Rally Norway threatened by bankruptcy?

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5th June 2007, 08:39
Viktory

Rally Norway threatened by bankruptcy?

Just read in the local newspaper, NWT, that Rally Norway is in danger of bankruptcy after their first WRC round. It also stated that the Swedish rally made a loss. However they only made a loss of 800 000 kronor (roughly €80 000 ) compared to 14.5 million kronor (roughly €1.45 million) that the Norwegian round lost.
The main reason for this is that they failed to charge all the spectators entry to the stages. They had anticipated a loss of 3 million kronor. They have until June or July (can't remember) to sort it out, with sponsors that they owe this money to, otherwise bankruptcy is the only option.
5th June 2007, 09:44
JAM

Quote:

Originally Posted by Viktory

Just read in the local newspaper, NWT, that Rally Norway is in danger of bankruptcy after their first WRC round. It also stated that the Swedish rally made a loss. However they only made a loss of 800 000 kronor (roughly €80 000 ) compared to 14.5 million kronor (roughly €1.45 million) that the Norwegian round lost.
The main reason for this is that they failed to charge all the spectators entry to the stages. They had anticipated a loss of 3 million kronor. They have until June or July (can't remember) to sort it out, with sponsors that they owe this money to, otherwise bankruptcy is the only option.

If true, it's a pitty because Rally Norway was a succes to WRC. But this situation leave us to the importante question of thinking about the costs.

FIA charges organizers to include them on the WRC callendar. They pay big entering fees, FIA made big demands on them that cost a lot of money. All of this are costs that must be covered by the return of the event.

But the main question is: Is FIA making the right promotional steps to elevate the WRC to a level that gave a fair ROI to the organizers? The answer IMO is NO it isn't.

In conclusion we have a championship that demand big fees and big investments, but this championship is not able to generate the return to cover these investments. You have always a good way to cover the financial holes with some help gave by governments in the name of a suposly national interest.
5th June 2007, 10:12
DonJippo

Quote:

Originally Posted by JAM

If true, it's a pitty because Rally Norway was a succes to WRC. But this situation leave us to the importante question of thinking about the costs.

FIA charges organizers to include them on the WRC callendar. They pay big entering fees, FIA made big demands on them that cost a lot of money. All of this are costs that must be covered by the return of the event.

But the main question is: Is FIA making the right promotional steps to elevate the WRC to a level that gave a fair ROI to the organizers? The answer IMO is NO it isn't.

In conclusion we have a championship that demand big fees and big investments, but this championship is not able to generate the return to cover these investments. You have always a good way to cover the financial holes with some help gave by governments in the name of a suposly national interest.

The main reason why Rally Norway is threatened by bankrupcy is said to be the fact that they failed to charge all the spectators entering the stages. Now can you tell me what the hell FIA has to do with that? It is true FIA has done lot of mistakes and sadly will do that also in the future but to blame FIA about everything that happens around WRC is just plain stupid IMHO.
5th June 2007, 10:43
swordsman

Talking about this you also must remember that one part of Rally Norway being so good is that they took big economical risks. If they arranged the rally with 15M crowns less (which is said to be what's missing) in their budget we would have seen a rally not as good as it was now!
5th June 2007, 11:05
Brother John

Be honestly and think logical. That's the key of success!

I.M.O. the date in the calendar is also not good for the two organisations!
Now they lose both money, all fans cannot permit themselves financially 2 weeks holiday and make a choice in there own country, more problems if you have 2 neighbouring countries with a WRC rally! Same problem with all the coupled rallies such as Spanje-Frankrijk, Duitsland-Finland! It is costs saving for the teams but certainly not for the organisations!

Off topic! :bandit:
As the only festival organizer in Europe, I went down with the entrance price instead of higher prices and i can tell you it was financially a terrible good decision! :hot:
5th June 2007, 11:06
AndyRAC

Quote:

Originally Posted by DonJippo

The main reason why Rally Norway is threatened by bankrupcy is said to be the fact that they failed to charge all the spectators entering the stages. Now can you tell me what the hell FIA has to do with that? It is true FIA has done lot of mistakes and sadly will do that also in the future but to blame FIA about everything that happens around WRC is just plain stupid IMHO.

Rally Ireland aren't charging spectators entry fees either, are they? I wonder if they will lose money as well. The problem is the F1A think the WRC can be like F1, and charge silly money to hold events, this has got to be re-thought. You shouldn't have to pay to be a round of the WRC, crazy. F1 can get away with it as it's swimming with money, WRC is tiny by comparison, when will these people wake up and realise this.
5th June 2007, 13:01
Iskald

No budget control

FIA is not the cause of Rally Norways economical troubles. Neither is selling to few tickets to spectators. In total Rally Norway sold tickets to 49 000 spectators, split into three-day rally passes, one-day passes and one-stage entry. They could have sold even more with a better ticketing service, that is true, but not near enough to cover the 1,6 mill. Euro loss they have accumulated. To achieve that they would have had to sell 70 000 more tickets or so, and that is simply utopia...If they really have budgeted with this kind of income from ticket sales, the responsible persons must be called irresponsible.

Actually Rally Norway have had no control on the budget and overall costs. This is the reason for their troubles.

When that is said, I don`t believe one second that this will jeopardize the rally`s chance of running a WRC-event in 2009. The money will be found to cover the loss and the company running the event will continue to work towards 2009.
5th June 2007, 13:36
BDunnell

Quote:

Originally Posted by Iskald

FIA is not the cause of Rally Norways economical troubles. Neither is selling to few tickets to spectators. In total Rally Norway sold tickets to 49 000 spectators, split into three-day rally passes, one-day passes and one-stage entry. They could have sold even more with a better ticketing service, that is true, but not near enough to cover the 1,6 mill. Euro loss they have accumulated. To achieve that they would have had to sell 70 000 more tickets or so, and that is simply utopia...If they really have budgeted with this kind of income from ticket sales, the responsible persons must be called irresponsible.

I'm not one of the 'blame the FIA for everything' brigade, but even so, I can't help but feel that its delusion as to the global status of the sport could be held partly responsible for these losses. In reality, we all know that no rally could ever hope to sell 120,000 tickets, but equally we all know that event organisers of all kinds exaggerate their audience figures and put the best spin possible on their events' significance in order to try and attract sponsors. Sometimes, this ends up with them writing cheques they can't (lterally and figuratively) cash.

I'm no economist or marketeer, but when something like the WRC starts being marketed as more of a global brand than it really is, it seems to me that the potential for such things happening is multiplied.
5th June 2007, 14:33
AndyRAC

Quote:

Originally Posted by BDunnell

I'm not one of the 'blame the FIA for everything' brigade, but even so, I can't help but feel that its delusion as to the global status of the sport could be held partly responsible for these losses. In reality, we all know that no rally could ever hope to sell 120,000 tickets, but equally we all know that event organisers of all kinds exaggerate their audience figures and put the best spin possible on their events' significance in order to try and attract sponsors. Sometimes, this ends up with them writing cheques they can't (lterally and figuratively) cash.

I'm no economist or marketeer, but when something like the WRC starts being marketed as more of a global brand than it really is, it seems to me that the potential for such things happening is multiplied.

That is indeed the problem. The WRC is not a global brand, no matter what people might think,FACT,it's not. It might have been a few years ago, but it has disappeared off the radar completely. So organisers should cut their cloth accordingly.
5th June 2007, 16:55
JAM

Quote:

Originally Posted by DonJippo

The main reason why Rally Norway is threatened by bankrupcy is said to be the fact that they failed to charge all the spectators entering the stages. Now can you tell me what the hell FIA has to do with that? It is true FIA has done lot of mistakes and sadly will do that also in the future but to blame FIA about everything that happens around WRC is just plain stupid IMHO.

First mistake: To charge spectators to see a event that is held on public roads. In a circuit you have a place built to that, and that has costs and spectators must pay to enter, but a stage rally?

The teams pay to get in and pay material to race, the organizers pay fees and have to pay the costs of running the structure of a rally, the spectators have to pay to stay on public places... Everybody has to pay, pay, pay, pay... there's not enough money to all of this and not many people ta accept pay to see a rally.

And in Norway seems don't even have money to pay the rally organizarion. Maybe the problem is on the costs and not on the profits.
5th June 2007, 21:48
COD

A bit raleted, although not directly:

There was news in Finnsh press today that ISC is trying to charge Neste Rally Finland an extra 100 000€ for timing equipment. The reason for this they are making loss and travel costs to Finland are so high :?:

Similar charge to other events for the rest of the year are plannned, but the charge is depending on country. Is that fair? And is it fair to charging events in the middle of the year?
6th June 2007, 09:11
Iskald

Agreed - in principle...

[quote="JAM"]First mistake: To charge spectators to see a event that is held on public roads. In a circuit you have a place built to that, and that has costs and spectators must pay to enter, but a stage rally?

QUOTE]

In principle I agree with you JAM, and in Norway we have a law defining the right to walk about in the forest and landscape completely for free. In most cases you are actually allowed also to walk also on private properties without being prosecuted as a trespasser. So I absolutely agree that if you walk out into the forest, and find yourself a place to spectate along the stage, you should not be made to pay.

But if you would like to have a rally program with a map and drive your car to a designated parking spot and want to watch the rally from a spectator point where the organiser have put up catering facilities and public toilets, you should of course pay for those services.

Rally Norway actually went further than most events in offering such services to spectators, which was very good IMO. The seasoned rally spectator will always find their way around, and most possibly avoid the special spectator points (and therefore also avoid paying for it). But for all "new" spectators, of which there were many in Norway this being our first WRC event, this was a very good service - and worth paying for, I would like to add.

But still with all these spectator points, where control of incoming spectators should have been very easy, ticket sales didn`t go as planned. So Rally Norway undeniably lost some money because of this. But the loss could never have been so much as they are telling us now, because they either had to sell 20 000 more three-day rally passes or 70 000 single-stage tickets to cover their total loss. Which IMO would have been absolutely impossible anyhow.
6th June 2007, 09:53
JAM

Quote:

Originally Posted by Iskald

But if you would like to have a rally program with a map and drive your car to a designated parking spot and want to watch the rally from a spectator point where the organiser have put up catering facilities and public toilets, you should of course pay for those services.

Dear Iskald

A catering service is not to be paid by a ticket, a catering service pays itself during the event. Some services as toilets and car park, could be paid, but for what i see lately these tickets are very expensive and are not to pay these services, they are to give profit to the organizers and pay a lot of other things.

I think that a 50% reduction of FIA fees to a WRC event would pay lots of things..

We must put questions to this new model of rallying. The old model worked well, the new model is not working but people continue trying to make it work even if this send spectators away.

As AndyRAC wrote here, the problem is trying to put on WRC the same format as they have on F1. This is not working buit they keep trying year by year. And the WRC faling...
6th June 2007, 10:23
René

Originally Posted by Iskald
But if you would like to have a rally program with a map and drive your car to a designated parking spot and want to watch the rally from a spectator point where the organiser have put up catering facilities and public toilets, you should of course pay for those services.

Its strange feeling for me when I read it because, for Monte Carlo and Corse rallies, we have all that you refer about and the event's are totaly free of charge for the spectator (except entrance in service parc) !
6th June 2007, 10:33
Gard

Well Iskald. I was at a spectator point which had at least 10.000+ people and none of them needed to pay to get in. Sure many of them, like myself, had ordered passes in advance. But we discussed this during the event and where I stood (app. 20 people) 3 of us had tickets. The rest didn't. most of them even wanted to pay, but couldn't find any to buy from. That would probably be 10% of the total loss, at that single spectator point, that day. If the same happened the next day, it would be 20%.
6th June 2007, 12:49
Iskald

Quote:

Originally Posted by Gard

Well Iskald. I was at a spectator point which had at least 10.000+ people and none of them needed to pay to get in. Sure many of them, like myself, had ordered passes in advance. But we discussed this during the event and where I stood (app. 20 people) 3 of us had tickets. The rest didn't. most of them even wanted to pay, but couldn't find any to buy from. That would probably be 10% of the total loss, at that single spectator point, that day. If the same happened the next day, it would be 20%.

Absolutely understood, Gard. It is no doubt that the organiser of Rally Norway could have done much better re. ticket sales. But not enough to cover a loss of 14,5 mill. NOK (or even more as current rumours is telling us).
A local newspaper in the rally region reported today that Rally Norway sold tickets for 12 mill. NOK, whick in comparison to the Swedish Rally actually is very good. But the problem is that they had budgeted with an income from ticket sales of no less than 26 mill. NOK.!!! That is more than the double of what they actually sold - which means that they had calculated/budgeted with ticket sales to no less than 100 000 spectators. In my humble opinion this can`t be recognized as anything else than a phantasy budget, and this they should have known in advance. If you budget like this in ordinary business - and naturally end up owing a lot of companies and persons a great, big bundle of money - you will probably be prosecuted for reckless business management.

And this is the sad conclusion after an otherwise great event. There are people and companies (small and large) out there who won`t get their money after delivering services to Rally Norway. They are not happy today...
6th June 2007, 13:09
BDunnell

Quote:

Originally Posted by Iskald

In my humble opinion this can`t be recognized as anything else than a phantasy budget, and this they should have known in advance. If you budget like this in ordinary business - and naturally end up owing a lot of companies and persons a great, big bundle of money - you will probably be prosecuted for reckless business management.

But this is what happens quite a lot with events of all types that overestimate their potential worth to sponsors when they have delusions of international grandeur.
6th June 2007, 14:12
DonJippo

Quote:

Originally Posted by JAM

I think that a 50% reduction of FIA fees to a WRC event would pay lots of things..

So how much is this famous FIA fee that you are referring to?
6th June 2007, 15:32
Tomi

Quote:

Originally Posted by DonJippo

So how much is this famous FIA fee that you are referring to?

Would be nice to know yes if there is any FIA fee, if somebody like Norway has taken own initiative to pay it cant be called a FIA fee.
6th June 2007, 16:19
JAM

Quote:

Originally Posted by DonJippo

So how much is this famous FIA fee that you are referring to?

The inscription tax on the calendar (or FIA fee that i refered to) is around 100.000 Euros. I don't know if this value is fixed or depend from event to event.
6th June 2007, 20:46
DonJippo

Quote:

Originally Posted by JAM

The inscription tax on the calendar (or FIA fee that i refered to) is around 100.000 Euros. I don't know if this value is fixed or depend from event to event.

That 100.000€ does not really make a big difference to the almost 1.5million€ loses reported...
6th June 2007, 20:51
Iskald

Quote:

Originally Posted by JAM

The inscription tax on the calendar (or FIA fee that i refered to) is around 100.000 Euros. I don't know if this value is fixed or depend from event to event.

Once more, the FIA fee has nothing to do with the troubles Rally Norway is experiencing. Last report quoted a loss of 20,1 mill. NOK, which is appr. 2,5 mill. Euros. This again means that a lot of companies delivering goods and services to the event faces huge losses. So far the political opinion regarding this event and its future has been extremely pro, but I fear the pipe will play another tune when local businesses (in the rally region) gets into troubles because they won`t get paid.
6th June 2007, 21:02
ste898

This is a very bad situation.....too see probably 1 of the best rounds of the 2007 championship in this mess.
The blame once again is down to the FIA and Dave Richards!!!
7th June 2007, 05:10
bowler

Quote:

Originally Posted by ste898

This is a very bad situation.....too see probably 1 of the best rounds of the 2007 championship in this mess.
The blame once again is down to the FIA and Dave Richards!!!

That is a big call.

Neither of them run the rally.

I suppose you need to blame someone else, and FIA and Richards are big targets.
7th June 2007, 07:06
Brother John

Quote:

Originally Posted by bowler

That is a big call.

Neither of them run the rally.

I suppose you need to blame someone else, and FIA and Richards are big targets.

I´l say It again, 2 rallys in 2 weeks for almost the same crowd is bad!
7th June 2007, 08:18
Daniel

Quote:

Originally Posted by bowler

That is a big call.

Neither of them run the rally.

I suppose you need to blame someone else, and FIA and Richards are big targets.

While we're at it I blame them for global warming, war in Iraq, that girl who went missing in Portgugal, for the recent rise in interest rates and everything else that isn't sunshine and lollipops :p
7th June 2007, 13:04
BDunnell

Quote:

Originally Posted by Daniel

While we're at it I blame them for global warming, war in Iraq, that girl who went missing in Portgugal, for the recent rise in interest rates and everything else that isn't sunshine and lollipops :p

:laugh:

Absolutely. They should be tried for war crimes too.
7th June 2007, 19:53
JAM

Quote:

Originally Posted by Iskald

Once more, the FIA fee has nothing to do with the troubles Rally Norway is experiencing.

I didn't say the the FIA fee would save the budget!!!
7th June 2007, 20:17
Lousada

Does the ISC charge anything for organising a WRC meeting? And/or do they claim anything, like Bernie claims all commercial signs on 'his' tracks?
7th June 2007, 21:16
Daniel

Quote:

Originally Posted by Lousada

Does the ISC charge anything for organising a WRC meeting? And/or do they claim anything, like Bernie claims all commercial signs on 'his' tracks?

The round is responsible for organising the round.
7th June 2007, 21:16
Daniel

Quote:

Originally Posted by BDunnell

:laugh:

Absolutely. They should be tried for war crimes too.

I thought that went without saying :p
8th June 2007, 14:36
FrankenSchwinn

Quote:

Originally Posted by Daniel

While we're at it I blame them for global warming, war in Iraq, that girl who went missing in Portgugal, for the recent rise in interest rates and everything else that isn't sunshine and lollipops :p

i didn't know the FIA was run by G.W.Bush!?

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