Knut Frostad talks about sponsorship, economics, China, and the VOR
by Guy Nowell, Sail-World Asia on 24 Feb 2012
Volvo Ocean Race CEO Knut Frostad is interviewed in the Sanya race village, during the Volvo Ocean Race 2011-12. Paul Todd/Volvo Ocean Race
http://www.volvooceanrace.com
The VOR fleet are presently stretching their legs, east past Taiwan, having escaped either a hammering or a glass-out in the Luzon Strait. And just last week we were were quite happy to take a ‘trip round the bay’ in the gentlest of conditions, sun shining etc on board Camper during the Volvo stopover in Sanya. It was an interesting experience, getting up close and personal with not only the sailors but also the movers and shakers behind the scenes.
Especially Knut Frostad, CEO of the Volvo Ocean Race, who had some very pithy observations on offer. Quite clearly – and, fair enough, quite unashamedly – Frostad draws a clear line between the VOR as an adrenalin-fuelled race for super-tough sailors driving even tougher boats, and the VOR as a vehicle for corporate sponsors to showcase their brands and their image to the consumer-driven economies of the world.
'The VOR is presently very much driven out of Europe. That’s where the visibility and understanding of sailing as a competitive sport lies. The economics have been very bad in Europe lately, so we have sponsors who are running marketing programmes who want to exposure in emerging markets – and right now that especially means China.'
It’s not a cheap exercise to fund an entry in the Volvo Ocean Race, and VOR have been at pains of late to try to cap the costs in order to attract more sponsors. Very recently, it’s not been a question of whether it costs €10m or €5m to run an entry – it’s just the fact that it costs anything at all. Frostad says, 'Ideally, we’d like 8 or 10 boats in the race. If the numbers get bigger than that then it would start to become unmanageable. The truth is that there are is a limited number of people (sailors) who are qualified to do this race, and we also have to make room for the younger newcomers. Yes, we’d like to see more countries, and more teams entered, and we have looked at lots of different ways to keep the ‘entry fee’ down – from one design boats to re-using ‘second hand’ boats.
Cost reduction
Frostad explains that in the recent past there has been a huge difference between the ‘cost of participating’ and the ‘cost of winning’. 'The last VOR, the cost of winning was very, very high. Eventually that kills the fleet – so we re-wrote the rules to stop two-boat campaigns, we limited the number of training days permitted on the water (to stop the setting up of long-term 45-man training camps), and we capped the number of sails a team can build at 15. Last time, the winning team built more than 100 sails… with the changes you can’t buy a win this time round. Five out of the six teams could reasonably start this edition of the VOR and be in with a chance of winning'. (ie. all those with a new boat – Team Sanya has a second-hand boat).
Some sponsors have discovered that multi-race programmes are cost effective – imagine how much gets thrown away at the end of a race in terms of knowledge, of ‘intellectual assets’… not to mention the staff and human assets, and all the material assets. Recycle that just once, and a second crack at an entry starts to make a lot of sense. Among this race’s competitors, Groupama and Abu Dhabi have committed to a two-race programme, and we have received expressions of interest from other parties already.'
Stopovers are expensive, but they assist in generating the return that justifies the corporate expenditure in the first place. They are where the sponsors get to showcase their products and services. Once upon a time there were just four stops – start/finish in the UK, then Cape Town (South Africa), Australia/New Zealand, Brazil, and then back to England. This edition of the race involves no less than 10 ports – the start in Alicante (Spain), Cape Town, Abu Dhabi (UAE), Sanya (China), Auckland (NZ), Itajai (Brazil), Miami (USA), Lisbon (Portugal), Lorient (France) and finish at Galway (Ireland).
'Different sponsors have different markets, but Sanya is the one place where every single sponsor is bringing in corporate guests, more than 10,000 of them in total. China seems to tick all the boxes.' [Remarkably, fully half the sponsors will have no more than a token presence in Auckland when the race fleet gets to New Zealand at the end of the next leg]. Camper, name sponsors of the Emirates Team New Zealand entry, will have brought over 2,000 visitors, staff and clients to Sanya, and run a corporate conference on the back of their presence in China.
Volvo – we’re talking trucks and diggers, here, not cars (and certainly not boats!) – themselves as title sponsor are making their presence felt with something like 6,500 visitors. The Pro/Am and Inport Racing weekend in Sanya will be attended by double the numbers of visitors of any other stopover, ever, and double the number that went through the proverbial turnstiles in Alicante before the start of the race.
Course change
The last VOR was the first race to move away from the ‘traditional’ Great Capes to port format, and move up. Literally, into new sailing (and marketing) territory. 'India, Singapore and Qingdao were all completely new stops for a global sailing event. But it’s not only about chasing the marketing opportunities, its also about growing the global sailing audience. Some places are just ready for takeoff – maybe not India quite yet, but certainly China. It is very noticeable that the media in Sanya are much more knowledgeable than they were in Qingdao just a couple of years ago. China hasn’t quite got the ‘sponsorship thing’ yet, but that’s probably because there are no internationally-recognised Chinese brands yet, but that’ll come. The Middle East countries understand it – look at Emirates Airlines sponsoring ETNZ, Qatar bidding for the World Cup, and so on…'
Right now, 174 ports have filed ‘Expression of Interest’ for the next Volvo Ocean Race. 'Realistically, that will come down to about 80 locations by May next year.' But deciding where to send the race is not just a matter of calling for bids and then handing the stopover to the place with the biggest wallet. 'There are plenty of places we’d like to go to, but they have to tick all the boxes – marinas capable of handling 70’ deep-keel race boats, with good hardstanding facilities, space for a race village, and don’t forget geography – it was a fairly negative experience getting the fleet up north to Qingdao during the last race, it’s more than a bumpy ride to get through the Luzon Strait at the beginning of the Sanya-Auckland leg. So who wants to go even further north to Shanghai, Korea, or Japan – which has to happen in the winter if boats are going to do the Southern Ocean and Cape Horn leg in the southern hemisphere summer? If the fleet went to Shanghai ('We’d love to take the race to Shanghai') where would they moor and where would they conduct their in-port racing? In front of The Bund? Probably not.
'So all in all we are very happy to be in Sanya! When we looked at the location originally, there was nothing here, which was a bit alarming. But the Serenity Marina has turned out well – it was all built in less than 24 months. We had some input with the designers, Camper & Nicholson, and the result is first class. It’s not right in the middle of town, so we were concerned that attendance at the race village would be reduced, but there have been an average of 10,000+ people here on a weekday and a max of 26,000 one day last weekend.' Frostad reminds us, 'people in China actually like coming to Sanya in the middle of the winter – it’s cold in Beijing, and tropical here right now!'
The Singapore experience
It doesn’t always work out as well. 'Singapore was not as good a location as we had hoped,' remembers Frostad. 'It was inside a private club, so it was perceived as ‘closed’ to the general public. And it was ‘miles away’ from the centre of town. Actually, it’s not very far at all, but Singaporeans are quite spoiled for events – they’ve got an FI race right on their doorstep - so walking across a bridge to get to Sentosa was a real hurdle! And the area for the inport races was less than ideal. And there wasn’t much wind. Yes, we learnt a lot about location that time.'
Frostad would very much like to take the VOR to Hong Kong. 'As a location, it has everything going for it. It is in China, and it has a mature sailing population.' VOR has already had preliminary discussions with Hong Kong, and one suggestion was to put place the event on one of the outlying islands. 'That wouldn’t work – it has to happen in Victoria Harbour, out of Central or Tsim Sha Tsui. We’d need the backdrop of Hong Kong.' And what is needed first of all is a champion for the cause. 'We need someone new and fresh, to wear the hat and drive the programme' as Frostad puts it. 'Hong Kong is attractive to foreign companies, and it is an international city. It has an established image as one of the homes of luxury brands.' (Think of the fashion ads you see in airports – ‘London. New York. Paris. Hong Kong’). Prior to the last Volvo race, there were three Chinese cities beating down the doors to be included in the schedule. And Hong Kong. 'The other locations were begging us to visit – they promised to lay on anything we wanted. At the same time, Hong Kong was looking at hosting a regatta in the Louis Vuitton Series, but we felt that they weren’t trying too hard to attract both events. By the time the LV event had fizzed out, the VOR had already made stopover decisions.'
A 'very narrow niche sport,'
Frostad concedes that sailing is a 'very narrow niche sport,' but goes on to point out that the VOR has consciously cultivated a 'high end visual impact image. The best photography, the best tv presentation – we now have tv channels running our programmes just because they think the material looks good. There are plenty of sailing races which involve boats that you would not put on the front cover of a magazine… they are white, and they have logos splashed all over them. That’s not good enough for the VOR – we work hard on our identity, and require the competitors and teams to do so as well.'
Right now all six boats in the Volvo fleet are approaching the southern tip of Taiwan, preparing to exit the Luzon Strait and start the long ‘drop’ to the south east that will take them past the Philippines and Papua New Guinea and eventually between Honiara and Fiji and down to New Zealand. Probably not one of the racing sailors is thinking too much about anything except how to make the boat go faster, and when the next freeze-dry curry is due. Or maybe how not to be seasick.
But for every one of those members of what is undoubtedly one of the most exclusive offshore sailing clubs in the world, the decisions about where they race their spectacularly fast boats, and when, is driven as much by the swirling breeze of commerce as it is by the vagaries of meteorology.
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