No matter which way you look at it, motorsport is about money and that can be frustrating. Great sporting talent gets left by the wayside because they aren’t able to (or don’t know how to) get sponsorship to stay on track.
This is the whole reason I set up Racing Mentor. It’s frustrating seeing talented drivers relegated to the sidelines.
I’ve been thinking about ways we can bring talent back into the mix.
Results don’t hurt your chances of getting sponsorship but, a lot of the time, sponsors care more about their bottom line than they do about what you’re doing on track.
Looking back at the old ways of sponsorship, businesses were encouraged to reward drivers for stellar driving and places on the podium. Even now, in top-tier motorsport, drivers will get bonuses for getting one of those top spots.
I think there’s a place for this in all levels of racing. Not only to incentivise you to race harder than ever and develop your skills to get closer to that podium but also to start bringing the narrative back to talent.
Whenever I do interviews about motorsport, people ask me: ‘What’s more important, money or talent?’
I don’t even hesitate when I say ‘money’, but I’d like to start saying ‘both’.
How an incentive-based sponsorship deal might work
First off, let me start by saying that you should always look for a chunk of money upfront from a sponsor for the work you’re going to be doing in return.
The rewards a sponsor gives you should be to incentivise you to get on the podium, thus getting their logos and brand ambassador (that’s you) bigger reach. This works really well if you have TV or live video coverage for your championship.
It’s all good and well racing in the BTCC with all that TV coverage but, realistically, how much will you get seen if you’re running at the back? Chase down a podium and hundreds of thousands of people will see you and your sponsors. Not to mention the knock-on coverage that comes from that.
Even without TV or online video coverage, there’s still a lot to offer a sponsor if you get on the podium. You can name-drop them across the circuit speakers, they get great photo content of you with a trophy, it’s a massive morale boost for their guests at the race, it’s a story to tell the people in the office, and it makes it easier for you to get press coverage too.
But you want your money upfront, right?
In terms of money, you don’t have to sacrifice an upfront sponsorship payment for these bonuses. In fact, they present a great way to add something extra to a sponsorship package because it’ll seem to the sponsor that they’re getting a better deal as some of it will be performance-based.
Let’s say you’re angling for a £20k sponsorship deal with all the good stuff such as press coverage, branding, video content, and a few events. If the business owner loves the atmosphere of motorsport and winning (either through you painting a picture or from their experience as a fan), you could add a bonus for wins onto that.
Maybe £500 per race win, and £200 for another podium position.
It’s not going to be life-changing but it brings your talent back into the conversation.
What you need to do is break that £500 and £200 down into benefits, just like you would the full £20k. For example:
- Exposure that leads to direct sales.
- Trophy pictures that fit with a brand’s ethos of hard work and performance.
- A trophy to visit their HQ for a staff morale boost or as a talking point for potential customers.
- VIP customers high on that winning feeling at a race weekend – making them more likely to spend.
It might not be for you
This is a model that means you need to put your money where your mouth is. You might prefer to take that £20k and just do your thing on track, giving extra benefit when you win without any extra cost to your sponsor.
This is for people who want to bet on their skills. It’s for people who like to take a risk. This adds a whole other element of excitement to racing, which is already pretty exciting as it is.
It might not be for them
A risk-averse business owner (is there such a thing?) might not want the unknown of those podium payments.
From your research and your initial discussions, you should understand if this is something a sponsor would be willing to go for. Think about how this kind of package might align with their goals and values.
Finding the risk-takers
If you can find a sponsor that loves the excitement of a bet (there’s an obvious angle here), then they’re likely to go for it. Find someone who loves the thrill of the unknown but also understands the benefits of the extra coverage and perks you could give from a podium position.
Look for businesses that value adventure, excitement, performance and reward. You might see this in their branding, company culture, or messaging. Even now, I bet (pun intended) you’re already thinking of brands that fit the bill.
Think this fits with your brand? Take some time to brainstorm some potential targets now.
It’s all in the pitch
As with any sponsorship deal, how you pitch is key. You need to take into account the business’s goals, tone of voice, your relationship with the decision-maker, the money you need/want, your timeline, and so many other elements (not to mention Brexit…).
The same goes for pitching a performance-based deal but this is where anchoring could work quite nicely for you.
Let’s look at some bigger numbers. You’re looking for £50k from one sponsor and you’re confident they have the money and would get huge benefit from working with you.
It’s worth going in at £80k and letting them negotiate down to the £50k you think is right for the deal you’ve put together. But what if you counter-offered with £50k plus a performance-based deal that could total another £10k if you perform well?
You’d need to reiterate the benefits of the £50k deal and the performance-based deal but you’ll walk away with the £50k you wanted, plus a potential extra chunk of money.
So what you’re offering to your sponsor is £80k worth of work (in their eyes) but, because you’re keen to work with them and love their ethos, you’re willing to do that extra £30k of work for a £10k performance-based model.
This then looks like they’ve got a great deal over what you initially pitched.
This is the whole concept of anchoring. Go in high when you know they want to work with you, and then let them have it at a lower price. It’s sales 101.
In writing this, I realise these tactics may sound shady to a non-business-person but this is just regular sales and the same thing any business owner would offer you in a similar position. The difference is, you’re not used to it. After all, you’re more focused on the racing, right?
On the other side of the table, your potential sponsor is employing their own negotiation tactics and some may even be hoping for your naivety when it comes to securing a business deal. Believe me, this is all done in good faith. Business is business.
Your contract needs to be watertight
You should have a contract with any sponsorship deal so both parties know exactly what is required of them.
With a performance-based model, this is even more important because the last thing you want is for a sponsor to weasel out of their payment when you hit your target.
Your contract needs to make it clear on the payment terms should you get that podium position, what extra benefits a sponsor will get, any extra work you/they need to do and anything else pertinent to the deal. I can’t say enough how important it is to get a lawyer to look over this.
Easing that risk
I recently connected with a company called Sports Alive. They do all sorts of motorsport insurance but they also cover performance-based bonuses and have started working with BTCC driver Tom Oliphant on this basis.
The way it works is like any insurance premium. You/your sponsor pays a lump sum to cover bonuses needing to be paid out.
For example, a sponsor might only have to pay £5k upfront to cover themselves for a £1k per-race-win bonus. If you win 10 races, that insurance policy was well worth it and they get all the perks of those 10 wins. The gamble is, of course, you might only win two races. Either way, you get the bonuses you’re owed.
There’s a number of ways you can work an insurance policy like this into a performance-based deal. Either you ask for more money to cover the insurance premium yourself — essentially betting that you’re going to win enough races to make it worthwhile — or you offer it as an option to a sponsor who wants to take a risk but doesn’t want to take /that/ much risk.
No matter how you structure a deal like this, remember you need to keep your sponsor’s goals at the forefront of your mind. Think about how what you’re doing can benefit them and make sure they understand those benefits at every stage of the pitch process. It’s also important to understand how you’re going to measure success too.
As I mentioned, this model might not be for everyone but I think it’s important we start to bring talent back into the mix. Your race wins might not be everything to a sponsor who wants track days and the use of your car for trade shows, but it’s important that you bring it into the conversation in some way because although money drives motorsport, it shouldn’t be everything.
Have you ever done a performance-based deal with a sponsor?