The Economy & IndyCar

hotwheelsThe entry list for this weekend’s St. Petersburg race has just been released.  At least 21 cars will contest the seson opener for the IndyCar series this weekend, which is down from the 26 cars that we routinely saw last year after the merger.  In this world of new realities, especially in the automotive industry and in motorsport, any loss has to be viewed with grave concern.  But, lets look at the good and bad of the offseason as far as momentum for the series goes.

All through last season we heard about potential title sponsors for the series, ranging from Citi Group to Subway.  While the IRL insisted that they would have a title sponsor signed by the end of the year, the title sponsor announcement never materialized.  And reportedly, negotiations became much more difficult after the 10 year contract with Versus was announced.  The commercial division of the league continues to express that they expect to have a title sponsor in place for 2010, but that may depend heavily on the direction the economy takes in the next few months.

The new TV deal with Versus has been portrayed as both fantastic for the league and as a desperate death knell reminiscent of CCWS on SPIKE TV.  Lets get the facts straight though, ESPN was not a good partner to the series.  They did not promote the series, they stuck it with obscure timeslots, they revealed tape delayed race results in their crawl and they pre-empted the races with women’s golf.  Versus is going to give us 3 hour race windows, qualifying shows, Indy Lights, race re-airs and other dedicated programing along with ad buys across the TV dial.  While ESPN airs in approximately 20 million more households than Versus, it would appear that Versus is going to be far more aggressive at promoting their 10 year relationship with IndyCar.  Now we all await this weekend to see the on-air product.

While the league has not been able to secure a title sponsor, it does have some new marketing going for it.  A licensing agreement has been reached with Hot Wheels who will be selling 1/24th cars, 1/64th cars, some electronic cars and track sets at Toys R Us, Walmart & Target nationwide.  Further, IZOD will be heavily marketing their line of IndyCar apparel and driver Ryan Hunter-Reay through billboards, magazines, tv commercials and movie theater adds.  Also, smaller marketing deals have been reached with Orbitz (travel website), DB Schenker (transportation logistics ) and the National Guard.

Also note that the new engine/chassis specs were supposed to be out by now for 2011. However, given the current economy, the league has decided that it would be best to put a new package off until 2012. Open Paddock want’s to see new engines, multiple engine suppliers and new tubs as much as the next website, but it would be economic suicide to try and push the potential new manufacturers in that direction at this time.

One would be remiss not to mention the deal with APEX Brazilian Ethanol that more than replaced the US EPIC Ethanol consortium who decided to not continue their arrangement with the series.

As for the cars that we have lost from last season, the most surprising loss is Rahal Letterman.  The loss of EPIC as their primary sponsor was a difficult blow for the team to take and they were unable to secure new sponsorship for a 2009 effort.  But one has to wonder what is going on at that team since they have not been able to develop a long term relationship with any sponsor.  Recall how Scott Sharp took his major Patron sponsorship and left the team for ALMS.  (also recall the legal battle that ensued)

As for the CCWS teams, they have had a major hurdle to overcome in the last year.  Even though they were given a free chassis ($600,000) and a free engine lease ($1,300,000) last season, it should be noted that they still had to come up with a very significant increase in their budgets over and above what they were doing in CCWS. Now for 2010, they no longer get the free engine lease, so they had to come up with an even larger budget to compete. At present, Conquest, Coyne and KV racing are slated to run single car efforts, but all have indicated that they will try to run a 2nd car. It should be noted that getting any increase in sponsorship in this economic environment should be seen as a major accomplishment, so we here at Open Paddock are very happy that these teams are fielding at least a single car each.

While the economy has hit racing hard, it is clear that the IndyCar series is not just surviving, it is thriving. Even with the setback in the economy, all momentum has not been lost, some plans have just been put on hold.

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