Youthstream: What's In It for Infront?

We’ll get straight to the point. If you want to know what Infront Sports & Media AG does, then simply read this well-crafted summary of their commercial activities. If you want to know the origins of the company, this Wikipedia profile is a perfectly adequate resource. However, the summary and profile do not mention Infront’s previous involvement in motorcycle sport, so that’s where MXGP Action Group is focusing in this article. And this requires a brief history lesson on the superbike world championship, with our searchlight concentrated on the many different companies which have held the promotional rights over the last 30 years. Be prepared to spot a familiar name from the Youthstream Shares Saga: everyone’s favorite former FIM president, Francesco Zerbi.

  

During 1985, the FIM began discussing the creation of a ‘sport production world championship’, thereby laying the initial foundations of what was to become the superbike series. Plans were formulated as the second half of the decade progressed, and from the outset the commercial rights were problematic. On 17th September 1987, the FIM had signed a contract with Sports Marketing Company (‘SMC’) of New Zealand (SMC was formerly known as MCC & Associates). SMC promoted the inaugural championship in 1988, but dramatically renounced its agreement with the FIM in March 1989 after the new season had started. 

  

By May 1989, the FIM had established that two companies were interested in becoming the promotional rights holder for superbike: Dentsu (of Japan) and the Flammini Group (of Italy). Dentsu’s interest quickly cooled, and by September 1989 Maurizio Flammini was declaring that his firm was ready to sign a three-year renewable contract as soon as possible. In October 1989, the FIM decided to entrust the marketing and promotion of the nascent superbike world championship to Flammini Racing, an organization run by Maurizio and his younger sibling Paolo. A contract was duly signed prior to the end of year. 


During the 1990s the superbike world championship flourished under the guidance of the Flammini brothers. The series soon caught the public’s imagination thanks to the spectacular on-track action courtesy of the likes of Carl Fogarty, Pierfranceso Chili, John Kocinski, Troy Corser, Aaron Slight and many others, all of whom competed on bikes that anyone could buy in road-going form. Spectator numbers became enormous, media coverage increased exponentially, and sponsors were keen to get involved in a branch of motorcycle sport which seemed to be heading into the popularity stratosphere. The smell of money was in the air, along with the heady aroma of exhaust fumes and tire smoke. 


In 1996, the FIM signed a contract with Superbike International Group, although this was simply the Flammini brothers operating under a different name. In 1998 Superbike International ceded 50% of its shares to Interpublic Group (an American advertising firm that had diversified into sports) as part of new joint venture, a move which saw a further change of name to Octagon Motorsports. The FIM duly signed a fresh contract with Octagon Motorsports in 1998, and Francesco Zerbi (who had become President in 1995) told his fellow executives that this brought a substantial increase in revenue when compared to the previous arrangement with Superbike International. 


The late 1990s and early 2000s was an interesting period in motorcycle sport: superbike was booming (to the point where it was arguably on, or near, a par with grand prix racing); Dorna – MotoGP’s rights holder – had a new owner (CVC); and the GPMA was advocating the introduction of four stroke engines in MotoGP (a move that would put the two most popular series on a collision course). Indeed, in 2000 Octagon was so concerned by the threat of four-strokes it began legal proceedings against the FIM to prevent the governing body from introducing new MotoGP technical regulations from 1st January 2002. This resulted in the FIM being called before the Court of Arbitration for Sport to defend its position (and successfully did so). 


By the end of 2000, Octagon had abandoned its legal action and entered into a collaboration agreement with Dorna instead. This agreement contained the following points: the current technical regulations for superbike would be maintained until 2003; subsequent modifications could be made with the expressed agreement of the FIM, the constructors and the promoter; the definition of prototypes would be included in the FIM technical regulations; and the management of the world superbike championship would be like MotoGP. The FIM also extended its contract with Octagon until 2011.


In 2002 Octagon received another extension from Francesco Zerbi (a mere two years since the previous one was sanctioned). This coincided with a major strategic shift in Zerbi’s thinking (which we cover extensively in the Youthstream Shares Saga story), with the FIM moving away from short-term agreements (i.e. no longer than the term of one presidential mandate) in favor of contracts with more ‘generous’ durations. As a result, Octagon had the security of knowing it would be the rights holder until at least 2011. 


But Octagon Motorsports was soon to disappear. In April 2003, the joint venture between the Flammini brothers and Interpublic ceased and a new organization called FGSport was created (with Maurizio and Paolo in charge).


AND THIS IS WHERE THINGS GET REALLY INTERESTING. 


During our original research into Youthstream’s ownership, we spent a considerable amount of time looking into Z Consulting Srl, the firm which a) listed Francesco Zerbi’s wife and son as its directors and b) held a 23 per cent stake in Youthstream between July 2003 and May 2004. 


Z Consulting Srl was listed at an address in Rome: Via Vito Giuseppe Galati 100.


FGSport was listed at an address in Rome: Via Vito Giuseppe Galati 100. 


What a remarkable coincidence! Who would have thought that the company controlled by the then-FIM president’s wife and son would be operating out of the exact same premises as one of the governing body’s largest promotional rights holders? A suspicious mind might think that there was more than a hint of inappropriate closeness in the relationship between Francesco Zerbi and the Flammini brothers. Let’s face it, Zerbi’s got plenty of form when it comes to transgressing ethical boundaries during his time in office. 


And on that point, the relationship between Francesco Zerbi and the Flamminis extends beyond merely sharing addresses. Maurizio has long been a keen supporter of the Igino Betti Foundation, the Rome-based body which Zerbi is a director of given his close family connection (Igino Betti was Zerbi’s father-in-law). Furthermore, some of the FIM’s contentious decisions in the Zerbi era undoubtedly favored the Flamminis. For example, in 2003 FGSport persuaded Zerbi to ban a machine loosely based on a Yamaha R1 road bike from competing in MotoGP, but not before the team concerned – WCM, run by Peter Clifford and Bob MacLean – had invested heavily in the project. You can read more about this decision here and here.


In May 2007 Infront Sports & Media AG appeared on the scene, having decided to make a “considerable investment” in the FGSport Group. The press release clarified that “the management of the Rome-based company under the direction of Maurizio and Paolo Alberto Flammini will remain in place.” That sounds familiar, doesn’t it? And the comparisons with the Youthstream acquisition don’t end there. In fact, the two press releases, written almost 12 years apart, are eerily similar in their tone and wording. 


In October 2008 FGSport was rebranded Infront Motor Sports. The Flammini brothers continued running the company, although the world superbike series was showing signs that it had plateaued in popularity and was in danger of entering a period of decline (which it arguably since has judging by the empty grandstands at many rounds). The address of Infront Motor Sports remained Via Vito Giuseppe Galati 100. Unfortunately, we cannot confirm if Francesco Zerbi was regularly visiting the office to collect the mail for Z Consulting Srl.


In September 2011 Infront Sports & Media was acquired by Bridgepoint, a leading European private equity firm, for €550m. Bridgepoint was already the owner of Dorna (having acquired the firm from CVC in 2006), and therefore MotoGP and World Superbike were part of the same organization. In a power struggle between the Flammini brothers and Carmelo Ezpeleta (Dorna’s granite-tough CEO), there was only going to be one winner. In October 2012 Bridgepoint announced that Dorna would run both MotoGP and World Superbike from the 2013 season onwards, a decision which also involved Infront Motor Sports becoming marketing partner and global advisor for both championships. Spain 1 – Italy 0. Moving the world superbike championship into Dorna’s hands effectively ended any involvement of Infront Sports & Media in motorcycle sport at that moment in time. And it also signaled the beginning of the end of the Flammini’s control of a championship which they’d run since late 1989. 


In February 2015 Bridgepoint reached an agreement to sell Infront Sports & Media to Dalian Wanda Group for €1.05bn (a healthy premium on their original €550m investment less than 4 years earlier). Dalian’s purchase of Infront was designed to improve the standing of future sports events in China. The superbike property was not part of the transaction.


By acquiring Youthstream in December 2018, Infront are back in the ‘two-wheels-and-an-engine’ game. But have they learned anything from their previous experiences with the superbike world championship? As they’re content to leave the current management structure in place, it seems as if they’re following the same ‘hands off’ approach as was used with the Flammini brothers. We know what Giuseppe Luongo is getting out of the deal (a very large amount of money, total autonomy and an even longer contract), but what’s in it for Infront? According to Julien Ternisien, the Vice President of Summer Sports, Infront “are looking forward to taking the sport to the next level of commercial success by activating our extensive media and sponsorship network as well as our full suite of innovative sports solutions. This goes hand-in-hand with improving media sales and accelerating digital marketing activities, including further improvement of the MXGP-TV OTT platform for fans all over the world.” This translates to us as ‘we’re going to sell more content and sponsorship to more people’. But who and where are these as-yet unreached potential fans, sponsors and media partners with little or no awareness of motocross? They can’t all be in China, even if it is the world’s most populated country. 


Infront invested in world superbike at the height of its popularity. That’s not always the optimum strategy for long-term financial success, and in our experience (gained in commercial activities completely unassociated with motocross) it’s much better to get in early and cash-out at the top of the market, rather than pay a high price in the hope that the product is going to continue an upward trajectory to the point where a decent profit can still be made. Frankly, we’re not convinced that Infront are going to make lots of money from owning the television, marketing and global promotion rights to the motocross world championship, despite what Giuseppe Luongo may have promised them during the negotiations. Dorna got badly burned financially when they acquired the rights from Mr. Luongo’s previous company and subsequently disposed of them again (to Mr. Luongo’s newly-created company, for a fraction of what they paid originally). If history is anything to go by, we recommend Infront handle their new acquisition with flame-retardant gauntlets, just to be on the safe side. 


What else potentially lies in store? In 2012 Infront worked in partnership with a creative agency to re-position and develop a new brand and visual identity for the world superbike championship. You can read about the project here, as it features as a case study on Infront’s website. We won’t be surprised if MXGP undergoes a similarly underwhelming exercise, although this would represent yet another set of superficial cosmetic changes rather than the deep-seated transformation which elite-level motocross is desperately in need of. Maybe they can re-name the series ‘MXGP Action’?


We’ve entered a new era. There’s a new FIM president with a refreshingly different attitude to those who went before. There’s a new rights holder for the motocross world championship. There are new countries on the MXGP calendar. There’s a new sense of cautious optimism that improvements benefiting the many not the few will be made. There’s a new Luongo – David, son of Giuseppe – in a prominent position. But despite all of this, there’s still a nagging doubt in our minds, best encapsulated in a famous song lyric: ‘meet the new boss, same as the old boss’. 


MXGP Action Group

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