Tuesday, July 27, 2010

Time to Kill the Brickyard 400?

Those who have followed the ebb and flow of my writing here know that I have frequently held up NASCAR as a successful U.S. motorsports business with which IndyCar should compete in the marketplace.

In my view, that assertion is becoming questionable. Yes, IndyCar would still love to have NASCAR's problems - in particular, its television audience. However, my purpose here is to offer an opinion on a different but related subject.

The Brickyard 400 should die.

I believe those IMS officials who say that 140,000 paying customers, roughly 54% of capacity at the IMS, are sufficient to make the event profitable. The television money alone might be sufficient to ensure profitability.

However, it bears noting that the audience is dwindling with each passing year.

Blame whatever you like – NASCAR’s general decline, relatively poor viewing angles, Goodyear, the COT. The fact is that the event is waning rapidly. The Brickyard 400 is contributing to the erosion of the Indianapolis Motor Speedway brand.

I suspect that NASCAR has over saturated the market for auto racing in the United States. If I am correct, then the House of France is dealing with a very large problem that it might not be able to solve. Its shared interests with the International Speedway Corporation and the threat of lawsuits from its other promoters likely render NASCAR unable to decrease its “inventory” of racing product, at least with regards to the Cup Series.

NASCAR’s problem need not be the Indianapolis Motor Speedway’s problem. After all, the IMS is certainly not immune to the problem of over saturation. Eliminating the Brickyard 400 would enable the IMS to reduce the “supply” of dates that are available for fans to witness racing at the track. This, according to simple economic theory, would likely increase attendance for those dates – in May – that remain. This would be good for the IMS and for IndyCar racing.

The good news is that the Indianapolis 500 is still very special. We know this because, in spite of everything, its rate of decline is minuscule compare with that of both the Brickyard 400 and the United States Grand Prix.

If NASCAR sponsors want to participate at Indianapolis, then let them become IndyCar sponsors.


Monday, July 26, 2010

IndyCar Notes

Hello, all. It's been awhile.

I have a few things to say.

1. Could it be that the NASCAR model is fundamentally broken? The decline in attendance is becoming embarrassing. The television ratings are still very good when compared with historical standards for motorsports in the United States. Nevertheless, they're falling, too.

2. I am disheartened by reports that John Lewis has resigned. He has a terrific reputation both inside and outside of racing. He shall be missed.

3. Some might find it somewhat surprising that I have been silent regarding the Dallara-and-Clothes announcement. My reasoning is that we need more information before we can make any judgments about the program. There is one exception, of course. Given the market value of operating an Izod IndyCar Series team, we can say with certainty that the new Dallara costs too much.


Wednesday, July 7, 2010

IndyCar: See the Future!

I go back and forth on the "innovation" question as it pertains to IndyCar racing. Yes, innovation was a great selling point for racing for nearly a century. However, as the author of this story in Slate writes, innovation in those days had everything to do with top-end speed.
That is not the case today.
Again, I point you in the direction of the column in Slate in which Edison2 is discussed.
Former racers Ron Mathis, Kevin Doran, and Brad Jaeger (Indy Lights) are managers for this very ambitious company located in Lynchburg, Virginia.
The Edison2 also provides a nice tie-in with IndyCar because it runs on E85 Ethanol. According to the company, the 750-pound Edison2 has demonstrated that it can get 101 mpg. That won't help APEX Brasil and UNICA sell ethanol, but it might just give IndyCar racing something interesting to promote.
Might we some day see the 5-gallon Indianapolis 500?

Tuesday, July 6, 2010

I present the following whopper of a quote from the Indianapolis Business Journal's Anthony Schoettle.

For many years, the series has operated under the false notion that the
teams are the most important component of the series. Don't get me
wrong. The teams are important, but they're not the singular element that
will make this series go.

Schoettle is correct, in my opinion. Teams supply a very important portion of the IndyCar product. They are not, however, the whole product. They aren't even close.

For example, no one in his or her right mind would claim that the Penske, Ganassi and Andretti teams are not far superior to those that participated full-time in the Indy Racing League prior to 2002.

Nevertheless, the facts indicate that interest in IndyCar racing has actually decreased since the Big 3 showed up. We know this because we have seen the crowds dwindle at multiple venues. We also have television ratings- the Indy 500, other network races, and cable events - that tell the same story.

Teams that show up with largely unknown financiers posing as drivers are not doing IndyCar any favors. Furthermore, the few IndyCar drivers who were actually hired by their teams aren't exactly easy for Randy Bernard & Company to sell.

The time has come to quit treating those teams with deference.


Tuesday, June 29, 2010

IndyCar Future: the macro view

The gentleman pictured above is Herbert Hoover, the 31st President of the United States. Fairly or not, his is the face of Great Depression.

You might be asking yourself what President Hoover has to do with IndyCar racing?

If a growing number of economists and hedge fund managers is correct, then we might just be headed toward the type of deflationary recession that prompted your grandparents to hide cash under the mattress and to wear the same overcoat for 50 years.

Keynesians and Austrians are beginning to agree that the risk of a global economic depression has never been greater. For those who are not familiar with economic schools, I shall say only that these two typically agree on exactly nothing.

If the economists are correct - and I note that they frequently are not - then what should IndyCar do in order to prepare? I have indicated my preference for low cost leadership positioning in the U.S. motorsports marketplace. Others have thoughtfully disagreed.

If the bottom really is falling out of the global economy, then what is IndyCar's best course of action?

I look forward to reading your thoughts.