Cancelled race costs

[Hardingfv32]

Generally speaking, when a race event is cancelled what are the financial responsibilities of the Region involved?

I wonder if SCCA would ever consider helping out a Region in these times?

Brian

[E1pix]

SCCA, nor any club or entity, has any part of causation nor restitution in this.

[Bill Johnson 42]

While I haven't seen others contracts most would / should have some kind of cancellation policy stated in the contract with time frames and reasons for cancellation. In that policy there should be some clause about natural disaster type events which this qualifies for.

Another question would be do you get your sanction fee back from national? I would think so.

Motorsports Reg is also agreeing to refund money without taking their normal processing fee so everyone should get all their money back.

[John Nesbitt]

Generally speaking, when a race event is cancelled what are the financial responsibilities of the Region involved?

I wonder if SCCA would ever consider helping out a Region in these times?

Brian

I have been a board member for my region. Refund of track rental will depend on several factors.

1. First and foremost, what the specific rental contract negotiated with the track sets out.

2. Whether the cancellation is at the behest of the track or the region.

3. How close to the event date it gets cancelled.


I expect that no sanction/insurance fees would be payable to the national office. I would be astonished if SCCA bailed out a region. What typically happens is either, (a) region member(s) advance it a loan/subsidy; and/or, (b) the region gets out of the business of staging events.

My sense at the moment is that regions are in less financial peril than prep shops, whether they are large operations or a single person.

[Dave Harmison]

I sure hope this thread stays as civil because I am curious about this situation.

I’ve never studied law as a lawyer but have had to learn some general concepts through the years.

I assume this situation would be a “force majeure” just like a hurricane, flood, etc. Is there a fairly “standard” way this is handled in race track contracts or is it highly variable, ie big famous tracks with lots of demand put all the risk on the renter, smaller tracks split the risk or have to shoulder the risk themselves?

I was at the 1993 Ruan DesMoines Grand Prix. After the days events ended on Saturday they had to cancel the headline races on Sunday, the TransAm, because the track flooded and the tap water in the city was unsafe to drink. End of the DSM-GP.

[Bob Wright]

As a track renter, what I see is "it depends" The force majeure clauses in many of the track contracts help, but there are situations where the deposit for an event is forfeit regardless of the circumstances. What happens if the track says 'we're open for business' even though the CDC recommends no gathering more than 50? If the renter withdraws, is anyone at fault and if so, who? Sticky wicket.

FRP is working through this in real time right now, with no clear answers. We have tens of thousands of dollars out in track rental deposits for the whole season, and have no idea when we can actually start our season. It changes almost hour by hour


We live in interesting times (paraphrase of a Chinese curse)

[Dave Harmison]

Thanks Bob. Nice to have some insight from an insider.

Besides the fact that in the last 24 months I’ve made, and lost, more money than I thought I’d ever have, I’m concerned as we all are about the economic position this will leave everyone in.

Will regions go broke? Will racetracks go broke? Will we be left with no place to race and no organizations with which to race? All tbd at this time.

Maybe we’ll just do like GM did in the last crisis and reorganize on paper as “the new SCCA” after we declare bankruptcy.

Yes, I’ve heard that Chinese curse before and it couldn’t be more fitting.

I hope it all works out for you.

[Mark_Silverberg]

I was at the 1993 Ruan DesMoines Grand Prix. After the days events ended on Saturday they had to cancel the headline races on Sunday, the TransAm, because the track flooded and the tap water in the city was unsafe to drink. End of the DSM-GP.

I was there as well - The Des Moines situation was similar but very different - The City informed the promoters that emergency services had to be diverted to address the flooding situation (which at that point was very dire). Consequently the permit to use the city streets for the event was rescinded. While the city water supply in Des Moines was declared unsafe later that day, the cancellation itself was not because of a public health issues. As i recall Des Moines did not regain a potable public water supply for over 40 days after the flood.

While that was the last year of the Des Moines race it had been in poor finances for several years. It was likely to end after that year any way.

The economic impact of the corona virus on racing will likely be the same as the economy in general - business in highly leveraged positions and with low reserves will face bankruptcy - future growth (new entrants) will be stunted. Businesses with low dept loads and assets in place will recover strongly as there will be less competition during the recovery.

[Hardingfv32]

Except for the Runoffs I do not see any exposure for SCCA. They could see layoffs because of lost sanction fees I suppose.

I can see the Regions functioning on a cash basis. The larger Regions having a small cash reserve for emergencies but the smaller Regions are simply not going to have funds for future tack rental deposits.

I wonder about COTA. They always seems on the edge of financial viability.

Brian

[romoman]

Except for the Runoffs I do not see any exposure for SCCA. They could see layoffs because of lost sanction fees I suppose.

I can see the Regions functioning on a cash basis. The larger Regions having a small cash reserve for emergencies but the smaller Regions are simply not going to have funds for future tack rental deposits.

I wonder about COTA. They always seems on the edge of financial viability.

Brian

I would guess that some of the reserves are pretty large, not small.

[mikey]

Given that all racing for us is disposable income with no chance of return, I'd say don't sweat it if you lose some money on cancelled events. God has blessed us with good fortune and maybe He needs some of it back for those less fortunate.

[John Nesbitt]

Except for the Runoffs I do not see any exposure for SCCA. They could see layoffs because of lost sanction fees I suppose.

I can see the Regions functioning on a cash basis. The larger Regions having a small cash reserve for emergencies but the smaller Regions are simply not going to have funds for future tack rental deposits.

I wonder about COTA. They always seems on the edge of financial viability.

Brian

I would guess that some of the reserves are pretty large, not small.

Situations in descending order of direness (if that is a word):

1. Prep shops - From singletons to multi-person operations, their cash flow has suddenly dried up. Worse still, given the calendar and tracks' schedules, most of those cancelled events are not coming back. These people are in real, immediate trouble, and many shops may fold.

2. Some participants. A fair number of entrants are small business people involved in services (doctors, dentists, any kind of in-person discretionary spending) or their employees. Their income has suddenly taken a huge dive, but their expenses continue. Again, a lot of that spending will not catch up. They are certainly out of racing for this year, and maybe longer.

More broadly, folks' investment accounts have gone in the toilet. People feel less wealthy than they did 6 weeks ago. That affects decisions to enter events.

3. Some regions. Most regions 'should' be able to ride this out. However, some are on the absolute edge financially and/or have lost (parts of) deposits as events cancel.

4. SCCA (national). As long as members keep renewing, it will have an income stream. However, it does have considerable overhead (staff etc.). If the shutdown persists, its marquee events (road racing and solo) will be at risk. There will be venue contracts to renegotiate. Membership may drift away over time.

5. Foreigners. You might not have considered this. A fair number of Canadians enter or volunteer at SCCA events (and FRP, and vintage). We are stuck on this side of the border until further notice.


Road racing is the very definition of in-person discretionary spending. By definition, it will be the first thing to get cut back when the economy tanks (see also: 2008-2009). The impacts from this one will likely be worse.

[reidhazelton]

If litigated, given the circumstances I'd guess most courts would void the contract based on frustration of purpose or impossibility if there isn't a clause specific to the circumstances (like previously mentioned, natural disasters not including simply inclement weather). The agreement was to be able to use the track for a given purpose, and now that the purpose is impossible. Push come to shove, promoters would likely get their money back if I were the judge - which I'm not. In the real world, litigating over this would not be good for anyone. The tracks should be understanding if the promoters need the money back to survive. Times like these we all need to work together to make things livable for everyone and not waste money in the court system, which isn't a quick solution either.

I think the bigger issue is, when this is over, how many people will there be who are able to go to the track? 2007 wiped out a lot of entries, and given the steep decline since and the aging demographic I worry this is the nail in the coffin.

[Bob L.]

Sent link to this thread along to an old hand up in Iowa... got this reply, they're not on forum, so posting for them...

"Please respond that 1993 was not the end of the DMGP. Ruan wanted to keep the race going that if we could raise up to 200 grand that he would match it. We did. We actually ended up in the black that year, and had another race in 1994. Having ARCA is what ended it."

Have no dog in this ... just wanted to report history as was passed along to me...from one who was there and involved in putting on the events......

Now have "the rest of the story"......... not just about potable water?

Bob L.

[Purple Frog]

If we hit 20% unemployment, all our worries about racing activities will be moot.

[Mark_Silverberg]

Sent link to this thread along to an old hand up in Iowa... got this reply, they're not on forum, so posting for them...

"Please respond that 1993 was not the end of the DMGP. Ruan wanted to keep the race going that if we could raise up to 200 grand that he would match it. We did. We actually ended up in the black that year, and had another race in 1994. Having ARCA is what ended it."

Have no dog in this ... just wanted to report history as was passed along to me...from one who was there and involved in putting on the events......

Now have "the rest of the story"......... not just about potable water?

Bob L.

Yes, quite embarrasing - I was at all the DMGP events and should have remembered that there was a 1994 event. Since most of the tickets for 1993 had already been sold and only Sunday events were cancelled it is quite viable that 1993 was profitable.

I do remember ARCA in 1994 - while entertaining they were not as impressive as the Trans Am cars and I don't feel ARCA added much to the event.

John Ruan was very much a supporter of the event and felt that other local companies should have also been more involved. The race ran from 1989 to 1994 which was a pretty good run in comparison to many street races.

[Raceworks]

If we hit 20% unemployment, all our worries about racing activities will be moot.

That's why I'm going ahead with some work on my toterhome. If things really hit the fan I'll end up living out of that.

(half-joking)

[dalz]

Sam, if it comes to that I hope it is armoured to withstand the masses looking for a scrap of food or a dry night of sleep.

Sheesh I never thought I'd be living a dystopian movie. If I had a choice in that I would've picked Rollerball.