dave wrote:I've talked to several board members about this, including one yesterday. The standard answer is "We can't make money on Nationals". So the questions I have are:
1) Does each event have to stand on it's own financially? (are Summer events the same as Fall and Winter?)
2) How much profit is required before an event is considered viable?
3) How are the region's indirect expenses allocated across events? (according to entry count, or equally across events?)
First, let's understand "making money". The region doesn't operate to generate profit. What we model for is to generate enough surplus above and beyond expenses so that we can cover our non-event expenses. These include things like the Wheel, the office staff, equipment for our crews, safety and tow vehicles, etc. Just this year we had to replace one truck and an engine in another. If we only ran the events at break-even, we wouldn't have the ability to run smooth, safe events.
For the last couple of years while the economy has been tough, we have not been making our budget (which is to have a surplus above the event expenses for the above). In a few cases we have had a net loss IIRC but generally somewhat small. Financially the region is in good health but we only get and stay there by making the program be sustainable. We could make entry fees free which would be incredibly popular... until we ran out of cash and shut down.
1 - No, it's already budgeted that some events do better than others. Despite giant turn out at Sonoma, it's by far from the best performing event in the schedule.
2 - No surplus is required by any rule or bylaw. We lose money every year on the Driver's School but we continue to run it because it's an investment in our future drivers.
3 - If I understand what you're asking, we don't allocate indirect expenses to the individual events. Those are all covered on the P&L but they're tracked (and depreciated in appropriate circumstances) separately. We do create event P&Ls for all direct event expenses.
So, the outstanding question is: why not throw a bunch of money at a Double National at, say, Laguna or Sonoma, as some other kind of "investment"? It's something the region could decide to do. The current situation is such that we have a small minority of dedicated National racers. How much benefit from a National accrues to SFR members vs. those who may belong to Cal Club or Oregon? Are we doing the best to serve the most of our members as we can with such an event when it would likely take away from a regional weekend? If we take the gamble and we don't get the expected return, what then?
A great example is the PCRRC. There are many people in SFR who would like to see an invitational-style championship race at the end of the season at Sonoma or Laguna. Ignoring all the macro trends in motorsports and why I think that's a bad idea, let's say we do it. How much are we willing to commit to making an event like that fly? $10k? $25k? $100k? How many years should we pour that level of funding into something "to see if it works" before it's simply financial mismanagement running the region into the ground?
There are really no right or wrong answers per se; we serve a diverse demographic of drivers and workers. All of these trade offs have benefits - the question is simply whether or not it's enough to tip the scales in favor of pursuing any particular course of action.
Having had this conversation so much as of late and with the Majors on the mind, I'd like to see a year-end post-Runoffs Regional vs. National shootout. Let's see who is really better!