criticism leveled at Dorna is unjust, there is one area where the Spanish company has truly failed motorcycle racing. Dorna, part-owned by a private equity fund and a pension fund, and saddled with vast debts, spends too much of its time living hand to mouth, ensuring that there will at least be a small profit this year to keep the owners happy. What they don't do is spend enough time and effort trying to expand the sponsorship base of the sport and increase revenues in the long term. Pay-per-view TV deals are lucrative in the short term, but the extra income gained from PPV broadcasters just goes to fill holes caused by sponsors departing because of a lack of audience. Dorna appear to lack both the will and the personnel needed to build a broader, stronger sponsorship base on which the sport can grow.
This is the real crisis facing motorcycle racing in all its forms: a lack of income. The sport relies far too heavily on just a few sponsors from a very restricted industrial and regional base. Take away energy drinks and companies trying to market to the Spanish and Italian markets, and there is a massive hole in the global budget of motorcycle racing. Despite a string of small deals, Dorna has failed to market both MotoGP and World Superbikes to new sponsors. This failing is doubly inexcusable, as motorcycle racing's two biggest demographics – men between 18 and 45 with disposable incomes, and fans from South East Asia – are extremely valuable to marketers and advertisers. Sponsors should be lining up to back MotoGP and World Superbike teams, but they are not.
Selling motorcycle racing to advertisers and sponsors is not easy: I should know, for if it were, I would be making a comfortable living, rather than just scraping along. However, Dorna has the means and the backing to secure the best marketing talent to help them sell the sport to sponsors. It is imperative that they start doing so now. If they wait until energy drink companies are forced to withdraw from motorcycle racing, it will be too late. And this time, there won't be the lucrative TV deals to paper over the cracks.