Why You Should Pay Higher Club Race Entry Fees
By Winding Road Staff
April 15, 2016
We previously outlined the rough costs of amateur road racing (What Does A Weekend Of Racing Cost?) We reference that here because, despite the fact that racing is expensive, we think racers would be better off if they paid higher entry fees. The thing is, if you review the costs of racing you will notice that entry fees aren’t that big a deal. Specifically, entry fees are about 10-15% of total cost.
To illustrate, let’s run a thought experiment. Let’s say you understand that a race weekend costs $3250. Then let’s say that cost goes to $3350 because entry fees go up. It is hard to imagine that very many racers wouldn’t show up if the total cost went up by 3%. That is especially true because in our experience most racers can’t quote the full weekend cost number within $1000, much less to within $100.
Admittedly, some people might not show up because $100 is a 20% increase in entry fees and they’d be upset. And some people might not show up because they haven’t looked at the real cost at all so they think the weekend costs entry fees plus fuel or some ridiculously underestimated number (and so for them a $100 hike in entry fees seems to be a 15% increase in costs). But most racers are pretty intelligent people so we’d bet the number who protest is small. We think protests would likely be minimal if racers understood what they were paying for with the extra $100 and why that was a good deal for them.
To understand why it is a good deal, look at this from the track’s perspective. Let’s say the sanctioning body can get 120 entries for a weekend. That means $60,000 in entry fees. If their costs are $30,000 for insurance (the biggie) and staff and equipment and sanctioning fees and pizza and trophies, then that leaves $30,000 to rent the track and for some buffer in case the weekend doesn’t sell as well as expected. $10,000 is a reasonable buffer because you might get 100 cars not 120. So that leaves $20,000 to rent the track.
Let’s say you can build a track for $5 million (COTA cost $400 million so we’re talking about a basic track here). In that case, your debt service (assuming you can borrow the entire $5 million) will be about $500k per year. Operations cost something, so let’s just assume $200k per year to make a nice round number of $700k in costs per year. Debt could be less, operations could be more, but that’s a good rough number for our purposes.
The typical track has about 4 months where it can’t operate effectively. December is a lost month just about everywhere. January – March is useless in the north; June-August is lost in the south and west. So, we have 8 months of operation. We assume we can rent the track three weekends a month, which gives us 24 weekends. If we rent the track for $20k per weekend, we get $480k in rental fees. Now we still have the track available for many other days.
But it is hard to rent on Tuesdays and Wednesdays and some weekends, so there isn’t a lot of the rental income that people sometimes think will be there. And prices are lower on those days. But let’s say the track could sell three days a week on average during the season. That’s 96 days at $2500 per day for $240k. So our total rental income is $720k per year. Which is essentially equal to our costs. So the owner gets nothing and has no money for repairs.
That’s a problem for you. Of course it is a problem for the track owner too. And the sanctioning body. Because race tracks that don’t make money can’t make improvements. They don’t have the money to make them and because they don’t make money they can’t borrow from financial institutions. So, the track surface gets rough, safety features are not installed, layout changes can’t be done and the bathrooms are smelly.
We’ve raced at too many tracks that have one or more of these problems. Of course, we’ve raced at places without these issues, so we know some of the distinction is well-run vs. poorly-run tracks. And some of the difference is based on location and the resulting number of days the track can be rented. Our point is that we want to run on a good surface, with proper safety and decent facilities wherever we go.
We could do that if entry fees were higher. If we paid $100 more per weekend, the sanctioning body collects $12k more in our example. With 24 weekends rented per year, the track would see $288k more revenue per year. Over a 5 year period, that’s about $1.5 million extra for resurfacing and other improvements.
If it were up to us, we’d have the sanctioning bodies keep these extra funds in a special account. We’d only do this if other sanctioning bodies did so (and if others didn't play nice, we'd return the money to the racers). We’d explain to racers what we were doing. Then, once we had a sizeable surplus set aside, we’d get together with our fellow race organizers and negotiate with track owners for improvements where they are most needed.
This approach could also lead to building new or better track capacity. If NASA, BMWCCA, PCA and SCCA each had a total of $1 million to contribute to building a new track in a region, it would go a long way to making it happen. And if existing tracks faced the serious possibility of better tracks replacing them, it would encourage improved management where track improvements aren't purely a matter of the track's ability to pay for them.
Better tracks and new tracks get talked about all the time. Here’s one way to ensure it happens.