I will do an update video on the state of play on the channel and the future soon, but as I said, this is the 2nd part of the latest chapter in the KTM Insolvency story and I wanted to get it out.
Here I talk about the effect on the world of racing.
With all the clamour of a clean sweep at Dakar it is easy to forget the financial woe’s at KTM, but what does all this mean for KTM Racing?
Well KTM Factory Racing is a separate and independent company. Sort of.
Although the organization representing the creditors, has stated that KTM will pull out of MotoGP, Moto2, and Moto3 as one of the conditions for approving KTM’s insolvency protection plan, people inside KTM and outside are determined to keep KTM’s racing operation afloat,
Although previously it was reported that the support for the MotoGP team was secure until 2027, Motorsport.com now report that .
“KTM maintains its firm commitment to motorsport for 2025” and “We will continue to compete in MotoGP,”
But they didn’t mention what will happen beyond the end of the 2025 season.
Even the administrators said “it’s important to remember that the brand’s slogan is ‘ready to race’ and that should be used to drive marketing”. So it’s not just Pierer who is being contradictory.
And we know they just stole the tagline from Husaberg anyway.
But remember there are still hundreds of workers just within the racing division, some, like Jeremy McWilliams will have lost their jobs, and many more will have many questions.
It has been suggested the reason Toby Price and Sam Sunderland made the move to cars is that they could see the writing on the wall.
Then there are all the specialist suppliers who will be owed money.
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Anyway, back to the saga at KTM Racing.
One announcement from Pierer Mobility stated that KTM’s motorsport season had got off to a great start, with three consecutive victories in the Enduro World Championships, back-to-back wins in the two first races of the Supercross season, and a clean sweep of all major bike categories in the Dakar Rally.
They say this is significant, because it signals KTM’s strong commitment to racing, but I would argue it is far more complex than that.
Drafting Edgar Canet in to race in Rally 2 at Dakar was obviously a bit of a genius move or stroke of luck, depending how you see it. But along with Daniel Sanders and Emanuel Gyennes, I hope they all got a decent bonus of some sort.
The three consecutive wins in the Enduro World Championships is fantastic too, but soured by the news about the sponsorship of the Hard Enduro World Championship, but I will come to that shortly.
Aprilia and Yamaha MotoGP bosses have both expressed concerns over KTM’s financial struggles, calling it a warning sign for the MotoGP community and it is. But the high costs associated with MotoGP are nothing new and only the organisation can change that.
Pit Beirer, KTM’s MotoGP team boss, recently published a 100-point plan to save the racing division, including reducing the number of factory riders to 40 for the 2025 season. However as with everywhere else within KTM there are some contradictions.
One thing seems certain though, the rumours about Lewis Hamilton taking control of the MotoGP team were it seems dead in the water.
The Hamilton deal was purely for the Racing Division of KTM, and Stefan Pierer made it very clear he would only consider investment that provided enough capital to save the entire company, not just its racing division.
He appears to be standing on a pile of rubble which was once his empire doing his best not to let that empire be dismantled, but maybe that is part of the problem.
It reminds me of the saying “Nero watched while Rome burned”
The announcement about new investment does not name any investors other than the Bajaj Auto offer, but as I said in the previous video, there is now an alternative rescue plan that has been presented to the administrators by Whitebox consortium and Fountain Vest who are venture capitalists from Honk Kong have expressed their interest in investment.
The most likely scenario is still the Bajaj deal.
They are already partnered with KTM, and produce all the small capacity KTM bikes, and they are already beginning to expand into the European market,
Wherever the investment comes from, KTM’s racing activities are an important marketing platform.
Peter Vogl who is head of the Administrative restructuring process has stated clearly that, and I quote “the sustainable restructuring of KTM can only succeed if the extensive motorsport activities are continued as a marketing vehicle under the slogan “Ready to Race”.
So although we know they stole the tagline from Husaberg, it is being recognised as a vital tool for the company’s marketing department. And that fits with the off road bikes. The term win on Sunday sell on Monday still has some merit in the MX and Enduro worlds where the various KTM brands offer many options. But how does that really work with MotoGP?
If either of the MotoGP teams wins, what do the customers go to buy?
I guess they are hoping that people flock to buy the SuperDuke’s and Super Adventure R’s, but are they the bike that the audience of MotoGP want? Somehow I don’t think so. So does the MotoGP effort help sell the smaller bikes?
Undoubtedly, but they are cheaper and have less of a profit margin. And they are built by Bajaj group, who keep most of the profits. So KTM bear the brunt of the cost, and any small rewards go to the Bajaj group more than KTM.
I guess the Pierer Bajaj company should be called the Bajaj Pierer group now.
Or not, we shall see after February the 25th when the final shareholders meeting happens.
If you are interested, you can hear more about the business side of everything in the video linked above about the latest developments at PMG headquarters.
Anyway,
First we get announcements that the MotoGP team is safe until 2027, and that made sense to me, because we know Suzuki had to pay a fortune to buy themselves out of their contract with Dorna. KTM just can’t afford that. So to say they were committed until the rule change, when their current contract runs out, all seemed very obvious.
Then we get assurances that the commitment is “Long Term” but few details.
Then the headlines start coming that the current restructuring plan foresees KTM withdrawing from road racing activities completely at the end of 2025.
What is said and what is done are often worlds apart and this is no exception. On the one hand all the talk is about KTM Racing being a part of and intrinsically important to the KTM brand, but then we get announcements saying don’t worry, it is a separate entity.
One thing is for sure, it cant really be both.
Regardless of who’s rescue plan is put into action, the KTM Factory Racing teams could continue their activities independently, but it is a big money pit, and with regulation changes on the horizon, the R&D budget needed to build a competitive bike will be astronomical right now.
If Bajaj gain control of Pierer Mobility through the purchase of new shares and bonds, then they would be in a position to either sell off the Factory Racing teams completely, or fund it all themselves. Either solution would comply with the Administrators plans.
Then we hear the first of the announcements that you don’t think about so much. You see, KTM were not just competitors, but also the main sponsor for the Hard Enduro World Championship. The funding for that sponsorship has now been pulled, leaving the whole championship in limbo.
WESS Promotion GmbH, the promotional company behind the FIM Hard Enduro World Championship, is set to enter liquidation after KTM pulled its financial backing and Red Bull reduced its support for the HEWC.
WESS Promotion created the championship, which was later named the FIM Hard Enduro World Championship, and it hopefully won’t disappear, but it will now be under new management and become a different legal entity.
WESS sent out a message to the riders stating,
“KTM’s recent decision to withdraw its support for the Hard Enduro World Championship has had a significant impact on our organization and the championship as a whole, The current team, under the leadership of Winfried Kerschhaggl and Ricardo Mitterer, is fully committed to ensuring the continuation of the series and is actively working to organise the promotion of the championship for the next season under a different framework. If changes are necessary, they will primarily affect the overseas races.”
Not very reassuring, but then maybe I am too used to listening to PMG lies.
The bottom line is that WESS Promotion covered the operational costs of the HEWC, but it was primarily funded by KTM. So unless they can find a new big sponsor, they will have to reduce costs dramatically.
If anything changes, it will probably be the cancellation of events outside Europe, and the Outliers event in Canada is the event being talked about.
Keeping the events in Europe would reduce costs for the organization and the teams and riders, but if that is what’s needed to keep the championship stays alive, better a European Championship than no championship at all.
Will they find a new sponsor? Who do you think that could be?
Despite how it might see at first, KTM’s departure might bring some positives.
In an interview with Speedweek, Winfried Kerschhaggl, the manager of the FIM Hard Enduro World Championship Series said,
Years ago, we proposed a concept for an Adventure Bike class. At the time, it wasn’t approved because KTM felt they didn’t have a rider in that category who could win. Beyond that, we can now seriously consider whether to allow electric bikes or even introduce a dedicated four-stroke class. This opens up opportunities to create new platforms where manufacturers, riders, sponsors, and customers can showcase themselves within the world of elite motorsport.”
Now let us look at that statement. KTM would NOT allow the FIM to introduce an Adventure bike class because they didn’t think they could win.
That sounds remarkably like the kid in the playground shouting “No, its my ball and you’re not playing!”
And seriously? I am not sure how many “years ago” but with the 950 and 990, then the 1090, 1190, and 1290, shouldn’t they have been chomping at the bit?
Separating 2 strokes and 4 strokes sounds like a good idea to create more racing each weekend and would seem obvious. And introducing an Adventure bike class would I think be fantastic. It would mean defining what the class would look like though. Would it just be “unclassified” bikes? 600Cc and over to include bikes like the KTM 690 and maybe even the AJP PR7?
I don’t think many big adventure bikes would stand a chance against the big singles in Hard Enduro purely from a weight factor.
Can you imagine taking a 1300GS around the Erzberg Rodeo?
As the fallout from KTM’s 3 billion euro debt unfolds,there will be more victims than the Hard Enduro World Championship.
The question is, who will be hit next?
Stefan Pierer took a step back from managing the various KTM race teams, leaving Heinz Kinigadner in the hot seat. Kinigadner is someone who has a long term relationship with Pierer, who is running out of people he can trust around him.
Along with Pit Bierer, it is Kinigadner who will be tasked with keeping the ship afloat at the various race teams. But he can only operate within the confines of the Administrators plan.
So while KTM won the Dakar Rally for the 23rd time in 26 years in January, everything is far from rosy.
The KTM Factory and Tech 3 teams from MotoGP will be official unveiled on January 30, and the first two MotoGP tests are just around the corner. So we will see soon.
KTM are competing in the Supercross Championships in the USA too. That has already started, so for now the KTM machine is rolling on.
The share price of Pierer Mobility reached an all time low in December, but began to improve after the announcement of the letters of intent an had risen by around 50 percent since January 1st. That is a big jump.
Carmelo Ezpeleta the CEO at Dorna has said that he firmly expects the two MotoGP teams from Red Bull KTM to continue to exist.
But in what form is still debatable.
There are eight Moto3 teams with 16 GP riders who are due to enter the World Championship with KTM RC4’s in 2025, but that is a huge and expensive logistics job.
Then there are the Moto 2 teams which may run a KTM banner but with a Kalex chassis and Triumph engine, what bikes are they trying to sell?
That one in particular makes no sense at all to me.
The racing teams do need an R&D budget if they are to survive too, and the administrators plan does not allow for that at present.
I said a while ago that I thought the present plan in MotoGP would be to run the teams until the end of the contract in 2027, and I still think that is likely, but beyond that is anyone’s guess.
Ditching the Moto 2 and MotoGP efforts might sound harsh, but until they have a bike they can sell to the people watching, to me it seems like a bad plan.
Ditching the Hard Enduro World Championship seems crazy to me, when the people watching there would go out to buy their bikes from KTM, Husky and GasGas if they won.
Sponsoring the event would put their dirt bikes right at the centre of the dirt bike market, and is much more relevant to the brand than MotoGP is in my opinion.
Racing has and always will be used as a vehicle to sell bikes. But however much you win, If you don’t have the bikes people want to buy, you will have no business.
What do you think the future of KTM and its race teams looks like?
For now, I’m signing off today.
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