Loyal citizens already know the answer. It is because the value of full-season primary sponsorship of a one-car IndyCar team is $1.3 million. If the cost of sponsoring a team for the season were equal to $1.3 million, then there would be a Miller Lite car, an Energizer car, and many others.
Regrettably, putting an entry on the track at all 17 IndyCar races costs approximately $4 million. If you want to run near the front and get whatever television exposure is available, then the budget needs to be in the $7 million range. Miller Lite and Energizer are not going to pay $7 million, or even $4 million, for a $1.3 million product. That would be stupid.
The two dominant teams in IndyCar have figured out how to sell a $1.3 million product for $7 million or more. Team Penske is leveraging its long-term relationship with a tobacco company that is forbidden from advertising anywhere else. Target Ganassi Racing arbitrages the Target Stores supply chain. Andretti Green Racing is using Ganassi's arbitrage strategy to leverage the supply chain at 7-Eleven (and, we suspect, Meijer Stores). That's why Miller Lite has a decal the size of a postage stamp on Tony Kanaan's car. Wonderful.
Many of Ganassi's associate sponsors would be good candidates for primary sponsorship with other teams. These are large firms with money to spend if the advertising opportunity is priced at its actual market value. In fact, Energizer was primary sponsor of Robby McGehee's IndyCar efforts in 1999 and 2000. This ended when Chip Ganassi moved his team to the IRL full-time. Coincidence? Maybe, but maybe not.
Examine the list of consumer products among the associate sponsors at Target Chip Ganassi Racing. Some are paying more to Target for in-store concessions than most primary IndyCar sponsors distribute to their respective teams.
Is it any wonder that Target Ganassi Managing Director Mike Hull is a big fan of high-tech racing? His firm needs high-tech racing in order to keep team costs greater than team values. Otherwise, TCGR's associate sponsors might become interested in primary sponsorship elsewhere in the series, just as Energizer did with Robby McGehee in 1999 and 2000.
Why don't we hear the Penske guys lobbying publicly for technology? Perhaps it's because the only threat to take their sponsorship is the federal government.
IndyCar needs a Miller Lite car and an Energizer car. The only way to achieve this outcome is to slash the cost of "producing" an IndyCar entry until it is equal to $1.3 million annually per car. That's the proper valuation. To those who don't like it, we're sorry. We don't like it either, and we didn't make this mess.
Team owners with legitimate sponsors can hire drivers that fans might actually want to see. This, too, would be bad for Target Ganassi Racing because it would likely have to compete with those popular drivers in order to keep its sponsors.
Much is at stake. Few understand. The examples above are not the exception - they are the rule. Perhaps some day we'll share the story of Moen, John Menard and Paul Estridge. It's good fun. We apologize for teasing.
For now, we're much more concerned with Ganassi. He and his surrogates, in our opinion, are obstructing the only economically rational path to growth for IndyCar Racing and hastening the decline of the Indianapolis 500. We don't blame them - their incentives are misaligned with the rest of the series, and that's not necessarily their fault.
We seek only to reduce the influence wielded by TCGR with regard to the new specs.
We even root for them sometimes.
Chair of the Committee of Public Safety
Roggespierre
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