Friday, September 18, 2009
Did Bridgestone forget to distribute the free tickets?
And Danica won this race last year? She should run as fast as she can to any NASCAR (sans-culottes!) series where she is able to land a ride. She doesn't need to fly half-way around the world and waste three weeks so that she can race in front of an average high school football crowd.
One camera has been fixed on a tight shot of about 100 people who appear to be eating lunch. That's the best crowd shot they've got.
This is why you operate your business for the benefit of consumers, not corporate partners.
If this were a street race, then we would calculate as such:
2,000 team members, sponsors, race officials, safety crew, food vendors, etc.
Let's be kind and say 5,000 fans in the grandstands
We're up to a crowd of 21,000!
On second thought, let's make it 4 days.
28,000 in attendance!
But ovals don't lie.
I can understand why the teams don't like them. It's tough to play Big Time Racer Dude when 5th grade productions of Our Town draw more people.
Honda should be embarrassed. It brought everybody to Japan for this? Well, sure, the teams and the IMS really paid for it. Think of it as the Motegi Tax portion of the engine lease, but still.
And why are IRL teams and the IMS still paying the Formula Dream Tax? It's no secret that Mutoh has about a dozen fans in the United States. But it looks like he has even fewer in Japan.
Maybe it doesn't matter. It isn't like Japan imports American sponsors' goods and services, anyway. Except Marlboro.
The poor camera operator in Turn 1 is gonna need some serious Ben Gay after this. The guy apparently is forbidden from showing the empty (and small) grandstands. He stops short every time he starts to pan left.
I'm sorry for piling on, but this really makes me angry. Let's chuck this puppy and start from scratch.
Blaming Versus for IndyCar's failure to attract a television audience has become a sport unto itself this season. But, just as all other excuses fall flat, this, too, will soon land with a thud.
Versus announced today that it will begin airing special programs that feature the twelve drivers that are competing for NASCAR's (sans-culottes!) Cup. The shows will air Tuesday nights at 11:00, beginning September 22.
Does anyone doubt that Tony Stewart brushing his teeth will attract more viewers than the IndyCar exhibition at Motegi?
Versus seeks destination programming. It clearly believed that IndyCar racing was exactly that. It is equally clear that Versus was wrong. The rump is all that's left of the IndyCar consumer market, and it is a tiny rump indeed.
The IRL and its teams refuse to serve an audience. Their sense of entitlement led some to trash what had been a very enthusiastic television partner. Enter NASCAR's sizable foot in Versus' door and up the IRL's...
Once again, IndyCar gets its just deserts.
Next, we shall consider this issue within the context of IndyCar racing.
Thursday, September 17, 2009
**NOTICE: Please see the comments below this article for alternatives to Dallara chassis monopoly. - Roggespierre**
If John Menard were to accept the roles of underwriter and distributor, then he would also acquire tremendous bargaining power to influence IRL management. He who spends the money has the power; in this case, there is no new chassis unless Menard spends a lot.
- An oval-based U.S. racing series that occasionally ventures into road and street racing because:
- Ovals will attract U.S. drivers and, therefore, U.S. fans, which will allow for:
- Increased sponsor participation in IndyCar, which will ensure that:
- Teams have sufficient capital to make good on their promissory notes with Menard.
John Menard has many tools at his disposal (sorry). He could save IndyCar racing from itself. The job will require not only lots of cash, but also ample resolve to engage in tough love. The IRL needs somebody like Menard much more than Menard needs the IRL.
Wednesday, September 16, 2009
"The author claims that the attendance estimate for Edmonton (a strong
60,000 on race day) is equivalent to the estimates for Kansas, Kentucky and
Chicagoland." - The Wicker Bill
Constructive debate becomes impossible when the counterparty engages in gross mischaracterizations. Let's review what I actually wrote.
"Attendance at IndyCar oval races at Kansas, Kentucky and Chicagoland was
undeniably awful in 2009." - Roggespierre
Any assertion that attendance at these races was equal to that of Edmonton, St. Pete and Mid-Ohio would obviously be inacurrate. That is why I wrote nothing of the sort.
I did in fact write that attendance at these events was approximately 60,000 back when the IndyCar Series was a predominantly oval racing product. It is now a predominantly road racing product. Its roster of drivers includes exactly one full-time entry that is driven by an oval racer, and he happens to be the founder's stepson. That is not much of a value proposition for U.S. spectators, a vast majority of whom has demonstrated that it prefers oval racing products.
I also articulated my moral abhorrence of publicly subsidized racing events. Edmonton drew 60,000 spectators. That in itself is very good. However, the Edmonton event requires direct public subsidies from the local, provincial and, this year, national governments. IndyCar racing, much as we might like it, is not a public good.
Permanent racing facilities, from Road America to Michigan International Speedway, are bastions of excess capacity. If IndyCar were to present a marketable product, then it might race at some of these facilities. Moreover, unlike publicly financed athletic stadiums, temporary circuits offer no residual value once the event is complete. It can't be used by conventioneers. Everything goes back to the warehouse until next year, when the whole thing is subsidized once again.
"This is called supporting evidence, Roggespierre." - The Wicker Bill
This dig is unnecessarily offensive and poorly conceived. Wicker Bill is referring to the paltry crowd at Chicagoland this year. I have not only stipulated to that fact, but also provided "supporting evidence" that is of a far more sophisticated orientation.
Wicker Bill has made my point. Oval racing fans will not accept a predominantly road racing product that occasionaly ventures into oval racing. However, they have demonstrated some enthusiasm for a predominantly oval racing product that occasionally ventures into road racing. Witness the two best-attended road races in the United States each year. They are at Watkins Glen and Sonoma, and they are not IndyCar events.
"I attended the Mid-Ohio race and I can tell you the crowd was outstanding.
The owner of the track told me the morning of the race that traffic was backed
up for four miles entering the course. This was not solely due to 'comp ticket
distributions by Honda and Firestone.'” - The Wicker Bill
My only claim regarding Mid-Ohio was that year-over-year attendance obviously declined in 2009. Notice that there is no rebuttal. In addition, Wicker Bill implicitly confirms my claim regarding comp ticket distributions by Honda and Firestone. "Not solely due to" would seem to imply that a good portion of the spectators at Mid-Ohio paid nothing for tickets. This does not present a particularly favorable valuation of the IndyCar product.
"Then, to wrap up the post, Roggespierre puts on his/her/its tin-foil hat and
leaves us with this gem: 'Oh, and if NASCAR Fans and Oval Fans were homogenous,
then the Indianapolis 500 could not possibly exist. Perhaps that is the
intent.'" - The Wicker Bill
The Wicker Bill has this one exactly right. It was a cheap shot; I am embarrassed to admit that I wrote it. Kudos to The Wicker Bill for calling me on it.
My goal here is to provide data analysis that might point the way to a successful economic path for the IndyCar Series. I failed in this instance. I apologize to readers who expect and deserve better.
Let us examine some specific points of criticism and assess their relative validity. Some of Wicker Bill's insights are better than others; is this not true for us all?
"Indy Idea blogger Roggespierre - I'm sure this is some sort of cleverWicker Bill is apparently not alone in that regard.
pun about the 18th century French master of the guillotine Maximilien
Robespierre, but I don't get it..." - Wicker Bill
Therefore, why Roggespierre?
1. Because heads have been rolling at the IMS and IRL administrative offices this year.
2. Because factional rivalry has thrown IndyCar racing into a state of perpetual and destructive revolution that has produced many economic carcasses and no market winners.
3. Because citizens tend to want the heads of IndyCar leadership without having a viable alternative at the ready.
4. Because I like the way it sounds.
"Roggespierre is clearly someone who wants most or all IndyCar races to be
run on ovals and allows this bias to influence his rhetoric." - Wicker
Wicker Bill's conclusion is correct. I do want most IndyCar races to be on ovals. I believe that the market for oval racing in the United States is much greater than the market for road and street racing. I want IndyCar to offer a racing product that the mainstream U.S. market will accept. I focus on the U.S. market because the Indianapolis 500 remains, at least to some degree, an iconic institution in its home nation.
I believe that a majority of racing spectators in the United States will not embrace an international, road racing product, no matter how outstanding that product might seem to those who like it.
I happen to enjoy sports car racing more than NASCAR racing. I thought that CART's North American Touring Car Series was outstanding. I was sorry to see it go. However, I also recognize that I am not at all representative of U.S. motorsports consumers at large in that regard. I believe that adults do well when they are honest with themselves.
"The blog entry begins by calling (Mike) King “a company man,” suggesting that his
statement that the attendance at Chicagoland, Kansas and Kentucky was poor this
year, and the attendance at St. Petersburg, Long Beach, Edmonton and Mid-Ohio
was good is because IndyCar told him too." - Wicker Bill
I respectfully request that Wicker Bill examine Mike King's public statements of seven or eight years ago. Compare them with his statements today. Then, explain where I got it wrong.
Wicker Bill commits a factual error that is fully confirmed by the record. I did not suggest that King challenged Pistone because "IndyCar told him to." I also do not believe this to be true.
Nobody has to tell Mike King what to say about IndyCar racing. He works there. King is fully incentivized to defend and support his bosses whenever he chooses to comment publicly. Therefore, my suggestion, in effect, was that Mike King is not a self-immolating moron. Why this is an object of controversy is beyond comprehension.
"Why would IndyCar, using King as a proxy, want to discredit three tracks
at which it will be racing at for the foreseeable future? Hell, Hulman & Co.
owns half of Chicagoland." - Wicker Bill
That is an outstanding and insightful question, one for which I have no answer. Perhaps Wicker Bill should ask Mike King. Perhaps I should, too. In this case, King's proclamations seem misaligned with the interests of both himself and his firm. I credit Wicker Bill for shining the light on this one.
Incidentally, Hulman & Co does not own half of Chicagoland. International Speedway Corporation purchased Raceway Associates (IMS was a partner) in 2007. I do ask that, if you must criticize, then kindly have the facts in order.
We shall continue this dialogue soon enough.
Tuesday, September 15, 2009
The epic college football battle between the Texas Longhorns and the Wyoming Cowboys pulled 73,073 viewers Saturday afternoon on Versus.
In Dallas-Fort Worth.
They'll have a typical IndyCar audience when the Houston numbers come in. Add Austin and San Antonio, and they might double IndyCar. The rest of the country is thick Texas gravy.
The Dallas-Fort Worth number was achieved without the estimated 458,000 DirecTV subscribers in the MetroPlex.
It seems to us that there might have been a few - like seven or eight - other college football offerings to choose from, including several from the state of Texas. In other words, there was competition.
Will Motegi attract 73,000 nationally? Did Sonoma? Chicagoland?
How soon can we anticipate hearing the same stale explanations?
People will tune in for college football, bull riding, cage fighting and cycling, but not for IndyCar. It needs to be on either a network or ESPN. IndyCar needs the casual fan, the channel surfer. -ApologistsThese excuses are not justification. They are condemnation.
Failing to draw viewers on Versus does not make IndyCar an exception. It does make it a market loser.
How much longer must we wait before the IRL and its teams drop their collective sense of entitlement and do what it takes to earn an audience?
The market is rejecting this product.
Right now, they are apparently thinking that more road and street racing is a splendid business proposition for the IndyCar Series.
Pete Pistone of CBS Sportsline recently argued that IndyCar should embrace ovals because the racing is fantastic. We agree with Pistone's conclusion, even if it is the product of hopelessly muddled logic.
King responded in Pistone's mailbag this week, suggesting among other things that road and street circuits are preferred because they have attracted greater attendance than ovals this season.
Mike King, Market Analyst: "Ovals, Bad"
King offers arguments that are convincing only on a strictly prima facie level. Attendance at IndyCar oval races at Kansas, Kentucky and Chicagoland was undeniably awful in 2009. But he seems to conclude that these tracks are somehow unable to draw an audience that would match those that attend events at road and temporary circuits.
We know that this is false because Kansas, Kentucky and Chicagoland have attracted large IndyCar crowds in the recent past. We know this not only because it is confirmed by data, but also because we were there.
Recall, too, that races at Kansas, Kentucky and Chicagoland early this decade drew better TV ratings - the primary profit lever, by far, for any racing series - than the non-Indy events today. Moreover, those ratings were achieved despite the presence of an exquisitely capitalized competitor and captured media that dedicated more effort to destroying the original IRL model than to growing its own business.
The problem is that IndyCar racing is no longer a product that is
designed to appeal to fans of oval racing. It is a road racing product. There is no counter-argument: one need only examine the schedule and the roster of drivers. - Roggespierre
Incidentally, many of those guys are now pulling the strings that manipulate the Indy Racing League.
Like we said, King is a pliant company man.
Mike King, Market Analyst: "Road & Temporary Circuits, Good"
King also engages in puffery, suggesting that the crowds at St. Pete, Long Beach, Edmonton and Mid-Ohio were "phenomenal."
Frankly, attendance had better be phenomenal at those events. We reiterate that IndyCar is a road racing product. Therefore, if it fails to attract crowds and television viewers who enjoy road racing, then IndyCar is an even greater market failure than we had previously believed.
The crowds looked just okay from our vantage point. Attendance at Mid-Ohio obviously declined year-over-year despite ample comp ticket distributions by Honda and Firestone. Edmonton, insolvent and requiring subsidies from more than one government entity, drew a crowd that would be considered mediocre at a large oval track. But it looks fine at an airport, where seating capacity can be adjusted for appearance's sake.
The course at St. Pete renders audience estimation nearly impossible, and we suspect that is the idea exactly. We can report that the locals in the Tampa Bay region are not particularly impressed. If not for the rivalry among local municipalities, then the event likely would not survive. It might not survive, anyway.
Warning to the IRL - St. Petersburg, Florida is engaged in a heated mayoral race. Citizens there are not pleased with the direction. This is unfortunate because your event is and has been part of that direction. If there is to be a new mayor, then we suggest that you begin smooching his derriere with some haste or risk losing public assistance. You might also want to contribute to the campaigns of each mayoral candidate, just in case.
Mike King: Taking what they're Giving & Working for a Living
King does make some salient points. For example, he wrote to Pistone that IndyCar events that are paired with ARCA and other stock car series have not been successful. We agree. IndyCar is not a stock car series and is unlikely to draw many stock car fans.
Unfortunately, King's overlords would like to have us believe that Stock Car Fans and Oval Racing Fans are one and the same. This is false.
If such an assumption were correct, then the early IRL would not have been a more successful television product than the present iteration. It would not have earned crowds of approximately 60,000 at Kansas, Kentucky and Chicagoland - each without the benefit of government subsidies.
If NASCAR Fans and Oval Fans were homogenous, then the Indianapolis 500 could not possibly exist. Perhaps that is the intent.
By the way, 60,000 was the estimated attendance at the "phenomenally" successful Edmonton event this year. Is there any reason to believe that St. Pete and Mid-Ohio attracted 60,000 paying customers?
Like we said, King provides a reliable approximation of whatever it is that the IndyCar bosses are thinking.
He will never be a market analyst. But he will keep his job.
Monday, September 14, 2009
The first step toward Deep Capture is enabled by the Brazilian Trade and Promotion Agency's Business Support Center in Miami.
Sell it if you got It
IndyCar has demonstrated that it is not interested in remaking its product to please consumers. However, IndyCar is interested in distributing free tickets to the Miami race to those who sample Brazilian foods at Sedano's supermarkets in South Florida.
Attendance at the Homestead-Miami event is typically mediocre and occasionally lousy. We suggest that IndyCar fans get used to it.
APEX Brasil obviously purchased the Homestead-Miami tickets from the International Speedway Corporation. The project value lies in the sampling of food. Will the recipients of the freebies even use the tickets?
That's supposed to be the really cool thing. It doesn't matter. ISC wins, APEX Brasil wins, and the IndyCar Series collects its sanction fee and leaves behind the stench of another subpar event. Guys like Terry Angstadt revel in pulling off deals like this. They are fools.
Then, when television ratings are released, exposing the ugly and undeniable truth, IndyCar teams, secure in their self-aggrandizement, will blame Versus. Angstadt is left to defend his television partner. Perhaps those attempts to circumvent market demand weren't so smart, after all.
Recall that this is Terry Angstadt's plan for "raising the value of the IndyCar Series."
Here's a rule of thumb: if it is free, then it is worth nothing.
I will concede that shenanigans such as these are a good idea only on the day when Roger Penske determines that the best way to make money in the truck rental business is to sell barbecue sauce. Until then, I shall consider it a fool's errand.
Is it any wonder that Homestead-Miami was included in the 2010 IndyCar schedule? It will be profitable, fans or no fans. The emerging strategy is unfolding before our eyes.
How is it that this silly little plan apparently seems like a good idea to the members of the IMS Board? Would they rather the grandchildren become custodians of the Greatest Race in the World or sales reps for exotic foods?
An Important Distinction
Before we continue, I want to make something perfectly clear. Brazil has every right to aggressively market its products and services in the United States of America. The South American nation is poised for substantial growth in the global economy. This is largely the result of hard work.
Brazil has earned the opportunities that are before it because, unlike the IRL, it has addressed its fundamental economic challenges, in particular a historically skewed distribution of purchasing power that favored a tiny, well-connected class of industrialists and bureaucrats at the expense of everyone else.
If you think that correcting this problem was easy, then we suggest that you attempt to accomplish something similar in the United States. It's no picnic. The difficulties that Brazil has overcome were much greater.
And, so, congratulations to the people and leadership of Brazil. The Indy Idea welcomes your fine products and services (and impossibly gorgeous models) to the United States.
However, we do request that you not recapitalize and therefore perpetuate an IndyCar racing product that the market has rejected. The United States is already home to dozens of Zombie Banks. It does not need a Zombie Racing Series to increase yankee misery.
Bankruptcy - comprehensive market failure - can be a very good thing. It breaks down silos, strips bare vested interests, and allows for cancelation of contracts that are not beneficial to the insolvent firm. The IRL is not likely to go bankrupt in the legalistic sense because it is owned and subsidized by the Indianapolis Motor Speeedway Corp.
Frankly, that's too bad. If not for its corporate parent, the IRL would be in Chapter 11 as we speak. It would have to cut costs to match its market value. It would be subject to market discipline. And it would be much better off than the operationally bankrupt Zombie Racing Series that it is today. Without subsidies, this wounded animal would come to know mercy.
APEX Brasil has good and noble intentions. But its benevolence is cruel.There is no doubt that the IRL needs APEX Brasil much more than APEX Brasil needs the IRL. We reach this conclusion because we assume that APEX Brasil has products that people actually want to buy.
Furthermore, what does IndyCar have to do with APEX Brasil's mission? Are race tickets necessary to convince grocery shoppers to sample free food? The logic seems confused.
The real value to be derived from the IRL/APEX Brasil partnership will ultimately be domiciled not in the racing, but rather in the derivative distribution contracts. And so I ask again: have we learned nothing?
We would wager that Brazilian products and services are of sufficient quality to be effectively marketed in the United States without having to endure the shackles of a Zombie Racing Series that refuses to fix its product.
So it seems that tomorrow shall be Groundhog Day in the IndyCar Series once again.
Will somebody at the Indy Racing League and the World's Greatest Race Course please stop this madness and give consumers what they want?
Welcome to a new week at the Indy Idea. It is clear that IndyCar racing has vanished from public consciousness. The coming weekend will effectively be the fourth in succession in which the product is not party to the sporting and economic culture of its home market. This is attributable primarily to Honda's Deep Capture of the IRL.
The Indy Idea: An IndyCar Detailing Shop
Those who routinely review the financial statements that publicly traded firms must file with the SEC are aware that the most important information is often located in the portions that almost nobody reads. Review of the footnotes brought down Enron. Evidence that allowed for prediction of the banking crisis was also to be found there.
We are pleased to have attracted some worthy contributors to the footnotes here at the Indy Idea. Citizens will find their musings in the comments that are linked below each original entry.
Osca has been an observer of the Indianapolis 500 and IndyCar racing since 1946. He has a degree in economics and therefore understands the macro and micro factors that have so changed the sport since he watched George Robson lead the postwar Junk Formula contingent to the checkers.
Oldwrench is a former participant in the sport. He was there to witness a time of great change and upheaval, the late 1970s and early 1980s, when many of the issues that now haunt IndyCar were in their nascent stages. His articulation of the way in which the IndyCar racing supply chain has evolved to become a perverted morass is invaluable. He has compelled me to reconsider and refine some of my own views.
Citizen John has provided hard data and analysis that we have incorporated in some recent articles. He and I agree that the IRL lacks a competitive market advantage. We do not always agree with regard to how the league might actually achieve competitive advantage. This is healthy and constructive. He makes me think better. Perhaps he will have the same effect on you.
Damon has contributed hard data that have allowed for quantitative analysis that is more accurate and relevant than it would otherwise have been.
Trick Dickle is a NASCAR enthusiast who seems to yearn for an IndyCar Series that he would actually want to watch. He might be converted to customer status if the IRL were to get serious about managing its product to attract an audience. Mr. Dickle is much more representative of the mainstream motorsports market in the United States than any IndyCar fan can fairly claim to be.
Others have contributed anonymously. The Indy Idea is a low-risk proposition. Competitors, managers and other participants in the series are welcome to join the discussion fully incognito. We don't want to hurt you. We want to help you lift yourselves out of the quicksand.
The anonymous option will remain until we begin to receive scary ramblings that focus on either irrelevant aerodynamic technicalities or the precious bodily fluids of the American people. At that point we reserve the right to reconsider.
Please reserve cliches, incremental solutions, and justifications for the albatross that is the present IndyCar Series for other forums. Don't expect to bring the same old tired, weak stuff here and have it accepted as wisdom. You will come away disappointed, aggrieved and angry.
The Indy Idea makes every attempt to respond to each comment with relevance and courtesy. At times, we succeed, but it becomes more difficult as additional readers contribute. This is a good problem to have.