Roggespierre's Maxim #6
Courtesy of Ken Homa, Georgetown University McDonough School of Business
Courtesy of Ken Homa, Georgetown University McDonough School of Business
Remedial would be Kind
At which stage would say that Terry Angstadt and Brian Barnhart operate? I would argue that they presently reside at top of Professor Homa's list and at the bottom of the motorsports management heap. Not all of the problems are their fault, of course. Unfortunately, their proposed solutions are not really solutions at all.
Note that I do not include Tony Cotman in my analysis of IRL management because his responsibilities and authority are unclear to me.
IRL management is Reactionary in almost every conceivable way. The league is indeed fighting to survive. To that end, we have ample and compelling evidence.
- Pursuing arbitraged sponsorships that are intended to preserve the status quo despite the absence of demonstrated demand for the racing product.
- Establishing a race promotion contract with the publicly subsidized promoter of the undersized Barber Motorsports Park.
- Attempting to convince the City of Baltimore and the State of Maryland to subsidize a 2011 street race.
- Renewing a Honda engine and sponsorship arrangement that forces IndyCar teams to work with a rent-seeking supplier that is bleeding the IndyCar enterprise of much needed cash.
- Attempting to secure robust financing in exchange for a non-strategic race in Brazil.
- Seeking corporate dollars rather than consumer acceptance.
- Allowing powerful teams disproportionate influence with regard to selection of the new specs that are to be introduced in 2012.
- Failing to realign IndyCar TEAM so that it might improve the IndyCar product to achieve market acceptance.
- Chasing short-term pay days rather than establishing a sustainable cost structure that might lead to a more salable product and increased U.S. television ratings.
- Choosing to believe that it is incapable of competing with the dominant market leader.
- Turning its back to virtually all empirical data and pursuing a market position that has very limited upside, at best.
- Attempting to force a demonstrably unwanted product on the market, rather than recognizing and adapting to consumer demand.
Toward a Market Competitive IndyCar Series: Fell the House of France!
I would like to see an IRL management team that might reside at the bottom of Professor Homa's list and the top of the U.S. motorsports market. The IndyCar Series needs Revolutionary managers! However, leadership of that type will require expertise in fields that have little or nothing to do with either sales or racing operations. I believe in all sincerity that the future of the great Indianapolis 500 Mile Race depends on it.
Acquiring such a management team is in the interest of the Indianapolis Motor Speedway Board of Directors. Now that the 2009 IndyCar Series season is nearly complete, I hope in earnest that the Board will commence with the job at once.
Roggespierre
It is the IRL that is the game's resource drain. It is the series that compounds every issue, every cost problem, and makes reinventing this mess a Sisyphean task.
ReplyDeleteNo matter how one slices it, the greatest marketers won't entice enough dogs to eat the IRL dog chow.
Worst of all, it diminishes the "Greatest Spectacle in Racing."
$25 million (or more) on the line over 500 miles at Indianapolis for all comers...that's the solution...or, the death rattle.
Rocketman53,
ReplyDeleteI am intrigued by your idea. But I do see one problem.
If the league folds and the IMS decides to put up $25 million for the 500, then I think we can assume that somebody will start a racing series using the cars that run at Indianapolis.
At least one team owner is already planning for such a contingency.
Would we then not fact the prospect of 1979 all over again?
Don't get me wrong. I find your idea very compelling. It certainly beats the heck out of what we have now. But I would hate to see Indy racing end one 30 year nightmare, only to begin another.
How might that be avoided?
Best Regards,
Roggespierre
Question for the tech geeks:
ReplyDeleteThe Panoz chassis are very, very cheap. A lot of them are sitting around as show cars. How much could it cost to bring one up to be capable of qualifying trim at Indy? Would it be millions?
I also note that no one has attempted a sort of "budget entry" with them. You'd think that with the road course package some work could be done to keep them competitive at a low cost (at least with Beck's team). I guess that's not even worth the investment?
VirtualBalboa,
ReplyDeleteYou're talking about a short term solution. It would probably be worth looking into if not for the IRL's deal with Dallara.
My understanding - and this is third-hand, so some details could be wrong - is that Dallara was awarded its monopoly position in exchange for league sponsorship. I am told that is why the old IRL G-Force/Panoz chassis were outlawed.
The IRL has painted itself into a corner at almost every point on the supply chain. It can't get out of the Honda deal or else it will have no engines next year. It can't get out of the Dallara deal or else it will have no chassis next year.
It's as if management tried to lock in exorbitant costs for teams that it would in turn have no choice but to subsidize.
I don't think that IRL management could alter the formula before 2012 even if it were so inclined.
Best Regards,
Roggespierre
In regards to your question sir, the answer....hardly anything. The chassis was designed for ovals in the champcar series. As for your "budget entry" attempt, the rules won't permit the cars to run. Safety is not problem, politcs is! Even the road course package is not out of line, the IRL is!! Little needed to be done to the Panoz. It simply is a matter of who blinked first, Champcar did, so if you wanted to race, you had no choice but to buy a "crapwagon". And with lawsuits in the wings, it was crapwagons for all!!
ReplyDeleteOldwrench,
ReplyDeleteMergification really has turned out to be a disaster. That isn't to say that the alternative would have been any better, however.
I learned yesterday - on a public forum, of all places - that the sanction fee at Long Beach is only $500,000. That made sense when it was negotiated because Kalkhoven and Forsythe were both buyer (ChampCar) and seller (GPLB). But then the IMS went out and bought the contract!
$500,000 covers the IRL's operating costs. That's it. The TEAM payments are more than $1 million per race. The Lights purse is $360,000.
Therefore, the IRL is losing at least $1.3 million on that event.
No wonder the Sisters are not pleased.
Best,
Roggespierre
Oh for the days of buying used race cars, working your magic, putting it in the show, finishing decently, picking up a check, paying the bills and pocketing the difference. Seems like ages ago, but people actually made money at this. Look at where all these high finance and marketing guys got us. Fighting for life and deeper in debt!
ReplyDeleteBring back The Old Hound!
ReplyDeleteRoggespierre
Well, gee, another reason for the IRL to go belly up - to shed all these "exclusives" to open up the racing.
ReplyDeleteIf there has been any lesson learned since 1996 it's that the "500" is the keystone, and it needs buzz reinforced each year.
CART/CCWS had all the advantages in '96 when it walked away, including all the established stars and better equipment. It failed for many of the same reasons IRL is failing now.
The IRL had nothing but the "500", which is now diminished but still iconic. The race can still create a level of celebrity: Hornish, Danica and Helio, for example. What's missing now is broad public interest to create "stardom."
You create interest by offering the largest purse in motorsports is Daytona's $20 million. Indianapolis paid $14,315,315 in '09. Team money amounted to $1.2 million per car. A $25 million "500" purse seems reasonable...and it's much bigger than NASCAR's premier event.
I'll take 30 years of "peace" for a revitalized "500". A series will take care of itself.
"Therefore, the IRL is losing at least $1.3 million on that event.
ReplyDeleteNo wonder the Sisters are not pleased."
Roggespierre,
Interesting. Makes me wonder if the primary focus of Barnhart and Angstadt is to get the corporate entity ICS in the black, while we're talking about making the series in toto a viable entity.
So are the cries of, "we can't get sponsors," met with, "Roger and Chip figured out a way, get creative." Or, again directed at the teams, "you need to find marketable drivers like Danica, then you'll get sponsors regardless of our competitive disadvantage in the marketplace."
-John
Oldwrench,
ReplyDeleteI'd be curious as to your thoughts on designing a car around an existing supply chain, say the existing sprint car chain.
A great deal of costs the teams incur comes from technology; to develop, implement and maintain it I should say. So while the engineers are analyzing various carbon composites for stiffness and debating the merits of a push-rod v. pull-rod suspension is there really any net gain to the fans over a tube-frame chassis with an outboard suspension?
I just don't think the techno thing works very well unless it's a continuing and evolutionary process like in ALMS or F1. It's just hard to keep any spec series modern on the one hand and on the other when it's time to change it'll be costly, all of which I'm sure you know.
Market acceptance would be a different question, but could you see a modern (yet tube frame) F5000 serving as a model for cost containment?
-John
Let me put something together using the information you provided. I feel that tech is not the problem. It simply is a matter of high cost of entry. Keep this in mind..If you were buying a house, which would be more cost efficent, a custom built on-site home or one from manufacturing facility? Race car manufacturing is of the same theory. Build it in a facilty using scale economics (Purchasing greater quanities at lower cost) and similar outside supply chain theory (competitive bid on goods sold) and you get that ugly word no one wants to hear in the IRL, Competetion!!! The chassis can be anything you want, the problem is sanctioning bodies limiting who can play. Tube frames will work, but the cost of safety vs. economic value must be considered. Carbon Fiber may have an advantage. Allow me some time to figure the cost ratios involved.
ReplyDeleteJohn and Oldwrench,
ReplyDeleteI like both the question and analysis here. I've wondered about the tube frame idea, too. But I simply don't have the technical expertise to give proper consideration.
From a market acceptance standpoint, ALMS and F1 are very interesting. The former has less acceptance in the marketplace than the IRL. The ALMS TV ratings on network this year were very consistent - 0.5 to 0.7, typically.
Almost all of the market value of F1 is tied to international television ratings. This makes sense - there is no country in which market competition among sporting entities is as ruthless as it is in the United States. In addition, F1 has "home teams" that are thought to represent the countries where they are domiciled. Thus, F1 has something in common with team sports in the United States that typically draw larger fans bases and TV audience than auto racing.
The economics of promoting an F1 race are even worse than those of the IRL. At least the IRL can draw an audience at Texas Motor Speedway without Eddie Gossage having to extract $10 million or so from the government.
My argument regarding technology is that its value is vested in its uses. Therefore, we should ask: how is technology used in the IndyCar Series? What tangible customer benefits does it offer? Does it improve the product? If so, then how? What would happen if we eliminated this technology? Would customers notice? Would the value proposition to customers be better or worse?
That is why I harp on customer focus. My sense is that the IRL chooses its technology according to 1) arbitrary reasoning, 2) legacy considerations ("the next evolution of Indy car"), 3) preferences of the most politically powerful competitors, and 4) perceived needs of the suppliers.
Customers never enter into the equation. That is something that must change.
Best Regards,
Roggespierre
The average fan doesn't know, or care, what is under the skin of a race car. But, they do care what that skin looks like, and they want to hear what the engine sounds like--or in the case of the turbine--it was the lack of engine noise, but the "Woosh" became a sound you'd remember.
ReplyDeleteThe Audi diesel in ALMS was nearly silent, but had a very appealing sound (tire noise and air penetration noise).
So if there could be different car shapes (looking like race cars, not reverse airplanes), without wings, using different engines, giving a visual and audio impression to fans---I'd bet we'd see open wheel racing begin to once again grow.
To get there we have to set an afforable limit on car ownership that makes economic sense.
In previous "rants" I proposed a "claiming price" for all cars. I continue to support that idea. No one is going to spend $2,000,000.00 to see it claimed for $1,000,000.00 are they??
osca
Osca,
ReplyDeleteI like the logic that underlies your "claiming price" notion. But I tend to prefer carrots to sticks.
One reason for the NFL's tremendous organizational success has been its ability to convince teams to cooperate. NFL teams forfeit all sorts of economic rights in order to join league cooperative efforts that tend to increase returns to all team owners. Getting Jerry Jones and Daniel Snyder to agree to share with Ralph Wilson and Bill Bidwell can't be an easy trick. But the NFL does it.
Might there be some way to do that with regards to technology in IndyCar? I think it is possible, but I am out of time. I'll probably take this discussion to the top next week.
Best,
Roggespierre
OT to this particular thread, but you hear that Tony Cotman refused to let 2 qualified (they have valid Indy Lights licenses and have tested/driven Indy Lights cars before) drive in the last race of the year at Homestead this week?
ReplyDeleteHere is a series, who has employed some of the worst wankers in the history of racing and still (after 8 years) struggles to put cars on the grid each week, and you have this clown telling two drivers to "stay home". The championship has been long decided, and this is the decision that is made?
The "country club" mentality of Indy Car Racing is one of the MAJOR reasons why its lost and going nowhere. Fire all of these bums running the sport into the ground and start over. ASAP.
I'd love to hear your take on it Roggie, in a seperate thread. Sure Indy Lights aren't Indy Car, but they are governed by the same "braintrust". And they are the top ladder (insert joke here) to Indy Car.
Mr. Dickle,
ReplyDeletePlease send email to indyidea@mail.com and let me know what you know. I'll take it to the top. I had not heard that story, but it doesn't surprise me.
I've left Cotman alone because he has worked in the shadows for the most part. But I have heard tidbits recently that would not seem to bode well.
Best Regards,
Roggespierre
Osca wrote;
ReplyDelete"The average fan doesn't know, or care, what is under the skin of a race car. But, they do care what that skin looks like…"
Hi osca,
I agree on the look. I'd qualify it by saying that it needs to look fast and further that the car needs to look fast on television.
I know a guy in television production and we've discussed the issue of transferring the sensation of speed to the viewer, something I feel is lacking with the current televised product. A couple points that come to mind:
1. Race cars don't look fast from distant camera angles. The sensation of movement (speed) the viewer receives is directly related to the movement of the camera. We kind of all know this when as kids we'd instinctively run up to the catch fence and whip our necks around following the cars whizzing by. It's actually not the car that's moving on your television screen, but the back-drop scenery blurring which causes the speed sensation for the viewer. The static shots of the cars flying by capture some of this, but with the liability of losing focus on the racing action.
2. Related to the above and why I mentioned it, is high down-force cars don't move around relative to the track. A viewer's sensation of speed is lower watching a car glued to the track compared to a car producing a high slip-angle and in four-wheel drift when the race track is the relative back-drop. The best way to transfer the sensation of speed of a high down-force car cornering is having the car coming directly at the camera with the camera near ground level, then the sudden movement of the camera as the car corners creates the sensation of speed.
I've been told: given enough optimal camera positions and angles, Formula Mazda cars can give a greater sensation of speed to the viewer than F1; and sprint cars on a half-mile can appear faster than IndyCars on a mile oval. I believe conveying that sensation of speed is a cornerstone of the product and for the viewing audience at least, that swivel on the camera man's tripod needs to function as the little kid's neck as the cars go flying by.
Anyway, I'm trying to let form follow function with my thoughts on this, with the primary function being an entertaining product as seen on from the viewer's perspective. So with the above examples, if we can't transfer the sensation of speed to the viewer with high down-force cars, or lower down-force cars create a greater sensation of speed for the viewer, then the latter should dictate the decision.
Take care,
-John
What is the purpose of trying to limit contestant investment in equipment? To make it "fair"? Who needs fair? (Look at MLB, for example, and the Yankees and Red Sox...and Twins and Rockies.) Set rules - X displacement, for example, then get out of the way.
ReplyDeleteIf one had such limits in 1946 there would have been no Novis @ $50,000 per copy. In '47 there would have been no Blue Crowns, also $50,000 apiece. The Novis never won despite Lew Welch's huge investment, later supplemented by Granatelli's money. The Blue Crowns dominated for a time. Then they were beaten by a much less expensive Kurtis Kraft dual-purpose car. And, of course, there's Granatelli's #40 turbine. The list is legion, as is the list of "pot and pans" entries. And that was part of the draw of the race - anyone could (theoretically) win. And if Penske wins, what's news?
Put $25 mil on the "500" table - set some rules - and let the competition begin. Thirty-three fastest get to race.
The future is wholly about the "500".
Roggespierre:
ReplyDeleteI've been reading this particular post and I agree with everything that's been said here. I guess the question really becomes one of: Do we scrap the IRL and start from scratch or do we try to restructure the IRL and make it a viable product for the marketplace? I stated earlier in another post thar I felt that the Indy 500 can be a part of a series but in no way, shape, or manner should it be beholden to the series or be the financial support for said series.
I think we all agree that the solution involves having more American drivers, racing on venues that Americans understand, at a cost for competing that represents true market value,and that rules need to be as open and flexible as possible without getting into a "who can outspend whom" scenario. We do this and the fans will come to the races and watch on television.
The hard part is how do we accomplish this?
GreyMouser,
ReplyDeleteThat is the hard part, isn't it? As Barnhart has said, the devil is in the details. In this case, he's right.
RocketMan53 has suggested that the series give way to a rebirth of the Indianapolis 500 Mile International Sweepstakes. He clearly believes that a simple rules package, open competition, and a $25 million purse would turn the trick - or at least get Indy back in the game.
There are elements of RocketMan's proposal that I like very much. In particular, I am a big fan of the thin rulebook and open competition. The $25 million purse would be very attractive, as well, but Indy would have to get significantly better television ratings in order to make it feasible.
The Indy-only option also addresses my suspicion that the notion of scarcity needs to return to U.S. auto racing. There are simply too many races and too many series that are competing for many of the same fans and virtually all of the same sponsors. This is not sustainable, in my view.
Might there be another way? I think so, but the fundamentals would have to be addressed correctly. There is simply no way that the present management team is capable of doing it. I plan to present my own proposals, beginning next week.
The 2012 specs present a rare opportunity to redefine IndyCar racing in the marketplace. Is the series worth saving? In it's present form, I think not. RocketMan is correct: the IRL is killing the Indianapolis 500. If allowed to continue, then it shall surely finish the job.
I know that my response to your question is something less than an answer. But I promise that we shall begin to address these issues - one at a time, hopefully - beginning next week.
Will anyone listen? Probably not. But that is why I conduct this site "As If."
Best Regards,
Roggespierre
Roggespierre:
ReplyDeleteThanks for the reply. It is what I expected, in that there is no hard and fast solution to the mess.
All one can do in our situation is to post like you say: "As if" someone is actually reading and thinking on the points we raise. I earnestly hope the "sisters" do read this and think on it. We are all passionate fans of IndyCar racing and really do not wish to see it die a slow painful death.
Regarding Barnhart's statement that the "devil is in the details" is a paraphrasing (or misquote) of a statement made by the German-born architect (later US citizen) Ludwig Mies Van der Rohe who stated with regard to architecture that: "God is in the details" And so it should be for IndyCar.
Regards. GM
GM,
ReplyDeleteThanks for sharing the knowledge. I like Van der Rohe's original version better.
I don't think there's a lot of thinking going on a 16th and Georgetown. I would like to be proven wrong.
Best Regards,
Roggespierre