Drag site icon to your taskbar to pin site. Learn More

Backmarker: Bridgepoint’s Messy Marriage

Thursday, October 4, 2012
Great Big Love

Carmelo Ezpeleta: As a communications strategist  Ive been on the inside of a few mergers. The easy ones involve merging similar businesses that operate in different markets  Fiat absorbing Chrysler  or merging a manufacturer with a distributor to create more vertical integration. Merging competitors is harder. Dorna CEO Carmelo Ezpeleta will find that the problem is not rationalizing the business  its merging two very different corporate cultures.
As a communications strategist, I've been on the inside of a few mergers. The easy ones involve merging similar businesses that operate in different markets (Fiat absorbing Chrysler) or merging a manufacturer with a distributor to create more vertical integration. Merging competitors is harder. Dorna CEO Carmelo Ezpeleta will find that the problem is not rationalizing the business, it's merging two very different corporate cultures.
The recent news that Bridgepoint Capital has ‘brought together’ the MotoGP and World Superbike championships was almost buried amidst the flurry of news releases from Intermot. [Full text here] If I was a conspiracy theorist, I’d wonder if they were trying to slip the announcement in under the motorcycle industry’s radar. I suppose if I asked Bridgepoint about it, they might say the opposite was true; that it was timed to hit as mainstream media was turning its attention to motorcycles because of the show.

But why would I ask Bridgepoint when it’s so much more fun to speculate?

First things first: From our perspective as motorcyclists, MotoGP and WorldSBK are the two biggest games in town. So it was big news when, last year, Bridgepoint (a huge investment company based in the UK), which already owned Dorna (the Spanish company that holds MotoGP’s commercial rights), acquired InFront (the Swiss company that holds WorldSBK’s commercial rights).

Anyway, a lot of motorcycle industry observers waited for the other shoe to fall. Not me; last September, I blogged...

The real reason that it's unlikely any kind of rationalization will result from this deal is that it's unlikely it will really occur to anyone. Dorna represents about 5% of Bridgpoint's portfolio. And the acquisition of InFront can only be about one thing, really... FIFA.

You see, in addition to SBK and a range of sports properties from show jumping (that's horses, not Evel Kneivel wannabes) to curling, InFront also holds the media rights for the Federation Internationale de Football Association. This is the giant, famously corrupt governing body of soccer, and the World Cup. As much as MotoGP and World Superbike are big deals for us, the global audience -- and attendant commercial opportunities -- for motorcycle racing are trivial when compared to soccer. Sony alone spends about $50M/year on FIFA sponsorships. And in a weak global economy, soccer's relative strength is enhanced by the facts that it costs almost nothing to participate in the sport at the (literally) grassroots level, that it has vastly better terrestrial/free TV packages in place, and that there are far more events in total with lower average ticket prices, making it more accessible to cash-strapped fans.

When Bridgepoint's board reviewed the due diligence on its InFront acquisition, I doubt that more than a minute was spent discussing SBK. And most of that minute was occupied when one old boy asked, "Really? We own motorcycle racing." At that moment a young assistant leaned in, whispered something in his ear. The old boy raised his eyebrows, muttered "Frightful things," and went on to ask, "How's Sepp Blatter doing these days?"

Fans throng the pit lane before a WorldSBK race at Miller Motorsports Park  in 2010. Both racers and fans love the relaxed attitude in the Italian-run series  compared to Dorna uptight paddock  where even Moto2 riders can barely get this kind of access. It would suck if Dorna influenced the friendly vibe in WorldSBK.
Fans throng the pit lane before a WorldSBK race at Miller Motorsports Park, in 2010. Both racers and fans love the relaxed attitude in the Italian-run series, compared to Dorna' uptight paddock, where even Moto2 riders can barely get this kind of access. It would suck if Dorna influenced the friendly vibe in WorldSBK.
I guess I might have been wrong, although the only official press release on the ‘merger’ (which was jointly issued by Dorna and InFront on Tuesday) begs more questions than it answers. You might want a big whiteboard, so you can sketch this out, because it’s complicated.

Again, as motorcyclists, we’d probably naturally assume that Dorna, thanks to its MotoGP property, would wear the daddy pants in this new relationship. That’s the implication of this statement, “As a consequence, MotoGP and WorldSBK, will be integrated within the Dorna Sports group...

However, in the next paragraph, Bridgepoint adds, “Alongside this re-organisation, Infront has been appointed as marketing partner and global advisor to both championships.”

So, they’ll both work on both championships. The Spaniards and the Swiss (and Italians, because notwithstanding InFront’s Swiss HQ WorldSBK is still Italy-centric.) Having spent eight years in Switzerland and at least a year in Spain and Italy, I can’t tell you how poor the prospects are for this marriage. Nonetheless, Bridgepoint seems to have concluded, “This is a logical and exciting development which should ensure that both these fantastic Championships continue to flourish.”

‘Continue to flourish’? Have they been paying attention? It’s far more likely that underneath this cheerleading, the impetus to rationalize world championship-level road racing is that both championships are too heavily dependent on Spain and Italy -- markets in crisis -- not to mention manufacturers whose commitment to racing has wavered of late.

It’s not as if MotoGP and WorldSBK have had a particularly warm relationship either. The adoption of the CRT rule caused some muttering in the Superbike camp, as must’ve the adoption of the production 600-based Moto2 class and for that matter, the move to four-stroke engines in MotoGP way back in 2002.

How, I wonder, did WorldSBK feel about Honda’s recent announcement that it would build an RC213V-inspired motorcycle for the street? Did they think, ‘Hey wait a minute, if they homologate it for our series, there will be similar RC Hondas running in both championships’? Talk about blurring the ‘prototype’ rules that were supposed to define MotoGP. But who were they kidding, anyway? The CRT rules already showed how opportunistically ‘prototype’ would be defined.

It was only a couple of years ago that Mauricio Flammini was sniping at Ezpeleta over the announcement of the CRT rule, which prompted Ezpeleta to tell the German magazine Motorrad, “Flammini's opinion has no meaning to me, and his WSBK series is a second class championship.”

The two motorcycle racing brands are competitors at some level and prone to poaching from one another. The first year of shared ownership hasn’t brought rapprochement. I can’t see them getting along just because some bean counter in London’s told them, “WorldSBK is now part of Dorna,” while pulling Paolo Flammini aside and whispering, “Don’t worry old boy, you’ll be in charge of marketing.”

Paolo Flammini  with his brother Mauricio  operated WorldSBK as a family business for years  before selling out and becoming an executive at InFront. You can bet that in his heart  the Superbike championship is still his. Some observers have already said  Before long there will be one series. I say  Flammini will throw himself on his sword before hell allow the Superbikes to become a MotoGP support class.
Paolo Flammini, with his brother Mauricio, operated WorldSBK as a family business for years, before selling out and becoming an executive at InFront. You can bet that in his heart, the Superbike championship is still his. Some observers have already said, 'Before long there will be one series.' I say, Flammini will throw himself on his sword before allowing Superbikes to become a MotoGP support class.
While I understand that Paolo, at least, has historically gotten along with Ezpeleta on a personal level, that was when both men were secure in their own fiefdoms. (Remember that, for years, WorldSBK really was a Flammini-brother fiefdom; Paolo and Mauricio owned it. You’d better believe that no matter what Bridgepoint says, Paolo still feels WorldSBK is his family business.)

Until now, if Ezpeleta and Flammini disagreed, they could brush it off. “It’s only business.” But when you’re working in the same business, such disagreements inevitably become personal.

It’s a truism, in racing, that the person you most want to beat is your teammate. Flammini wants to beat Ezpeleta. It will be incredibly frustrating for him (and everyone else emotionally invested in WorldSBK) if they feel that Dorna and the boss are stacking the (Powerpoint) deck in MotoGP’s favor.

And there are more opportunities for conflict than just internecine bickering between Dorna and InFront -- rival companies with rival cultures that have been thrust together. That’s because there are three other stakeholders who must, in the long run, remain satisfied.

• The FIM, also based in Switzerland, is the global sanctioning body for motorcycle sport. In theory, Dorna’s authority to claim its MotoGP series as a/the world championship derives from the FIM. Dorna’s contract does not expire until 2036. But there are surely plenty of weasel clauses in that contract, so Dorna has to keep the FIM satisfied.

• IRTA, the International Road Racing Teams Association, comprises the teams, major technical suppliers, and sponsors participating in MotoGP.

• Last but not least the MSMA, the Motorcycle Sports Manufacturing Association represents the manufacturers.

Until now, Dorna, the FIM, IRTA, and the MSMA have had seats on the Grand Prix Commission, which votes on rules and regulations. Although on the face of it, all those parties have common interests in stabilizing motorcycle sport, increasing the size & diversity of most grids, and then expanding its global audience, their relationship has often been pretty fractious.

IRTA and the MSMA, in particular are themselves made up of teams and manufacturers that have divergent interests. In theory, the MSMA can change or enact technical regulations on its own, if such decisions are unanimous. If that sounds like a complex group dynamic, imagine bringing InFront and WorldSBKs interests into the equation.

That’s surely going to happen, though, judging from the FIM’s official statement. [Full text here]

The FIM President Vito Ippolito said of the reorganization: “I welcome Bridgepoint’s decision to bring the two championships together within a single organization. We shall shortly be holding a meeting of all the stakeholders in order to reposition the two championships and look into the technical and operational implications. We shall then be able to adapt the regulations to ensure that they have a distinct identity in future.

Wow, eh? ‘Reposition the two championships’, ‘technical and operational implications’, ‘adapt the regulations’.

It sounds as if they really do want to rationalize the two championships. It’s about time we had that discussion, which has been a parlor game amongst observers of the motorcycle racing industry, since Carl Fogarty single-handedly usurped Grand Prix racing’s premier-class status in the important UK market, and handed the crowds and prestige to the Superbikes.

My take on it is that WorldSBK shouldn’t just be a production-based championship, I think it should be a production championship. Although people here in the ‘States and in Britain bitterly complained when the AMA and BSB series ‘dumbed down’ their Superbike rules, neither show suffered. Frankly, anyone who thinks that a bone-stock ZX-10 or Panigale isn’t a superbike has never ridden one.

I doubt the CRT rules are long for this world, but as long as both series are running four-stroke motors of similar displacement, anything that helps to distinguish the series in the eyes of the casual fan is probably good. So, MotoGP technical rules that specify the wheels and rider be visible from the side should be dropped. If we brought back dustbin fairings (I mean their modern equivalent, of course) the two championships would be visibly different, in the way that F1 cars are visibly different than Touring Cars or WRC cars.

I could go on, and I’m genuinely interested in others’ opinions on this. Please comment. But for now, I remain skeptical. Bridgepoint’s move to unite Dorna and InFront feels like an arranged marriage to me, and with the FIM, IRTA, and MSMA moving in, there are far too many in-laws in the house.

Even if Dorna/InFront can pull together, it’s worth bearing in mind that any one of the four principals (Dorna/InFront, the FIM, IRTA, and MSMA) could be ostracized by the other three, who could still operate a meaningful world championship, under some new title if necessary.

The FIM implies that, thanks to Bridgepoint, the technical aspects of our sport will be rationalized. The truth is, fixing what’s wrong has to start with rationalizing the structure of the sport and the way it’s governed. Note to Bridgepoint: Good luck with that.

Login or sign up to comment.