By Julie Scharper, The Baltimore Sun
7:56 PM EST, February 24, 2012
The men behind Downforce Racing have convinced city officials they have the skills to run the Baltimore Grand Prix, have secured the blessing of IndyCar executives and have sweated through months of contract negotiations.
But those efforts pale in the face of the challenge that now lies before them: pulling together an expensive and elaborate racing festival in just six months.
"This group needs to get moving now and not wait," said Lisa Delpy Neirotti, a professor of sports marketing at George Washington University. "They have plenty of time, but they just need to spring into action now."
The city canceled its contract with the organizers of last year's race after they ran up $12 million in debt and left creditors unpaid. Downforce Racing — Indianapolis-based contractor Dale Dillon and former Constellation Energy Group executives Felix J. Dawson and Daniel Reck — formally won a contract with the city this week, after a 3-2 Board of Estimates vote.
Now they must open offices and hire staff, sign deals with contractors, plan the track, sell tickets and craft a new image for a Labor Day weekend event that many Baltimoreans associate with snarled traffic and unpaid debts.
The first and perhaps most important task is finding a company to sign on as the festival's title sponsor, a designation generally worth $1 million to $2 million. That money could fund marketing, salaries and contractors before ticket sales begin.
"If you don't have a title [sponsor], the chance of this being a financial success is very small," said Tom H. Regan, a professor of sport and entertainment management at the University of South Carolina.
Baltimore Racing Development, the group that put on the inaugural race, never landed a title sponsor. As last year's race approached, race organizers and city officials shrugged off concerns about the lack of one.
But when the Baltimore Racing group collapsed in debt, both the group and city leaders attributed some of the financial problems to the lack of an influx of cash from a title sponsor.
Dillon, who has worked on races in St. Petersburg, Fla., and Toronto, says finding a sponsor is a "top priority." And he is hopeful that he will be able to sign a sponsorship deal.
"We're in those conversations now," Dillon said. Landing a title sponsor is "the goal of every event."
Regan said Downforce has about a month and a half to secure a sponsorship deal. As the date of the race looms closer, there are fewer benefits for a sponsor, he said.
Delpy Neirotti, the George Washington professor, said most sports sponsorship deals are signed about a year before the event.
"The sponsors are losing time to get their name out," she said. Most companies work out their budgets a year in advance, so it can be hard to secure last-minute sponsorship money, she said.
Delpy Neirotti said Downforce's five-year contract with the city could be a boon as the racing group seeks sponsors. The group could structure a deal in which the sponsor pays a minimum for the title rights in the first year but contributes substantially more in the future, she said.
Robin Miller, a racing analyst for the SPEED Channel, said that the popularity of last year's event should help the new group find a sponsor.
Drivers praised Baltimore's street track and enthusiastic audience, and nearly 110,000 tickets were sold over the three days of the racing festival. IndyCar executives, eager to capitalize on the Mid-Atlantic market, consider the race one of the jewels of its 2011 season.
"All they have to do is show [potential sponsors] pictures of last year's race," Miller said.
Last year's successes should also help ticket sales because those who have fond memories of the race are likely to come back. Dillon said he hopes to begin selling tickets in mid-March.
Although ticket sales are starting later than last year — and Downforce has missed the chance for holiday-season sales — city officials say that 70 percent of last year's tickets were sold in the three months leading up to the race.
Regan, the University of South Carolina professor, said this year's ticket sales are an important indicator of the long-term viability of the race.
"You're going to want to see a significant majority of people who bought tickets last year buying them again," he said.
Downforce will be somewhat hampered in efforts to reach out to those who bought tickets last year — the old group owns the list of those who purchased tickets, and it's unclear whether it will sell the list.
The old group also purchased about $1.2 million in concrete barriers and fences now stored at a former Department of Transportation garage off Russell Street. Because those assets were used as collateral for a loan from M&T Bank, it is unclear who owns them. It also is unclear whether Downforce will try to purchase the old barriers and fences, or commission new ones.
City Councilman William H. Cole IV, who worked closely with past and current race organizers, said he thought the new group would be able to leverage the successes of last year's race.
"We won't have those growing pains like we did in Year One," he said.
Cole said he believes that the two miles of roads near the Inner Harbor used as the Baltimore Grand Prix track would be good for another decade. The city spent nearly $7 million last year repaving the roads in preparation for the race — months of traffic-snarling work that drew ire from residents and businesses.
Dillon, who owns a construction company and has laid tracks for two other races, said the track needed little work.
"It's truly just annual maintenance — filling in potholes and cracks," Dillon said.
Without the need for extensive roadwork, preparations for the second year will be much less taxing for those who live and work in the city, Cole said.
Moreover, there is no need to cut down trees — another of the preparations for the 2011 race that drew considerable public criticism — and plans for traffic, public safety and transit can more or less be recycled from last year, he said.
"As far as the city goes, the second year is much less complicated," Cole said.
Cole said he planned to discuss adding more gates to the race area and additional pedestrian bridges over the course to alleviate congestion during the event. He also said the route of the Charm City Circulator buses might need to be tweaked.
One of the most important challenges facing the group — and one aspect in which the three principals lack experience — is marketing.
"They need to start now, marketing at other races and just getting the word out," said Delpy Neirotti. While ticket sales were good last year, she thinks they could have been improved with a more aggressive marketing campaign.
Sarah Davis, IndyCar's senior director of business affairs, said that she would like to see a more regional marketing push.
"We'd like to see more marketing in other cities, and IndyCar will help with that," Davis said.
Cole said the success of last year's race could ease the search for a title sponsor.
"Last year, ... no one really knew what to expect," Cole said. "They had a hard time putting a dollar figure on an event that hadn't run yet."
Cole said he thought Dillon's reputation in the racing world would be helpful in the search.
"Dale is a known asset," he said. "There will be doors that open because of his involvement."
Executives from both IndyCar and the American Le Mans Series, which is also part of the city's racing festival, expressed their confidence in Dillon when they came to Baltimore on Wednesday for the city's vote on the Downforce contract.
Scott Atherton, the president and chief executive officer of the American Le Mans Series, pointed out that Dillon is highly respected in the world of racing.
"This industry at this level is a very small fraternity, and everyone at this level knows him," Atherton said.
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