Money for Next to Nothing
Those are the same team owners that furnish a racing product that the market has rejected. Some received free IRL equipment as mergification gifts from the Indianapolis Motor Speedway. Others have been provided various levels of sponsorship by the Indy Racing League. Some are pressing IRL management to not only adopt new technical specifications that most teams can't afford, but also secure an underwriter to bear the risk of non-payment.And yet they still expect to receive evenly distributed payments for merely showing up with a car and a non-performing asset behind the wheel. IRL Commercial Division President Terry Angstadt practically conceded the point in his recent comments to Bruce Martin of Versus.com.
Apparently, IndyCar TEAM is indeed negotiable, so long as it serves the interests of the present team owners. We know this because Angstadt is amenable to restricting payments to a seemingly arbitrary number of teams.
"That's a 22 to 24 car number. We would need to make decisions beyond that on some kind of criteria on how you get one of those spots because that is a huge commitment from the League. If we have 28 cars not all of them are going to be able to share in the program." - Terry AngstadtLet there be no doubt that the present teams are firmly in control of the IndyCar Series. How, exactly, does restricting car count increase the value of the IndyCar product?
Citizens who are old enough to remember the CART "franchise" system will notice the similarities. In both cases, the goal is to protect the existing participants at the expense of prospective new entrants. This is a disservice to customers who might like to see large fields at IndyCar races and bumping at Indianapolis.
In essence, the teams want the IRL to further devalue its product, approve new equipment that costs more than the product's market value, secure 3rd party financing to underwrite its development, and subsidize the teams to cover whatever cost remains. That the IMS Board of Directors might allow this scheme to come to fruition is incomprehensible. Nevertheless, because the IRL is managed by racing operations personnel and a salesman, that is exactly what appears to be happening.
IndyCar TEAM distributions should be indexed to quantifiable market demand for the portion of the product that each individual team contributes. This is a typical supply chain arrangement.
An Example of Extreme Makeover IndyCar TEAM
Dennis Reinbold might be our favorite IndyCar team owner. We shall therefore use him as an example and hope that he does not take offense.
We suspect that our proposed measures of demand would demonstrate that Buddy Rice, the 2004 Indianapolis 500 champion, contributes more than rookie Mike Conway to the value of the IndyCar Racing product. We shall not say here that Conway got the ride because his family owns FM Conway, a large construction company in the United Kingdom that happens to be one of Conway's sponsors, but we suspect that the fact might have augmented his candidacy. We would, however, propose that Dreyer & Reinbold Racing receive less appearance money for furnishing Conway than it would have received had Buddy Rice remained in the car.
Product Management is Marketing
This is an example of product management, an activity that is sorely lacking at the Indy Racing League. In our scenario, IndyCar TEAM is transformed from a subsidizing expenditure into a marketing incentive program. Every team that shows up to race would get some money, but those that add greater value would get significantly more.
We hope that the IMS Board and the IRL will consider our proposal or something similar. We wish to see IndyCar Racing grow to become a competitive product. Aggressively managing the product, using money that has already been earmarked for expenditure, would be a good place to start.
Roggespierre
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