IndyCar: A Tale of Two Cities

Now we know why the IndyCar Series will not race at the Milwaukee Mile in 2010. Frankly, it should not be a surprise to anyone who has been paying attention.


Dave Kallman of the Milwaukee Journal-Sentinel confirms the worst.

"...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."

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.


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

Awesome!

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.

Roggespierre

IndyCar Baltimore Attendance Increased to 150,000

Baltimore was one hot and humid city today. Hopefully, somebody will pour water on the crazy notion that the consumers in the former home of the Colts are nuts for IndyCar Racing. Apparently, the "feasibility study" found that 150,000 would converge on Charm City if only IndyCar racing, mass market phenomenon that it is, would come to town.

This area has much in common with the rest of the country. It is therefore probable that Greater Baltimore does not care about the present IndyCar product. The best hope for this event is that the locals think Al Unser, Jr. will actually drive in it. Little Al is recognized here. Danica, thanks to a strong activation effort by AirTran - big at BWI airport - is also well known.

Two stars - one retired and the other just as likely to be racing over in Dover in NASCAR next season. All other drivers combined? They're nobody here.

Maybe they think they'll get an "international audience" from DC. Think again, sirs. We live among them. They do not give a damn. The Brazilians at the embassy and the consulate know less than Americans about the Brazilian IndyCar drivers. The emigres here are diplomats and intellectuals. Do you really think they talk about IndyCar racing at the World Bank?

Indy Racing League - you have no market position. You have no fans. You must choose a market segment, serve it and serve it well, and let the others go. Try to get everybody and get nobody. Do you really want to see that at the Indy 500? That's where we're heading!

The Deal: IndyCar, Danica, Chip & Gillette

Is a deal brewing that involves Danica Patrick, Chip Ganassi, the IndyCar Series, and the Gillette division of Procter & Gamble? It's certainly plausible. Here's what we know.

• Gillette is part of Ganassi's leveraged supply chain deal with Target
• Chip Ganassi is rumored to have a sponsor interested in Danica
• Ganassi said publicly that Danica should stay in IndyCar and that he will not take her to NASCAR
• Jerry Gappens of New Hampshire International Speedway spilled the beans on a proposed IndyCar race at Gillette Stadium in Foxboro, Massachusetts
• Gillette has rumored interest in title sponsorship of the IndyCar Series
• Danica remains non-committal about her IndyCar/NASCAR "decision"

The Committee of Public Safety suspects that Ganassi is trying to strike a deal with IMG's George Pyne, Danica's representative, to put her in a Ganassi Indy car with primary sponsorship from Gillette.

The Problem

Danica starring in television commercials featuring Gillette products is worth much more than Danica driving an Indy car. Sponsoring her IndyCar program means Gillette must spend at least $7 million per season (probably more) of which $5.7 million is not justified by consumer demand for IndyCar racing. Pyne, a former NASCAR executive, therefore plans to take Danica and Gillette to NASCAR, where the price of sponsorship is justified by market demand.

Plausible Scenario #1

Ganassi tells the IRL's Terry Angstadt that IndyCar will lose Danica unless somebody underwrites Gillette's sponsorship of her ride at TCGR. Angstadt recalls that Gillette owns naming rights to the football stadium in Foxboro, Massachusetts. He proposes the "Indy 200 at Gillette Stadium" to sweeten the pot and keep Danica in IndyCar.

But that creates another problem. Who will pay the sanction fee for the Gillette Stadium event? Angstadt turns to the best tool in his toolkit, Apex Brasil. He lines up the International Events Unit to promote the Foxboro race and to assume the financial risk that goes with it.

Then Angstadt goes for the home run. He pitches Gillette a Brazilian-manufactured alternative to some product it has to buy anyway. It could be steel, plastic, payroll software, toilet paper - it doesn't matter so long as Gillette buys a lot of it. The Apex Brasil firm kicks some of its newfound Gillette revenue to the Indy Racing League and some to Chip Ganassi Racing.

If the deal is big enough, then IndyCar becomes the Gillette IndyCar Series. Danica Patrick joins Chip Ganassi Racing in a "Gillette" sponsored Indy car. Apex Brasil pays for both deals but fulfills its mission, landing a large new account in the United States for a Brazilian firm.

IndyCar takes to the parking lot at Gillette Stadium. Jerry Gappens' head promptly explodes. Bruton Smith looks even more like Don Rickles. The IRL invites Ganassi Racing's Mike Hull to design the new Indy car. The IMS breaks ground on the Terry Angstadt Luxury Suites & Day Spa.

The transaction did not increase ticket sales at IndyCar races. Television ratings did not improve. But the IRL is convinced that those things will happen just as soon as Gillette activates its IndyCar title sponsorship. Supply chain arbitrage saved the day!

Three years later, the IRL is still looking forward to Gillette's sponsorship activation. Gillette wanted and got Danica Patrick at fair market value. It did not care that in the process it had somehow acquired IndyCar Series naming rights, a race in a parking lot, and 15-million cubic feet of Brazilian gauze.

Plausible Scenario #2

Gillette declines the Deal of the Century and takes Danica to NASCAR, where fair market value includes the cost of operating a racing team. IRL management rationalizes that George Pyne, the former NASCAR executive, had intended to deliver Danica to his former employer all along. IndyCar returns to the business of planning a new generation of cars and engines it can't afford.

Roggespierre

IndyCar: Life on the Street

This would be funny if it were not so depressing. Rather than price the IndyCar product at its market value, IRL Commercial Division head Terry Angstadt has written a letter to officials in Baltimore, effectively pleading with the city and the State of Maryland to subsidize a 2011 street race in Charm City.

"I am taking this opportunity," wrote Angstadt, "to convey to you, collectively, how interested the Indy Racing League is in the possibility that our organization would sanction an IndyCar Series event in Baltimore starting in 2011."

Roggespierre has, shall we say, contacts in and near Baltimore. They detect zero popular demand for this event. The IRL could have Barry Levinson direct the telecast, Tom Fontana and David Simon write the script, and Paul Attanasio serve as executive producer, and it would not matter. As we wrote previously, an all-city lacrosse tournament would achieve more.

Much of Baltimore still hates anything that has to do with "Indianapolis" and "horse power". Most Marylanders simply do not care about IndyCar racing. Baltimore is not desperate enough to get excited about hosting a downtown street race. The citizenry believes that Baltimore already is somewhere. The Ravens play there. The Orioles play there. The Wire was shot there.

But then, this isn't really about drawing fans, is it? It's about convincing the city and state to pay for a product that the market has rejected. Why change the IndyCar TEAM program to attract fans when you can get bailed out by local governments, at least for awhile?

The Republic understands - the teams want events like this. Anything to avoid market discipline, right?

Street races do not make money without government handouts. You don't believe us? Take a moment to peruse Case SPM-31A from the Stanford Graduate School of Business. You don't believe the pointy-headed types? We invite you to read what the Texas Comptroller of Public Accounts has to say.

Notice that Long Beach claimed to generate only $20 million to $30 million per year from the Toyota Grand Prix, by all accounts the most successful temporary circuit in North America. Yet Baltimore expects to attract $100 million? How?

The principals of Baltimore Racing Development, LLC are Steven Wehner, an "entrepreneur" about whom little is known except that he owned a gas station on Martha's Vineyard at one time - we're not kidding - and Baltimore attorney Jay Davidson. But all parties implicitly admit that government money is paramount to the cause. These guys are so committed to Baltimore that they're already eyeing other east coast cities - just in case.

May we suggest Bridgeport, Connecticut? It's perfect - blighted, politically corrupt, and economically bankrupt despite being nestled in the middle of the Hedge Fund Hills of Fairfield County. It's as close to Manhattan as you'll ever put a race car. The late Paul Newman lived nearby and remains fantastically popular. Currently the host of no spectator events of note, Bridgeport is appropriately desperate. Like we said, it's perfect.

Or you could redesign the IndyCar product so that it might attract an audience at actual race tracks...

Nahhhhhhh.

Apologies to Theodoric of York

Roggespierre