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“People would call NASCAR on the Monday after the Daytona 500 and say, ‘I want to build a racetrack in my area.’  NASCAR’s response is 'well we’re not in the racetrack business.  We’re in the sanctioning body business."

National Speedway Directory Publisher Takes us Behind the Scenes of the Motorsports Industry

by Michael and Ziva Allen

 

frost1A bunch of rich folks are sitting around the paddock after an event and they start talking about how they want to buy some cheap land in a rural location and build a track.  “Hey, great idea!  Then we can drive whenever we want.  And yeah.  We can write off our track driving costs and probably make money too.” 

If they are serious and smart, the first thing they do is call Tim Frost.  When looking for the ideal consultant, then Frost is the ideal motorsports industry insider to have on your side.  All of his businesses revolve around motorsports, and yet he is not a driver.  In fact, Frost will tell you that if you have a question about driving, do not turn to him.  Drivers are emotional.  We love track events and our cars and we think everyone else will too.  But Frost brings objectivity to the scenario.  And that is a good thing.  Otherwise the venues we love to attend would probably sink like rocks without that business perspective.  Frost does not participate in the hobby.  “I came into this industry from a little bit of a different background.  I became involved in this industry from a business perspective.  I didn’t come in as a driver.  I didn’t come in as a sponsor.  I didn’t come in as a manufacturer.  In the mid-90s I came in actually from a corporate finance background.  A numbers background.  And while I was with one of the larger accounting firms, I was working in our sports and entertainment division doing appraisals, finance and evaluation and we got involved in doing feasibility for a proposed racetrack in the Detroit, Michigan area.” 

Track Analysis

Frost got involved early on and found a niche that was not being filled by other experts.  “The ability to prepare some type of analysis or study of the industry is what our clients needed.  Nobody was doing work in that aspect of the sport nor had the ability to find out information, such as the economics of the sport and the numbers behind the industry, from an event perspective and from a facility perspective.  It really didn’t exist.  So we worked on that.  In 1996 we worked on a project at Gateway International Raceway.  At that time, the developer of that facility was Chris Pook, the founder of the Long Beach Grand Prix.  That in itself was quite the eye opener, to work with someone as esteemed and respected and knowledgeable as Chris Pook."  Frost comes in, analyzes the proposed facility and makes his recommendations.  As he says, "If you build it, will they come?”  Frost has the answers. 

There are various revenue streams needed to keep a track afloat.  Frost explains that “by assessing the economics of the event, you’re basically looking at revenue and expenses associated with that event.  And in that case, with a motorsports event, you’re typically looking at four different types of categories.  One would be admissions, one would be track rental, one would be sponsorship and advertising and another one would be concessions or food and beverage.” 

Multipurpose Facilities

In order to realize the greatest revenue stream, Frost encourages maximal use of the land and the resources available.  For example, multi-purpose facilities that are set up to run more than one event on the same day give a better return than single purpose facilities.  “If you look at some of these tracks that have two circuits,” says Frost, “you have two in and out roads and the ability behind that is to have pit areas which can serve both so there’s a practicality with separate circuits and the ability to run multiple configurations independently.  So if you take Palm Beach, for example and if you go back to the Moroso days, the road course, which is a return road and part of the drag strip - well that meant that only one circuit could be used at a time.  So that meant you were limited on the amount of event days.  Part of their redesign was to then separate the drag strip from the road course.  And therefore each could be operated independently without having to close any down.  So if we take a place like Palm Beach, we would typically divide that place into three, four maybe five different venues.  We would take the drag strip, the road course, go kart track and then we would probably take part of the paddock area that is being used for the parking area.  And then you could take the mud bog.  Each of those has its own ability to be programmed to generate revenues.  And the whole idea with a facility like that or any facility is the word ‘utilization.’  How many days or event days could we get out of the place to keep it going and to bring different groups in there?”  When Moroso sold the company and it became Palm Beach International Raceway, the tracks were re-designed and some turns were sacrificed to allow for the multi-usage Frost discusses.  In fact, for some, their all-time favorite turns are now gone!

Just to give you a sense of the counter-play between emotion and practicality, Frost talked about just one way that he acquires his projects.  “We found out the sanctioning body for the leagues would get calls all the time saying, ‘hey I want to go and build a racetrack, what do I do?’  Well typically people would call NASCAR on the Monday after the Daytona 500 and say, ‘I want to build a racetrack in my area.  I have a whole bunch of land just sitting around.’  NASCAR’s response is well ‘we’re not in the racetrack business.  We’re in the sanctioning body business.’  So the next question will be, ‘who do I contact?’  And then they would get in touch with me.”

Working with Alan Wilson

As a consultant, Frost is often called in to work closely with track designers.  Says Frost, “You get Alan Wilson and other people similar to Alan and they know the designs and the ins and outs of what it takes to engineer or to design a facility.  So Alan would come in and he would design the place but then people would potentially need the business plan or a feasibility study or some other type of document and so Alan would say, ‘hey here’s a person you may consider calling.’  I’ve been fortunate to work with Alan on probably half a dozen to a dozen projects over the years.  Alan is highly respected in the industry and people know who he is and he kind of has his signature design.  When you’re in the paddock area talking to other people, some people like his tracks and some people don’t.  There’s really no in between.  For myself, I can take the fifth on that because I’m not a driver!”  (Our April article on Alan Wilson goes into more depth on the controversy around designing a track with safety in mind.  Read what Wilson himself has to say about the highly controversial designs of Herman Tilke.)

Sector Growth

We took the opportunity to talk to Frost about the perceived expansion of the track day world.  In Frost’s expert opinion, he sees a demand forfrost3 track days and club use to be fairly strong.  Again, always thinking in numbers, Frost arrives at this conclusion from a number of different ways.  “One, you can actually see that there has been a growth in facilities from road courses over the last 10 years.  There have probably been about 15 new tracks that have been built and/or reconfigured from a road course perspective.  And then when you actually look at the number of track days that are out there, I think you’re seeing more companies and more people that are establishing businesses as track day schools.” One example of this expansion is the recent news that Chevrolet is coming out with a track dedicated version of the Camaro reviving the Z/28 name (see our March issue article on the Z/28).  And we asked Frost about this development.  “I think from a Chevrolet standpoint, they decided that it’s part of their realignment of their performance division that they are backing certain series that are out there as far as the Corvette and other things. So I think the manufacturer support is strong, but again that comes down to a kind of budgetary decision over the health of the car company and what programs that they are going to support on an annual basis.”  Frost helps us to realize that Chevy is marketing itself as a performance division and is using motorsports to drive that image.  It seems that the win on Sunday, sell cars on Monday adage is thankfully at work in driving revenue towards our activity.

National Speedway Directory

Frost is involved in several other motorsports related businesses in addition to his financial consulting company.  “Well like anything that you do when you’re looking for ways to learn and ways to obtain information, I came across a publication called National Speedway Directory, which had been in existence for about 30 years” say Frost.  This massive Directory contains every track in North America, the entire professional race series’ schedules, every sanctioning body, museums, and lists of every motorsports publication.  “So I got to know the owner of this publication, a gentleman by the name of Alan Brown.  He’s probably one of the most knowledgeable men about racetracks in this entire country.  And I say, ‘hey Alan, if you ever want to do anything with it, let me know.  I’d love to see about buying or doing something.’  So we acquired the publication five years ago in 2009 and we’ve been doing it for the past five years.”  This year, the publication celebrated its 35th anniversary!  Frost says that, “it’s pretty much considered as the bible of motorsports.  It’s considered a pocket handy guide and it’s something that you keep on your desk or in the race shop or you keep it in your briefcase.”  In 2010, Frost and his associates released a companion telephone application called Track Guide, which is available for both Android and iOS cell phones. 

We may only think about road courses, but did you realize just how many tracks there are?  Frost indicates that “We have oval tracks, we have drag strips and we have road courses.  There are approximately 1,300 tracks in the United States and Canada.  Of those tracks, 75% are oval tracks, 20% are drag strips and 5% are road courses.  Of oval tracks, we have two types.  We’ve got two surfaces.  We’ve got dirt and we have paved.  Of those, 75% of oval tracks are dirt and 25% are paved.  So if we work this out, there are approximately 1,000 oval tracks, 200 drag strips and about 100 road courses.  And if you divvy that out, there’d be 750 dirt tracks, 250 paved tracks and about 200 to 250 drag strips and about 100 road courses.  The National Speedway Directory lists information about all these tracks in one handy guidebook that can fit in your pocket.” 

Race Track Business Conference

In addition, Frost was approached by the organizers of the Performance Racing Industry (PRI) trade show about establishing a business conference associated with the annual event.  “In 2012 we established the Race Track Business Conference.  The idea of this conference is to gather industry professionals in an education and networking environment.  We initially did it in Orlando and then we were in Indianapolis this year.  In our initial year we had Humpy Wheeler come and speak as our keynote and this year we have Mark Miles who is the CEO of Hulman and Company and associated with Indy Car and Indianapolis Motor Speedway.”

frost9440xIf all that is not enough, Frost is also involved in motorsports radio programming.  “We hooked up with Dennis Michelson and his company, Race Talk Radio and what we wanted to do is identify a niche in the business where I thought that there was ability to create a weekly radio show on the business of motorsports and the idea for that was to kind of bring in people in the industry and talk about their business involvement.”  The variety of guests on the program has run the gamut.  Everyone from track operations to the promotions side to the suppliers to the actual sanctioning bodies have all been interviewed by Micheleson.  Frost discovered this niche when he recognized through investigation that nobody was focusing on road racing.  The radio program covers many different aspects of motorsports.  But two years ago, Frost established a show specifically covering road course racing called At The Apex. And this show covers anything from club days, to bikes, to cars and everything in between.  Frost says, it “focuses in on the participants of the sport.  Not as much from a business perspective but more from a road course perspective.”  At The Apex follows teams and drivers and Frost believes that this particular show has actually been one of their more exciting ones.  Through this show, people in the road racing industry are given an avenue through which they can tell their story and get their perspective heard.  You can find At The Apex and all of the other on-demand motorsports radio programs at www.racetalkradio.com.

The Human Factor

Most telling is what Frost had to say about the people involved in motorsports.  “The beauty about our industry is people are very friendly.  The majority of people are pretty accessible and the willingness to share information is unlike most other forms of activity.  I think the interesting part is when you’re dealing with people’s passion, people’s desires, their dreams; this industry is a lot more focused and a lot more accessible.  The barriers to entry inside this industry are lower than others.  If you’re dealing with proprietary technology with software or manufacturing, it’s much harder to get that type of information or people aren’t going to share that with you.  If you’re dealing with a commercial race series and you’re talking about your setups and all the other things, of course no one’s going to give you that.  It’s much more competitive.  But I think you see a much more collaborative effort on many fronts within this industry.  It is much more open.  People are much more willing to share.”

And ain’t that the truth!

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