No news is good news, at least as far as the current outbreak of COVID-19, or the coronavirus is concerned.
And for thirteen days – nearly two whole weeks – we went without a change to the calendars of either the WorldSBK and MotoGP calendars (ironically, that changed this morning).
Given the speed at which the world has changed over the past two weeks, that is almost an eternity in normal time. The same could not be said for other motorsport disciplines. For two weeks, we have been inundated with cancellations and postponements.
The Le Mans 24 Hours Endurance motorcycle race has been postponed until August. The Daytona 200 and Daytona TT flat track races were postponed until October. The Merzouga Rally has been canceled, the route of the Silk Way Rally changed. The Isle of Man TT was canceled, Supercross and MXGP had rounds canceled and postponed.
The TT wasn’t the only iconic event to be canceled. F1 canceled Monaco, probably the most prestigious race on its calendar, and postponed the races at Zandvoort and Barcelona, joining the Bahrain, Vietnam and China races in being pushed back to the second half of the year. The Le Mans 24 Hours car race was put back until September.
Changing Day by Day
As of Monday, March 23rd, the only motorsports event still planned for April was the Dutch round of WorldSBK at Assen. But when The Netherlands announced further restrictions on movement, extending the ban on events until June 1st, and banning gatherings of more than two people, WorldSBK at Assen became an impossibility.
A day later, on Tuesday, March 24th, Dorna issued a new calendar, with Assen WorldSBK postponed until the weekend of August 23rd.
We won’t have to wait another two weeks for calendar updates. The WorldSBK rounds at Imola, Aragon, and Misano are all likely to be postponed until later in the year, with another version of the calendar due out at the end of the week.
Even how long that calendar will last is open to question: the world remains in a state of flux. Changes to the MotoGP calendar are imminent as well, and could happen this week.
The postponement of Assen WorldSBK was inevitable. In addition to the ban on large events put in place by the Dutch government, other travel restrictions were also in place.
The Netherlands had joined the EU ban on non-EU travelers from entering the Schengen zone, which is due to last for 30 days, starting on March 17th, and has banned all flights arriving from Spain.
There are bans on movement in place in Italy, Spain, France, and parts of Germany, as well as a ban on entering Belgium. Every day, new restrictions are being put in place.
Even if the Dutch government were to change its mind and lift restrictions currently in place, the Assen round of WorldSBK would still be impossible to hold on its original date. The global nature of international motorsport (and indeed, all sport) means that restrictions in other countries could still prevent vital staff and equipment from getting to Assen.
If Italy is still in lockdown, then Pirelli and Ducati staff won’t be able to fly to The Netherlands. If Austria still has its borders closed, or Bavaria still has restrictions on movement in place, then trucks with tires and bikes won’t be able to drive from Bologna and Milan.
If the current restrictions on movement are still in place in Spain, then the KRT team won’t be able to leave Spain and drive their equipment up from their Barcelona HQ, and team members wouldn’t be able to fly to Assen from Spain due to the ban on inbound flights.
The Honda WorldSBK team will face a similar fate, with the added complication of Alvaro Bautista being stuck in Spain, and Japanese HRC staff unable to enter Europe due to the Schengen travel restrictions.
Even local team Ten Kate Yamaha, based 55 km from the TT Circuit in Assen, would be unable to compete if restrictions on movement in France prevent rider Loris Baz from getting to The Netherlands.
Navigating a Tangle of Rules
Events scheduled for May and maybe even June will face this same complex web of international, national, and regional restrictions.
Both the MotoGP and WorldSBK paddocks contain a multitude of nationalities, with teams located all over Europe and Asia, and staff from all around the world. As long as the Schengen zone travel restrictions are still in place, racing is going to be impossible.
But even if all restrictions in Europe are lifted, paddock staff from outside the EU would face impossible choices.
If, for example, restrictions on travel to Japan are still in place, Japanese staff could be faced with a choice between not going to races, or being stuck in Europe indefinitely, until the Japanese government changed its mind.
There’s a bigger question here as well. At some point in the future, restrictions around the world will be lifted.
When they are, how will the fans react? After a prolonged period of social distancing, of avoiding large gatherings, of being quarantined at home, will fans want to throng together in crowds in their tens of thousands?
Even in countries where movement has not been completely restricted, there are signs of people avoiding social contact.
In The Netherlands, shops have closed despite there being no legal requirement for them to do so. In popular shopping streets and malls, fashion stores and others have closed voluntarily because the streets they line are deserted, bare of casual shoppers.
People are staying away, in part through a sense of social responsibility, in part out of a sense of fear and disquiet.
This kind of significant social change has a lasting impact, and can take a while to turn around. Circuits and event promoters are itching to get going again, but they fear that even when they do, after the worst of the current outbreak has subsided, people will be slow to return to old habits, slow to venture into places where infection might still linger.
According to psychologists, it takes six weeks to form new habits. If social lockdowns, quarantines, or social distancing practices stay in place for a couple of months, it might take some time to return to normal.
And that’s without the obvious and vast economic impact of the outbreak. Assessments of the economic impact of the COVID-19 crisis are bleak: two quarters of severe contraction, followed by a rebound to levels below where the economies of the world were at the start of the year.
In the Euro zone – where eleven of the remaining nineteen races are to be held – investment bank JP Morgan is forecasting a 15% and 22% contraction in Q1 and Q2, followed by a rebound of 45% and 3.5% in Q3 and Q4. The magic of compound interest means that the Euro zone still ends up 0.5% down over the year. And it is a similar story in the rest of the world.
What effect will such a catastrophic economic shock have on the willingness of race fans to spend money on tickets?
Even as governments and central banks are pulling out all the stops to mitigate the worst of the economic damage, fans will surely become more fearful and more cautious about spending money, to go to races, and perhaps even to buy TV and video packages to allow them to watch the races.
These choices will be made even more difficult by the fact that the postponement of so many events, sporting and otherwise, has seen them rescheduled to the second half of the year.
While we face a hiatus of two, maybe three months without racing (or soccer, or baseball, or cycling, or pop festivals, or opera, or theater, or movie-going, etc. etc. etc.), all of this will be back on with a bang at the end of the year.
Even in the current situation, with the Jerez MotoGP round still nominally scheduled to go ahead, the MotoGP calendar from August is insanely packed.
Brno and the Red Bull Ring on consecutive weekends, then a weekend off, then Silverstone, a weekend off, Misano, a weekend off, then Aragon and Thailand back-to-back, then a weekend off, then the Pacific triple header of Motegi, Phillip Island, and Sepang on consecutive weekends, then another weekend off, and Austin, Argentina, and Valencia on consecutive weekends.
And that’s just MotoGP. WorldSBK will have to cram postponed rounds into the same slot, as will F1, and the European soccer leagues, and cycling’s grand tours, and every other event you haven’t heard of.
Not only will consumers be economically wary of spending money on entertainment, at exactly the same time, their choice of events each weekend will be vast. There will simply not be enough hours in the day to keep up with the tsunami of sport which will deluge the later part of the year.
Even rescheduling the races missed in the early part of the year will be tough. Putting together calendars which clash with other major series as little as possible is hard at the best of times.
But with the best part of half a year of major events to cram into the second half of 2020, recreating that intricate mesh of non-competing events becomes impossible.
Not just because of the clashes with other sporting events. Circuits cannot afford to sit unused in normal conditions, and so schedules are packed with events.
Not just major racing series: weekends are filled with national and regional racing championships, weekdays filled by track days, test days, and all manner of other entertainment. Large corporations treat key staff or big customers to private runs on track.
Take Assen as an example. In addition to the Dutch TT MotoGP race and the WorldSBK round, the circuit hosts a number of other major events. The Ducati Club Races at the end of May draw tens of thousands of fans.
The Truckstar Festival at the end of July draws a crowd of 50,000, the Gamma Racing Days in early August some 80,000 fans. There’s the German DTM championship round, en early September, followed by the British Superbikes weekend in late September, which kicks off BSB’s championship showdown.
All these events and organizations have contracts with the circuit. Moving them to make way for MotoGP or WorldSBK is no simple matter. Agreements have to be sought, and the promoters of existing events given a compelling reason to move.
Such reasons may exist – other championships may be forced to reschedule their own series to avoid clashes and find slots for postponed rounds – but the delicate job of jiggling all of the competing pieces into place is unbelievably tricky.
It’s not just the promoters of existing events that need to be managed. Staging a MotoGP or WorldSBK race is not just a question of rolling the bikes into the garage and then out onto the track.
Marshals are needed, most of whom are volunteers and need to book vacation time to attend. Medical staff need to be hired and volunteers recruited to man the marshal posts, the circuit hospital, and to look after the sick and injured among the tens of thousands of fans who turn up for the race.
Security personnel are needed to manage the crowds and keep the peace. Police are needed to ensure safety inside the track, and manage traffic flows into and out of the track.
Medical helicopters need to be booked to be able to transport any serious injuries from the track to the nearest hospital. A camera helicopter is needed to film the overhead footage.
Staff are needed to work the concession and food stands dotted around the track. And a host of other hospitality staff are needed to serve in restaurants, VIP lounges, and elsewhere.
Organizing all this is a significant challenge. And if MotoGP and WorldSBK return to action at the same time as all other major events – sports, festivals, etc – then demands on staff and resources are going to be huge.
Circuits and races will be squeezed from two directions: from the public, who have a vast array of entertainment options to choose from every weekend and so may choose not to go to a race; and from other events, which are trying to hire staff and resources from the same pool as a MotoGP or WorldSBK weekend.
Some races will be very difficult to reschedule. In an interview last with French sports daily L’Equipe, the promoter of the French Grand Prix, Claude Michy, said that the only realistic window for a rescheduled Le Mans round would be in June.
“If we can’t move to a date in June, it will be very complicated for us,” Michy told L’Equipe. “Most of the free weekends have already been given to the first races which have already been moved.”
Le Mans faces a particular problem, as it is very much the spiritual home of endurance racing, on two and four wheels, and for many other racing disciplines (the circuit and the city play host to 24 hour bike, car, truck, cycling, mountain bike races, even a 24 hour literary book reading marathon).
The circuit’s schedule revolves around the endurance calendars of both motorcycles and cars, and fitting those races in is paramount.
This pattern will be repeated throughout the world, as Dorna tries to cram some semblance of a full calendar for both the MotoGP and WorldSBK championships into an ever-decreasing window between now and the end of the season.
That would require a radical reconfiguring of the schedule, however. Geography and climate would decide when we would be racing where; Phillip Island, Argentina, Thailand, Sepang all races which could happen in December and January, opening up space to fit Jerez, Mugello, maybe even Le Mans and Barcelona.
Rearranging the calendar is all well and good, but there has to be someone to race there. The loss of races in the first part of the year is placing a heavy toll on the teams, who are facing costs to keep afloat without receiving the payments from Dorna which are linked to each race.
These payments are much bigger in the MotoGP class. For Moto2 and Moto3, and especially in WorldSBK, they are a much smaller component, if at all.
They also face cuts in spending from sponsors, and in some cases, completely withdrawal.
But in general terms, the teams have a lot of costs to pay up front. Staff costs, race trucks, equipment, tools, insurance, all these have to be paid whether racing happens or not.
Income, on the other hand, is less predictable. Sponsorship deals are based on contractual goals, which include the promise of exposure at races or on hospitality to be used for corporate entertainment purposes. With fewer races, sponsors may try to reduce the amount they pay this year, or try to get a discount for the following season.
Sponsors might not be able to pay, even if they wanted to. The economic fallout from the COVID-19 pandemic will be both significant and unpredictable. Some sponsors may not survive, or be brought to a situation where they simply cannot afford to continue sponsoring racing if they are to remain solvent.
Saving the Teams
This is where Dorna will have to step in. According to Red Bull KTM Tech3 team boss Hervé Poncharal – also president of teams association IRTA – the series promoter is already working on a rescue fund for teams in the Grand Prix paddock. After all, if a significant proportion of the teams fail financially, Dorna won’t have anyone to race in a rescheduled calendar.
“Wages are a big part of my budget,” Poncharal told German-language website Speedweek. “For that reason, we are trying to find a solution so we can continue to pay our employees, even though they are at home. The important thing is to make sure that all the teams can survive.”
The good thing is that Dorna understands the situation the teams find themselves in, Poncharal said. “We have an assurance that Dorna won’t abandon us.” The Grand Prix rights holder and IRTA are negotiating a minimum allowance which would help the teams survive until racing can start again.
Lessons from the Past
This is a lesson Dorna has already learned from bitter experience. The lesson of the global financial crisis of 2008 was that Dorna could not rely on the factories to fill the grids in MotoGP. Costs spiraled out of control, factories dropped out, teams switched to the junior classes to be able to survive.
With the help of a small group of confidants inside MotoGP, Carmelo Ezpeleta came up with idea of the Claiming Rule Teams in order to cut costs and ensure the survival of the series. Souped up superbike engines in prototype chassis demonstrated to the manufacturers – and Honda in particular – that MotoGP would survive without them.
Dorna chose the teams, and fought for a set of technical regulations which made racing cheaper, and then instituted sporting regulations to support that. Dorna then altered the financial basis of the sport, to make sure the private teams were funded well enough to stay afloat, and to force factories to supply competitive machinery at much lower costs.
This time, however, Dorna faces a much greater challenge. The manufacturers buckled to Dorna’s demands in the period after the Global Financial Crisis because they wanted to continue racing. (And for a more complete review of that period, see this article looking back at the last decade of MotoGP.)
The factories were open to persuasion, but a global pandemic of a disease capable of causing mass fatalities and the ensuing economic fallout cannot be bargained with. There is nothing Dorna can do to alter the situation, dependent as they are on the decisions of governments around the world.
First, Save Yourself
Dorna can only try to ensure the teams survive, so that they still have a product to sell, once racing can resume. But this also places an enormous financial burden on the Spanish company itself.
Dorna’s finances are just as dependent on individual races as the teams. It has three main streams of income: sanctioning fees (the money circuits pay for the right to hold a race); TV rights; and sponsorship. All three of those are tied in with racing.
The sanctioning fees are most obviously tied to racing. Circuits pay for the right to stage a MotoGP round, and if that MotoGP round isn’t held, they aren’t liable to pay. Once racing starts again, then circuits will start to pay Dorna for those races.
Sponsorship and TV rights are a big part of Dorna’s income as well. Though it is impossible to know the precise details of the contracts Dorna has with broadcasters and sponsors, they almost certainly contain minimum performance clauses. If the number of races is reduced, then broadcasters and sponsors will want some of their money back.
Dorna will also be waiting for payment from sponsors and broadcasters. It is common business practice to stage payments over the year, rather than paying everything up front in a single lump sum. Dorna also has to hold already paid funds in reserve to cover claims from broadcasters and sponsors demanding money back for races which have not been held.
This could be covered by insurance, but that would depend on Dorna having included clauses covering a global pandemic in the insurance contracts it drew up.
Like taking out full insurance cover on a rental car, this can be a matter of balancing risks vs. costs. The costs may be high, but if Dorna believed the chance of a global pandemic was low, it may have been a risk they were willing to take.
They would not be alone in that: much of the strain being placed on health systems around the world is because hospitals don’t have the spare capacity to cope with a huge surge of cases of infectious disease.
In the US, dealing with the COVID-19 outbreak has been further hampered by the decision to merge the department dealing with pandemic response into a wider security team, covering the proliferation of weapons of mass destruction and defending against bioweapons and other biological threats.
Choices are made based on weighing risk against cost. Sometimes, those assessments turn out to be wrong.
This also appears to have affected the English Premier League, the world’s biggest soccer league. According to a story in The Athletic, the EPL could stand to lose £762 million in broadcasting revenue, if they have to cancel the rest of the 2020 season.
Broadcasters, who have already paid the League that money, are claiming it back, as they are losing revenue of their own from lost pay-per-view games and lost advertising revenue.
Dorna is currently operating at a much reduced level, with stringent budget cuts imposed on all levels of the organization. But Dorna and its owners Bridgepoint Capital are committed to the continuing existence of the Spanish company, and therefore, of the racing series it promotes.
Bridgepoint reportedly spent €550 million to buy a 71% stake Dorna back in 2006. Since then, the valuation of Dorna has reached around €2.5 billion.
That is a lot of money to just throw away over a short term business interruption. Dorna’s revenues are believed to be somewhere in the €250-300 million range, with a handsome operating margin.
It is better to take a sharp loss in the short term and try to earn back the difference once the extraordinary circumstances we find ourselves in have passed.
What does this mean for racing in 2020? Your guess is as good as mine. Control over the course of events is out of the hands of everyone but national governments – as French Grand Prix promoter Claude Michy put it, “the virus is in command”.
If infection rates can be controlled, then the chances of racing resuming will increase. Racing in May seems almost impossible, while June seems wildly optimistic.
The earliest either MotoGP or WorldSBK might start to hold races again is July, but even that might not be possible. The next window of opportunity might come in August, when MotoGP is due to return from its summer break.
Some races may be dropped. Finland was due to make its debut in July, but the circuit may decide to miss a year to give themselves more time to work on the facilities at the track.
Brno has struggled to pay the fee agreed with Dorna, and may elect to drop out. Dorna may feel that four races in Spain is too many, and decide to drop, say, Barcelona or Aragon. The Sachsenring may not be able to hold a race at another point in the year.
Le Mans or Mugello might not be able to fit MotoGP into their calendars in the latter half of the year. Argentina may be deemed to expensive, and too difficult to fit into a packed calendar – logistics make it almost impossible to run back-to-back with other rounds.
Wait and See
In short, the 2020 MotoGP and WorldSBK calendars are very much pick-your-own-adventure stories at the moment. Calendar updates are due to be issued for both series this week, but those will be provisional, until we get much deeper into summer and health authorities around the world believe they have much firmer control of the coronavirus outbreak, and can prevent it from spreading uncontrolled again.
If I were a betting man – and more importantly, had spare cash to wager, rather than facing a precarious future without racing – then I would put money on racing happening in 2020.
Less than 19 MotoGP races, for sure, but enough to constitute a season. As Claude Michy put it to L’Equipe, “if we want to have a championship in 2021, we need to have one in 2020 as well. Even if it’s a truncated one.”
Fingers crossed. Stay indoors. Wash your hands. Act as if you are infected, and don’t want to infect anyone else. That is our best hope of seeing world championship motorcycle racing in 2020.