Saturday, October 3, 2009
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.
Friday, October 2, 2009
Thank you to Damon for relaying this information from Sports Media Watch.
Thursday's National Hockey League opening night prime time game on Versus drew 833,000 viewers. The late-night second game of the double-header earned a .37* rating, easily beating all IndyCar races this season except for Long Beach (.50).
(*I originally wrote that the second game got a .49 rating. That was inaccurate. I regret the error.)
Even without 18 million DirecTV subscribers, this was the best NHL opening night in history on Versus.
2009 IndyCar cable ratings are here. Additional analysis can be found here.
Recall that I have argued:
- Versus is not to blame.
- The DirecTV exodus is unlikely to have much impact on IndyCar ratings.
The good news is that we have identified some sports with which IndyCar is competitive.
- Major League Soccer = 292,000 viewers average on ESPN2
- WNBA = 269,000 viewers average, also on ESPN2
The problem is the product.
Dave Kallman of the Milwaukee Journal-Sentinel confirms the worst.
If the Mile makes it to next season, then it will have NASCAR's Triple-A feeder series to thank. The IRL has failed in Milwaukee.
"...as much as the fans of the IRL race are devout, there aren't enough of them willing to buy tickets, and the event does not make money for the track."
Milwaukee to Baltimore: the New Math
Meanwhile, attendance figures for the proposed Baltimore Grand Prix just keep getting better. Is it not amazing that the same series that couldn't draw in Milwaukee is going to be the most popular thing to hit the streets of Charm City since John Unitas?
Let's see. IndyCar attracted approximately 28,000 spectators at Milwaukee this year.
28,000 * 4 days = 112,000 fans for the Baltimore Grand Prix
2,000 crew, officials, vendors, volunteers, etc. * 4 days = 8,000 more in attendance
Total Baltimore Grand Prix Attendance = 120,000
Incidentally, the crowd at this year's Honda Indy Toronto was estimated at between 30,000 and 40,000 spectators. I can't find any records of public subsidies for that one. But we do know that the IndyCar teams incur the Toronto Tax as part of their engine lease payments to Honda.
Just think of the exposure. How else might Baltimore be seen on television by an audience like this?
Warning to the People of Baltimore
This race is a boondoggle. Most of the money that might be spent at the Baltimore Grand Prix would likely be spent in Baltimore anyway. This thing will generate less economic output than an Orioles' weekend series with the Red Sox.
Don't take my word for it. Ask the good people of San Jose. Check with the folks in Edmonton. Consult the Texas Comptroller of Public Accounts.
Ask yourselves the following question.
If IndyCar racing attracts so many spectators, then why is it being dropped by facilities that are in the business of promoting auto racing events? Why can't IndyCar earn a profit at the nearby Richmond International Raceway, or the Milwaukee Mile, one of the world's most historically relevant race tracks?
IndyCar racing is a market failure, a product that has been rejected by auto racing consumers in the United States. That is why it needs government subsidies for a minor league event at a glorified test track in Birmingham and for a contrived street festival in Baltimore.
This event will never be profitable, although the same might not be true of the promoter - that will depend on the amount of the government handout. Baltimore and the State of Maryland will subsidize this mediocrity every year for as long as it exists.
This IndyCar Series does not deserve the Milwaukee Mile. It certainly doesn't deserve to be bailed out by Maryland taxpayers.
IndyCar broadcast network ratings excluding the Indy 500 are here.
Indianapolis 500 ratings are here.
Cable network IRL IndyCar Series ratings are here.
Breakdown: Similar Segments
That IndyCar cable television ratings decreased significantly this season is not in dispute. I have argued that Versus is not necessarily to blame.
The following line graph would seem to support my conclusion. It includes cable television ratings for the sequence of IndyCar races that has occurred since Mergification with ChampCar in early 2008. I ask that you examine the graph and look for trends.
Notice that the decrease began at approximately mid-season in 2008. The 2009 Long Beach race, the second event that was telecast on Versus, outperformed four races in 2008 that were telecast on either ESPN or ESPN2. In addition, this year's race at Texas was competitive with the later 2008 events that were telecast on cable.
Cable ratings have been decreasing more or less consistently for a season and a half. That would seem to constitute a significant trend, one that had been established well before Versus entered the picture.
A prior two-year spread is similar in appearance. Cable ratings for the 2003 and 2004 IRL IndyCar season are plotted on the line graph below.
Notice the similarity to 2008 and 2009. With the lone exception of the 2004 opener at Homestead, the general trend is downward. I would argue that 2003 and 2004 were very similar to the past two years.
Both segments were subject to market shocks. Mergification with ChampCar occurred prior to the 2008 season. Blendification with much of what had been CART similarly occurred prior to the 2003 season. Recall that it was then that Honda, Toyota, Target Chip Ganassi Racing, and Rahal Letterman Racing migrated to the IRL.
My hypothesis, therefore, is that in both 2003 and 2008, a percentage of the established consumer market for the IRL product rejected some of the product elements that had been integrated from CART and ChampCar, respectively. Similarly, a percentage of the consumer market for both CART and ChampCar rejected the proposition of watching their previously favored drivers, teams and constructors participating in the IRL.
Granted, there is some variability. Nevertheless, I believe that my hypothesis is reasonably persuasive.
So, how did IndyCar exit the depression of 2004? In a word, Danica. The cable ratings spiked immediately after she led late in the race at Indianapolis as a rookie in 2005.
Apparently, the drivers in the cars do in fact matter. Regrettably, there are no Danicas on the horizon. In fact, there are few prospective IndyCar drivers from the United States. That does not bode well for the future of the IndyCar Series.
Thursday, October 1, 2009
I am referring, of course, to the Danica to NASCAR story. Ten days prior to a three-driver shootout for the a season championship that consumers have deemed irrelevant, Danica to NASCAR is the undisputed Top Story in IndyCar racing.
Columnist Bill Center provides a solid summary in the San Diego Union-Tribune.
Danica to NASCAR: a Management Problem
Unless IndyCar teams hire compelling U.S. drivers, Danica to NASCAR will dominate all coverage of the league until she finally joins the dominant market leader on a full-time basis. Of course, most IndyCar teams are unable to hire drivers from anywhere because they require Piloti-shod financiers to fund their operations.
This is the fault of IRL management.
Management has mucked up the supply chain so badly that teams must pay the Motegi Tax, the Mid-Ohio Tax, the St. Pete Tax, the Toronto Tax, and the Formula Dream Tax in order to acquire underpowered, spec Honda engines. There is no price competition among makers of chassis and replacement parts because Dallara has a monopoly.
The teams are uninvolved in manufacturing the racing equipment. They must purchase everything. They are not permitted to manufacture, cooperate, and sell in order to recoup cost - not that they would do it if they could.
What do these factors have to do with Danica to NASCAR dominating press coverage of the IndyCar Series?
IndyCar is not a consumer product because its costs are approximately five times greater than its value. Everything - from drivers to racing venues - therefore must in some way subsidize market failure. The formula favors international road racers and driver-financiers that can't be sold to a large U.S. audience.
No Stopping this Train
IRL Public Relations can not stop Danica to NASCAR. Do not blame PR.
Reporters are instructed to write and present stories that might attract a large audience. Danica to NASCAR is the only such story in IndyCar racing. Do not blame the media.
Tim Cindric wants NASCAR drivers at Indianapolis next year. Cindric is one of two team owners that can afford to hire driving talent from the United States. Why does he not do so? Why does he want others (NASCAR drivers) to solve the problem? Perhaps it is because that is the IndyCar Way.
The IRL is managed by Terry Angstadt, Brian Barnhart and Tony Cotman. Collectively, they have paved the way for the behemoth that is and will continue to be Danica to NASCAR. Why should they not be held accountable? They are the managers, after all.
They have inflated the cost of participation.
They have invited monopoly.
They have granted concessions.
They have elected to seek government subsidies rather than consumer acceptance.
They have earned the long Danica to NASCAR nightmare that is only now just beginning.
The histogram below contains comparative Nielsen cable ratings for IRL IndyCar events from 1996 through 2009. Specific races that were telecast on cable television in each year are identified below the graph.
Note that individual event ratings were not available for 1999, 2000, and 2002. The season average is presented for each race in those years.
- 1996 - no cable events
- 1997 - (1) Texas 0.6 ESPN2
- 1998 - (4) Texas 0.4 TNN, Charlotte 0.9 TNN, Atlanta 0.9 TNN, Vegas 0.3 TNN
- 1999 - (7) Phoenix 0.54 cable, Charlotte 0.54 cable, Texas 0.54 cable, Pikes Peak 0.54 cable, Atlanta 0.54 cable, Pikes Peak 0.54 cable, Vegas 0.54 cable
- 2000 - (4) Disney 0.61 cable, Texas 0.61 cable, Atlanta 0.61 cable, Kentucky 0.61 cable
- 2001 - (6) Atlanta 0.6 ESPN2, Texas 0.6 ESPN2, Richmond 0.5 ESPN2, Nashville 0.6 ESPN2, Gateway 0.4 ESPN2, Texas 0.4 ESPN2
- 2002 - (5) Fontana 0.47 cable, Texas 0.47 cable, Pikes Peak 0.47 cable, Nashville 0.47 cable, Gateway 0.47 cable
- 2003 - (6) Texas 0.44 ESPN, Richmond 0.48 ESPN, Nashville 0.32 ESPN2, Gateway 0.7 ESPN, Nazareth 0.55 ESPN, Texas 0.46 ESPN
- 2004 - (6) Homestead 0.9 ESPN, Motegi 0.1 ESPN2, Texas 0.4 ESPN, Richmond 0.24 ESPN2, Nashville 0.5 ESPN2, Fontana 0.1 ESPN
- 2005 - (10) Homestead 0.6 ESPN, St. Pete 0.4 ESPN, Motegi 0.5 ESPN, Texas 1.0 ESPN, Richmond 0.4 ESPN2, Kansas 1.1 ESPN, Nashville 0.3 ESPN, Milwaukee 0.5 ESPN, Sonoma 0.6 ESPN, Fontana 0.6 ESPN
- 2006 - (7) St. Pete 0.3 ESPN, Motegi 0.6 ESPN, Texas 0.6 ESPN, Richmond 0.4 ESPN2, Nashville 0.4 ESPN, Milwaukee 0.4 ESPN, Sonoma 0.6 ESPN
- 2007 - (9) Homestead 0.39 ESPN2, St. Pete 0.6 ESPN, Motegi 0.4 ESPN, Kansas 0.3 ESPN2, Texas 0.7 ESPN2, Richmond 0.6 ESPN, Nashville 0.4 ESPN2, Michigan 0.28 ESPN2, Sonoma 0.6 ESPN
- 2008 - (10) Homestead 0.8 ESPN, St. Pete 0.42 ESPN2, Motegi 0.33 ESPN2, Kansas 0.74 ESPN2, Texas 1.0 ESPN2, Richmond 0.9 ESPN, Nashville 0.5 ESPN, Edmonton 0.4 ESPN, Kentucky 0.43 ESPN2, Sonoma 0.41 ESPN2
- 2009 - (11 to date) St. Pete 0.3 VS, Long Beach 0.5 VS, Kansas 0.15 VS, Texas 0.36 VS, Richmond 0.22 VS, Edmonton 0.24 VS, Kentucky 0.14 VS, Mid-Ohio 0.2 VS, Sonoma 0.25 VS, Chicago 0.24 VS, Motegi 0.14 VS
Wednesday, September 30, 2009
Danica Patrick shed absolutely zero light on her future career path at Homestead-Miami Speedway Wednesday. Unfortunately, that is apparently all that reporters wanted to talk about following the Q&A session.
Here is a telling quote from the Associated Press story.
"Patrick was at Homestead-Miami Speedway with several other drivers Wednesday to test for the IndyCar finale Oct. 10."Who were those "other drivers?" Apparently, this is not important information. I don't blame Tim Reynolds, the AP writer. His job is to generate stories that U.S. motorsports consumers might actually want to read. They are interested in Danica. They are not interested in the rest of IndyCar's failed "stars".
This must be frustrating as hell for the IRL public relations folks.
Myth of More Promotion
Allow me to confess that I like IRL PR chief John Griffin. I admit that I do not know him very well. But I have been duly impressed in my limited dealings with him. Frankly, I also have some sympathy for the man.
His job is to sell a collection of international drivers to U.S. racing consumers who have demonstrated that they are not interested. The IRL's Big Cheese has effectively blamed Griffin and his charges for IndyCar's comprehensive market failure. Never mind that Terry Angstadt refuses to manage his product.
"Marketing" is thought to be synonymous with "promotion" at the Indianapolis Motor Speedway. Therefore, it's up to PR to create consumer demand where none exists. Good luck with that, John.
First-year undergraduate business students know that marketing begins with the Four Ps.
1) The product is not designed for the purpose of attracting consumers.
2) IndyCar is overpriced at every point on the supply chain.
3) The product is offered in places where government subsidies can be procured rather than where consumer demand might be cultivated.
4) Obviously, the problem is lack of promotion!
Why does anyone still believe this garbage?
Cause without Effect
You aren't going to do much better with regard to promotion than having a Dancing with the Stars winner and an SI Swimsuit model in your starting field. Helio and Danica finished 1st and 3rd, respectively, at the 2009 Indianapolis 500. Yet the Greatest Spectacle in Racing produced its worst national television rating in recent memory.
Believe it or not, the IRL has typically overachieved with regards to its public relations hires. Most have been experienced, talented professionals who tried hard, became frustrated, and then escaped to jobs where they might promote something that consumers actually want.
Management competence has been elusive in the other IRL executive offices. Unfortunately, it is there that Product, Price and Place are determined.
The key here is television revenue and commitments. NASCAR has quite a few of both. IndyCar has very little of either because the product is not designed to attract U.S. television viewers.
Therefore, NASCAR is willing to take a chance on the new Mile promoter because it needs to fill its Grand National television schedule. If the promoter fails to pay, then NASCAR still collects a (smaller) profit because it earns significant television revenue.
The IndyCar Series is scheduled to begin the 2010 season March 14 at an undisclosed Brazilian location. Reporting on the Brazil expedition has been muted in recent weeks, but some have suggested that the deal is done and that Tony Cotman is feverishly working to design a temporary street course at Location X.
Why then, is A1GP claiming that it plans to race the same day, most likely at Interlagos? The news has Brazilian property owners geeked!
Might we see competing series in Brazil on the eve of the Ides of March? Is that what Terry Angstadt and APEX Brasil had in mind? I still think it more likely that A1GP will run in support of the IndyCar Series.
Tuesday, September 29, 2009
Chicagoland Speedway President Craig Rust is a man of his word. That is not good news for the IndyCar Series.
According to the Chicago Tribune, Rust has followed through on his promise to decouple NASCAR Cup and IndyCar ticket purchases at Chicagoland. Cup attendance was down approximately 20% this year. IndyCar attendance has been in steep decline for some time.
I do not know whether or not the IRL contract with Chicagoland continues past the 2010 season. If it does not, then I think the odds are pretty good that the speedway that was co-developed by the IMS will likely be eliminated from the IndyCar schedule. Possible replacements include a government subsidized race in Baltimore and a harebrained parking lot event at Gillette Stadium in the noted motorsports mecca that is Foxboro, Massachusetts.
The histogram below contains comparative Nielsen ratings for the Indianapolis 500 from 1996 through 2009. Information that is relevant to the data is listed below the graph.
I invite you to go to the Comments section and post your suggestions about how to resuscitate ratings for the Greatest Spectacle in Racing.
- 1997 - 2 days of rain; all but 13 laps completed on Tuesday
- 2004 - flagged due to rain at 180 laps
- 2005 - Danica leads late in the race
- 2007 - includes a rain delay and flagged due to rain
NOTICE: Specific races on network TV in each year are identified below that graph per VirtualBalboa's suggestion. Thank you, VirtualBalboa. Series milestones are also listed.
Network Races and Key Milestones
- 1996 - Orlando 2.2, Phoenix 2.2, New Hampshire 1.6, Vegas 1.4
- 1997 - Original IRL specs begin competition; Orlando 1.8, Phoenix 1.8, Pikes Peak 1.4, Charlotte 1.0, New Hampshire 1.4, Vegas 1.1
- 1998 - Orlando 1.8, Phoenix 1.9, New Hampshire 1.3, Dover 1.6, Pikes Peak 1.1, Texas 1.1
- 1999 - Orlando 1.8, Dover 1.3, Texas 0.9
- 2000 - Montoya dominates Indy; Phoenix 1.7, Vegas 1.3, Pikes Peak 1.0, Texas 0.9
- 2001 - Castroneves leads CART domination at Indy; Phoenix 1.0, Homestead 0.8, Pikes Peak 0.7, Kansas 1.3, Kentucky 1.1, Chicagoland 1.1
- 2002 - Penske to IRL full-time; Homestead 1.5, Phoenix 1.2, Nazareth 1.1, Richmond 1.0, Kansas 1.2, Michigan 1.2, Kentucky 0.9, Chicagoland 1.1, Texas 0.9
- 2003 - Honda, Toyota, TCGR, AGR and RLR to IRL full-time; CART postseason bankruptcy; Homestead 1.8, Phoenix 0.9, Motegi 0.7, Pikes Peak 0.7, Kansas 1.4, Michigan 1.0, Kentucky 0.8, Chicagoland 0.8, Fontana 0.6
- 2004 - Phoenix 0.9, Kansas 1.2, Milwaukee 0.8, Michigan 0.8, Kentucky 0.8, Pikes Peak 0.5, Nazareth 0.9, Chicagoland 0.8, Texas 0.8
- 2005 - Road and street races added to schedule; Phoenix 0.6, Michigan 1.3, Kentucky 0.9, Pikes Peak 0.8, Chicagoland 1.0, Watkins Glen 0.7
- 2006 - Homestead 0.8, Watkins Glen 0.8, Kansas 1.2, Michigan 1.0, Kentucky 0.8, Chicagoland 0.7
- 2007 - Milwaukee 1.0, Iowa 1.1, Watkins Glen 1.0, Mid-Ohio 1.7, Kentucky 0.6, Detroit 1.0, Chicagoland 0.9
- 2008 - Mergification with ChampCar; Milwaukee 0.8, Iowa 1.1, Watkins Glen 1.1, Mid-Ohio 1.3, Detroit 0.9, Chicagoland 0.8
- 2009 - Milwaukee 0.7, Iowa 0.8, Watkins Glen 0.87, Toronto 1.0
Monday, September 28, 2009
Because I think that IRL management and IndyCar teams should be made to recognize that the numbers matter. They are not mere inconveniences. They are jeopardizing the very existence of IndyCar racing.
The product is the problem. It is unpopular and it costs too much.
On balance, Sonoma has to be a disappointment. It was the only race of the three that started at a reasonable hour for an IndyCar race.
It is also interesting that the DirecTV exodus from Versus did not seem to affect IndyCar. Chicagoland and Sonoma were run prior to the DirecTV blackout. Motegi came after the blackout. Its location and start time seem sufficient to explain the slight drop from the previous two races. The DirecTV impact would appear to be minimal.
Sunday, September 27, 2009
The mood in the paddock at Road Atlanta this weekend was apparently every bit as gloomy as the weather. Rain forced the ALMS to shorten Petit Le Mans. A poor value proposition took care of the rest.
Citizens on site report that disappearing financial backing is on the minds of many in ALMS. We already know that the St. Petersburg Round will vanish along with Adrian Fernandez's team in 2010.
But our informants tell us that the gloomiest teams of all were those that had hoped to add IndyCar operations next season. The problem?
"It goes back to the value proposition and finding the money to compete." - InformantHerein is another problem with the present course of IndyCar racing. Government subsidized events in Brazil and at Barber Motorsports Park might fill the schedule and ensure that the league can continue to waste money on the present teams. But these events do nothing to increase the value of the IndyCar Series.
That would require working to establish a legitimate fan base that actually wants to watch the racing from week to week. Unless and until that happens, prospective new competitors will find it extremely difficult to finance their upstart IndyCar ventures.