The inaugural round of World Superbikes in India is under serious threat, which leaves Dorna facing severe problems just months after taking over the running of the WSBK series. Bureaucracy, customs formalities, and import bonds threaten to see the race, scheduled to be held on March 10th at the Buddh International Circuit near New Delhi in India, either postponed or called off indefinitely, according to reports over on GPOne.
The problem revolves around the difficulties faced by the need to temporarily import large quantities of material into India, and consists of two parts, GPOne is reporting. The first issue is one of timing: the Indian round of WSBK is due to be held on March 10th, just two weeks after the opening round of the series at Phillip Island in Australia.
The problem is that Indian customs regulations demand that the technical equipment (bikes, parts, tools, and other equipment) need to be in a customs warehouse in India 15 days ahead of the race, to allow the customs service time to inspect the goods prior to entry into the country. That would make racing at Phillip Island difficult, given that it would mean that the bikes would have to be in India at around the same time that the WSBK men need them to contest Superpole on the Saturday before the race.
The second problem could be even bigger. Normally, when goods are imported into a country, that country’s custom authorities levy some form of import duty, a tax on imports. However, in the case of goods which are only in the country temporarily before being exported again, as in the case of racing motorcycles to be used at a round of World Superbikes, the import duty is either waived entirely, or a temporary import duty is paid, to be returned (minus a handling fee, of course) once proof has been shown that the imported goods have left the country again.
The problem here is that the sums involved are large: import duty on a street-legal superbike is 105% of its new value, though what value would be used to calculate the duty on a race-ready WSBK machine remains to be seen. Similar amounts are due on all spare parts, tools and other equipment, meaning the sum required for each team in temporary import duty could easily run into the high tens or low hundreds of thousands of euros.
Though they would (eventually) see this money returned, it would mean that already cash-strapped World Superbike teams need to find very large bank guarantees for a period of several months. While WSBK budgets might just be able to stretch to covering those amounts, the much poorer World Supersport teams would have a real problem handling this.
The problem of temporary import duty is not unique to India, of course. Many countries around the world impose similar charges, but usually, political support for sporting events such as MotoGP, World Superbikes or Formula One helps smooth the passage of equipment in and out of the country. Customs procedures are shortened, temporary import duty requirements are either waived or reduced.
In the case of Formula One, for example, a separate internal department of FOM, the company which runs F1, deals with such issues for the championship as a whole. Dorna does something similar for MotoGP, while Infront Motor Sports has tried to do the same for WSBK. But while F1 is a global sport with an income in the billions of dollars, World Superbikes must work with a much more modest budget, which creates problems when faced with the gargantuan bureaucracy of countries such as India.
But dealing with India is not easy even for F1; the Indian Sports Ministry could have waived import duty requirements for F1 by designating the race an event of national importance. They did not, leaving the F1 organization to deal with a mountain of paperwork for the event. The situation was so complex that some teams, such as Ferrari, decided against flying in development parts for the Indian race, a decision which Fernando Alonso felt cost him significantly in the title chase.
Just months after taking over World Superbikes from Infront Motor Sports, Dorna faces its first major challenge. An emergency meeting has been called in Madrid for next week to discuss the situation. At the meeting will be Dorna, the Italian shipping company charged with transport, and representatives of the teams, according to the reports by GPOne.
The way this situation is handled will be a test of Dorna’s intentions towards the World Superbike championship, but it is also a test of Dorna’s future strategy for both WSBK and MotoGP. Dorna is very keen to break into the major Asian TV markets, seeing India and Indonesia as key to their future expansion.
This is a goal shared with the manufacturers, who are seeing increasing shares of their revenue being generated by sales of motorcycles on both the Indian subcontinent and Southeast Asia as a whole. Staging a race in India is the first step in Dorna’s Asian strategy, and having World Superbikes visit the country first would see WSBK paving the way for a MotoGP race in the country as well.
But while postponing the race would be a major setback for this season, it could well prove to be an advantage in the long term. The India WSBK race was probably the straw that broke the camel’s back in the battle between Dorna and Infront, which saw Bridgepoint, hand control of WSBK and MotoGP to Dorna, taking it away from the Flamminis, who have run it for the past couple of decades.
Early in 2012, Dorna had been in negotiations with the Buddh International Circuit to stage a MotoGP race in April, either before or after the race in Qatar. But Infront reportedly massively undercut Dorna’s offer, offering a round of World Superbikes in March for a fraction of the price Dorna was asking for the MotoGP race.
The offer was a political move on the part of Infront, the sanctioning fee being requested from the Buddh International Circuit way too little to make it a commercially viable proposition for either WSBK or MotoGP to visit regularly. Snatching away the Indian round was a victory for Infront, leaving Dorna without a race in India, the circuit showing no interest in organizing a race for the price Dorna was asking, now that they had the ultra-cheap WSBK round on offer.
Now that Dorna controls both series, however, they may be able to use their leverage to increase the price of both MotoGP and WSBK races in India to more commercially sustainable levels. This would be good for both series in the long run, with World Superbikes covering its costs for going there, and MotoGP perhaps even turning a profit. By threatening to call off the Indian WSBK round, they could hope to persuade the Buddh International Circuit management to increase the sanctioning fees they are willing to pay.
Much depends on contracts, however. If Dorna cannot blame the customs difficulties on force majeure – which seems unlikely, as customs procedures are well-known and well-established – then they may be forced to either pay off the organizers, or try to work whatever miracles possible to make the race happen. While Dorna should have been prepared to face the problems of dealing with the notoriously sluggardly Indian bureaucracy, the real problem lies in the conflict between Dorna and Infront.
While both sides were busy fighting for supremacy in the Bridgepoint board room, they were neglecting to ensure that the details of the race in India would be dealt with. In the bitterest of ironies, the battle precipitated by a conflict over the Indian World Superbike round could end up causing the Indian World Superbike round to be called off.