Q: How much of the value proposition that Honda refers to is the need to supply half the IndyCar field vs the overall viewership of the series? I see IMSA as more viable, because an OEM can step in and support two-three cars, whereas the IndyCar ask would be to start with 10-12. Am I missing something, or is the need really to get to 4+ OEMs so the ask is to support six-eight entries?
Alternatively, what cost savings would come from a spec engine and OEM differentiation coming from ECUs?
Dan, Brownsburg, IN
MP: The IMSA dollars are high as well, but this all comes back to perceived return on investment. For what Acura/Honda spends in IMSA, there’s a strong feeling of great ROI being delivered. At the price point to be in IndyCar — whatever that number is — there’s a feeling that the return is far too small.
I tend to think of ROI in terms of inflation. According to Honda, IndyCar’s inflation is off the charts while IMSA’s is manageable.
So as you said, if Honda had fewer cars to support in IndyCar — say, a third or a quarter of the grid — the ROI would be perfect.
Going to a spec motor means there’s a significant one-time development cost, just like the energy recovery systems, but after the product has been locked down on technology and mass-produced, the annual costs are limited to rebuilds and support technicians. As it is, each engine supplier spends gobs of money every year to improve their respective engines, and if that annual cost almost entirely went away, they’d have the yearly leases to pay for and, in theory, have a ton of extra money — still well below what they spent today — to put into marketing and promoting IndyCar.
Due to today’s high costs to compete, those marketing and promotion budgets have been slashed to the smallest number I’ve seen since the Indy Racing League was a thing. IndyCar’s greatest problem is that not enough people know it exists. More fans and better TV ratings solves a lot, and it’s hard to make serious inroads on this age-old problem if there’s almost no money left over for the manufacturers to help present IndyCar to a wider audience.
There were many reasons for CART’s huge popularity at its zenith in the 1990s, and among the larger contributing factors was the massive marketing investments made each year by its three, four, or five auto manufacturers who supplied engines and spent crazily to promote their involvement in the series through TV and print advertising campaigns, purchasing large volumes of tickets to give away, etc. Many of the Fortune 100 companies who were in the series as team sponsors did the same exact thing, which was a huge help.
But we can’t ignore the enormous financial might that auto makers could bring to bear in bringing IndyCar’s product to the masses through their marketing and promotional budgets if: We had three or more manufacturers in the series and, most of all, those manufacturers have proper marketing/promotions budgets to deploy. But that won’t happen as long as the costs to supply engines are so stiflingly high when two brands are left to support the entire field.
Want to make IndyCar great again? Do things that free up the dollars so car companies can make a huge difference in pointing the national spotlight on the series through TV, streaming, print, and digital campaigns.
Q: Interesting to read that Honda might leave IndyCar but says it has the money to expand in F1 and possibly into NASCAR. This news follows the delay of the hybrid system (again). Obviously the lack of a third engine supplier makes the economics difficult for Honda. We all know Honda are racers — they are in IMSA with Acura, and in MotoGP. How likely is it that they are serious?
Craig, Leland, NC
MP: Is 1,000,000,000-percent a strong enough answer?
Couple of points here: Honda’s F1 involvement is funded/built/run by the main corporation in Japan; IndyCar is funded through American Honda’s budget. Now, with a new alignment that starts this month, California’s Honda Performance Development — the property that designs/builds Honda’s IndyCar motors, builds its IMSA GTP motors, and so on — has been renamed Honda Racing Corporation U.S., which directly affiliates it with Honda Japan’s parent racing division, HRC.
We expect some of the HRC F1 work to, for the first time that I know of, have HRC U.S. getting involved, and that’s where the comments about possibly using HPD/HRC U.S’s future IndyCar budget for F1, or NASCAR, or wherever, has relevance.
If Honda didn’t want to stay in IndyCar, it would have said nothing, waited until whatever point it felt was appropriate, and informed the series it was leaving. But that’s not what it did. It wants to stay, but not without changes to meet its ROI needs. That’s what partners who care about the health of a series do before it’s too late. Let’s hope IndyCar calms down and acts in the smartest way possible.
Q: Mailbag letters have become a predictable tsunami of complaints about Penske Entertainment’s handling of the series, lack of marketing innovation and delays in green-lighting a new chassis or attracting a third engine manufacturer.
I’m a long-time fan. I don’t much care about those complaints: the cars look good, the racing is close, and the engines are loud.
What does greatly annoy me is the hugely crappy TV deal the series is stuck with. I used to watch every race avidly. Now, in Canada, I can’t. Some races are shown on a major network, some on a specialty sports channel, but in recent years, I haven’t been able to see some races at all. They are carried on a provider few people get — or have even heard of!
I don’t own or run a multi-billion dollar racing and entertainment organization, but I know a dumb deal when I see it. Why did Penske sign/allow it?
A. Jenkins, Ontario, Canada
MP: Let me thank you for a non-Honda/hybrid/car question! To the best of my knowledge, it’s the strongest offer IndyCar received. I’d also keep in mind that as a U.S.-based series, IndyCar’s focus has been on signing the best U.S. broadcast deal, and yes, I know the series races in Canada, and since ABC/ESPN was dropped, the “international” TV package has been less awesome than it was under the former TV deal.
As the last TV/streaming negotiations were underway, IndyCar CEO Mark Miles told me more than once that the series was chasing hard to find a streamer to really grow IndyCar’s digital footprint. That obviously did not happen; it’s the one major expectation that fell short of what I was told they were seeking. Streaming is also the one I’m most curious to see where things end up when the new deal is done ahead of 2025.