Fee Review 2023 – Schedule B price adjustment
Following a thorough review of the fee structure of MotorSport New Zealand the difficult, but ultimately fiscally responsible decision has been made to adjust the fees charged by the organisation from 1 August 2023.
The scope of the review was to investigate the current financial position and ongoing sustainability of MotorSport New Zealand. The review, completed by the two appointed board members, looked into the current fee structure, operational expenses, the cost of servicing and supporting event services as well as the organisation’s ability to invest in the growth of motorsport.
Ultimately, the review found that the current fee structure, which has not seen any significant increase since 2014, does not adequately provide the revenue required to run the organisation and invest in the future of the sport. This means that if changes are not made at this time, MotorSport New Zealand will need to rely on its cash reserves to meet operational expenses which is not a sustainable position long term.
The cost of supporting events and compliance complexity have increased substantially in recent years. To ensure the organisation keeps up with increased compliance requirements, investments have been made into the services MotorSport New Zealand provides to its member clubs, competitors and officials.
A dedicated training resource has helped raise the quality and consistency of our volunteer officials to a higher standard. While a health and safety resource will ensure our member clubs and event organisers can access advice and support in this area without engaging external providers at a greater cost to the individual member clubs.
Whilst a small CPI adjustment was made in 2016 for some fees, inflation has seen costs rise by 25% since 2014 and 24% since 2016. Since then, the rise in the organisation’s operational costs due to a prolonged period of higher-than-usual inflation has been absorbed without being passed on to customers.
Part of the review was also a line-by-line analysis of MotorSport New Zealand’s expenditure. Whilst already operating on a lean budget for several years now, measures have also been put in place to ensure the organisation does not incur unnecessary costs. One of the outcomes of the review is that the board was satisfied that there is no further expenditure to cut without detrimental effects on the sport or cutting services already provided.
MotorSport New Zealand will continue to find additional sources of revenue, but as an ASN and National Sporting Organisation, these avenues are always limited as our core business is enabling motorsport, not operating in a commercial space.
Competition licensing will see an increase of $30 for both C and R grade licenses whilst M grade licences will increase by $13. The discounted rate for new C and R grade license holders will remain, albeit with a $55 increase to the C grade price and $50 to the R-grade price.
Participation levies for both National Race and National Rally events will increase by $7 while National Championship Race & Rally levies will both increase by $10. After discussions and feedback at the AGM, ClubSport events will not see an increase in participation levies in the 1 August adjustment.
These are the most direct cost increases that competitors will face from the fee adjustment. For an average competitor who competes in eight events a year, this equates to an $86 annual cost increase for race and rally and $13 for ClubSport Advanced. This represented an approximate 9% increase on average for competitors, much less than inflation and overall, less than a tank of petrol.
Competition licence holders will also continue to get great value with their MotorSport New Zealand licence through the range of great partner discounts available for fuel, accommodation, insurance, ferry travel and other deals with more being added. The various partner discounts that are available easily offset the full cost of a competition licence over the course of a year.
Technical fees will increase by an average of 12% while event permit fees will rise by an average of 12%.
The annual declaration fee structure will change from 1 January 2024. To help meet the costs of servicing our member clubs, a minimum charge of $500 will apply to all clubs if they have a small number of members. The tiered membership pricing will be replaced with clubs being charged a flat rate of $12 per member.
To remain financially secure going forward, MotorSport New Zealand will begin to introduce annual adjustments to, as a minimum, keep up with inflation. These adjustments will take effect on 1 January each year, with the first beginning in 2024.
These changes will help return MotorSport New Zealand to a near-break-even result in 2023 and a small and growing surplus in 2024 and beyond.
“MotorSport New Zealand’s decision to change these fees has not been made lightly and all efforts have been made to minimise any fee changes,” said Wayne Christie, President of MotorSport New Zealand.
“Motorsport and sport, in general, are not immune to the rapidly rising costs due to inflation. We have done very well as an organisation to not pass on increasing costs for nearly 10 years in most instances. However, we need to ensure our future economic sustainability as a sport and that means remaining financially viable.
“I want to acknowledge the work of our two appointed board members who showed the relevance and need for the independence of appointed board members. In this review, they found the best result for the organisation by drawing on their considerable business, accounting and legal acumen.”
This review work was supported by Elton Goonan, MotorSport New Zealand’s CEO.
“The organisation is in a solid financial position at the moment,” said Goonan.
“Although, without making these changes, the reality is that we would need to start using our cash reserves to meet operational expenses and that is something that we don’t want to resort to.
“These changes will allow us to build on our already strong financial position to grow and develop motorsport in what are challenging times ahead for us.
“We hope that our customers and member clubs understand the reasons for this change in our fees and why it is necessary.”
You can see a full breakdown of the price adjustments in the Schedule B amendment.