Racing to an IPO

Bizsport

Now one driver, Britain's Justin Wilson, has figured out an innovative way to land sponsorships and finance training expenses. And this could provide the impetus for other professionals "" including India's Narain Karthikeyan "" to steer in the same direction.

Not very long ago, the managers of Minardi F-1 driver Wilson floated a company to raise as much as £2 million "" the sum he needed to race on the F-1 circuit each season.

Justin Wilson plc, as the company is called, announced at the end of the deadline that the opportunity to invest in Wilson was actually oversubscribed. The maximum subscription targeted was £1.2 million (around $2 million).

According to the prospectus, the potential return for investors is in two stages. This naturally depends on Wilson's success.

The first stage is for investors to double their money, and this may be paid out after three years and once sufficient capital has accrued into Justin Wilson plc, which receives all income related to his activities as a motor-racing driver.

Lest the investors worry that all the money goes into Wilson's personal kitty, it was made clear that hispersonal income would be limited to £50,000 in 2003, £75,000 in 2004, £100,000 in 2005 and thereafter index linked until investors have received double their investment.

Once all this has been achieved the second stage is for investors to be collectively entitled to 10 per cent of all Wilson plc's income until 2012.

The investinwilson.com logo has been prominently displayed not just on Wilson's Minardi F1 car, but also that of his team mate Jos Verstappen.

When subscriptions closed, analysis showed that there were over 900 investors, 70 per cent of whom have the minimum £500 worth of shares.

Another 20 per cent bought £1,000 worth of shares and the remaining 90 shareholders purchased more than £1,000 of shares. Of the investors 85 per cent were male and 15 per cent female.

Justin is seen as the new big talent from Britain and is expected to make a big mark in the near future. Even Minardi boss Paul Stoddart was impressed by the idea and its subsequent response.

The British Racing Drivers' Club (BRDC) made a commitment to become a major shareholder even before the scheme was launched.

There are several non-cash benefits for investors in Justin Wilson plc. They get Wilson merchandise, discount coupons and of course returns on investments, once Wilson takes off on the fast track.

Taking a cue from Wilson, the latest to raise funds in such a manner is prospective CART Champ Car driver David Rutledge who has opened up sponsorship opportunities to his fans.

Racing car drivers and their managers realise there is bound to be a huge shortfall and vacuum in funding once tobacco sponsorship is fully banned in Europe.

While things have been put on hold vis-à-vis F-1, the ban, considering public opinion in its favour, will ultimately come.

The 24-year-old Rutledge, a go-kart driver with F-1 ambitions, and his managers hope to build on his driving success by opening up a sponsorship package of his Champ Car World Series pursuits. The new online sponsorship programme "" sponsordavid.com "" offers a package valued at $1,000 for $119.

BENEFITS to people who invest $119 include a discount shopping card, monthly newsletter, coupons, giveaways and merchandise supplied by David's corporate sponsors.

Other perquisites include a VIP invitation to special events and the chance to win a fantasy race weekend at an upcoming CART race. As Rutledge's spokesperson was quoted as saying, "Our goal is to make our sponsors feel like they are right there with David as he races. They, in fact, will be part of the team."

In the past two Dutchmen have used such routes to finance their way in sport. In 1999 It was Tom Coronel, who founded a company called "The Flying Dutchman" and launched a business plan to finance his F-1 entry.

Coronel did not quite make it to F-1, but did race in Japan and was champion Formula 3 and Formula Nippon in 1998 and 1999. This year in 2003 he is back to Japan for the Japanese GTC Championships.

Before Coronel, Dutch golfer, Maarten Lafeber had launched a similar business plan with greater success. But that success also came because Lafeber did quite well once he achieved his Tour Card on the European PGA Tour.

Any takers for a similar venture in Indian sport?