The Supercars Championship is currently relishing in one of the best championship battles in years between the Red Bull Holden Racing Team and the Shell V-Power Racing Team.
However, court documents which have recently been released show how close the category was to collapsing at the end of 2014 due to the difficulties of teams running.
Thanks to an ongoing case between V8 Supercars Holdings Pty Ltd and Sanpoint Pty Ltd (also known as the Fiore family/Triple F Racing), court reports of the legal issues between the groups have given background to the running costs for teams due to the Racing Entitlement Contract (REC) agreements.
The case is about the handling of Sanpoint’s REC being sold and the surrounding environment within Supercars between Archer Capital, who has a 65% stake in the sport, and the teams, who have the remaining share in V8 Supercars Holdings.
In January 2014, before the season began, an advisor, Tim Miles, wrote to Supercars CEO James Warburton and one of Archer’s directors, Rishabh Mehrotra, to say out of the 25 cars on the grid, two were profitable but ten made a significant loss.
During a board meeting in May 2014 for V8 Holdings, Warburton made it known Polestar (Volvo’s racing operation) was looking for two more RECs, while Brad Jones, one of the two team representatives (the other being Roland Dane) informed the board a New Zealand consortium was looking to purchase a team.
Dane made it clear in the meeting suggested a new business model needed to be implemented for the category to remain sustainable, allowing teams to keep racing and attract new entrants to the sport.
In an email to Archer’s Greg Minton in June 2014, Warburton claimed the current state of affairs included 10% of teams handing back RECs at the end of 2013, seven RECs could be at risk for 2015 and Ford was going to pull out of sport at the end of the season, despite his efforts to keep them on board.
The email also stated teams were also burning around AUD$1million per car, as well as noting the ever increasing threat from the Australian GT Championship and Formula One Management (thanks to the Australian Grand Prix being a non-championship round).
Things started to get dire when Warburton said in an email to Mehrotra, “GT’s have approached 4 of the leading Teams to run in their category next year, my view is that it is a wait-and-see approach as they would prefer to do V8 Supercars, however, the GT’s and to an extent Seven are actively pushing to hurt us and if they see the sport as fragile they may get some traction…”
One owner of four RECs stated he was losing sponsors at the time, noting to Warburton 2015 would be his last year for at least two of his RECs “as he is already funding $2 mill from HSV plus losing a further $2 mill a year on current trend”.
As the breakdowns started to occur in the discussion between V8 Holdings/Archer and the teams, Warburton sent an email to Mehrotra where he essentially stated he was worried the teams would unilaterally pull out of the sport, leading to the demise of Supercars.
Further discussions occurred and closer to the date of the final deal, Warburton sent an email to Mehrotra, Jones and Dane saying, “The deal must happen and to suggest any alternative path is possible or viable by either side will produce simply catastrophic results and will see the inevitable demise of our sport…We are absolutely kidding ourselves if we believe we have any other options and as CEO of the Sport I really can’t be any more frank than that.”
CEO of Archer Capital Peter Wiggs intervened in October 2014, after Ford had already announced their official departure from the sport, sending an email to Jones and Dane, apologising for the way everything had been handled including his lack of knowledge thus far on the issues present.
The court notes do not mention the resolution to the saga, though it’s safe to say a viable ongoing agreement is in place given the fact we still have a Supercars championship to talk about.
Now in its third year, Foxtel and the Ten Network’s coverage of the Supercars Championship brings in $241 million over its six year deal, something which has arguably helped boost the sport at least in terms of the money incoming.
In a turn of events, Supercars is looking to implement the “attack is the best defence” strategy when it comes to the threat of the Australian GT Championship, currently engaging in talks to take over management in the near future.
Notes for the case can be found here: https://www.caselaw.nsw.gov.au/decision/598a5277e4b074a7c6e17a6d
Image via Red Bull Content Pool
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