Monday, May 16, 2011

With regard to tracks the ICS races on and sanctioning fees

(by Obi wan crapwagon.com 5-13-11)

Likewise, it is dangerous to believe anything that the spin doctors at 16th & Jonestown have to say about the sanction fees they are supposedly getting from the track owners. Last year Bernard made a big deal in the press about how he was going to hold fast on his demands for a $1.3 million sanction fee from each and every promoter and he commented that some of the existing races on the schedule might be let go because of it. From this it can be logically concluded that “some” of the promoters of existing races weren’t paying the full sanction fee (or perhaps any at all). Then, a few months later he had to eat his words to save the Edmonton race and to put Milwaukee on the schedule. At the press conference announcing the return to the schedule of the Edmonton race (after it was canceled), its promoter (Octane Motorsport Events Inc.) implied that they were getting the race for the cost of their promotion (meaning they were paying no sanction fee). Milwaukee is widely believed to be an IICS track lease; which is made all the more expensive by the fact that the track operators already owed the League for its 2009 race there. The last time the League raced at Las Vegas Motor Speedway in 2000, the Idiot Grandson leased the track from SMI and promoted the race. The Rodeo Clown has already admitted that the League is going to promote the latest LV race itself; a track rental or revenue-sharing scheme seems a likely possibility.

Reportedly, one of the Rodeo Clown’s first missions on behalf of Mother Mari was to notify ISC’s Lesa France Kennedy that the League was demanding a 30% increase in its sanction fees from the NASCAR oval cartel company. Kennedy’s response was to drop the League from all her tracks; which is why the League was forced back into bed with Smith and SMI.

I think it is probable that ISC was one of the few track owners paying the League sanction fees, albeit probably at a discounted rate. I say this based on the observed behavior of the company and its well-known practice of using IRL races to jack up the price of its Cup tickets via mandatory season ticket packages.

After being a surreptitious supporter of the IRL from its inception, ISC suddenly jumped into the League with both feet in 2001; when 6 of its tracks comprised 46% of the IRL race schedule. The next year ISC had nine tracks hosting League races; which comprised a whopping 60% of its race schedule. 2001 was notable for also being the year that Toyota announced that it was defecting from CART to the IRL and Penske took a powder at the end of that season, precipitating a mass exodus of manufacturers and major sponsors from CART to George’s misbegotten League. ISC’s sudden opportunistic move would seem to have been made with some foreknowledge of coming events in AOWR and it should come as no surprise to learn that Roger Penske was sitting on the BoD of ISC at the time and was the company’s largest single shareholder outside the members of the France family trust. At Indy in 2002 it's said that an inebriated Penske confessed that he had originally intended to defect from CART a year earlier (i.e. 2000) but was delayed (probably by his deal with Honda). On the face of it, it was Penske’s intention that caused ISC to move when it did.

With almost all of CART’s engine manufacturers defecting to the League for the start of the 2003 season, it was a good time for a traditional track-owning corporation like ISC to make money from manufacturers vying to buy naming rights to races (as part of their Mindy/IRL co-promotion contracts) and, of course, for the ever anticipated “breakout year” for the League. ISC kept nine of its tracks on the IRL schedule through the 2005 season. That was the year that the manufacturers (Japanese and American) had second thoughts about League success that always seemed just around the corner but never actually arrived. Chevy had already announced its departure in 2004 and Toyota bought its way out of its contracts a year early and defected from the IRL to NASCAR.

One reason that I believe that ISC was paying sanction fees to the League was the pattern of its withdrawal from the series. Almost none of its races were ever well-attended, so their profitability had to arise from other revenue sources. As mentioned, sale of naming rights to the races was one and subsidized ticket (block) sales by League manufacturers and sponsors (e.g. Marlboro) was another. Then there was the fact that the races were dirt cheap in comparison to NASCAR because under stock car sanction the track is responsible for putting up the race purse. The IRL guaranteed its own race purses at $1 million per race, so that was an expense the track owner didn’t have to bear. Given that the stated IRL sanction fee was between $1.2-1.3 million, one could see how a NASCAR cartel member track might view the races as being practically free. As also mentioned, ISC utilized the presence of IRL races on its season-ticket “track paks” to artificially inflate the price of its Cup tickets.

So, when many of these alternate sources of revenues started to go away along with some of the IRL’s manufacturers and major sponsors, ISC began by first withdrawing tracks that didn’t host Cup races (e.g. Nazareth, Pikes Peak, Phoenix), leaving tracks where they could use the IRL to inflate Cup ticket prices, and then those where the demand for Cup tickets was particularly weak (California, Michigan). The very last ISC tracks to go were mainly those with one Cup date and weak demand, where the IRL race was actually a meaningful component of their schedule of races, especially when paired with other NASCAR series (e.g., Homestead-Miami, Watkins Glen, Kansas, Chicagoland). Of these, Chicagoland was partly owned by IMSC, which explains its place on the schedule (meaning when IMSC ownership went away, so did the IRL race soon after).

In any event, my guess is that the last ISC tracks (excepting Chicagoland) to remain on the IRL calendar had deeply discounted sanction fees (if any at all) because of the notoriously weak attendance for League races at them. These are the ones for which Bernard et al demanded a 30% fee increase and which ISC withdrew instead.

A final reason to suspect that ISC was actually paying IRL sanction fees at some point in time is that when it moved to acquire League races circa 2001, it quickly muscled Bruton Smith and SMI out of the Indycar market. By 2005, SMI’s two Texas IRL races had been reduced to one; which was the only SMI oval track left on the IRL calendar (the newly added Infineon road course also being an SMI track). I think this is significant because it had already been established (by 2001) that SMI’s speedways (excepting Texas) were exclusively League track rentals. ISC was evidently offering more; if only pairings with NASCAR series like trucks or inaugural races in new markets.

If my observations and reasoning is correct, it seems unlikely that Bruton Smith and SMI are paying much at all for their IICS races. Smith didn’t counter ISC during its years of dominance of the league schedule by trying to match or better its offers. He seemed content to stay with his one profitable Indycar race (Texas). So, when the League’s races proved so unprofitable to ISC that it withdrew all its tracks from the schedule, why would Smith pay good money to take their place? In short, he wouldn’t.

To answer your question directly, these would be my guesses:

St. Petersburg – Greed Brothers/Honda sponsored race; Honda’s contribution may have been deducted from their “Tony Tax”; now there’s no telling who pays whom. Gomer mayor may still be hanging around.
Barber – New race, new suckers, getting public monies plus Honda sponsorship; if they’re paying a full sanction fee, they’re crazy given the actual and potential attendance and zero TV exposure.

Long Beach – CCWS acquisition, still owned by the Amigos as far as I know; the 2008 “unification” made provision for the League to pay the Amigos for this one!

Sao Paulo – new race, rich crazy Brazilian suckers, what can one say but there’s one born every minute; this one is probably paying the League full boat and then some.

Mindy – goes without saying: Jeff pays Randy, Randy owes Jeff, the money never leaves the H-G bank account.

Texas – the impossible dream; Gossage has complained that he’s getting soaked and paying more than any other League customer; he yanked Texas 2 in protest (that and ISC getting the favored spot after Indy), so he may be paying the “usual” sanction fee (whatever that is). Sponsored by Firestone this year, probably won’t be next.

Milwaukee Mile – track rental; probably for the amount they already owed plus something for track expenses. Interestingly, A.J. Foyt “sponsorship” gone; somebody wasn’t willing to kick in to the kitty (either A.J.’s or Mari’s).

Iowa Speedway – relatively new race, good attendance first couple of races (but max attendance 30,000) and the corn council is still on-board; unless they have a reduced bull-ring sanction fee, probably paid the man but attendance is way off and TV coverage nonexistent, so expect some renegotiation.

Toronto – CCWS acquisition; Greed Brothers/Honda sponsored race; Honda’s contribution may have been deducted from their “Tony Tax”; now there’s no telling who pays whom.

Edmonton – (see above) CCWS acquisition; the Frenchies are either getting it free or nearly so.

Mid-Ohio – Honda’s home-away-from-home race; whatever HoMoCo's I-scratch-your-back, you-scratch-mine arrangement with the Pagoda is applies here.

New Hampshire – former Bahre owners went sour on the League back in the beginning (and they may have been doing a favor for the Frances anyway) and they spurned repeated Pagoda requests to return. Smith and SMI now own the track, so it may be part of a package deal. The race doesn’t have title sponsorship, so if Smith is paying anything, it probably isn’t much.

Sonoma – another Smith/SMI track; whatever rules apply.

Baltimore – new race, new suckers, the mayor and public monies, crazy Baltimorons.

Indy Japan – Honda’s home race; will probably be cancelled now that it may tend to glow in the dark. I don’t know if the League offers refunds but there will be no travel money coming in.

Kentucky – newly acquired Smith/SMI property with a long history with the League (as the only game in Sparta, KY). If Smith has a package deal or volume discount, this track applies for it.

Las Vegas – Smith/SMI property with a history of being an IRL track rental. The Rodeo Clown is handling the promotion on behalf of the League, so it’s probably a track rental.


IMHO

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