Following on the heels of a similar announcement at Chicagoland Speedway, management at ISC sister track Kansas Speedway now says that customers may purchase tickets separately for the NASCAR Cup and IndyCar Series events in 2010.
The Kansas City Business Journal has the complete story.
Sink or Tread Water
Given the demonstrated unpopularity of the series, any change that might force an IndyCar event to live or die according to its ability to generate legitimate value in the marketplace must be considered an unfortunate turn for the league.
IndyCar needs to race at venues such as Toronto and Barber Motorsports Park, where race day attendance of 30,000 or so is thought to be pretty good. Events such as these typically require subsidies of one type or another. They are the unmistakable signs of market rejection.
Incidentally, Milwaukee drew almost 30,000 this year. However, there, the government is not amenable to requests for subsidies. Thus, the Milwaukee Mile is gone from IndyCar racing.
Unfortunately, the International Speedway Corporation is a private, for-profit firm. It undertakes only those projects that might produce an operating profit. IndyCar race promoters must pay the IRL a sanction fee that is in excess of market value; this allows the league to pay its largely insolvent racing teams a sum that exceeds their market value; this is required because operating an IndyCar team costs approximately five times the market value that an IndyCar team produces.
The cascade of prices in excess of values is the reason that IndyCar will not race at Richmond next season.
Sadly, barring a sudden surge of U.S. consumer enthusiasm for international drivers and overpriced cars and engines, a similar fate likely awaits the IndyCar events at Kansas and Chicagoland.
Roggespierre
Is there any point at which you will focus your intellect and resources on affecting a practical solution?
ReplyDeleteYou have demonstrated your ability to denude every aspect of the Kingdom's business plan.
The best suggestions you have offered are to replace the IndyCar Series with a competition between low budget, home brew teams with little-known American drivers in the seats.
Rudimentary budget projections I put together, and you have read them, reveal that it costs more than $0.5 million just to assemble a team and get it to the events. That's with no car, engine, tires or spares. Your replacement series sounds more like Ministocks running at Islip Speedway.
The focus needs to be placed on improving the only product IndyCar has to sell, and in attracting investment by selling it. Anything else is a continuation for the call to its dissolution. That's a curious plan for a racing fan to continually voice.
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Andrew Bernstein
Hello Sir,
ReplyDeleteMy point is that cutting costs significantly is the first step. If that requires cutting races, then that's what it requires. If it means reducing the technology that is available to the teams, then so be it.
IndyCar needs to earn fans in the marketplace. This means giving them what they want. We know what they want - NASCAR has three series that all draw significantly better TV ratings than IndyCar.
Is there room for a cost-efficient, relatively low tech IndyCar series? This question has nothing to do with what you or I or the teams would like. The question is whether or not it is possible?
I do not pretend to be a tech guy. So, I ask the tech guys, is it possible? Could such a thing be better than USAC Silver Crown? If so, then it needs to be done right now.
Until the league gets its costs under control, there will be no growth. You can't market a product that is not designed to appeal to an audience. Most IndyCar drivers are in the series not because they are marketable, but rather because they or their families and friends possess the economic resources to finance the operating costs of a team.
You will never grow the series that way.
Begin with the customers. What do they want? How big is the market? We know where the biggest motorsports market is in the United States. Why should NASCAR have the three top series in this country? Why can't IndyCar at least be Number Two?
It's because IndyCar continues to insist on racing equipment that market is telling it that it can not afford. Until that changes, nothing will get better.
You have to crawl before you can walk. We all started with piggy banks, right? How did we grow our money? Most of us used some combination of earning more and not spending it all. The IRL and its teams need to do exactly that. Show some discipline. Be adults. No, you can't have what you want, not now, because you haven't earned it in the marketplace.
Swallow your pride, race what you can afford, and begin to build something that can be sustained. That is the only alternative that will lead to growth and a series that you and I can agree is undeniably awesome.
I hope that qualifies as an answer. I did my best.
Incidentally, I highlight the negative here because there are still many in IndyCar who do not want to grow up and race what they can afford. This makes me angry because I care about the long-term vitality of the Indianapolis 500 and IndyCar racing. I do not care whether or not specific executives and engineers have jobs. I do not embrace drivers simply because they happen to be the ones that we have. If they do not add value, then they should be gone.
I make no money doing this and I spend a lot of time and effort here. I love IndyCar racing as if it were a human being. I consider this a sickness.
Sometimes, you have to take a couple of steps back before you move forward. That is exactly where IndyCar is today, at least in the economic sense. But I see no willingness to make the very difficult and, at times, certainly unpopular choices that must be made. That would require real leadership, the kind that is so obviously lacking right now.
And so I vent here.
Best Regards,
Roggespierre
Roggespierre,
ReplyDeleteFor the sake of brevity, I'll sidestep the topic of your second paragraph for another discussion on another day.
The Indy Lights Series put 22 cars on the grid at the Speedway, and the entry numbers have dropped since then. The last Formula Atlantic race at Road Atlanta drew ten entrants. Formula BMW Americas has disappeared entirely. Not many sponsors, or fans, seem terribly interested in the lower open wheel formulas.
My technical racing experience is not at all current, so I can only guess what the season budgets for these smaller formula teams would be. For this discussion, let's assume that $1M would be sufficient to assemble a team and run a 15 race American schedule.
2010 starts alot sooner than Brazil. The only way to affect the major change you recommend is for IndyCar teams to liquidate their now worthless assets and buy new cars, which would be Indy Lights or something akin to them.
One of the lessons I have learned from reading your work is that Indianapolis 500 attendees are a lot more "event goer" than they are "race fan". Some would be delighted to find that 50 cars were attempting to qualify for next year's Show. As soon as the 190 MPH lap speeds were posted, they'd all look at each other and ask. "When do the big cars get here?"
Just as damning as the lack of speed would be the diminution in status that such a big step backwards would yield. Then you'd get your unknown American drivers at Indy: the best talent would jump to Nascar, the midpack runners would stay in their Formula 2 or 3 seats, or Nippon and A1GP seats, and race abroad.
As of today, the least expensive way to race the 2010 (and probably 2011) season is with the current chassis and the current engines. Certainly budgets need to be cut to the bare bones, but in my opinion the competition level can be raised through relatively minor changes to the existing equipment.
Drastic changes to the expenditure side of the balance sheet are not possible. Improving the product and selling the product to raise the income side is the answer.
Building chassis and engines is not a low tech proposition, nor is it a low budget one. Nascar teams have reached this plateau after years of investment and consolidation. They had the budgets to phase in their replacement spec cars without an interruption to their series. IndyCar is not in a position to do so.
We are stuck with Dallara/ Honda for 2010, and likely 2011. Working with what we have, like it or not, is the only short term option.
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Andrew Bernstein
I don't disagree with any of your major points. Yes, the short-term (2 years) will be very, very difficult. The current package isn't going to change much.
ReplyDeleteYour point regarding performance and speed is a very good one. I recognize that you can't take Silver Crown cars out to the IMS and call it the Indy 500. A technical solution is needed, and I'm definitely not the guy to do it. But I get very scared when Brian Barnhart talks about the "next evolution of the Indy car."
What the heck does that mean? What are the goals that he wants to achieve with the next package? If significant cost reduction is not one of them, then there is no reason to do it.
Barnhart says he hopes to have a plan to announce around Thanksgiving. That's less than two months away. Therefore, very critical decisions regarding the future of IndyCar racing are being made right now. Is there any reason to think that Barnhart won't screw it up? He most certainly will if he's listening only to Mike Hull and Tim Cindric - the two guys who can afford to competitively operate the current specs. Those guys are very influential and very smart.
Barnhart is no genius. He's going to do whatever he thinks it is that will keep him in his job for the time being. That means appeasing guys like Hull and Cindric.
I also think that Barnhart is looking at off-the-shelf chassis again. That's incredibly stupid. These teams need to recapture some of their expenditures. That's one thing that NASCAR teams can fall back on. IndyCar teams can't. I have seen nothing to suggest that Barnhart has so much as an elementary understanding of supply chain economics. He needs to get it right.
He also needs to be willing to say bye-bye to engine manufacturers if they continue to demand significant concessions that screw up the supply chain, the cost structure, and the racing schedule. Going to Motegi and killing all momentum for the championship is fundamentally stupid. Allowing Honda to effectively tax the teams to fund its "sponsorship" of Mid-Ohio, Toronto, St. Pete, and Formula Dream is even more stupid.
Honda is making cash money on its IRL participation. The league can not afford to give away the farm again. It would do much better allowing engine builders like Menard, Ilmor and Cosworth to strike their own deals with the teams. The teams that need to save money could do so. Penske and Ganassi could strike their own development deals with their engine builders. They did it that way in IndyCar racing for many years, and it worked pretty darn well.
But I think that Barnhart is hellbent on signing up manufacturers again. Again, these are decisions that are being made right now. They are very relevant.
I want participants and fans to put pressure on Barnhart to do the right thing for IndyCar racing. I want them to put similar pressure on Terry Angstadt. I want members of the IMS Board of Directors to be bugged by somebody whenever they leave the house. It is inexcusable to kill this sport. They need to know that we know.
In the short term, you're right. Little can be changed. But the decisions that are being made right now will determine the future economic structure of IndyCar racing. They have to get it right because, if they don't, then there will not be another chance.
The next two years will look a lot like this year except, perhaps, that car counts will dwindle a bit further. There isn't much that can be done about that unless more drivers with big cash come along.
But the 2012 specs have to be about much more than a cool new chassis and engine. The have to be about preparing to succeed in the marketplace. A practical cost structure must be established.
That's when legitimate growth can begin. The next two years are about survival. And they will survive, somehow.
Best Regards,
Roggespierre
Hi Andrew,
ReplyDelete1. Daytona 500 qualifying:
1987: 210 mph
1988: 193 mph
2. Jonathan Palmer figured out how drivers can run an entire F2 season for less than 0.5 million.
NASCAR's still around and the F2 grids are full. The 'status quo' will need be disrupted if it's a question of survival.
-John
Roggespierre,
ReplyDeleteThe first reponse I have to make is a repetition of words I have written elsewhere. I have learned a tremendous amount from following your footsteps to gain a better grasp of your logic. Thank you for painting the picture as you see it.
I was in agreement with your last post, until the subject of engine suppliers came up. This is one area where the economy of scale pays a major dividend. While I am learning to view Honda as less of a benefactor and more of a profiteer, the benefits of having one engine supplier at present are significant.
Engine development programs are massively expensive. Larry Curry has tossed out some big numbers when discussing the old Menard Buick program: several concurrent new programs would drive the cost up when divided between a customer base that comprised only half of the teams. Then there's the question of rules compliance...
In the most diplomatic of terms, there are statements in the technical pages of Track Forum that point out some obfuscation of the previously mandated boost limits. Close scrutiny of two or more competitive engine types by ICS will lead to the "unintended consequences" of increased regulation, resources and man hours. For those reasons alone, continuing the current use of one uniform supply is an advantage. Plug and play. Boring, but still capable of providing some variables if properly enacted in my opinion.
As for recapturing expenditures in the Nascar mold, I think this is feasable only for Penske and Ganassi: and the rich getting richer doesn't help much. If KV Racing wanted to build exhaust headers to supply other teams with, they'd need a dyno room and engine for R&D, bending equipment for stainless steel pipe, and a top shelf welder/ fabricator dedicated to the production. Penske has all that, and would be making their own. So perhaps SFR and Fazzt might buy KV headers, if they were an advantage over the two existing suppliers. There's no economy of scale when there are so few customers for products that cannot easily be created. Nascar teams have the facilities, personnel and customer base already in place.
It's difficult for me to guess about Brian Barnhart's overview and autonomy when reading his comments. One prospective chassis design is likely to come from Dallara, which will be derivative. If the Honda prototype model displayed during the Indy 500 is another one on the table, there's a lot of 'splainin' to do. Aside from being ungainly, it looks like the perfect vehicle for taking flight after wheel to wheel contact. Three wheelers, electric cars, and Silver Crown roadsters are all just fine. They're just not fine IndyCars.
I had hoped to meet other interested parties to join in a constructive discussion about IndyCar's future: I thank you for affording this opportunity to any who are so inclined. My regret is that I cannot offer a mastery of the technical information required to paint as clear a picture. But I've got a whole box full of crayons, and I'm workin' on it.
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Andrew Bernstein
Greetings John,
ReplyDeleteI hesitate to distract the discussion with a debate of your analogies, but they are good points and worthy of examination.
Nascar's introduction of restrictor plates was necessary to inhibit top speed, no matter how much the regulation has been maligned in the subsequent years. At least it has helped to keep the cabs on the ground. The resultant 200 MPH gridlock is still viewed today as an invitation for disaster.
The same can be said of IndyCar aero regulations that have produced a similar, and more dangerous, form of pack racing. Limiting top speed is not a bad thing per se, but eliminating speed differential is the problem. I believe it is one that can be corrected without replacing the current equipment.
The introduction to Jonathan Palmer's incarnation of F2 I just read reveals the following:
The economies of scale are fully in place as Williams (through Palmer) supplies fully spec cars, engines and perparation. Team budgets for maintenance requirements, and also for the less demanding travel required, are therefore lessened.
Palmer owns a number of the racetracks where the events are held, so expenses for the competitors can be further controlled.
I'll not delve into the comparisons of safety, although I believe the IRL's attention to this critical issue is unsurpassed. The F2 cars are likely not quite so fast as Dallara/ Hondas, nor are they engineered to withstand the rigors of high banked oval racing. I can still remember working on a 1980 March Formula Atlantic car, amd a 1981 March Indy car. More apples and oranges.
As I alluded to before, you can shut the whole thing down and invite Formula Atlantics (or F2) to the Speedway. More than ten cars will be entered for that race, perhaps a full grid of professionals and novices would convene. The question then becomes how many fewer fans will pay to watch them all motor around.
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Andrew Bernstein
Andrew Bernstein,
ReplyDeleteI have read with interest your discussion of engine development costs. May I add a bit to the discussion/
Check out this website:
http://www.world-sprintcar-guide.com/sprint-car-engines.html
Mopar engines are offered for $43,500.00 a copy.
These engines produce 800 HP.
So engines are available---now let each team produce a chassis (using the excellent driver capsule that IRL uses) as the basic starting point.
osca
R'pierre, which is it?
ReplyDeleteAbove you wrote "Why can't IndyCar at least be Number Two? It's because IndyCar continues to insist on racing equipment that market is telling it that it can not afford."
Elsewhere you've frequently attributed the viewership/popularity problem to the lack of American drivers.
Frankly, IMHO, the equipment matters less than the drivers to the general public - which is conditioned to see the winged arrow cars as Indycars. Put Tony Stewart in a go-kart at IMS and the fans would flock. Put Robert Doornbos is that same kart and Speedway security would be called.
You continue to return to the survival and growth of "the series." The series is the hole in the boat sinking the only American open wheel event that matters, the 500-Mile International Sweepstakes. If the IRL disappeared tomorrow, it would be a perfect beginning to restoring the sport.
While part of the National Championship, the historical fact is that the 500 was economically and technically independent of AAA/USAC/CART because of its financial magnitude. One-off entries were more the scene than the full-time Trail sloggers. Things went awry when that formula was discarded.
To save money, divest the series, and put the resources into a $25 or $30 million purse. That's what made the race legendary; that's what's missing. Let car owners sort out their own series to recoup their investment, if they can.
Restore the 500 as the "Greatest Spectacle in Racing," offer the largest purse in motorsport, and the rest takes care of itself.
This is good discussion. I wish that I had more time, but I have to coach Little Roggespierre's baseball team.
ReplyDeleteI will say that the economies of scale argument is enticing. The problem is that all of the benefits of scale accrue to Honda Performance Development. That is how it funds its participation elsewhere in the series.
The teams need to get those benefits. They can do so only if they are free to negotiate their own deals with engine suppliers. If there is competition, then the teams can walk away.
Gotta go. We'll resume when I have more time.
Roggespierre
Greetings Osca,
ReplyDeleteThe example you gave is not a stressed-member
design cylinder block. Installing a unit like that in a rear-engined formula car chassis results in the construction of a 40 year old Formula 5000 race car. That's a complete redesign, and one which adds significant weight and girth by comparison.
We have seen that 650 HP approximate is sufficient to achieve maximum trap speeds of over 230 MPH at Indianapolis. The IRL has elected, in my opinion, to cap the speed at somewhere near the 230 threshold. Written discussions of the rules changes intituted for the 2004 season, and the reasons which prompted the changes, are the basis for my point.
There are other purpose-built racing engines already available that are more readily adaptable for use in a chassis design similar to the Dallara. My position is that for the near term, and for the sake of the discussion I'll use two years as the term, the least expensive option is to run what is already being brung.
Alternate engine choices will inevitably lead to redistribution of weight, center of gravity change, different cooling requirements that could require alternate heat exchangers, etc. So your sprint car engine is one of many that could serve as a platform for a new car, but that power plant doesn't turn a wheel until 2012 at the earliest.
I am of the opinion that Roggespiere is correct about Honda's arrangement: with the research and development costs amortized over at least the past three years, the cost of maintaining the current program should result in a much lower cost per unit as a component of the team leases. I have no hard numbers to substantiate that opinion, however.
The leases also cover the cost of tech support personnel from Honda, which would otherwise add at least one engine performance specialist to the budget of each team. That's about two engines per season of value, the way I see it. If you don't wreck your ride, two engines gets you at least four race weekends (2600 miles total maximum). That's almost one quarter of the season. If the Honda tech support carries a fee in addition to the high price of the engine lease, the current deal looks even worse.
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Andrew Bernstein
With all due respect to those who have written, all of you and many others are blowing smoke up you you know what! I have owned an engine development shop for over 30+ years and do R&D for all different types of engines. You argument is flawed. The simple fact of ANY engine is based upon one thing...MONEY. The more you invest into one, the more you get out of one! ANY engine can be made to fit the chassis and meet the demands, the question is, who is going to pay for all this development?? Whether a production based or raced bred based engine is choosen, it is still going to cost more $$$$$$ than most teams can afford. And if you think than manufacturers are going to be running to Indy Car racing to show their stuff, your just kidding yourself. With the current economic conditons, massive debt, reduced revenues and poor economics of Indy Car, the chances of that happening are highly remote. I love how all of those who write on these blogs all know how to spend other people's money, but yet have not spent any of their own. You might want to consider putting YOUR money where your mouth is!!! I have done several budgets for Indy car and Roggespierre is correct, the value of Indy car is not in line with the cost. Who is going to pay 4 times the value of any product!!
ReplyDeleteHowdy Wrench,
ReplyDeleteIf that post is directed towards me, you need to spend less time reading your dial bore gauge and more time reading the subject material. Any increase in present day costs is impossible in my view, including R & D investment for prospective engine and chassis configurations.
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Andrew Bernstein
No, not directed at you BUT at the subject matter. Instead of me not reading a bore gauge,maybe you need to work in the industry! Cost in any industry are escalating! The bottom is simple....lower the cost of the product to match the value of the product.Indy Car is no different than any other product. If there is no supply chain competition then the product remains artifically high. If the only supplier of a product has no competitors, he gets to set the price. Not the market.Lowering costs is directly related to one thing.....competition!!! On track or off, so look at the bigger picture and not just a small piece!
ReplyDeleteThanks for the riot act. I've been rebuilding street car engines since 1975, Linclon Tech graduate 1977, certified Jaguar Technician 1989, more if you want. Try buying yourself some oversize connecting rod bearings for a 4.0L Jaguar V8, and then lecture me about supply and demand.
ReplyDelete___________________________________________
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Andrew Bernstein
Ok, Certified Ford Master & ASE Master Tech, All Penna. State Inspection Liscenses, Certified ASE DIesel & Body Master Technician, Grad of Lincoln Tech 1979, Graduate Richland College, Dallas,Texas Manufacturing Engineering & Industrial Management, Graduate Penn State University, BA- Letter Arts & Sciences, BS In Business- Managment & Marketing, BS in Finance, Certified Master Welder in Stick, Mig & Tig, Consultant to the Ford Motor Company 20 years, Awarded 7 Patents by the US Goverment...shall I go on?? This all sounds real nice But I served time at the Indy 500. So with all this being said, no one is picking on you. The focus is how the problem gets fixed. Ask Roggespierre how I changed his perspective on the cost factors of Indy Car racing ! You and I may disagree, but I do not read riot acts. I simple state my veiws and support my position with the information provided. Citizen John recently provided me with a current IRL budget. The costs simply do not match the value.
ReplyDeleteIn that case Old Wrench, I'll patiently await to read your solutions for improving the competitive balance for the IndyCar 2010 and 2011 seasons.
ReplyDelete___________________________________________
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Andrew Bernstein
You may wish to go back and review former posts on this site. Mine and others are about the very subject matter. As for the any statements that may have offended you....don't be...that is the purpose of this site. It is to bring constructive ideas forward. Just remember to support your theory with facts, and I and others will listen intently. And one other thing....Welocme aboard!!! We need more like you to interject your thoughts !!!!!
ReplyDeleteGentlemen,
ReplyDeletePlease, let's not get personal. We all want IndyCar racing to succeed. Some articulate it differently than others. There is nothing wrong with that. We all have strengths to offer.
Andy,
I frankly have no idea how the competitive balance might be improved in the next two years. As I have written many, many times before, there are two teams that can outspend the others by at least a 2-to-1 ratio. IndyCar has already demonstrated that tightly controlled specs do not work. Yet that is usually the solution that's offered when keeping on-track competition close is the goal.
We all know the facts regarding the cost-to-value ratio for IndyCar teams. Next year is a done deal because the budgets are based on this year's market performance, which was horrible. Therefore, there will be no new sponsors unless unless they are either 1) affiliated with Danica or 2) sold in a completely separate market.
Vision Racing and Newman Haas Racing are in some trouble, if published reports are to be believed. Tagliani's new FAZZT Racing looks like it's funded by a single wealthy investor - I have not seen any significant sponsorship announcements from that team. If it is like every other team, then there are no such announcements forthcoming.
From an economic perspective, it would seem that competitive balance can not be achieved until the new specs are brought on line in 2012. Getting it right even then will require leadership and foresight that has not typically been displayed by present management.
So, Andy, my question is this: what can be done to improve competitive balance without adding costs? If there really is something, then I would definitely like to know about it. I would tout it here regularly. Any marginal improvement in the product over the next two years will allow the series to get to the new specs in better shape. That seems to me to be a worthy goal.
Best Regards,
Roggespierre
Oldwrench,
ReplyDeleteWell said!
Andy is a passionate fan. Frankly, I admire his enthusiasm and positive attitude about the series.
I also think that his first post on this thread was right. So far, much of what I have written here has been an airing of grievances. There is a time and place for that, but at some point it becomes, well, pointless.
He is not the first to suggest that I re-focus on solutions, that I begin to lead discussions about what IndyCar should do and should be. The more I think about it, the more I think that Andy and the others are right.
The end of the IndyCar season provides a good opportunity to do an about-face. That is when I will begin to throw some possible solutions out there. Some will suck. Others will be mediocre. A few might be good. But they will all be based on economic reality. That is, after all, what I know best, so it makes sense that I frame my proposals in that manner.
You guys forget more about automotive technology than I'll ever know. Therefore, you are well positioned to help. I need to know what is possible and what is a pipe dream from a tech perspective. Your help - and debate - would be very valuable.
Oldwrench has a very keen understanding of the racing supply chain. This is crucial. I know economic rent-seeking when I see it (example: Honda) but I have never worked in a manufacturing oriented industry.
I do understand contracting because I negotiate and manage contracts every day. I was once very involved in television and promotion, so I have a solid background in those areas. I also understand how government subsidies work; unfortunately, they are becoming a central financing component for IndyCar racing.
But I know nothing about propulsion systems, aerodynamics, torque curves and suspension geometry. For that, I need guys like you.
Anyway, that's where we're heading beginning Monday, October 12.
Best Regards,
Roggespierre
The focus needs to be placed on improving the only product IndyCar has to sell, and in attracting investment by selling it. Anything else is a continuation for the call to its dissolution. That's a curious plan for a racing fan to continually voice.
ReplyDeleteThe problem with AOWR is, as far as I am concerned, this viewpoint. Roggespierre and I probably have very different viewpoints on how good or bad an idea the IRL was from the get-go, but that doesn't change the fact that what he is saying is true. They are uncomfortable facts, yes, but they are facts. This, to me, is not a paragraph entailing a "let's fix the problems" mentality, and more of a demand for adherence.
Clearly, the product as is does not sell and will not sell. If one makes a "call for dissolution" by noting the serious and radical change pertaining to costs as unquestionably a necessity for the survival of AOWR (and I am talking about the immediate future!), then call me an anarchist. Anything left is tantamount to shuffling deck chairs on the Titanic.
Actually you aren't but for the sake of agrument...may I join you? Simply put, racing is a business. Like any other business it has to have one thing in order to survive.....it is called profit. Spending 4 million to make 1 million is called...a loss! Roggespierre has layed the ground work about television and the fact the product does not meet the demands of the consumer. Damon has pointed out the value of American drivers and the lack there of. I have presented the supply chain argument. Put all of this together and you basically have a understanding of how we got here and why it isn't working. Now, who at the IRL offices and the IMS offices are listening to us and do they care??? One is lead to believe that they are not. So with that said, now that the deck chairs have been re arranged Would you care to join me on deck as we watch an iceberg pass to the right side of our ship??? If we are lucky, we will miss it !
ReplyDeletePleased to meet you as well Mr. Balboa, and thank you for the attention you gave my comments with your presumptuous and incorrect interpretation.
ReplyDeletePerhaps you'd care to reserve further criticism until you read the post linked below. I will be at Homestead on Friday with the hope of presenting initiatives for technical changes to any Series administrator or team principal that will grant me the time. Next week I'll be happy to publish the proposals I offered, and any reaction they may have elicited.
http://www.trackforum.com/forums/showthread.php?t=129165
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Andrew Bernstein
Andrew,
ReplyDeleteAny progress is better than none, and I commend you for your efforts. I also understand your aggravation with all the 'negatives' Roggespierre highlights and you're correct in saying it doesn't help at all it the here and now. But Roggespierre isn't saying anything all the potential sponsors don't already know; they hire guys like him to conduct a much more thorough valuation than he's done here. On top of that you have the NASCAR marketing machine saying the same thing and comparing their product with ICS to any and all prospects out there. The days of taking a successful business owner to the races and then off to the local strip club to pen a deal are long past.
But here's the problem: to keep ICS afloat some entity will need to put more monetary value into IndyCar than they can hope to get out. Asking a sponsor to do that is akin to: asking Honda to supply engines for free; Firestone to supply tires for free; Dallara to supply parts for free; the drivers to race for free; the crews to crew for free; etc… How well do you think that would go?
Yes, at the heart of this whole mess is a bunch of numbers that don't add up, but behind it is the perpetuators of the lie. An acquaintance fell for the ChampCar hype in AZ and NV, lost a ton of money, and now looks at the entire racing business community as a bunch of swindlers. Now we have IndyCar's incarnation of Gentilozzi trying to run the same con game on the poor East Coast suckers who buy in.
If you really believe those who caused the problem are the ones who will then fix the problem, then so be it. In my view they who caused the problem are the problem, and until they go, IndyCar will continue to be a problem until it dies. Good things simply don't come from bad people.
-John
Hey, we are making progress, (and showing a bit of angst perhaps).
ReplyDeleteI hesitate to mention but I have degrees in economics, and a bit of experience since I was with Smokey Yunick and Paul Goldsmith both at Daytona and at Indy for their first sojurn into "open wheel" racing.
Racing was affordable and interesting, allowing for innovation and failure; think of Smokey's Indy side car for both.
Smokey's dead but his ideas still make sense; a simple rule book allowing for diverse approachs to solve the same problem---go fast enough to win at a cost that can be accepted.
If we can't find a product that is affordable then open wheel racing must fail.
So if a race car can NOT be built and maintained within a budget that can be afforded by owners, and with a possiblity of, with sponsorship help, provide a profit--this is an exercise in futility.
Since this website now has people who work in the very fields we need---I can't wait for the discussion to begin!
osca
Greetings John,
ReplyDeleteIt is always helpful to have my idealistic bent straightened with a healthy dose or realism. That's why I heed messengers, not aim at them.
Your summary presents no open window of opportunity: there also is no public indication that CART II is poised for emergence. So attempting to introduce innovation to the existing hierarchy appears to be the only positive course of action.
Abstract ideas are pretty easy to dismiss, particularly when they are original. I have a stack of them. If they get me inside the loop, you'll be reading about them. If they get me laughed off, you'll be reading them alot sooner.
_____________________________________________
Stay on track
Andrew Bernstein
John and Osca,
ReplyDeleteThank you for bringing your expertise to this site. Oldwrench, too. Those who have experience on the inside add so much to whatever it is that I do here.
John,
Your anecdote about the guy who lost his shirt in AZ and NV conjured a recollection of mine. I have a very distant relation who owns a relatively small but very successful sports marketing firm in Manhattan. He has only three or four clients, but they are all very large, global firms.
He entered his clients into sponsorship deals at the Long Beach Grand Prix during the ChampCar years. His assessment? They were the worst deals that he ever made. He believe that he was repeatedly lied to, and he swears that he will never again get his clients into "IndyCar racing."
Never mind that he never dealt with the IRL or "IndyCar" racing. That's how he characterizes the whole bunch. I tried to tell him that there is a difference. He didn't care.
Of course, there isn't much of a difference anymore. IndyCar racing is trying to pull the same shenanigans that ChampCar made routine.
As you say, sponsors have plenty of guys like me to tell them when something is a boondoggle. They have tons of data located in efficient databases that they can call up on their spreadsheets. IndyCar seems not to understand the quantitative nature of sponsorship in the 21st Century. These guys are sophisticated, and they have the numbers for every possible sports and entertainment marketing option.
If a guy like me can use mostly public information to blog in his spare time and figure out sponsorship value within a couple hundred-thousand dollars, then that should tell you all you need to know. The professionals know much more, and they are telling IndyCar that it is not a competitive product.
The NASCAR marketing machine would not be so successful if it did not have numbers to support its claims. Notice that NASCAR teams are losing sponsors as the numbers decrease. This is what any rational actor would expect. But NASCAR could lose half of its value and Cup would still be worth more than 8 times the value of IndyCar.
Osca,
I like the idea of opening up the rules. I know that the top teams will outspend and, potentially, dominate. But how is that different than what we have now?
Allow the teams to spend at the budgets they can afford. Allow them to cut their own deals with suppliers. That is how supply chains become efficient - through free market negotiations between buyers and suppliers.
Evolution happens randomly. It is not dictated by the sanctioning body. The IRL has demonstrated that, when suppliers are chosen by the league, those suppliers become more powerful than the league. Honda has the IRL by the.... Without Honda, there are no engines next year. It owns not only the hardware, but also the intellectual property. It can therefore force the league to cut a 6-week hole in the schedule to race at Motegi.
Crap like that can not continue to happen. It won't if the IRL allows the supply chain to develop naturally and in concert with what teams can afford.
Best Regards to All,
Roggespierre
I am glad to know that osca knew Smokey! He was one of my favorite chief mechanics. His 1973 Indy 500 small block chevy race car is exactly my point. He scared the crap out of the established teams thru "innovation". The cost to produce the small block was about 1/5 the cost of an Offenhauser. The established teams had a fit not only in the cost function but the qualifying speeds he got! Smokey got there on brains and hard work, not on a large wallet. He is one of many. This is what happens when you allow the supply chain economics to work, better products, lower cost, and interesting racing. I believe the proper term is " More bang for the buck !"
ReplyDeleteOldwrench,
ReplyDeleteSmokey was a character, and a great thinker, and how do I say this---frugal to a fault.
Dan Gurney came to him asking about how he could get his aluminum block to stop twisting--Smokey told him to get an iron block, Gurney said, "but it weighs 40 pouinds more", Smokey smiled and told him, "get a lighter driver". Simple solutions to complex problems.
Perhaps we could use his logic on making race cars more affordable. F1 is for innovation, NASCAR for "taxicabs", so why not make the IRL or it's successor, affordable, innovative open wheel racing???
osca
I agree!! I know that 25 years ago, I presented the CART teams with an electronic shift transmission similar to the model currently used today. I only recieved one reply, that from Roger Penske. He stated he would forward the information to his shops in Poole, England. Any action would come from them. I never heard a thing. The point is that the forementioned unit cost less than the Hewland LG 500 and the Wiessman gearbox used at the time. Smokey was of the same belief, find a better way and use what you already have. You can utilize exsisting parts from other sources and arrange them in a more efficent package. Many of his innovations came from already exsisting products. He is credited with making and ultilizing the first flow bench for racing. I have one myself and it is an indespenceable tool for making horsepower. That is how you win.... stop the whining and find a better way!! Glad you knew him osca, he was quite a guy !!
ReplyDeleteGeez Wrench, you should be making a killing. Here's what an Indy wrench wrote...I'm not sure if he was talking about the current X-track or maybe an Emco:
ReplyDelete"A complete spare gear stack cost about $28K in 2004-2005. The individual gears were just under a grand each. It's fairly easy to have $50K in the transporter gear drawer."
Your gearbox, bolted onto the dirt car motor. Make a front and rear adapter plate, like Falconer used to put on the small blocks. Then bolt it into this:
http://www.race-cars.com/carsales/other/1203344266/1203344266ss.htm
Call me when you're ready, I'll work out the suspension geometry so you can fab the wishbones. Maybe I'll have CFD figured out by then, and I can design a current spec undertray too. It'll be a snap!!!
________________________________________
Stay on track
Andrew Bernstein
Hence the reason for economics of scale. Xtrac is the ONLY gearbox used by the IRL. They set the price, not the market. When you have competition, you get price wars, that equals lower cost to the consumer or as we know them, race teams. I have many ideas for blowing holes in little financial empires. Smokey was king of cutting cost and going fast !!! Just a leason learned years ago !!
ReplyDeleteOldwrench,
ReplyDeleteYessir! The benefits of scale should accrue to both the supplier and the buyer. In the IRL model, everything goes to the supplier. It doesn't matter whether it's Dallara, Honda, Firestone, or Xtrac.
Scale economies are important when there is competition. They allow manufacturers to gain competitive cost advantage by producing and selling more. Of course, selling more requires that manufacturers DROP THEIR PRICES.
These monopoly deals have given the aforementioned companies Herculean power over the Indy Racing League and its teams. That must stop. The answer is competition and a naturally-evolved supply chain that is the product of free market negotiation between teams and their suppliers.
Your delineation of how "sponsorship" at various levels has mucked up the supply chain is one of the most valuable contributions that I've had here to date.
Much Appreciation,
Roggespierre
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