Two years ago, renowned Indian racers, Aditya Patel and Armaan Ebrahim, decided it was time to introduce India to a franchise-based racing league. The challenges were countless — getting investors, securing sponsorships, selling the teams, getting international racers onboard and creating a format that would hold the attention of viewers. Cut to two years hence, the league has formally been launched in the country and is set to kick off at the Buddh International Circuit on November 30, with big names like Narain Kartikeyan and the Crown Prince of Abu Dhabi announced as team owners among others. The first two rounds of the championship have former F1 race drivers – Alex Yoong, Vitantonio Luizzi and international racers namely Austrian F1 legend Nikki Lauda’s son Mathias Lauda, James Hunt’s son Freddie Hunt, China’s Frankie Cheng and Englishman Oliver James Webb added to the mix of domestic drivers. Apart from the on-track action the league has already started eSports racing, a sim-based racing championship, held across six of the franchise cities (Mumbai, Delhi, Chennai, Hyderabad, Ahmedabad and Pune) to find a potential race driver from the participants as we speak. On the sidelines of the inaugural round of eSports racing in Mumbai, Sohini Dutt caught up with
Abhinandan Balasubramanian, Co-founder of the X1 Racing League, to know more about the financial workings of the league. How difficult has it been as a startup to get investors & sponsors to roll with the idea of a racing league given that motorsport in India doesn’t get the crazy following as say cricket?
I can’t say it’s been a fun ride. Of course there have been road blocks and all that but from day one we have been clear on what we want to do and it’s always been – Esports & motorsports and because of that hybrid model of the business itself we’ve had investors and venture capitalists who’ve taken us through this journey and their support has been fundamental to us getting here and of course the sponsors and team owners have come in, in the last six months and they are our stakeholders going forward. But, I’d say all credit to our investors who backed our vision since day one and these are guys who include tech entrepreneurs, venture capitalists, promoters of large Indian business houses and that’s the journey that’s taken us here and from here it’s all the team owners, sponsors and everything on how we create this ecosystem for everyone which is going to take us forward.
People with a business acumen would like to know how much of an investment needs to be made to start a racing league in India
We are breaking a lot of myths around motorsports. People think you have to start with a billion dollars, globally there have been ventures that have been proven to start from scratch, guys like One Championship in Singapore and even Formula E started small, they proved a concept and then went about to raise money and they’re here today. So just to speak economics, we are investing about Rs 25 crore for just the execution and production of the overall event – eSports and motorsports. Also, the team owners are spending $10 million over a span of 10 years, incrementally on their respective teams.
Our focus as the league promoters is to ensure we’re getting the right content and making the experience for both live viewers, spectators and TV audience great.
So what’s the long-term return on investment plan?
In the long-run we are starting off with eSports and motorsports over a two-month period but as we go forward there’s going to be more of these events, it’s going to be a longer calendar. We’re going to add speed summit which is a very critical part of our venture itself which is a third IP within the X1 Racing brand and over a ten-year period you’re looking at like a venture capitalist who would invest with a long-term view and not a 2x or 3x return. They’re looking at a 12-15x return within a 5-7 year period and we’ve seen our valuation grow from 2017-2019 to 10x.
From the first round of investment to the second round of investment, people like Mohit Burman and LetsVenture have invested, we’ve seen over the last 18 months that valuation grow in 10x without the first season launch and now with everything in place we’re expecting to return at least 20-30x to them over the next 10-year period. That is what they’re taking this risk for. It is high risk but high returns as well and this is what our promise is to them.
The league kicks off in a month’s time, what is the distribution plan?
We are in talks with a broadcaster, we will be finalising things and we will be broadcast on television – the name of which will be a big reveal soon. The idea is in India to also have a marketing plan around it, around the network itself to take it to other general entertainment channels and not just restrict it to the sports audience. Our target base in the first 3-5 years is going to be the urban, premium sports fans. We want to take them as our low-hanging fruit and impact them. The education levels for them to understand motorsports is much lesser and for the lack of a better term, the cost per user-acquisition or a fan in that segment is much lesser than say trying to attract crowds from other sports segment. Otherwise for distribution we are also looking at OTT, we also have our own distribution channels, we are being internationally distributed as well, we’ve got a good set of international drivers, Aditya and Armaan have brought into the league and the idea with them has been strategically getting the right drivers as well.
We’ve got a Chinese driver, a Malaysian driver, so those are two markets – South East Asia and China which have a huge culture and heritage on motorsports, that can also lead to our global distribution, so it’s going to be well distributed throughout all platforms.
Sim-racing is quite big in Europe, what response are you anticipating through this eSports racing?
We’re starting from scratch here, but one thing has been proven that in motorsports highest level you can go from sim-racing to a motorsport racer and that’s F1 also. At the last
Race of Champions the winner was a guy from eRacing who beat Sebastian Vettel and all these guys in an actual motorsport event. So I think the pathway has been set, it’s been defined by international standards at the highest level, what we are trying to do is build a platform where it can be realistic for Indians. Till today motorsport has always been seen as a sport for the rich and a very niche market, what we are trying to do is to open up that target base and tell everyone that this is more accessible than you think and with this we have an opportunity to identify real talent. We aren’t promising we’re going to get a Formula One caliber driver from next year with this competition but this is the grassroots level where you can find and nurture that talent.
We’ve created an eco-system with ESports and racing where not just endemic brands and suppliers to the automobile industry but also non-endemic brands like our ESports title sponsor – One Plus, they can come and participate in this because now it’s not just about your core motorsports audience, it’s also about expanding that audience base to people in malls and colleges where we are going to be taking the containers for sim-racing. The economics and macros of the automobile industry have not really affected us because we didn’t take that into account while forecasting all of this, our business forecast was about what are we establishing, controlling our economics and not letting the outside trends affect that economics and that’s purely down to how we’re managing our business model which is very cost-effective. We aren’t saying we are a technology company, we aren’t going into R&D and investing millions of dollars in that, rather we are solely focusing on the drivers so the car becomes a very ancillary part to the overall content. So the macro economies of the country aren’t affecting us. Also, with names like JK Tyres backing us, one of the biggest promoters of motorsports in India is behind this.
Giving this is motorsports and eRacing it would be natural to assume you’d approach endemic brands to be primary sponsors for the league but with the automobile sector witnessing a slowdown, has it lead to hurdles in roping them as sponsors?