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Let’s talk money

So I actually enjoy this subject, my professional background renders this whole finance subject of interest to me and, dare I say it, bordering on fun? I probably lost a few of you there already, but stick with me because budgeting is a topic so few people seem to actually plan around (in racing, or in life really) – winging this will seriously come back around. I’m going to use this post in conjunction with my 2023 season plans post to show you how I think about it all, inception to writing checks, with my personal bits pulled to the side.

So we know this sport costs an enormous amount of money, whether you’re a hobbyist like myself or a professional racer, and whether you’re competing in club-level racing, or competing in a full season of international GT racing. The relevant bit in what I just mentioned is that it’s all in fact a spectrum – and YOU get to elect how much you spend in a season, or don’t.

There are both gentlemen drivers and pro racers spending $200K to $500K dollars for full season seats in GT4 or GT3 (respectively), sprinkle another $100 to $200 for a 24H series round – just as there are father son duos trailering their garage-built MX5 to weekend club events spending maybe $10K all-in at the end of the year. There is no right or wrong answer other than knowing what YOU have to contribute towards your effort.

1) So, how much capital DO you have?

This is the first question you need to answer for yourself, frankly before you do anything else. Why? It’s very exciting to reach out to teams to figure out how much XYZ will cost, go shop for gear, read up about different series and classes, etc. The problem is if you don’t firmly know how much you have to spend, then all these other bits are a waste of time, because you’re spending or preparing to spend money you don’t actually know you have yet, or how much – especially so those of us committing to full seasons.

So? What is your number? $10K? $25? $100? $1M? Furthermore, you should think long and hard about how you’ve come up with this number.

  • What is my number?
  • Do I have ready access to this money here and now if I needed to write one check? If not, how is it split up per month?
  • Are there any contingencies associated with this number that could impact or reduce it later on?

I looked at my personal financial situation for the year, knew what I was and wasn’t going to do in terms of personal travel, notable expenses, etc. and came up with a $GBP 30K figure. Admittedly, mine net of the above questions, was a bit arbitrary; it could have been higher just as it could have been lower but it’s what I felt comfortable with in the end – with the intention of maximizing its value. It also had no contingencies or timetable for accessing – it was there and ready for use.

2) You have $X, now how much is it all going to cost?

The hard part is out of the way, now the fun bits start to pop up. The great thing about the position you’re in now, is you can have an intelligent season shopping process because you’re equipped with the knowledge of what you can, and cannot do.

I cast a wide net when I first started reaching out to teams. I was talking to people in everything from C1 Endurance to Sports Car Prototype. Knowing my budget, I was able to quickly determine, as an example, that although I could do a full season of BRSCC Prototype racing, I’d get just 4 rounds and a couple of test weekends worth of driving, or roughly 6-8 hours of total seat time I figured. This didn’t line up with my goals for 2023. I’ve written more about my process for my 2023 season planning as well as more broadly about circuit racing categories under MotorsportUK.

You need to be thinking about the following major categories of spend you’ll have in a season, and whether they all apply to you or not:

  • Arrive/Drive Seat, Car Hire OR Car Purchase
  • Accommodations
  • Apparel (on and off track)
  • Licensing & Memberships
  • Marketing
  • Media
  • Miscellaneous
  • Race Entry Fee
  • Testday Fee
  • Trackday Fee
  • Travel & Logistics
  • Web & Online

This might be a good time to download my spreadsheet I’ve prepared and making openly available to all. This is an integrated financial model that will help you input budgets, track your expenses, visually summarize where money is going, and forecasting your season ahead to ensure you’re on track month over month.

The numbers behind all the above categories are uncovered through your research, shopping, due diligence and phone calls with teams and/or businesses – which again, is made massively easier because you know what you have to spend. Buying new racing gear this season with $2K to spend? Stop wasting your time gawking at an all-carbon $2K helmet.

After deciding on a full season of C1 racing, both in C1 Endurance and CityCar Cup Challenge, plus the 24H of Silverstone round, I had an essentially completely mapped out picture of my A&D budget for the full season, along with race fees, and licensing and membership fees. That’s an easy 85% of my total season budget fully accounted for, locked tight. I could now keep working backwards from there, I was left with 7K or so for the gear I did need this season, accommodations, and travel.

By now, you’re probably starting to see why my approach makes sense. Working in reverse, top-down, with the largest and most firm expenses first, means you always know where you stand budget wise, at a full-season level, and also down to the individual line items as you’re spending said budget. Sure you could still mess this up by overcommitting yourself, but the difference is in this situation you’d be knowingly doing it (… don’t do that) rather than surprising yourself in August when you don’t have the funds to continue.

3) Create the budget forecast for the year ahead

Once you have all known expenses accounted for, you can start working it into a monthly budget forecast for the entire year. Start plugging away the most firm (date and cost wise) line items first, like each of your race meetings and all their associated fees for example. Then you can move on down your list to the known unknowns (e.g. a hotel you’ll need but haven’t booked) which you can plug in estimates for that you’ll firm up as the year goes on (while tracking whether you are going over or under, consistently or occasionally, etc.).

After everything is punched in, go check out your year-end budget balance cell (if you’re in excel). How have you done? Are you over? Under? Dead-on? You have the big picture summary view – if you’re over, start to drill into the individual categories to figure out why and where specifically, and make adjustments accordingly.

I found that I had some extra funds leftover for travel / logistics so I looked around for where I could get some more value I thought was worth it and noticed if I pre-booked some of my longer rail trips from London that I knew I was going to take, I could book them in a more premium class and still be on budget – say no more, comfort over long distance is valuable enough to me!

4) Putting in your expenses as they hit the accounts

The season is live, but you’re not done! I’m guilty of this as I’m typing this very post – as the season gets on we get so focused on the race meetings and our performance that we forget to do the ancillary tasks, like tracking your actual expenses over the course of the season!

This is a critical step though, and I recommend trying to do it as they land, but at minimum on a monthly basis. This is the only way you can know for sure that you’re staying on budget throughout the year, otherwise you made your budget for funsies and for all you know you’re going way over in Q1, or leaving budget on the table!

5) Look ahead into the season

If you created a well thought out budget, and you’re tracking your expenses actively and consistently, then it becomes relatively straight forward from end of Q1, or after 2-3 race meetings, to see how you’re doing. Are hotels costing more than you expected? Are you finding that you spend more than you thought at the race meetings themselves? The time to answer these questions is as early as you start noticing imbalances in the budget that show up more than 2 or 3 times for specific categories.

At that stage, it’s what I’d label a trend, and if it continues, then you’ll surely go over by year-end, whereas if you address the problem early and compensate during the season then you’ll be right where you had originally planned.

Again, if you followed my earlier advice, then you addressed large and fixed expenses first (top-down approach), so your problem areas should involve smaller, variable expenses, like accommodations per earlier example – find more cost-efficient solutions for the rest of the season if the current program isn’t working.

In Summary

1) How much money do you want to spend?

  • You don’t know what you can or can’t do, or what you should be allocating your time towards unless you know what you have to spend in the first place
  • Furthermore to having a number, flush out anything that can alter that figure if it isn’t readily available in a bank account in full

2) How much is the season going to cost?

  • Do your research and reflect on what it is you want to do this season, then have the discussions to sort out costs to make an informed decision

3) Create the budget

  • Follow the top-down approach – start with the largest, and most firm expenses (arrive and drive / car hire fees, race, licensing and membership fees, etc.), and work your way down progressively, using the new remaining balance of the original budget at each level
  • Once the budget is finished, compare your final figures and make adjustments up or down accordingly

4) Maintain the expenses

  • Over the course of the year, track and categorize every dollar leaving your account that ties back to your season program into the budget buckets you created, ideally on a monthly basis or per race meeting

5) Watch your cash flow each month, adapt your season program accordingly

  • Compare your actuals against your original budget and zoom in especially in places the budget is regularly over the original plan. Figure out why early, and make early adjustments to stay on budget for the full year