Menard Interested in IRL Engines

Click the story title above for the link to Bruce Martin's full report on Versus.com.

Among the interesting tidbits, Tony George tells Martin that John Menard has "expressed recent interest" in becoming an IndyCar engine provider in the future.

This is very good news.

Honda is an enigma. It might be an enigma that is a net positive for IndyCar Racing, but that is difficult to determine. Roggespierre invites citizens to consider Honda's various positions in the IndyCar Racing supply chain.

1. It is a supplier to all of the IndyCar teams. We do not have sufficient data to say that Honda profits from its supplier role, but a $1.2 million (Ilmor gets some) engine budget per car per season is enough to turn the cerebral wheels.
2. It is a supplier to the IRL Operations Division. Honda supplies pace cars for all races but Indy. It is doubtful that the IRL actually pays for these cars. The question is whether the deal consists of 100% in-kind compensation or does it include a cash payment from Honda to the IRL?
3. It is a customer (type 1) of the IndyCar Series. It pays the series an undisclosed sum in its role as a series sponsor.
4. It is a customer (type 2) of the IndyCar Series. Honda is promoter of the Motegi race. Does it pay a sanction fee? Does it receive "consideration" due to guarantees that it will supply engines for 33 starters at Indy and all cars that can afford to pay the lease?
5. It is a customer of Andretti Green Promotions. Honda is title sponsor of the AGP races in St. Petersburg and Toronto. The issue of whether this is "new money" or merely a transfer of Honda's previously committed sponsorship dollars from the IRL to AGP is not publicly known.
6. It is a customer of Andretti Green Racing. Honda sponsors Hideki Mutoh's "Formula Dream" entry.
7. It is a customer of IRL broadcast partners ESPN and Versus. Honda buys advertising on the IRL telecasts.
   

Roggespierre's Question of the Day: is Honda's Total IndyCar Project cash-flow positive or cash-flow negative? Danton will not guess for fear of losing his head.

This is wise.

Here's the itemized calculus:

1. $1.2 million * 22 full-time season starters = $26.4 million revenue (one-offs not included)
2. plus value of "Honda" on every engine cover of every car in every race
   
3. less portion of rebuilds completed by Ilmor
4. less Direct Sponsorship payments to IRL
5. less St. Pete & Toronto sponsorship payments to AGP
6. less Formula Dream sponsorship payments to AGR
7. less Sanction Fee & costs incurred due to Motegi
8. less broadcast advertising buy
9. we'll assume that the official cars are in-kind compensation
   

That's quite a package. Is the sum of lines 3 through 9 greater than the sum of lines 1 and 2? Maybe, but the cash infusion to Honda from the teams for spec, mileage-restricted engines reduces the cost of sponsorship considerably.

Roggespierre assumes there must be a reason that HPD honcho Erik Berkman has warmed to the idea of remaining sole engine supplier to the series.

Danton notes that Honda's expenditures on Formula Dream and Motegi add exactly zilch to the Total Package Value for the IndyCar Series. Remember, too, that the IRL , via its TEAMS program, redistributes $1.2 million per season to each full-time entry.

Consider all this - a confounding task, we admit - and one questions whether the league would do better with cheaper engines for the teams, a reduced redistribution of cash to the teams through the TEAMS program, and fewer "revenues" from the engine supplier.

An enigma, indeed. Keep talking, Mr. Menard.

Roggespierre