Speedway CEO about the get down and dirty
Apparently, laying off more than 13 percent of its staff was only the beginning of budget cuts at the Indianapolis Motor Speedway. It seems that CEO Jeff Belskus has hinted to Schoettle that additional and, perhaps, more substantial cuts are in the pipeline.
Schoettle indicates that both the Brickyard 400 and the MotoGP race are potential casualties. Not surprisingly, he also suggests that the Month of May could be primed for a haircut.
Not a TEAM Player?
Most important to IndyCar Series fans, Belskus is apparently considering either reducing IndyCar TEAM payments or scuttling the appearance money program altogether. Schoettle also mentioned that Belskus might alter the IndyCar Series schedule, focusing on more profitable (read: publicly subsidized) road and street races in lieu of oval tracks.
In my view, that these items are under consideration demonstrates the severity of the financial difficulties that imperil this unwanted product. Belskus is reputed to be a fine accountant. I do not doubt his qualifications with regards to reshaping the projected 2010 IMS Income Statement.
The question is whether or not he is capable of making strategically advantageous decisions. For example, if Belskus were to reconfigure the ridiculously wasteful IndyCar TEAM program, then I would be the first to applaud his efforts. Similarly, I would not shed a tear upon learning that the Brickyard 400 and the MotoGP race are not part of the long-term IMS operating strategy.
Shortening the Month of May would be a mistake, in my assessment. The 500 is a declining event by any objective measure. Whittling away at its edges would not create efficiency, but rather it would only hasten the event's plunge toward irrelevance and, ultimately, annihilation.
Conversely, ending the non-IndyCar escapades at Indianapolis might just make trips to the IMS seem special again. Re-establishing scarcity could be a first step toward restoring the mystique of the Greatest Race in the World.
I will likely have much more to say whenever Belskus chooses to take definitive action. For now, there is a specter that hangs over the hallowed ground of the World's Greatest Race Course. Is Belskus a workouts and turnarounds guy, or is he merely a manager of the downward spiral.
We shall soon know the answer.
Roggespierre
I don't live in Indy and never have, so I understand I don't totally appreciate what the 500 means to the community. However, because I don't live in Indy, I want IMS to compress the 500 festivities.
ReplyDeleteI have long advocated the following schedule.
2 Weeks before the 500 - An Indycar race at Kentucky
(Why Kentucky? It is close enough to Indy to start creating buzz)
Monday - Friday - Open Practice (and none of this dedicated ROP crapola)
Saturday - Pole Day - Fill 1-11
Sunday - Fill 12-21
Monday - Tuesday Open Practice
Wednesday - Bump Day Fill 22-33
Thursday - Off
Friday - Carb Day (PLEASE include a Silver Crown race!)
Saturday - Parade
Sunday - Race Day!
This is not so much to save money... but it allows a working stiff to take one week off and see every bit of meaningful on-track action.
That provides value to the fan. It this was the schedule I would be in Indy every May for a week instead of a week-end.
I guess I'll put up a contrasting viewpoint to Donald's.
ReplyDeleteEVERYTHING should be tried before officially shortening the IMS schedule in May.
Three reasons:
1. Such a move, like the changing of the qualifying format a few years ago, is an explicit admission that the product has weakened - it doesn't allow fans to get the same jobs done that it once did.
The difference is that shortening the schedule is, even to the most casual observer, a clearly measurable admission of product weakness - and an indication that the product is NOT expected to be improved to the extent that it can ever fill its own historic shoes again. Ugly message.
2. As has been shown several times on this blog, the Indianapolis 500 is THE crutch on which the series leans. It must be the last line of defense. Any (fan-perceived) contraction in the event lessens the 500's ability to, if necessary, act as a strong foundation for something like what Rocketman53 has been suggesting ($25 mil on the table, etc.).
IF things really blow up, isn't it wise to have invested the most into maintaining the stature of the ONE event that defines IndyCar?
3. The Month of May in Indianapolis. Chipping away at this institution is chipping away at the soul of the city. And when we say "the fan" I suspect a disproportional number of those to whom we refer are on some level emotionally connected to not only the 500 but the traditions and city that surround it.
In a vacuum I would agree with something like Donald's proposed schedule - sure looks like a heck of a week. But there is simply too much baggage to go down that road unless ALL else fails. It would be the admission of massive defeat.
Oh, and also, isn't that where CART was going anyway in the 1990s?
BC,
ReplyDeleteCART wanted to go much farther. Andrew Craig told Indianapolis Mayor Stephen Goldsmith that the 500 needed to become a 3-day event. He suggested that this would be GOOD for the city because it would allow CART to become stronger; a stronger series would make for a better 500, he argued.
The irony is that Goldsmith had been inclined to side with CART and try to help it negotiate a deal with the IMS. After hearing what Andrew Craig had to say, the Mayor of Indianapolis changed his opinion and backed TG without equivocation.
I agree with your assessment of the Month of May. I harbor no illusions - it is in need of significant repair - but it's the one building block that might gain traction if it had the right on-track product and aggressive promotion.
Donald,
Given the state of qualifying, I would be willing to consider your suggestion, albeit grudgingly. When I force myself to be rational, I really have no choice but to admit that the present "show" does not warrant three weeks.
When qualifying is a foregone conclusion, why spend all of that dough?
There is, however, a wild card in all of this. Recall that Honda charges teams only $90K for a one-week Indy lease. The month-long teams pay more than $200K for Indy engines. Cutting back the schedule would therefore cause Honda to lose more than $2 million in revenue.
It's no secret that Honda plans to significantly reduce development in 2010. Perhaps Honda will achieve cost cuts that offset the such a revenue hit.
Then again, maybe not.
Honda has the series and the IMS by the you-know-whats. It has all of the bargaining power to dictate policy.
Preserving Honda's cash flows might be the only thing that saves the Month of May at Indy.
That's pathetic.
Best Regards,
Roggespierre
Roggespierre said...
ReplyDelete"Is Belskus a workouts and turnarounds guy, or is he merely a manager of the downward spiral."
Or it could be a veiled threat. If other cities are willing to subsidize IndyCar…
What's IMS's economic impact to Indianapolis?
-John
I believe that it is a manager of the downward spiral. Every product has a life cycle. Indy has just finally begun to see its. The product is poor, the customer doesn't like it and the powers ignored it for too long. It may just have to collaspe before the little guy (as always) comes in to clean up the mess and start over again. Only time will tell but I would say that the party is just about over!
ReplyDeleteJohn,
ReplyDeleteBelskus has no bargaining power with regards to the City of Indianapolis. If he could physically move the IMS, then perhaps a veiled threat would be worthwhile.
The strategy might work with regards to the Brickyard 400. But threatening to just not have an Indy 500 would lack credibility.
Best,
Roggespierre
Oldwrench,
ReplyDeleteMy suspicion is that the Powers the Be lack sufficient expertise to understand the problem, much less fix it. I'm not talking about Management.
What are the core competencies that the members of the IMS Board bring to the enterprise? Why should anyone believe that the Board knows either who can or how to author a turnaround?
Best Regards,
Roggespierre
CART wanted to go much farther. Andrew Craig told Indianapolis Mayor Stephen Goldsmith that the 500 needed to become a 3-day event. He suggested that this would be GOOD for the city because it would allow CART to become stronger; a stronger series would make for a better 500, he argued.
ReplyDeleteThe irony is that Goldsmith had been inclined to side with CART and try to help it negotiate a deal with the IMS. After hearing what Andrew Craig had to say, the Mayor of Indianapolis changed his opinion and backed TG without equivocation.
Never heard about this. Just wondering, do you have a source? Not questioning it. Just in case I ever want to reference it again.
VirtualBalboa,
ReplyDeleteI do have a source, but I am not at liberty to give it up. I will say that Mayor Goldsmith started a Motorsports economic development initiative, and that he assigned specific individuals in his administration to manage that initiative.
I was a local new reporter in Indianapolis at the time. As such, I dealt with the city administration with some regularity. I have since remained in contact with some of those individuals, more than one of whom has since transitioned to a career in motorsports.
That's probably all that I should say. For that I apologize.
Best Regards,
Roggespierre
That's alright. I'll just pretend I never heard it. I did just read though that the FIA's given Craig a job to head up the WTCC, so I'll try and pull an interview with him in the next couple of weeks and I'll ask him about that. Then I can be my own source.
ReplyDeleteVB,
ReplyDeleteI would be interested to hear what he says, now that everything is in the past.
One important thing to remember is that CART really did see itself as a budding competitor with F1. It had some reason to believe that - Nigel Mansell, new races at Motegi and Rio - and believe that it most surely did. Craig tried to sell Goldsmith the notion that Indy would become the 500 and what would be the US Grand Prix, all rolled into a single, high-impact weekend for the City.
Recall that Gurney's White Paper drew much from the Bernie/Max F1 model. Globalization was the plan.
Andrew probably thought that he had found a kindred spirit in Goldsmith, a very bright, very aloof Harvard Law Grad whose outlook was of a far more Globalist variety than your typical Indianapolis Mayor. In that regard, Craig was not altogether wrong. Goldsmith was inclined to believe that TG had overreacted and overreached.
Where Craig failed was in his assessment of the mayor's position. Had Goldsmith been a prospective investor, then he probably would have bought what CART was selling.
Unfortunately for Andrew, Goldsmith was instead the Mayor of Indianapolis. He therefore believed - accurately, in my view - that CART had left him with no choice.
Best Regards,
Roggespierre
One important thing to remember is that CART really did see itself as a budding competitor with F1....Craig tried to sell Goldsmith the notion that Indy would become the 500 and what would be the US Grand Prix, all rolled into a single, high-impact weekend for the City.
ReplyDeleteThe whole dynamics of pre-split CART and the formation of the IRL is very interesting to me - and mysterious because it is not something that has been written about extensively - or at least catalogued for the internet. It seems like you were either there or you really don't know much about it (and I wasn't "there"). Everything I've ever heard about WHY Tony George did what he did has been by word-of-mouth and usually highly biased.
And it seems strange to me, especially with all of the hot feelings that were stirred up, that this stuff isn't readily available. You would think that by now, if not a tell-all book, there would at least be a few webpages dedicated to the fiasco...
Anyway, off topic a little? Then again, I'd argue that a good understanding of the origins of the split couldn't hurt efforts to chart a course for the future.
I've been doing a decent amount of research on the topic of the split; Old articles are basically where I'm primarily gearing towards. There's a clear narrative to the outside world that is developed:
ReplyDelete-Tony George takes over as head of IMS
-Lots of work done to unify CART/IMS, collapses for then unknown reasons
-Calls for Tony George to do something from various people in the press, such as Brock Yates
-More talks that go wrong
-Tony decides to form the IRL
Its the intimate details within there that people harp on. No one comes out smelling like flowers, particularly Tony. As far back as the 1994, shortly after the IRL was announced to be created, it was also indisputably clear to sponsors that this was going to probably destroy both, and they vocalized it in a big way.
Both sides have personal ammunition; people running off with money. Robbing municipalities blind for street races. Tony George trying to lock up his first wife in a mental hospital to prevent her from divorcing him (and later admitting that the two of them used cocaine frequently). Its no wonder with all the ugliness that things didn't turn out so well.
See, all them intimate details could really make for a compelling investigative tell-all type of book! I bet with good promotion and the right angle such a work could have some mainstream appeal.
ReplyDeleteFor the practical purpose of understanding the current situation, though, I'd be most interested in knowing exactly WHAT the different parties wanted and WHY those things were good/bad postions and how they relate to the present situation. Know thine history lest ye repeat it unawares - that kind of thing.
Its infinitely interesting. I'd love to get a chance to talk to Tony and let him go on the record about a lot of these specific issues. Looking back around late 1991 when there were, in earnest, attempts to unify, you can see that the press saw Tony as being overly loyal to USAC. That's about where I'd like to start - did they think that USAC was looking out specifically for their best interests in ways that CART wasn't, and what made him believe that USAC was better equipped for the job of managing Open Wheel?
ReplyDeleteThis is all horribly off topic, though.
Having a race at Kentucky before Indy would require a fixed race, because if a Red car won that first race it would turn the fans off, having a different winner would turn them on, only way any car other than one of the 4 Red cars could win that race would be if Honda dialed in an extra 50/75 HP in maybe 3 or 4 different cars
ReplyDelete>>BC said...
ReplyDeleteI guess I'll put up a contrasting viewpoint to Donald's.
EVERYTHING should be tried before officially shortening the IMS schedule in May.<<
Just to be clear... I am not suggesting SHORTENING the month of May... just compressing it. There is too much time during May where nothing goes on. There is no good to crowning your pole sitter TWO WEEKS AND A DAY before the race. I want IMS to jam all the action into a week so more folks can see it (like me!).
Speaking of which, they also need to screw around with the DAILY schedule. It should be a CRIME if the cars are not running between 11AM-1PM and 4:00-PM to 7:00PM every weekday. Make the mid-week action available to the most people. Make it a place where people go for lunch during the work day, or people come after school or work.
And finally...
>>Roggespierre said...
Given the state of qualifying, I would be willing to consider your suggestion, albeit grudgingly. When I force myself to be rational, I really have no choice but to admit that the present "show" does not warrant three weeks.
When qualifying is a foregone conclusion, why spend all of that dough?<<
I would make one suggestion to spice up the qualifying show. They need to pay money and points for Indy 500 QUALIFYING in the same way they pay money and points for the average IRL race. Why not? It will get better TV ratings and more paying fans than most IRL races do. It will give teams real incentive to go for it, and it would make a good May all the more important to winning the Indycar championship.
VB,
ReplyDeleteInfinitely interesting - that's a good way to put it. I agree.
TG was still a very young man, not to mention a very inexperienced executive, when he decided to create the IRL. I always wonder how much of a role certain confidantes must have played - Dick King, John Capels, John Barnes, A.J. Foyt. Tony needed support if for no other reason than to help convince his mom and sisters to go along. Josie was married to Steve Krisiloff at the time, and he worked for Jim McGee, one of Tony's more vocal critics.
I always wonder where the business rationale ended and the personal animosities began. So many wanted to say that the whole thing was about Power and Control. I tend to agree, but I do not dismiss the notion that TG might have had some reason beyond egoism to actually seek Power and Control. The Goldsmith anecdote leads me to believe that TG might have had a legitimate business purpose for doing what he did.
But then I remember that he's married to a relative of Jerry Forsythe, the one CART/ChampCar owner who refused to make nice when he had the opportunity. Clearly, the "Ego Theory" can't be dismissed, either.
Off topic? Absolutely. But I still find it much more fascinating than the current IndyCar product.
Best Regards,
Roggespierre
FTA: "Each team that races the entire circuit, is guaranteed a seven-figure check from the series... Expect Belskus to look to end that practice, possibly passing that responsibility on to sponsors or just plain making it clear that it’s up to the teams to either sink or swim on their own."
ReplyDeleteAbsolutely the right thing to do, IMHO. Starve off that damn moneypit series that exists only through IMS money. Nothing focuses a man's mind like a noose. Simultaneously, announce a $25 million Sweepstakes purse and entry rules/spec parameters for 2011. Then get out of the way!
I agree with Rocketman53 !! When you have 25 million reasons to get motivated, you can get an awful lot of interest really quick! Nothing motivates people like M O N E Y !!! Put some rules in place that open the mind as well as the pocket book and get out of the way. If it goes that way....count me in!!! As for the IMS board RP, I agree...they have and are missing the boat. One can only hope someone within the IRL read this board. More people here understand the problem than the IRL Team!!
ReplyDeleteI always wonder where the business rationale ended and the personal animosities began. So many wanted to say that the whole thing was about Power and Control.
ReplyDeleteMy personal theory is that the founding of the IRL and "power" and "control" are, in some ways, exclusive. The ability to control was important, but he never actually did a good job of it. Hell, he barely tried to do it. In other words, there was no real vision. He did it because of and for friends who had told him how desperately action needed to be taken. Over time, he was forced to shoulder burdens that he clearly never expected; Bankrolling teams, sanctioning the IRL's own races, and so on.
VB wrote:
ReplyDelete"My personal theory is that the founding of the IRL and "power" and "control" are, in some ways, exclusive. The ability to control was important, but he never actually did a good job of it. Hell, he barely tried to do it. In other words, there was no real vision."
This thing smacks of the last gasp of the USAC traditionalists and the CART "progressives." It always struck me like the dog caught the speeding car...once it clamped onto the bumper there was little else it could do.
The second part was the 1996 Memorial "Dual Disaster" Weekend that turned both the IRL's "500" and CART's U.S. 500 into punchlines. Neither series ever recovered from that debut. I always suspected that from then on a mutually expected unification became less possible, starting the downward spiral.
This thing smacks of the last gasp of the USAC traditionalists and the CART "progressives." It always struck me like the dog caught the speeding car...once it clamped onto the bumper there was little else it could do.
ReplyDeleteYou go back in time, and you see him bringing in USAC as the sanctioning body to oversee the races and F2000 was brought in as a support series. I don't think he ever intended to to "operate Indycar racing". I think he just wanted veto power over who would, and with the long history of USAC and the Speedway (and likely, USAC getting in his ear, among others), he felt forced to create a series no one wanted at the absolute wrong time.
In a totally separate question: I remember reading many, many years ago that Marco Greco was able to run the entire 1997 IRL season for about a million dollars. How did the IRL manage to keep costs so low then as compared to now? Obviously there's been inflation since, but I don't think it entirely answers that. Again, still way off topic.
VB,
ReplyDeleteTotal Inflation from March 1998 until September 2009 was about 33.15%.
If I recall correctly, the 1997 season only had, what, seven or eight races? So that helped.
But the engine economics in the IRL's early days were actually very attractive. Guys like Menard could spend a lot if they wanted to, but it wasn't necessary. Mickey Nickos built one motor for Ed Rachanski and Jim Guthrie, who in turn used it to beat Menard and Tony Stewart at Phoenix.
Amazing, the stories that are possible when the teams control their own supply chains!
The gearboxes were crap, but they were cheap. And you didn't need multiple configurations for ovals, road courses and street circuits.
Larry Cahill, car owner for Donnie Beechler and later Robby McGehee, told me that he would keep going so long as he could do it for no more than $2 million per season. He was an interesting guy - at one time he owned more Holiday Inn franchises than anyone - and he absolutely did not want sponsors. He wasn't much of a talker and he had no intention of becoming one.
Cahill was a hands-on owner who had brought Beechler from Silver Crown. He had plenty of money and was willing to spend it if it meant that he didn't have to run a corporate hospitality operation. The early IRL gave him that option. And then it reversed course.
True to his word, Cahill exited the series when the IRL traded its business model and its soul for Honda and Toyota.
Roggespierre
I went and looked around to see if I was right, and apparently it was the 11 race 1998 season. Even with inflation, that's astounding that Marco was able to do that.
ReplyDelete""The gearboxes were crap, but they were cheap. And you didn't need multiple configurations for ovals, road courses and street circuits."
ReplyDeleteThat is the point dead on the mark. If the thing only lasts one race but the overall cost is less than you can run all the races you want. I know the gearbox I proposed to the CART teams of the 80's cost less than anything they even run today. On reason for this, all the parts were off the self. Why redo what has already been done? The only reason for any change is one of three things:
1. Does the change improve the individual or collective performance?
2. Does the change provide a financial benefit?
3. Does the product offer a marketabilty difference?
If any of theses apply, you measure them on a cost vs. return value ratio. I know the product I offered, provided all 3 but those who are the powers didn't want it because it effected their position within an organization. Same applys for any product. It is more about who gets the money. The IRL wants this to continue.
old wrench wrote:
ReplyDelete"I know the product I offered, provided all 3 but those who are the powers didn't want it because it effected their position within an organization. Same applys for any product. It is more about who gets the money. The IRL wants this to continue."
The IRL owners and suppliers undoubtedly do, but it is apparent to me that the IMS Board is becoming wary of the sugar daddy relationship that is draining the asset. I expect this to soon become an "all in" game.
Mickey Nickos built one motor for Ed Rachanski and Jim Guthrie, who in turn used it to beat Menard and Tony Stewart at Phoenix.
ReplyDeleteThat's it, isn't it? That's the kind of thing that used to make Indy racing what it was: the Affirmation of entrepreneurship and independence, the Intrigue of an underdog's surprising result, stories that can be shared among the Community...
Imagine if Versus had this kind of stuff to play with, instead of two tires and a P2P button! A "marketability difference", I'd say!
BC: Isn't this why we get up in the morning? If we all want to watch Penske & Ganassi continue to dominate the sport shouldn't we just send our money directly to them? I remember Roger Rager in 1980 give Johnny Rutherford a hard time for 5 laps at Indy. The fans went nuts!! They were on their feet screaming and cheering!!! I thought that was part of the Indy experience. It is when you overcome great odds that sponsors and fans alike want to involve themselves with the sport. The little guy carrys the hopes and dreams of all who seek a better life. Isn't that the American Dream? And why we watch Indy? Everyone of us has a bit of Walter Mitty in us !
ReplyDeleteI think the CART IRL split started when CART was formed just after Tony Hullman's death. I think Tony George saw the CART guys try and push the Speedway around (there were even extra qualifiers in 78 or 79). I think he has held a grudge since then.
ReplyDelete