Thursday, 23 November 2017

The Future of the Isle of Man TT

What is the Isle of Man famous for?

Up until last week it would have been the TT. Not any more. It’s because newly-crowned F1 Champion Lewis Hamilton bought his private jet there, saving himself £3m in tax.

An expose into the murky world, as some might describe it, of tax avoidance has propelled this little piece of land in the Irish Sea, along with other islands such as Jersey, Guernsey and Bermuda, into world headlines - condemned as tax havens.

It is not as if the Manx Government doesn’t have enough to contend with. While robustly defending itself against accusations of helping rich people to avoid or, more seriously, evade paying their dues they were hit with accusations of incompetence on a much more important front. How to commercialise, or not, the TT races.

‘Embarrassing’ and ‘damning’ are two adjectives used to describe the project to raise more money for the Island by appointing a professional promoter. A report of several hundred pages concludes that
the proposal, approved by Tynwald in 2016, was fundamentally flawed and lays the blame firmly at the door of the Minister for Economic Development Laurence Skelly and his CEO at the time Chris Corlett.

Not only embarrassing but seriously damaging for the Isle of Man Government. As Roger Willis, Financial Editor of leading trade paper British Dealer News, and a Manx resident, described it: “The chances of getting any other promoter involved with the TT are probably zero. The Isle of Man Government has lost all credibility as a trustworthy commercial partner.”

What is he talking about? Some four years ago, the government’s Department of Economic Development (DED) concluded that as the costs of the TT were going to rise and something had to be done about it.

At that time, the TT fortnight and Manx/Classic brought in some £28m to the Manx economy of which the government take was £2.2m but the estimated cost of running the events was £6.3m. So the cost to the government was £4.1m. And rising.

So the idea of a World Series was born. Let’s exploit the brand, the uniqueness of the TT, the greatest race in the world. An international racing series in the ‘closed season’ on road circuits, mostly in the Southern Hemisphere, with the final being the TT. Let’s get a consultancy to do a feasibility study.
Enter The Sports Consultancy, a London agency, who had worked for a number of major sports. Their study was very detailed and the idea seemed to be welcomed by those who believed their predicted revenues. Of course, it hadn’t a cat in hell’s chance of even getting off the ground as anyone with the slightest idea of the economics of motorcycle racing would have told them had they been asked. Three hundred and fifty thousand pounds later the project was abandoned.

But that project shone a light on the fallibilities of the governmental structure which were to be cruelly exposed in the second Big Audacious Goal (BAG), that of commercialising the TT itself, and the Classic, by contracting out the marketing and promotional rights to an independent company.
This was not pie in the sky. It was a good idea. Governing bodies, in this case the Manx Government, are not very good at running commercial or professional events which is why most sports, eg the FIM or the FIA, contract out their major series to be run independently - MotoGP by Dorna, Formula One by F1.
The Manx Government, just like its counterpart in Britain, is compartmentalised into ministries and departments who appear to rarely talk to each other. For months, the Department of Economic Development went on its merry way, aided by The Sports Consultancy, in selecting a promotion company who would take over the marketing of the two big events. From a very short list of two, a small but ambitious London-based promoter, Vision Nine, was selected. It had considerable experience, and success, in running outside consumer events, some in surfing allied to music. It was young, energetic with big ideas.
But when the proposal was presented to Tynwald in early 2016 there was a catalogue of complaints from other departments, including legal, that they had not been consulted and it was far from being feasible. It certainly fulfilled the main objective of increasing the revenues and, on the face of it, lowering the cost to government.

But there were those who didn’t believe doubling the attendance figures was achievable or could be accommodated; and even if it was an extra £5m would have to be spent on infrastructure, police etc; that the government would be losing control to the promoter under the terms of their agreement… The contract with Vision Nine was not signed, lawyers made money and probably still are.

So has any good come out of this fiasco? It will certainly not have done the TT or the Classic Festival much good in the eyes of the 82,000 inhabitants of Mona’s Isle, not all of whom welcome the disruption these events cause – even less their representatives in Tynwald who have probably cost them the business end of a million quid. But it does reinforce the old adage that while ideas are great, execution is everything.

While the status quo will be more or less maintained for the next couple of years, improvements are being made for teams and spectators. But a full audit is being carried out out to ascertain the true costs of running the events which many representatives believe have been seriously understated. This will almost certainly lead to a return to the professional promoter idea, an absolute necessity to maximise the potential of an amazing event still being controlled by amateurs while run very well by an extraordinarily small number of dedicated professionals.

And the good news is that despite the politicians getting it badly wrong, attendance at this year’s TT was 6.2 per cent up on last year at 45,054, a quarter of whom had not visited the event previously. And they spent £34.1m…
What is curious next year is the unchanged race schedule for 2018. Why? It can only be that, following the cock-ups in trying to bring the venerable old lady into the 21st century, the whole organisation has been affected by the risk aversion virus all too common in today’s world.

But, they are of course, taking great risks - the biggest being the weather. Too many races, too many riders put huge strain on a timetable which is guaranteed to be interrupted. This means that everyone, riders, teams and organisers are under pressure to get in the required laps.

An independent promoter is still the way forward but does government red tape make any decisions impossible?  

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