There are some realistic principles when you have to prepare a motorsport budget. In this case, we’re going to look at a motorsport event and not from a driver’s point of view; however if you’re a driver, we can provide that to you.
The primary obstacle to any event is the inability of the event organizer (often the founder) to be able to delegate responsibility because they’ve started as a one-man band, probably grown and then met an unsuitable partner and had difficulties and they won’t trust again, or they believe anyone could do their job, so they wont delegate and the event doesn’t grow with the inevitability that a competitor takes over the key fields. The other risk is not recruiting capable workers because capable workers translate to on-site income opportunities in gate ticket sales, food & beverage concessions, souvenir merchandise sales, souvenir program sales and parking fees and everything else.
In most venues, there are policies in place governing what you can and cannot do during your event so if you don’t ask up front, you could find out the hard way, in the small print
after signing the lease contract.
And don’t discount your loyal fans and a membership scheme of which we have numerous varieties.
Be realistic about the budget
Are you really going to get those 20 sponsors and 50 entries for that event? a) Create your ideal scenario (20 sponsors, 50 drivers).
Create your realistic scenario (where you are most likely to end up)
Create your worst-case scenario (your fall-back position when everything that you imagine can go wrong has gone wrong, including weather! sponsors going bust or not coming through, etc).
Is it viable? If not, cut costs until it is.
Count sponsors only if they’ve signed a contract
If you’re being paid for online advertising, only
Choose your Venue
Your budget depends on your venue!
What are the arrangements for the Venue agreements – don’t take the venue’s own contract, it’ll be written only to help them.
Agree the venue in advance and agree the budget and terms quickly. Our Venue contracts are written neutrally and are designed to be acceptable to both venues and their users.
Does the venue want some kind of guarantee?
What are the cancellation dates?
What are the payment dates?
You’ll need a deposit for the track
Don’t pay deposits for your room hire and catering, after all, you’re hiring the track and therefore everything that goes with it. You can arrange to use rooms for VIP or hire them out for 3rd-party VIP in due course and it can all be paid for after the event. Have a final booking date and arrangements for the track to sell any unbooked VIP rooms and give you 50% of the commission.
The quicker you can nail this, the more accurate your cost estimating will be.
The entire event budget tends to hang on the venue or destination.
Until your event venue is decided upon, the budget is still up in the air then your numbers will not make any sense and moving forward with your planning will be impossible and you’ll miss costs.
Simple things can make a huge difference in costs.
Know what that figure is and factor this into your budget
And if you’re expecting lots of people, talk to the police about traffic management early. Don’t be bamboozled into paying for the police, they have a statutory duty to manage traffic for events, so they can’t actually charge you despite what some forces will claim.
Be clear about what type of an event you are aiming to deliver
What are the realistic number of visitors?
What are the entry fees?
What are the event specific sponsor fees?
If you’ve allocated championship sponsor fees across each event, what is available there? (If you’ve spent it on administration, don’t double count it)
Can prizes be sponsored or do they come from administrative costs
Are you getting all of the visitor fees and entry fees from drivers?
Are you able to sell hospitality, both VIP and visitor eateries?
If you’re doing VIP hospitality, in what enclosure? How are the VIP’s seeing the races? Multi-TVs or a large screen TV in hospitality? How is this being policed? Who is paying for security?
Who is paying for food? What about soft drinks? What about alcoholic drinks?
Are any of your sponsors able to provide free soft drinks?
If you’re having 20,000 visitors that’s at least 10,000 meals to be provided in a 90minute period – can the catering cope?
- your guest invitations?
- programme production and pricing to your budget
- advertising in your programme
- VIP Check-in
- VIP document availability
- We’ll handle actual and potential sponsor’s VIP invitations
Your budget will look very different for each event model type so ensure you are clear about which option you are working towards.
Don’t waste money.
Don’t place banners where they’ll be impacted by cars. If possible without obstructing spectator view, raise them above the race area. A banner may only cost £50, but by the time you’ve re-ordered and re-printed and had delivered, the real cost is at least £100 per banner +VAT.
Use in track advertising if possible away from crash areas. Re0using items means savings.
And have provisions for sponsors to pay for their banners if they’re damaged.
- Indication of revenues
Once you have a costs budget then you can determine the price points that you are aiming at charging? Check out the competitive events already being attended to see what the market is used to paying and benchmark your event against theirs to create your rationale for a higher, lower or similar price point.
- Fixed and variable costs – what costs are you liable for irrespective of the size of the audience? Which costs grow as your audience grows?
- Venue agreements – most venues want some kind of guarantee. A deposit for your room hire and catering. Know what that figure is and factor this into your budget
- Contingency – usually 5-10% for unforeseen costs (risks)
1. Work out your break-even point. What level of revenue (for fee-paying events) or funds do you need to cover all your costs to make the event viable?
2. Group your income/revenues and cost figures into categories. Revenues come in the form of Delegates Revenue, Sponsorship Revenue, Advertising Revenue and Exhibition Revenue. Costs generally come from: Research, Marketing/PR & Promotion, Delegates (goodie bags, badges, registration), Venue (room hire, catering, AV audio visual, décor, and furniture), Exhibition costs, Travel & Accommodation (staff), Speakers (expenses, fees) and Hospitality.
3. Create an Excel spreadsheet with a separate tab for your Revenue and Costs figures. Add in formulas where necessary.
4. Add a top sheet which pulls together all of your total costs and revenues for the above categories in a single figure for easy reference. This is your Summary sheet and will be your first tab in your Excel spreadsheet. It is this tab that you will use in your Budget meetings for accounting for each item. The other sheets provide the breakdown if more detail is required, especially where cost savings need to be made.
5. On separate 2nd and 3rd tabs allocate a few lines for each of the above categories, labelling each as you go along. Put in figures relevant to each item so that you can itemise each element that you are spending on. For instance, for the venue cost – break down the total cost into room hire, catering, and audiovisual etc. so that you can see how that total cost is made up. If later on you need to make savings it is clear what each item costs and where you are likely to be able to make any savings. If it is bundled into the one cost it will be harder to identify whether any savings can be made.
6. Run budget exercises for your events to review and analyse costs and revenue forecasts at timely intervals during the planning and co-ordination phases. tips
Overall budget management
My best clients create 12 week, 6 week, 1 week and Flash (on the day) forecasts. They are the best at managing costs and forecasting revenues. If you have the resources then I would recommend this approach. It flags up any dips in revenues, takes into account any unanticipated costs and highlights any unforeseen issues that were not apparent during the planning stages but have hit you like a rocket. This approach to budgeting is magical and does wonders for your planning abilities – not only for the current phase but really sets you up for those repeat events.
In the throes of planning for your event however, it may emerge that actual revenues were not as rosy as you first anticipated so cost savings or reductions are going to have to be made to prevent the event from making a loss. This is where the detailed budget really comes into its own. Those itemised lines for each cost really help you re-think each cost and revenue figure – is £2,000 really necessary for décor?! This is where you are able to remove those ‘nice-to-haves’ and cut back in areas without losing the event integrity and core essence.
Budget management is essential for successful event management. It helps you think and plan ahead, re-think and adjust your plans but also be prepared for any unforeseen mishaps and any changes in the landscape throughout the planning and execution of your event. It most importantly stops you haemorrhaging money where your event is concerned.
It is no different to making a budget for your grocery shop or monthly bills at home – be realistic, have a plan, nail the critical elements that will help your accurately forecast and regularly review.