IRL IndyCar Competitive Strategy

Previously, we charged that the Indy Racing League lacks a competitive market strategy. The operative word here is "competitive," for it seems that IRL management is indeed following a sort of strategy, one that is not necessarily intended to increase IndyCar's competitiveness in the marketplace.

We remind you that two very strong forces are presently driving IRL management decisions.

1. The league (needlessly, in our view) fears the bargaining power of some of its teams.


2. The IMS Board of Directors wants immediate revenue growth from its IRL subsidiary.

That in mind, we commence with our strategic analysis.

Market Selection: NASCAR and the United States Grand Prix

NASCAR (sans-culottes!) has demonstrated that ample consumer demand exists for a racing product that features American drivers, low-tech cars, and almost exclusively oval tracks. Conversely, observable demand for a racing product that features alternatives to these attributes is considerably less.

How do we know this?

The inaugural United States Grand Prix at Indianapolis provides a valuable data point. Formula 1 is the undisputed industry leader in the international, high-tech, road racing market segment. Pent-up demand for the F1 product in the United States could not have been greater in 2000; Formula 1 was returning to the country following a nine-year absence. Tickets were reasonably priced. The IMS publicized the event sufficiently.

Spectator turnout was the rough equivalent of a typical NASCAR Cup event, of which there are 34 annually in the United States. Furthermore, NASCAR Cup nearly doubled F1 in attendance that same year at that very facility. The lone independent variable in this equation is the racing product - cars, drivers, teams and circuit. The rational economic actor has no difficulty determining that American drivers, limited technology, and oval tracks collectively constitute the much more promising market segment. This is not a difficult judgment. The very best of the alternative market segment was demonstrated to be roughly half of the segment in which NASCAR operates.

Furthermore, it appears as if our assumption regarding pent-up demand for F1 in the U.S. was accurate, as well. The inaugural U.S. Grand Prix at Indianapolis led all F1 races in attendance. Subsequent F1 events at Indianapolis produced smaller crowds, even before the tire debacle, pent-up demand having apparently been satiated. Attendance in Year 1 was at least the equal of CART's most popular events regardless of circuit type. Indy's inaugural Grand Prix was, by any measurable result, the best result that could have been anticipated given the product and its market segment.

Notice: We ask that individuals who do not like this outcome kindly keep their tertiary arguments and personal prejudices to themselves. Much like firms that actually compete in the marketplace, we deal here in observable data prior to making judgments and strategic decisions. Thank you.

Onward to the House of France

We have confirmed that NASCAR (sans-culottes!) operates in a very attractive market. How, then, might the Indy Racing League become competitive in that market? And what does this have to do with the emerging, non-competitive IRL strategy that we discussed at the outset of this article?

These questions are critical. We shall answer them with haste.

Roggespierre