How History Is Repeating with Energy Drinks, And Creating Another Tobacco Disaster in Motorcycle Racing

06/11/2014 @ 6:50 pm, by David Emmett20 COMMENTS

How History Is Repeating with Energy Drinks, And Creating Another Tobacco Disaster in Motorcycle Racing monster energy barcode 635x423

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 that 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.

Sales 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 attrack 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 millenium.

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 that 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 appears 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.

This article was originally published on MotoMatters, and is republished here on Asphalt & Rubber with permission by the author.

Comment:

  1. Conrice says:

    Hopefully, we find a new vice that can sponsor the sport before Energy drinks get hit legally.

  2. DevonSowell says:

    Agree 100%

  3. paulus says:

    Personally… I am sick of seeing energy drink sponsorship.

    This problem also transfers over into MX/off-road where every man, woman and child is some form of energy drink brand spokes person and every race a branded carnival.

    I realize the need and the bucks involved, but the product is pure sh*t!

  4. KSW says:

    Good story David. Meanwhile, VIP is overflowing and at the recent Isle of Man TT Honda was but one company who has no budget for the those creating the brand in the media room yet can afford to rent the entire Millntown estate, erect tents, cater the event with great food and construct a 100 meter scaffolding structure to watch the race from an exclusive location. Meanwhile, no $$ for anything else. Funny that.

    On energy drinks, I’d say the water and Gatorade going into all those sponsored energy drink bottles are the real winners. Now how do we get rid of the Energy Drinks and give away water while Gatorade moves in as the drinks sponsor? Hmm….. you mean people will follow off a cliff if told to do so? Yep, right over the cliff.

  5. Great article, it makes me want to go into marketing if I could somehow help the sport i love. Watching how motorcycle racing has decayed in the US really breaks my heart, especially after seeing the passion that a lot of the individual racers have.

  6. Mitch says:

    What is it that ties motorcycle racing so endemically to sponsorship by vices? Nascar has wholesome candy and construction for some reason? Why can’t a bank or airline sponsor a bike?

  7. smiler says:

    Great article but to say that many of the issues regarding MotoGP are not Dorna’s fault is just not correct.

    The fundamental problem is that no one in Dorna has been centrally involved in motorsport. In F1 Ecclestone, like or loath him has been both a driver and team owner. He rescued F1 from bankruptcy in the 70′s and no matter what people say F1 is very profitable and popular. This season likely to be a truely memorable one.

    The Flammini brothers, who ran WSBK. One was a trained economist and business man, the other used to be a racer and race team owner. Their legacy is still reaping rewards in the series.

    Carmelo Ezpeleta – managed a track in Spain. Not to mention the fact that Spain has no domestic motorcycle industry. usually very helpful. He also completely ignored Stoner’s reason for leaving. Like him or not, when was the last time a young rider left motorsport for the reasons he gave?

    The article mentions what a great job they have done with coverage. By way of example: Dorna signed a 5 year deal in the UK with BT. A hugely unpopular deal because although profitable for Dorna it slashed the viewing public in the UK, in a time of recession, hardly a sensible move, reducing popularity in a huge market for MotoGP.
    The have enforced pricing to print media that ensures most of them have little or no covergae in an era when print media is under pressure thus reducing interest.
    From what has been expressed on this forum, coverage in the States is a joke.

    There are four rounds in Spain with another set up this year in Argentina, a former colony and significant market (apart from the hickups) for Repsol. How about rounds in S Africa, Canada, Belgium, Russia, Scandinavia, India. Czech, the list is very long.

    It has continually promoted the careers of Spanish riders. The most expressive example of this is the waving of the rookie rule for MM. A Spanish rider, riding in a Spanish rider team for a Spanish sponsor. Apart from the safety implications, the rider has not made MotoGP more popular. Would the last couple of years been more exciting with MM on a satelite bike, of course they would.
    It promotes the Spanish CEV feeder championship on the main MotoGP site. That would be like Obama covering all Democrat news on the White House website.

    With regard to technical regulations, Dorna has side lined the FIM in favour of trying to run the show itself. This has been a mess as can be seen with Honda’s domination and monopoly in Moto2 and 5 different classes of bikes racing in MotoGP. A class where rules are excepted when one (dominant) manufacturer cries foul – Ducati’s use of the open rules to its advantage and Honda subsequently moaning with the consequence that Ducati will be punished for success.

    Dorna has had at least 5 years to ween itself off Rossi and his dominent marketing cache for Dorna. This might have been part of the reason for promoting MM so heavily. However in MM they have a decent rider with no charisma or character at all. He will never fill Rossi’s boots in that regard.

    Thus far it seems to have done better in WSBK, though this is perhaps more to do with the legacy left by the brothers Flammini. There are more manufactuers and riders this year able to compete for the podium. More manufactuers this year and some great racing.

    MotoGP is suffering from the double whammy of being dominated by Spain and it’s companies as well as a concentration of soon to be unpopular products.

    Who is likely to rescue MotoGP. Like him or loath him. Rossi yet again. What will he do when he retires from racing? Play golf, surf, settle down? As his racing carrer comes to an end, he has invested in a moto3 team already. This has been successful and provides a counter to Spanish ambitions and an avenue for italian riders.

    I think he will play a central role in MotoGP in the future or who else?

  8. Gutterslob says:

    I’m curious about one thing though. I cycle a lot and consume energy gels on a regular basis. I know the possible side-effects and all. Not a fan of drinks like Red Bull or Monster, but what makes them bad/worse then energy gel? Is it the caffeine content? If it’s just the sugar and caffeine, then why is stuff like Coca-cola still sold to minors?

  9. paulus says:

    Gutterslob, good point.
    I don’t think that energy drinks they are any worse/better than gels… just a more mainstream and recognizable variation of the same sugar/caffeine/taurine type product.
    Coca-Cola and others already have their market position and have not (yet) joined the ‘extreme’ sports sponsorship leagues.

    At the end of the day, unless you need the quick carb hit for fueling exercise energy…. it’s all shite!

  10. Jp182 says:

    Gutter I think that’s because:
    1. The Coke brothers spend a large amount of money lining pockets in various governments and political groups

    2. They have moved away from pushing soda to pushing branded water instead to help with their image

  11. spamtasticus says:

    Pushing? since when is making a product available for purchase freely considered pushing? The only products that have ever bern pushed on me have been expensive college textbooks and now health insurance.

  12. scuppasteve says:

    smiler:

    I agree with a lot of the things you have written above, but the fact you think MM has no charisma or character shows how biased you are against him, Repsol and Dorna. MM is the best thing for the sport since Stoner. Rossi has always been a great character and amazing rider, but he has faded to the likes of Jorge Lorenzo and MM. J. Lo and Dani Pedrosa are people that have no charisma or character, thats why everyone is push MM so hard to be the face of MotoGP, those two have no real brand worth and can’t be packaged and sold the way MM and Rossi can.

  13. Conrice says:

    @Mitch – The reason that it’s usually vices that sponsor is because the profit margin is insanely high. Therefore, they have more money to spend on marketing AND they’re entirely dependent on marketing as well because, in general, they’re new or at least, young products. They’re also driven by marketing because lets face it, no one really “needs” RedBull or Monster.

    @JP182 – The Coke brothers? Who are they? Are you a little confused with the KOCH brothers, who have absolutely nothing to do with Coca Cola? There are no “Coke brothers”. SMH

  14. Xan says:

    In the states, I think serious legislation (IE banning advertising to minors) is probably not on the horizon for energy drinks. There is no massive special interest push, monied to the hilt, like there was for tobacco. Also, the impact on health is drastically different. The extreme level to which energy drinks are involved in EVERY sport also means that there would be massive lobbying efforts against such regulation. I personally could not care less if sports advertise energy drinks. I do find it silly though when someone finishes some strenuous activity, the cameras come on, and they crack open a red bull. I have to assume that they immediately vomit it up and chug water after the press is gone. I personally enjoy energy drinks, but not as something to quench thirst lol.

  15. John Mith says:

    Given enough time and lack of resistance from the motorcycle community they will eventually go for the bikes themselves if given enough times. Bikes are dangerous you know. So is Smoking and Energy drinks and going outside of your house.

  16. No one in Dorna has been centrally involved in motorsport? Carmelo Ezpeleta is a former racing driver, team owner, and then circuit owner. He ran the Calafat circuit, Jarama, and played a central role in the construction of the Barcelona circuit. He has run Dorna’s motorcycle racing operations since 1991, which is 23 years.

  17. Interesting points are raised in the article as well as the comments above. It will be interesting to see how it plays out if they go away and the sport is forced to rely on endemic sponsors again.

  18. David says:

    The reason tobacco and energy drink sponsorship rules in motor sports is because Genius marketing peeps know motor sport fans are mindless idiots who blindly follow the current pied Piper over the cliff.

    I never smoked or tried one of those drinks.

    Which is why I’m such a Genius! LOL

    Seems like Cool Aid sponsorship would be HUGE!!

    More Mindless Idiots drink that stuff than Sports Drinks!

  19. KSW says:

    David,

    I’ll say this on growing the sponsors and those involved. When I talk to Frine and Dorna as a business owner with magazine/newspapers, finance company, bio diesel and the request is a simple one such as Media Credential that I don’t have to pay for I am summarily told no. Now, Dorna knows my situation and many of those corporate sponsors are using our companies on the investment side. What part of the Dorna/Bridgepoint brain isn’t working that causes them to tell me they have no interest in my being at the track, in media or in any way promoting there brand without paying them to do so? If you or anyone can answer that question then they need to relay that to the brain dead personnel working the front lines at the track. The issue of sponsorship in racing is complicated as in my previous post here I mentioned the hundreds of thousands of dollars spent on VIP hospitality for those who have no clue about racing but when it comes to sponsoring a team/rider they have little to offer. Even you, Scott, Jens, Tony are all paying to be there. I can easily afford to pay but on what planet does media pay to promote a private equity investment? Evidently, planet MotoGP. I challenge all of those involved at the corporate, for profit, publicly traded company level to either put there money into racing not gourmet food, chefs flown in from Italy and all those other useless expenses or go away. IF they aren’t as interested in fully supporting the sport as they are in stroking there own backs at the track then they are doing the racers/teams no favors. But hey, what do I know? I offered more than Dorna the moon and was told to go away.

  20. tony says:

    Who cares what the sponsor is for motorcycle racing ? I can’t believe your comparing energy drinks to tabacco … at least energy drinks aren’t killing people like tobacco has been, and if energy drinks are such a bad thing to put in front of younger kids and you think age limits should be placed on them, then so should soda, cheeseburgers, pizza and french fries which i believe are hurting kids way more than monster energy supporting motorcycle racing….

    “Sponsors should be lining up to back MotoGP and World Superbike teams, but they are not.”

    -so just let the energy drink companies allow the teams to do what they do and enjoy watching :)