(by Obi Wan crapwagon.com 6-29-11)
Setting aside for the moment the not inconsiderable question of whether or not the Hulman-Georges would ever have been willing to deal with the CCWS in good faith and entertain the possibility of a real merger of the two warring series, there is an aspect of the situation during CCWS’s last days that I think needs to be addressed.
In the past, Leo has very eloquently presented the idea that the only way that CART could have survived the “Split” – and actually thrived – was for the team owners to have immediately repudiated IMS and the Indy 500 and its lame new series and strike out on their own to forge a new identity for the sport and market Champ Car to the world (including the domestic market). The Indy 500 was an important part of the sport but in the final analysis only a part. Champ Car wrote most of its history outside of the confines of Marion County, with its small-minded denizens, and in 1996 the sport was at its height and in full possession of an eminently marketable motorsport property with its own uniquely American identity and 87 years of glorious history and tradition.
It is my contention that two basic assumptions underlie the Hulman-Georges’ war and hostile takeover of the sport. One, is the belief of the Hulman women – “Big Mary” and Mari – that they owned the sport through right of inheritance from its supposed former possessor, Anton “Tony” Hulman. Second, was the belief that all the wealth in the sport derived from IMS and the Indy 500. It was this latter belief which justified (in their minds) a seventeen-year campaign (1991-2008) to extort and rob CART’s team owners.
A look at their family history quickly reveals that none of Tony Hulman’s immediate adult heirs had any experience at making his/her own money; by and large they married it and/or inherited it. Their idea of family enterprise was to mostly oversee their inherited properties, clip coupons, and tax anyone and everything that entered the gates of IMS for their annual race. However, the Terre Haute family has also demonstrated countless times that it is nothing if not greedy; which tendency they believe they offset in part with their philanthropy (like alms to the poor).
Thus, while other motor sports dynasties, like the Frances of Daytona Beach, were reinvesting their profits in expanding their motor sports through physical expansion (like buying and/or building fourteen speedways) and strategic name-brand sponsor and media alliances, the Hulman-Georges were content to sit at IMS like Bedouins at a strategic caravan crossroads and tax (or extort) the sport’s other stakeholders as they came within their sphere of influence. The problem with this is that there is a natural tendency on the part of the taxed (or extorted) to find a way around the predators. Hence, the sport was inexorably moving away from IMS and the 500 as much as possible; which contrary to Hulman-George paranoia wasn’t actually very far (as subsequent events proved).
Faced with a potential decline in the revenues from their inherited property because of their own short-sighted, rapacious behavior – potential because IMS’s revenues in the era of CART inevitably trended upward – the Hulman-Georges decided to take back “their” sport (and not incidentally all its accumulated wealth). They justified this naked extortion by casting themselves in the role of “victims” who were only trying to reclaim what was supposedly already theirs.
My point here is that the belief that the sport owes all its popularity and wealth to IMS and the Indy 500 is demonstrably wrong. The Hulman-Georges have wasted the vast majority of their inherited wealth proving that point. Ironically, the Terre Haute family is about the only ones who didn’t get it. That’s probably because they would then be revealed (to themselves) as the bumbling extortionists that they really are.
The fact that our sport didn’t owe the bulk of its success to IMS and its once-iconic race would have been nakedly apparent if CART’s team owners had turned their back on it in 1996 and never looked back (as Leo suggested). Then, I think, the future of our sport would have been very different. The IRL, on the other hand, would have carried on exactly as it did; the only difference being that it might have failed at an earlier date.
The one crucial factor that encouraged the Hulman-Georges in their erroneous beliefs was the inability of the key team owners in CART (i.e. Penske, Ganassi, Patrick, Greens, Andretti, etc.) to ignore IMS and its race. For all the years of the war they hovered around Indianapolis in mind and spirit and made close to a dozen attempts to broker a deal with the Hulman-Georges to return to the Brickyard. Consequently, it was virtually impossible to convince the dim-witted Hoosier family of the errors in their thinking when the sport’s leading stakeholders (i.e. team owners, major sponsors, manufacturers, even NASCAR) was telling them by their actions that they were right.
Is it any wonder that the Indiana family is perplexed when three-quarters of the sport’s major players joined their banner circa 2002-2003 and then spent less than three years in the League before deciding that the Hulman-Georges’ “vision” and “leadership” for the sport was unworkable; and then left it entirely! From the family’s perspective it must seem like their belief system was correct until the moment it wasn’t; leaving them without an alternative to take its place.
Back on topic, beginning with CART’s bankruptcy proceedings in Judge Otte’s courtroom circa 2004 Tony George convinced himself that the Amigos were corporate raiders whose only intention was to rob him by acquiring CART’s assets for a song and then turning around and jacking up their price for eventual sale to him. Being an idiot and a fool to boot, George decided that every dollar the Amigos spent on the CCWS was being added to his eventual bill. Thus, he stubbornly decided that he would pay the would-be robbers not one cent more than he offered in bankruptcy court (allied to a firm belief that his original offer was superior to that of the Amigos but that he was cheated by not having the “right currency”); and he was prepared to spent millions from his family fortune in order to save dollars on the cost of CART’s assets. Consequently, the more the Amigos spent to prop up the CCWS the more impossible an agreement with George became because of his stance.
This was similar to the position he took in 1991 when someone (probably Penske) convinced him that he was offering top dollar for CART when in actuality his offer was insultingly inadequate. Subsequently, when he was approached by various team owner groups wishing to sell him the sport but at a better price, he refused to deal with them because he was paranoid about being taken advantage of.
The point here is that if the Amigos had turned away from the possibility of a merger and/or sale to George and tried to take the sport in a new direction (meaning away from IMS and the 500 for the first time since 1996), there is the remote possibility that their five-year plan might have worked and/or circumstances would have forced both sides into a real merger. George and his family would have been faced with the reality that IMS and the 500 meant nothing to the Amigos and their motor sport and they would then have had to either accept or reject the fact that their thinking and belief systems were wrong with respect to them.
It is my sincere belief that Gerry Forsythe was embarked on a plan to redefine Champ Car as a motor sport completely unrelated to IMS, the 500, and the IRL. I may be wrong but I think Dan Pettit eventually joined him in that enterprise in contradiction to the position of his old partner, Kalkhoven. Practically from Day One of the CCWS, however, Kalkhoven tried to broker some sort of deal with George and therefore reinforced his belief that Kevin was trying to rob him. As a blatant opportunist and early front-man for Kalkhoven (IMO), Paul Gentilozzi further cemented the Terre Haute family’s belief that they were dealing with would-be thieves. Very early on in IRL-friendly motor sport forums accusations were made that both Gentilozzi and Kalkhoven were crooks. This was the standard Gomer assessment of them practically to the moment of the 2008 “unification.” To the best of my knowledge, no such calumny was ever directed at Forsythe or Pettit (despite the fact that he was Kalkhoven’s partner). I believe this is because the views of the IRL “insiders” resident on the boards (for example the paid shill “indycool”) reflected the beliefs of their employers (meaning George et al).
It sounds like a Zen parable but I think the only way an equitable merger of the warring series might have been effected – not that this is something I desired – was to NOT seek to merge the two series. Then, the negative economic forces afflicting both series might have forced it into being. Kalkhoven prevented that possibility (IMO) by constantly seeking to cut a lucrative deal with George; which brings to mind the punch line to a George Bernard Shaw joke: “We've already established what you are, ma'am. Now we're just haggling over the price.”
I put the “blame” for the sell-out of the sport to the Hulman-Georges squarely on Kalkhoven’s stooped shoulders. His evident greed was the enabler to George’s continued delusions (IMO); which discouraged rational thinking and hampered reasonable discussion. I believe the financial structure of the CCWS was such that only one of the three Amigos (Gentilozzi being largely irrelevant in my view) could force the others to capitulate to his views or be forced to buy out the dissenting partner. This, IMO, put an opportunistic Kalkhoven in the cat bird seat: the other Amigos either went along with the deal he almost single-handedly brokered with the Idiot Grandson or they would be forced to buy him out – an investment which then included Cosworth and Pi Research and race contracts as well as the remaining assets of CART. As a result, the dissenting Amigos could be forced to pay Kalkhoven top dollar for newly acquired assets which might prove worthless if the CCWS went bankrupt. Then, if memory serves, Kalkhoven forced the issue by first disappearing and afterward refusing to pay his share of the CCWS expenses; making it abundantly clear that he was done investing in Champ Car no matter what his partners did or didn't do. Thus, Forsythe for one, was being asked to essentially double his investment in a highly risky venture while his opportunistic partner waltzed away with a tidy sum no matter which way the negotiations went; or pay Kalkhoven's share of the expenses without any guarantee of re-imbursement. In fact, I think a case could be made for the proposition that Gerry Forsythe was Kalkhoven’s intended mark all along (rather than the Hulman-Georges). I think it is highly doubtful that a new hobbyist team owner like Kalkhoven could have gotten inside the multi-million dollar FoMoCo Cosworth and Pi deals without Forsythe giving him entry. The same is likely true of the LBGPA contract. Once he was a partner in those deals, Kalkhoven had more to gain from forcing Forsythe to buy him out than he could likely have gotten in any bankruptcy proceedings (because he was going from owner to a position as secured lender) or from selling them to a parsimonious George.
So, if one is looking for the architect of the 2008 “unification,” as well as a likely co-conspirator, I think one need look no further than the owner’s chair in the KV Racing Technology-SH Racing and KV Racing Technology-Lotus pits in the IICS paddock.
My vote for hero of CART and the CCWS is Gerry Forsythe. NOBODY invested more in the sport, often in its darkest hour and at greatest financial risk, than him. Nobody fought longer or harder to preserve the sport we loved. I, for one, won’t allow a Brutus to tarnish his name or reputation. I’ll never put an “F” before GF’s initials.
Showing posts with label obi wan writings. Show all posts
Showing posts with label obi wan writings. Show all posts
Monday, July 4, 2011
Friday, June 24, 2011
Another nail, 2012 car still a dream
(by Obi Wan crapwagon.com 6-23-11)
We're seeing all the makings of a typical Pagoda bait-and-switch con job. They've got everyone focused on the timeline for the prototype chassis -- of which they theoretically need only one hand-made example – rather than where the production “safety cells” are sourced. That, for sure, is not as advertised.
The production safety cells were supposed to be manufactured entirely in Dallara’s Indianapolis factory; which was ostensibly the reason that the State of Indiana was subsidizing their sale (using Federal disaster relief money). Now, the Pagoda is setting the stage for the first production run of Dallara cars – most likely the greatest number of them that will be sold at any one time and the only ones the state is subsidizing – to be manufactured entirely in Italy; where needless to say they don’t pay state (Indiana) or federal (USA) taxes.
Moreover, as a show of “good faith,” Dallara Automobili and its rarely mentioned local suck—er, co-partner Scott “Clueless in Indy” Jasek and the Indy Racing Experience were supposed to put up $7 million toward the cost of the new plant. So far, the Speedway Redevelopment group has used public funds to demolish the derelict building that was on site and prepare it for construction of the new Dallara factory; but there is no report that the Italian firm (as a separate entity from the IRE) has so far contributed a single dime toward the creation of its new American facility.
Anyway, I don’t think it should be overlooked that the Hulman-George’s rubber-stamp MORONIC committee essentially filched the best parts of both the Lola and DeltaWing proposals and gifted them to their Italian pals. Approval of the Dallara proposal (by the H-G’s) was always a foregone conclusion but the pirated portions of the other chassis-makers’ proposals help sell the clueless Indiana politicians on the idea of subsidizing the Italians. When the DeltaWing started to gain traction with the public, the H-G’s persuaded the politicos to use the money the DW group was counting on to build their prototype, to boost Dallara sales instead.
We also shouldn’t lose sight of the fact that other crucial parts of the plan to roll-out the 2012 cars are well behind schedule as well. For instance, the Rodeo Clown says that the decision on the aero kits is due any week now. However, we are well past the point where the aero kit manufacturers were supposed to declare their “intentions” (and cut the H-G’s their checks for 250 G’s each). So, it’s beginning to look like that decision has already been made (or has been made for them).
Moreover, the Dallara shenanigans mentioned above seem to point to a certain reluctance on the part of the Italians to invest their hard-earned lira in the H-G’s 2012 car. If the 2012 car were to be cancelled today, it seems likely the Italians could walk away without losing a cent. The obvious delays in rolling out the new prototype – for example, has anyone actually seen one in the flesh? – may speak to difficulties in finding someone to finance its design and construction. The H-G’s may have expected Dallara to front those expenses as the cost of doing business with the League, but aside from perhaps absorbing the cost of the lone prototype the Italians don’t seem to be investing much (if anything) in IndyCar’s future. Of course, the H-G's notorious penny-pinching may have left them no choice; their profit margin may be so skeletal that they literally can't afford to underwrite the new car without huge risk.
There’s no question that the H-G’s believed that they could specify the 2012 car of their dreams and simply order the team owners to buy it. Besides the obvious problem that the vast majority of teams don’t have the money to do so, the few that do – like Penske – have signaled that they aren’t going to allow the Terre Haute family to spend their (teams) money. If Penske and his fellow team owners have essentially vetoed 2012 aero kits, what else might they veto? It’s not inconceivable that they could balk at buying the new car entirely, in which case the H-G’s would be royally screwed. In this regard, the team owners can afford to play a waiting game and the H-G's cannot. Every day it becomes clearer and clearer to potential sponsors and broadcast partners that IndyCar can't survive one more season of the status quo. The H-G's desperately need the new car and the few remaining fans of the series expect it. If the H-G's demand that the team owners declare their intentions (with, say, purchase orders for the new Dallara) and they don't, what then? The H-G's can't afford to wait and find out; they'll most likely have to fund the new car themselves on faith (of which there is presently very little) or consider an exit strategy. That would seem to be their only choices.
Let’s imagine for a moment that the ex-CART team owners – which are about all that’s left in the IndyCar paddock nowadays – are as sneaky and evil as the H-G’s and their Gomer followers obviously believe them to be. Someone stricken with paranoia might begin to suspect that they’ve been biding their time in Gasoline Alley smiling their smiles while they bleed the H-G’s of every cent they can wheedle out of them; while casually tossing one obstacle after another in their path. Meanwhile, almost all the sources of revenue available to the IMS, ICS, and H-G’s are drying up along with series attendance, television ratings, and sponsorship. This has reached such dire proportions that there is serious talk about IMS needing to be sold. Well, who would likely buy the troubled Speedway from the weakened H-G's?
The NASCAR oval cartel (ISC, SMI, DVD) is currently overextended and suffering attendance and ratings problems of their own. John Menard could show the H-G's a thing or two about pinching pennies until they scream; so don't expect him at anything but an IMS fire sale. Well, don’t look now but at least one likely candidate to buy IMS is sitting in Gasoline Alley and just so happens to be the one currently causing the most grief. However, if one were to move against him, well then, one could kiss Chevrolet good-bye and with them the glorious new “re-birth” of IndyCar! However, if one doesn’t move again him, one may end up handing him the keys to a bargain-basement-priced IMS along with a reborn IndyCar. Then, unfortunately, there's always the possibility of moving against the wrong sneaky ex-CART team owner and while the outraged Pimp is destroying one's IndyCar renaissance, the Chipster steals the keys to the Brickyard.
What’s a body to do?
JMO
We're seeing all the makings of a typical Pagoda bait-and-switch con job. They've got everyone focused on the timeline for the prototype chassis -- of which they theoretically need only one hand-made example – rather than where the production “safety cells” are sourced. That, for sure, is not as advertised.
The production safety cells were supposed to be manufactured entirely in Dallara’s Indianapolis factory; which was ostensibly the reason that the State of Indiana was subsidizing their sale (using Federal disaster relief money). Now, the Pagoda is setting the stage for the first production run of Dallara cars – most likely the greatest number of them that will be sold at any one time and the only ones the state is subsidizing – to be manufactured entirely in Italy; where needless to say they don’t pay state (Indiana) or federal (USA) taxes.
Moreover, as a show of “good faith,” Dallara Automobili and its rarely mentioned local suck—er, co-partner Scott “Clueless in Indy” Jasek and the Indy Racing Experience were supposed to put up $7 million toward the cost of the new plant. So far, the Speedway Redevelopment group has used public funds to demolish the derelict building that was on site and prepare it for construction of the new Dallara factory; but there is no report that the Italian firm (as a separate entity from the IRE) has so far contributed a single dime toward the creation of its new American facility.
Anyway, I don’t think it should be overlooked that the Hulman-George’s rubber-stamp MORONIC committee essentially filched the best parts of both the Lola and DeltaWing proposals and gifted them to their Italian pals. Approval of the Dallara proposal (by the H-G’s) was always a foregone conclusion but the pirated portions of the other chassis-makers’ proposals help sell the clueless Indiana politicians on the idea of subsidizing the Italians. When the DeltaWing started to gain traction with the public, the H-G’s persuaded the politicos to use the money the DW group was counting on to build their prototype, to boost Dallara sales instead.
We also shouldn’t lose sight of the fact that other crucial parts of the plan to roll-out the 2012 cars are well behind schedule as well. For instance, the Rodeo Clown says that the decision on the aero kits is due any week now. However, we are well past the point where the aero kit manufacturers were supposed to declare their “intentions” (and cut the H-G’s their checks for 250 G’s each). So, it’s beginning to look like that decision has already been made (or has been made for them).
Moreover, the Dallara shenanigans mentioned above seem to point to a certain reluctance on the part of the Italians to invest their hard-earned lira in the H-G’s 2012 car. If the 2012 car were to be cancelled today, it seems likely the Italians could walk away without losing a cent. The obvious delays in rolling out the new prototype – for example, has anyone actually seen one in the flesh? – may speak to difficulties in finding someone to finance its design and construction. The H-G’s may have expected Dallara to front those expenses as the cost of doing business with the League, but aside from perhaps absorbing the cost of the lone prototype the Italians don’t seem to be investing much (if anything) in IndyCar’s future. Of course, the H-G's notorious penny-pinching may have left them no choice; their profit margin may be so skeletal that they literally can't afford to underwrite the new car without huge risk.
There’s no question that the H-G’s believed that they could specify the 2012 car of their dreams and simply order the team owners to buy it. Besides the obvious problem that the vast majority of teams don’t have the money to do so, the few that do – like Penske – have signaled that they aren’t going to allow the Terre Haute family to spend their (teams) money. If Penske and his fellow team owners have essentially vetoed 2012 aero kits, what else might they veto? It’s not inconceivable that they could balk at buying the new car entirely, in which case the H-G’s would be royally screwed. In this regard, the team owners can afford to play a waiting game and the H-G's cannot. Every day it becomes clearer and clearer to potential sponsors and broadcast partners that IndyCar can't survive one more season of the status quo. The H-G's desperately need the new car and the few remaining fans of the series expect it. If the H-G's demand that the team owners declare their intentions (with, say, purchase orders for the new Dallara) and they don't, what then? The H-G's can't afford to wait and find out; they'll most likely have to fund the new car themselves on faith (of which there is presently very little) or consider an exit strategy. That would seem to be their only choices.
Let’s imagine for a moment that the ex-CART team owners – which are about all that’s left in the IndyCar paddock nowadays – are as sneaky and evil as the H-G’s and their Gomer followers obviously believe them to be. Someone stricken with paranoia might begin to suspect that they’ve been biding their time in Gasoline Alley smiling their smiles while they bleed the H-G’s of every cent they can wheedle out of them; while casually tossing one obstacle after another in their path. Meanwhile, almost all the sources of revenue available to the IMS, ICS, and H-G’s are drying up along with series attendance, television ratings, and sponsorship. This has reached such dire proportions that there is serious talk about IMS needing to be sold. Well, who would likely buy the troubled Speedway from the weakened H-G's?
The NASCAR oval cartel (ISC, SMI, DVD) is currently overextended and suffering attendance and ratings problems of their own. John Menard could show the H-G's a thing or two about pinching pennies until they scream; so don't expect him at anything but an IMS fire sale. Well, don’t look now but at least one likely candidate to buy IMS is sitting in Gasoline Alley and just so happens to be the one currently causing the most grief. However, if one were to move against him, well then, one could kiss Chevrolet good-bye and with them the glorious new “re-birth” of IndyCar! However, if one doesn’t move again him, one may end up handing him the keys to a bargain-basement-priced IMS along with a reborn IndyCar. Then, unfortunately, there's always the possibility of moving against the wrong sneaky ex-CART team owner and while the outraged Pimp is destroying one's IndyCar renaissance, the Chipster steals the keys to the Brickyard.
What’s a body to do?
JMO
Thursday, June 9, 2011
CART, Democracy and Roger Penske
(by Obi-Wan crapwagon.com 6-7-11)
CART was structured very much like a professional sports league with individual team owners looking out for their own best interests (i.e. team) and trying to gain an advantage (unfair or otherwise) over the other owners. However, with its democratic governing structure it was rightly (IMO) assumed that the more extreme individual interests would be largely canceled out by collective group interest when it came to voting.
We all know that there is usually a difference, sometimes great, between the way a democracy is supposed to operate and the way it actually does in the real world. However, the important thing is that the ideal be kept ever in mind and that there is a constant striving on the part of a majority of the citizens to bring the ideal into being. When that situation is operative, abuses of the system are hopefully short-term as its members correct them in pursuit of the perfect model.
Yes, like a lot of rich men Penske used his wealth to finagle (some might say abuse) CART’s democratic governing structure. However, I believe that a correction for his more flagrant practices was well under way within CART by a majority of the team owners and it was this “revolt” which Tony George seized upon in his early efforts (and justifications) for taking over the sanctioning body. When the reformers within CART got a good look at what George was trying to sell them – basically a “benevolent” dictatorship – they wisely chose to reject Tony’s offer and decided to handle Penske on their own.
It is my suspicion that Penske set up the Idiot Grandson to fail (in his takeover bid) with the predictable result that George vowed to do everything in his power to ruin them and the sport, and then RP used Tony’s very real threats to convince the other team owners to abandon CART’s democratic governing structure and adopt a mutated form of George’s autocratic commission (only with Penske in charge instead of Tony). In his July 8, 1994 press release announcing the formation of the Indy Racing League, George refers to this as “the recent trial period (July 1992 - Jan. 1994) with George as a non-voting CART board member [that] failed to move IMS and CART closer together.”
What Tony doesn’t mention is that the CART board of which he was a non-voting member was a special seven-person board that he and Penske (IMO) forced upon the organization to replace its previous 17-member democratic board. When George quit the new CART board in a fury because it selected Andrew Craig to replace Bill Stokkan as CEO instead of Tony’s hand-picked choice, Cary Agajanian, the team owners quickly reverted to the original democratic structure (but with a maximum of 24 members).
Between July 1992 and January 1994 I would contend that Penske was more in charge of CART than at any other period except during the organization’s formative period. Once the other team owners took back CART governance in July 1994, immediately after George formally announced formation of the IRL, I think Penske’s days as ruler of the sanctioning body were over. As the other owners looked to correct The Captain’s perceived abuses of power, he seemed to begin to distance himself from the organization he co-founded. In 1996, he sold 12% of his motorsports holding company to NASCAR’s France family and in 1997 he helped engineer the taking of CART public; which allowed him to cash out his CART interests at the expense of unsuspecting new shareholders. In 1999, he sold out all his CART stock (as soon as he was legally able) and completed the sale of PMI to the Frances. From that moment on, Penske had no more ownership or designs on the governance of AOWR.
My sense is that Penske prolonged his rule over CART as long as he was able but that an impatient George forced his hand. Stokkan’s decision not to seek renewal of his contract as CART president (in part because of harassment from George), created a situation from which there was no escape: the choice of his successor as nominal head of the sanctioning body caused George to make his move to take over the company and when that failed and he left, the spotlight turned on Penske.
I believe Penske may have dodged a bullet earlier, at the time that Tony made his bid to buy the sanctioning body. For unknown reasons George had decided on Goodyear’s director of racing, Leo Mehl, to be his nomination for the position of commissioner over the sport; whose sanctioning body was to be renamed “Indy Car, Inc.” When the team owners firmly rejected Mehl, George was incensed and called their refusal a “deal breaker” with respect to his entire proposal. Why Tony chose to make Mehl his line in the sand is a mystery, because he (Mehl) was reportedly turned away because the owners thought he was “Penske’s man.” At the time Roger owned the Goodyear racing tire distributorships for the Midwest, East and Eastern Canada, so it was not an unlikely assumption. I think it illustrates, however, how much resistance there was to Penske’s influence over the sport; to the point of paranoia. It is perhaps too facile to suspect that since Penske helped prep George for his presentation to the CART BoD, he may have been the one to suggest Mehl to George. On the other hand, it has been written that A.J. Foyt played a pivotal role in the advancement of Mehl’s career, so possibly George’s godfather was the purveyor of the idea of the Goodyear man for the position of commissioner. If there was indeed a connection between Penske and Mehl, it makes for interesting speculation about Roger’s influence over the IRL after George chose him to head his new motor sport from 1996-2000; an influence of which Tony may possibly have been unaware.
Be that as it may, I think that it is likely that the surprising amount of support that George found among the small-team owners in CART alerted Penske to his vulnerability. As you noted, CART’s governing structure theoretically gave each franchise holder equal power within the series; however, a prominent team owner like Penske had much more invested in the series and, hence, much more to lose. If George had succeeded in getting enough of the disgruntled team owners on the CART board to agree to sell him the company (i.e. sport) in November 1991, then Roger would have been out millions of dollars. At the time CART was financed by a $7 million personal loan (according to Bob Jennings) from Penske, which would have been repaid, but Roger was undoubtedly using his influence over CART to capitalize his other motorsports properties; which would have been put in jeopardy.
For example, Penske was just about the only team owner with enough foresight and financial wherewithal to see that the only way the sport could secure the speedway racing component of the sport was to own speedways and act on it. By doing so, Penske not only guaranteed access to speedways for CART but contained George and his family in Indianapolis. This was especially effective as Tony had made it clear that he was only interested in creating an oval-centric motor sport. Of course, these were not Penske’s only reasons for owning speedways. For instance, speedway ownership combined with leadership of CART gave Roger a seat at NASCAR’s table roughly equivalent to that of the Frances and arguably more influential than that of other speedway owners like O. Bruton Smith. That’s because Smith could only turn to the Frances for access to the profitable races he needed to make his speedways prosperous but Penske had access to his own motor sport for that purpose; access which he could use to barter with the Frances for Cup races. So, coming relatively late to the NASCAR table, Penske still commanded a choice seat.
Another use for his control of CART was to be found (IMO) in Penske’s pioneering use (in motor sport) of the sort of public-private financing for the construction of multimillion dollar speedways that other professional sports leagues used to build their stadiums and enrich the franchise holders. Here, I think Penske forged a path that was later used to great success by the titans of NASCAR.
Thus, it is probable that while the democratic board structure of CART was intended to treat all team owners as equals, the reality of the situation was that (to paraphrase Orwell’s Animal Farm): “all team owners are equal; only some are more equal than others.”
The fact that Tony George got relatively close to buying CART out from under Penske – a fact of which George seems unaware – must have come as a shock to Roger; as well as being a wake-up call. I think it could be argued that Penske needed to assume direct control over CART during George’s “trial period” in order to prepare to divest himself of his suddenly vulnerable properties at better than fire-sale prices.
This speculation gets an added measure of intrigue if one factors in the contention that Bill France Jr. manipulated the Idiot Grandson into acting to destabilize CART and essentially attack Penske’s corporate holdings and drive him into France’s arms. If that seems like a far-fetched conspiracy theory, it is lent some credibility by Tony George’s report during a radio interview last week (in company with Robin Miller) that he was heavily influenced by France and urged by key USAC leaders to act as he did in his challenge to CART and formation of the IRL.
If there is truth to the assertion, then it certainly worked. When France reportedly influenced George to move against the team owners of CART – and Tony started reporting this to the press not long after he assumed the presidency of IMS in January 1990 – Penske had a prominent place in NASCAR politics and deal-making. Six years later, Roger was more or less forced by a dysfunctional George to hedge his bets and ally himself with the Frances. By 1999, Bill France Jr. owned almost all of Penske’s motorsports holdings, thanks to the loose cannon that is Tony George. In return for his endangered properties, Penske received ISC stock which made him the second largest shareholder in the company outside the France family group. However, ISC and NASCAR are structured such that the Frances retain control of the companies almost no matter how much their share holdings are diluted; so while on paper Penske was the second most influential person in NASCAR, the reality is that he would always be subservient to the Daytona Beach family. Thus, France’s manipulation of Tony George, if real, won him control over Penske and undisputed hegemony over NASCAR. Bruton Smith evidently only woke up to that reality when he heard rumors that a merger between ISC and PMI was in the offing (circa 1998/1999). Way too late, he tried to reach Penske in order to negotiate a deal but Roger reportedly wouldn’t take his call; by then, the merger was a fait accompli.
Back on topic, in the 1994 press release announcing formation of the IRL, Tony George commented (in the third person tense of which he is fond): ” "The Indy Racing League offers a new series management structure and philosophy which we at the Indianapolis Motor Speedway believe in very strongly," George said. "We are pleased to include the 1996 Indianapolis 500 exclusively in this new series."
The rhetoric masked what was an ultimately successful hostile takeover of the sport. The “new philosophy” of which Tony spoke was the divine right of kings, coming from a Terre Haute family that considers itself to be AOWR royalty. For all of George’s talk about answering the pleas of the sport's other stakeholders, there has only ever been one stakeholder in his view: the Hulman family. Tony is fond of masking his autocratic ways with hosts of advisory committees, commissioners, political appointees, investigative bodies, etc. and the original title of his sport, league, is a farce meaning: ”an association or union of persons, nations, etc, formed to promote the interests of its members” or in the sports context, ”an association of sporting clubs that organizes matches between member teams of a similar standard.”
Yet, inclusive as it was meant to sound, the Indy Racing League only ever had one controlling member: the Hulman-George family. Everyone else is either an employee and/or a vassal of the royal family. Tony only discovered the harsh reality behind the façade -- which other supposed members of the league had known for quite some time – when his mother, sisters, and the family attorney deposed him and sent him into brief exile in June 2009.
In any event, the sport is now in the hands of a family of former wholesale grocers. That may sound like a knock, but it is a necessary descriptor. That’s because the Hulman-George family approaches the sport as if it were one of the commodities that once graced their long-gone warehouse shelves. From the beginning their aim has been complete ownership of the sport, after which their strategy is to make their proprietary product cheaper than competing products. Their grocery sense tells them that this is the way to dominant the market place; the difference between baking powder and auto racing being negligible in their view.
This is the primary reason that INDYCAR fans have had to endure the same boring motorsport product (i.e. the “spec” series) for the past eight seasons. The key to the H-G strategy for motor sport domination is to make participation in their motor sport as inexpensive as possible – so that any dissenting team owner can be summarily banned and easily replaced, thus making the family business immune to outside influence – and to make its equipment proprietary. This latter feature proved to be vitally important to their takeover of the sport.
Early in 2002, when CART was reeling from a year of sabotage, unprecedented attacks in the NASCAR press and, most importantly, the defection of Team Penske and the majority of its auto manufacturers/sponsors to the IRL, its new president (Chris Pook) tried to save the series by recommending to its franchise board that it adopt the IRL’s chassis and engine specifications virtually verbatim so that the team owners could operate in both series at will. Tony George responded to the CART board’s adoption of the IRL’s technical outline as a threat and, belatedly, as an opportunity. He already had in place regulations that permitted manufacturer participation in the IRL only on an approved basis; mostly as a means of taxing the sport’s suppliers. To ensure the proprietary nature of his equipment, George took a further step and demanded that those suppliers who were dependent on him – for instance, his chassis makers – sign letters of exclusivity. After being wooed by the league and spending more than a million dollars on a prototype Indycar chassis for the new “common” formula, Lola for one refused to sign the exclusivity agreement and was disapproved as a league supplier in favor of the vaporware MK Racing company (which never produced an operable racecar). As a consequence, Lola Cars nearly went bankrupt and had to reorganize.
In case his exclusivity agreements proved inadequate (or unenforceable), George had a back-up plan: he had exclusive rights to certain pieces of equipment, like the Xtrac transmission, whose use he mandated on all IRL chassis. Thus, an outside chassis maker like Lola might be able to build a “common” chassis but it could never be used in the IRL without the family’s blessing. The same was true of any potential engine manufacturer, who was required to have their product badged by an official IRL automaker. Again, this policy was put in place so that the H-G family could siphon off most of the auto manufacturer sponsorship that was going to the team owners (in CART for instance), a sum in the hundreds of millions of dollars (in the popular rival series). When Chris Pook announced CART’s common-equipment initiative early in 2002, CART had five committed engine manufacturers signed on but only one was an approved IRL supplier (Toyota). One by one, the potential “badges” were dissuaded by the IMS owners from allying with the CART engine makers. For instance, a disgruntled Honda formed an alliance with Penske’s Ilmor Engineering (one of the committed engine makers) and made it a condition of their partnership that the engines not be made available to the rival Champ car series. Another interested “badge,” Nissan (Renault), withdrew from competition when faced with the daunting prospect of an all-out engine “war” in the IRL between Honda and Toyota. Finally, Toyota reneged on its agreement to sponsor CART teams and looked to balance its IRL budget on the backs of the CART team owners and Ford, disgusted, headed for the door. Only an 11th-hour appeal by Pook to Ford kept the Detroit automaker as a CART engine supplier; albeit on an exclusive basis as a requirement. Hence, George and the IRL were the actual architects of the latter-day CART “spec” series (as a last-ditch effort by it to survive).
The only reason that INDYCAR fans are getting the “exciting” new 2012 Indy cars, assuming they do, is because the Hulman-Georges were guaranteed that the new cars would be half the cost of the old cars; which fits perfectly with their strategy to control the marketplace for their motor sport. However, the initiative is doomed to failure (IMO) because the family could not care less about the desires of the fans but rather see the new formula as expanded opportunities to suck more money out of their sport’s suppliers. For example, the family recently concluded a sponsorship deal with Borg-Warner to become the exclusive turbocharger supplier for the new 2012-2016 Indycar formula. A quick check of the suppliers the last time that the sport featured turbocharged cars (i.e. CART/CCWS), didn’t turn up Borg-Warner as one of its turbo suppliers; Honda used IHI turbos and Ilmor-Mercedes and Cosworth used ones from Garrett. Now, if the H-G’s new formula actually sees the light of day, its engine manufacturer clients will have to try to differentiate the performance of their engines using the same brand of turbocharger (because the family gets a fee for its use). The same is true, as recently disclosed by project leader Tony Cotman, for the trusty (if not tried and true) Xtrac transmission and, of course, Dallara chassis. It is rumored that it was the H-G’s greed and attempt to soak Firestone that caused the tire maker to announce its withdrawal from the ICS in 2013 (and refuse to “co-promote” the series).
In his recent radio interview, Tony George lamented that major ICS sponsors like PVH/IZOD were wasting their resources by sponsoring individual teams (e.g. Penske) and drivers (e.g. Ryan Hunter-Reay) when they should be using the money (in his view) to promote the INDYCAR brand. That, of course, is a euphemistic reference to the option of paying the money instead directly to the Hulman-George family; a practice Tony more than endorses. Yet, in the same interview George also lamented his inability to fund his Vision Racing team because he was unable to secure sponsorship for it! Amazing as it seems, his team’s sponsorship went away with his control over the IRL and its rulebook and officials. Tony doesn’t seem to understand why sponsors would want to back winning teams and drivers (instead of his own losing ones) or use their money to market as they see fit rather than just hand the money to his family as a form of Hoosier baksheesh.
Anyway, it is debatable how “different” the new Indycars are going to be when the H-G family controls its specification and development and are shopping every identical nut and bolt of it to the highest bidders in order to line their pockets.
Back on topic, it is a commonly held belief in our sport (and especially among the Gomers) that governance of the sport by team owners was an unmitigated disaster. That tired notion couldn’t be further from the truth, IMO. It is often overlooked that CART was modeled after Formula One’s F1CA/FOCA (Formula One Constructors Association) and that both premier open-wheel series arguably reached the heights of their popularity and prosperity worldwide when they were governed by their team owners. Here it should be remembered that Bernie Ecclestone was merely the spokesman/agent for his fellow team owners until he managed to get his lawyer, Max Mosley, to persuade the FIA to sell the commercial rights to the sport to him in 2000 without competitive bid and on scandalously easy terms. This had been made necessary by Bernie’s attempt to take his FOM companies public, which required him to make financial disclosure about the inner workings of his F1 empire. When his fellow team owners found out how much he had been skimming from the sport, supposedly at their behest, they made plans to buy the sport themselves and dump the rapacious Ecclestone and Mosley. The Gruesome Twosome barely beat them to the feeding trough. The point being that however much Eccelstone or Penske actually pulled the strings in their respective motor sports, the sports were actually operated by associations of team owners when they achieved their greatness. The proof of the collective team owners’ not-inconsiderable influence is the extraordinary escape plans that both el supremo and The Captain had to avail themselves of when their fellows discovered that they had been skunked.
Further, I don’t think we should forget that any human enterprise, no matter the purity of its intentions, is subject to corruption; especially one organized for the financial benefit of its members (as was CART and FOCA). When Penske opened the series floodgates to auto maker sponsorship of the teams with first, Chevrolet, and then Mercedes-Benz, he made the team owners self-aggrandizing representatives of the car manufacturers. Honda had done wonders in CART with a relatively modest budget and large doses of innovation. An internal study by rival Japanese manufacturer Toyota in the 1990’s highlighted Honda’s success in CART as one of the keys to its sales success in North America; where Honda’s share of the market was roughly equivalent to that of Toyota (at around 10%). This was remarkable because at home in Japan, Honda was usually considered an “also ran” in comparison to giants like ToMoCo (the Nippon GM) and Nissan. On the basis of the study, Toyota’s leadership decided to declare “war” on Honda and make the focus of their attack Honda’s participation in the CART series.
On entering North America’s premier open-wheel motor sport, Toyota’s greatest asset was its massive capitalization. Toyota initially tried to take Honda’s approach to the sport with its alliance with Dan Gurney’s All-American Racers; but without much success. Gurney attributes Toyota’s lack of results to its meddling with his efforts. Honda’s CART campaign was being run for the most part domestically by the motorsport arm of American Honda; whereas Toyota insisted that TRD in Japan oversee Gurney’s efforts (especially with respect to their engines, which were an embarrassment). Finally, Toyota decided to take the gloves off and BUY victory over their rivals in CART. The opening salvo was their purchase of Target Chip Ganassi Racing’s four-time championship team (with Honda powerplants) for a rumored $40 million and then their representation of TCGR’s championships as their own. This so incensed American Honda executives that one had to be restrained at the Detroit Auto Show – where the TCGR cars with Toyota livery were on display – from physically attacking the visiting president of Toyota!
In any event, it is debatable if ANY democratic institution could have withstood corruption when a special interest group with such vast resources targeted it with literally hundreds of millions of dollars in “sponsorship.” I’m going from memory but if it serves, in the last years of CART participation by the major engine manufacturers, Toyota’s budget was said to be around $110 million annually (and an unknown sum under the table); with Honda at around $80 million and Cosworth at about $60 million. Ganassi became the de facto Toyota bagman in CART and used its wealth to buy votes on the CART franchise board (which had conveniently been made separate from CART’s corporate Delaware Board and oversaw all technical developments in the sport). I think it was relatively easy for certain team owners – now divorced from series governance by the IPO – to convince themselves that taking money to vote Toyota’s agenda would have little effect on the sport. In point of fact, it ended up destroying it; as the Ganassi-delivered Toyota ultimatums destabilized the series and enraged Honda (who was unable to match Toyota spending on corruption) to the point where it left the sport for the IRL but, more importantly, decided to destroy CART as an act of revenge for its betrayal of the carmaker.
If the Champ car sanctioning body had not been embroiled in a deadly “war” between itself and the IRL (going on seven years), it might have been able to curb the manufacturers’ abuses of the system with measures akin to the government’s campaign spending reforms but it had the IMS owners actively aiding and abetting the turmoil in CART (“I bring a hammer to work every day”); and it ran out of time and sponsorship. Much is made of the fact that CART had $100 million in the bank (from the IPO) when Pook began to fight back in 2002. Overlooked is the fact that the Hulman-George family spent at least six times that much to win its war. Moreover, the H-G’s started and ended the conflict with two renewable sources of income – the Brickyard 400 and Indy 500 – whereas CART lost much of its income-generating assets with Penske’s defection.
So, say what you will about CART under the leadership of its democratic team owners; the proof was in the pudding (and CART’s once-soaring popularity). As Winston Churchill remarked: ” It has been said that democracy is the worst form of government except all the others that have been tried.”
In any event, one fact of which I am positive is that our sport will never prosper and/or regain its popularity as long as it is a captive of the would-be royal family from Terre Haute.
JMO
CART was structured very much like a professional sports league with individual team owners looking out for their own best interests (i.e. team) and trying to gain an advantage (unfair or otherwise) over the other owners. However, with its democratic governing structure it was rightly (IMO) assumed that the more extreme individual interests would be largely canceled out by collective group interest when it came to voting.
We all know that there is usually a difference, sometimes great, between the way a democracy is supposed to operate and the way it actually does in the real world. However, the important thing is that the ideal be kept ever in mind and that there is a constant striving on the part of a majority of the citizens to bring the ideal into being. When that situation is operative, abuses of the system are hopefully short-term as its members correct them in pursuit of the perfect model.
Yes, like a lot of rich men Penske used his wealth to finagle (some might say abuse) CART’s democratic governing structure. However, I believe that a correction for his more flagrant practices was well under way within CART by a majority of the team owners and it was this “revolt” which Tony George seized upon in his early efforts (and justifications) for taking over the sanctioning body. When the reformers within CART got a good look at what George was trying to sell them – basically a “benevolent” dictatorship – they wisely chose to reject Tony’s offer and decided to handle Penske on their own.
It is my suspicion that Penske set up the Idiot Grandson to fail (in his takeover bid) with the predictable result that George vowed to do everything in his power to ruin them and the sport, and then RP used Tony’s very real threats to convince the other team owners to abandon CART’s democratic governing structure and adopt a mutated form of George’s autocratic commission (only with Penske in charge instead of Tony). In his July 8, 1994 press release announcing the formation of the Indy Racing League, George refers to this as “the recent trial period (July 1992 - Jan. 1994) with George as a non-voting CART board member [that] failed to move IMS and CART closer together.”
What Tony doesn’t mention is that the CART board of which he was a non-voting member was a special seven-person board that he and Penske (IMO) forced upon the organization to replace its previous 17-member democratic board. When George quit the new CART board in a fury because it selected Andrew Craig to replace Bill Stokkan as CEO instead of Tony’s hand-picked choice, Cary Agajanian, the team owners quickly reverted to the original democratic structure (but with a maximum of 24 members).
Between July 1992 and January 1994 I would contend that Penske was more in charge of CART than at any other period except during the organization’s formative period. Once the other team owners took back CART governance in July 1994, immediately after George formally announced formation of the IRL, I think Penske’s days as ruler of the sanctioning body were over. As the other owners looked to correct The Captain’s perceived abuses of power, he seemed to begin to distance himself from the organization he co-founded. In 1996, he sold 12% of his motorsports holding company to NASCAR’s France family and in 1997 he helped engineer the taking of CART public; which allowed him to cash out his CART interests at the expense of unsuspecting new shareholders. In 1999, he sold out all his CART stock (as soon as he was legally able) and completed the sale of PMI to the Frances. From that moment on, Penske had no more ownership or designs on the governance of AOWR.
My sense is that Penske prolonged his rule over CART as long as he was able but that an impatient George forced his hand. Stokkan’s decision not to seek renewal of his contract as CART president (in part because of harassment from George), created a situation from which there was no escape: the choice of his successor as nominal head of the sanctioning body caused George to make his move to take over the company and when that failed and he left, the spotlight turned on Penske.
I believe Penske may have dodged a bullet earlier, at the time that Tony made his bid to buy the sanctioning body. For unknown reasons George had decided on Goodyear’s director of racing, Leo Mehl, to be his nomination for the position of commissioner over the sport; whose sanctioning body was to be renamed “Indy Car, Inc.” When the team owners firmly rejected Mehl, George was incensed and called their refusal a “deal breaker” with respect to his entire proposal. Why Tony chose to make Mehl his line in the sand is a mystery, because he (Mehl) was reportedly turned away because the owners thought he was “Penske’s man.” At the time Roger owned the Goodyear racing tire distributorships for the Midwest, East and Eastern Canada, so it was not an unlikely assumption. I think it illustrates, however, how much resistance there was to Penske’s influence over the sport; to the point of paranoia. It is perhaps too facile to suspect that since Penske helped prep George for his presentation to the CART BoD, he may have been the one to suggest Mehl to George. On the other hand, it has been written that A.J. Foyt played a pivotal role in the advancement of Mehl’s career, so possibly George’s godfather was the purveyor of the idea of the Goodyear man for the position of commissioner. If there was indeed a connection between Penske and Mehl, it makes for interesting speculation about Roger’s influence over the IRL after George chose him to head his new motor sport from 1996-2000; an influence of which Tony may possibly have been unaware.
Be that as it may, I think that it is likely that the surprising amount of support that George found among the small-team owners in CART alerted Penske to his vulnerability. As you noted, CART’s governing structure theoretically gave each franchise holder equal power within the series; however, a prominent team owner like Penske had much more invested in the series and, hence, much more to lose. If George had succeeded in getting enough of the disgruntled team owners on the CART board to agree to sell him the company (i.e. sport) in November 1991, then Roger would have been out millions of dollars. At the time CART was financed by a $7 million personal loan (according to Bob Jennings) from Penske, which would have been repaid, but Roger was undoubtedly using his influence over CART to capitalize his other motorsports properties; which would have been put in jeopardy.
For example, Penske was just about the only team owner with enough foresight and financial wherewithal to see that the only way the sport could secure the speedway racing component of the sport was to own speedways and act on it. By doing so, Penske not only guaranteed access to speedways for CART but contained George and his family in Indianapolis. This was especially effective as Tony had made it clear that he was only interested in creating an oval-centric motor sport. Of course, these were not Penske’s only reasons for owning speedways. For instance, speedway ownership combined with leadership of CART gave Roger a seat at NASCAR’s table roughly equivalent to that of the Frances and arguably more influential than that of other speedway owners like O. Bruton Smith. That’s because Smith could only turn to the Frances for access to the profitable races he needed to make his speedways prosperous but Penske had access to his own motor sport for that purpose; access which he could use to barter with the Frances for Cup races. So, coming relatively late to the NASCAR table, Penske still commanded a choice seat.
Another use for his control of CART was to be found (IMO) in Penske’s pioneering use (in motor sport) of the sort of public-private financing for the construction of multimillion dollar speedways that other professional sports leagues used to build their stadiums and enrich the franchise holders. Here, I think Penske forged a path that was later used to great success by the titans of NASCAR.
Thus, it is probable that while the democratic board structure of CART was intended to treat all team owners as equals, the reality of the situation was that (to paraphrase Orwell’s Animal Farm): “all team owners are equal; only some are more equal than others.”
The fact that Tony George got relatively close to buying CART out from under Penske – a fact of which George seems unaware – must have come as a shock to Roger; as well as being a wake-up call. I think it could be argued that Penske needed to assume direct control over CART during George’s “trial period” in order to prepare to divest himself of his suddenly vulnerable properties at better than fire-sale prices.
This speculation gets an added measure of intrigue if one factors in the contention that Bill France Jr. manipulated the Idiot Grandson into acting to destabilize CART and essentially attack Penske’s corporate holdings and drive him into France’s arms. If that seems like a far-fetched conspiracy theory, it is lent some credibility by Tony George’s report during a radio interview last week (in company with Robin Miller) that he was heavily influenced by France and urged by key USAC leaders to act as he did in his challenge to CART and formation of the IRL.
If there is truth to the assertion, then it certainly worked. When France reportedly influenced George to move against the team owners of CART – and Tony started reporting this to the press not long after he assumed the presidency of IMS in January 1990 – Penske had a prominent place in NASCAR politics and deal-making. Six years later, Roger was more or less forced by a dysfunctional George to hedge his bets and ally himself with the Frances. By 1999, Bill France Jr. owned almost all of Penske’s motorsports holdings, thanks to the loose cannon that is Tony George. In return for his endangered properties, Penske received ISC stock which made him the second largest shareholder in the company outside the France family group. However, ISC and NASCAR are structured such that the Frances retain control of the companies almost no matter how much their share holdings are diluted; so while on paper Penske was the second most influential person in NASCAR, the reality is that he would always be subservient to the Daytona Beach family. Thus, France’s manipulation of Tony George, if real, won him control over Penske and undisputed hegemony over NASCAR. Bruton Smith evidently only woke up to that reality when he heard rumors that a merger between ISC and PMI was in the offing (circa 1998/1999). Way too late, he tried to reach Penske in order to negotiate a deal but Roger reportedly wouldn’t take his call; by then, the merger was a fait accompli.
Back on topic, in the 1994 press release announcing formation of the IRL, Tony George commented (in the third person tense of which he is fond): ” "The Indy Racing League offers a new series management structure and philosophy which we at the Indianapolis Motor Speedway believe in very strongly," George said. "We are pleased to include the 1996 Indianapolis 500 exclusively in this new series."
The rhetoric masked what was an ultimately successful hostile takeover of the sport. The “new philosophy” of which Tony spoke was the divine right of kings, coming from a Terre Haute family that considers itself to be AOWR royalty. For all of George’s talk about answering the pleas of the sport's other stakeholders, there has only ever been one stakeholder in his view: the Hulman family. Tony is fond of masking his autocratic ways with hosts of advisory committees, commissioners, political appointees, investigative bodies, etc. and the original title of his sport, league, is a farce meaning: ”an association or union of persons, nations, etc, formed to promote the interests of its members” or in the sports context, ”an association of sporting clubs that organizes matches between member teams of a similar standard.”
Yet, inclusive as it was meant to sound, the Indy Racing League only ever had one controlling member: the Hulman-George family. Everyone else is either an employee and/or a vassal of the royal family. Tony only discovered the harsh reality behind the façade -- which other supposed members of the league had known for quite some time – when his mother, sisters, and the family attorney deposed him and sent him into brief exile in June 2009.
In any event, the sport is now in the hands of a family of former wholesale grocers. That may sound like a knock, but it is a necessary descriptor. That’s because the Hulman-George family approaches the sport as if it were one of the commodities that once graced their long-gone warehouse shelves. From the beginning their aim has been complete ownership of the sport, after which their strategy is to make their proprietary product cheaper than competing products. Their grocery sense tells them that this is the way to dominant the market place; the difference between baking powder and auto racing being negligible in their view.
This is the primary reason that INDYCAR fans have had to endure the same boring motorsport product (i.e. the “spec” series) for the past eight seasons. The key to the H-G strategy for motor sport domination is to make participation in their motor sport as inexpensive as possible – so that any dissenting team owner can be summarily banned and easily replaced, thus making the family business immune to outside influence – and to make its equipment proprietary. This latter feature proved to be vitally important to their takeover of the sport.
Early in 2002, when CART was reeling from a year of sabotage, unprecedented attacks in the NASCAR press and, most importantly, the defection of Team Penske and the majority of its auto manufacturers/sponsors to the IRL, its new president (Chris Pook) tried to save the series by recommending to its franchise board that it adopt the IRL’s chassis and engine specifications virtually verbatim so that the team owners could operate in both series at will. Tony George responded to the CART board’s adoption of the IRL’s technical outline as a threat and, belatedly, as an opportunity. He already had in place regulations that permitted manufacturer participation in the IRL only on an approved basis; mostly as a means of taxing the sport’s suppliers. To ensure the proprietary nature of his equipment, George took a further step and demanded that those suppliers who were dependent on him – for instance, his chassis makers – sign letters of exclusivity. After being wooed by the league and spending more than a million dollars on a prototype Indycar chassis for the new “common” formula, Lola for one refused to sign the exclusivity agreement and was disapproved as a league supplier in favor of the vaporware MK Racing company (which never produced an operable racecar). As a consequence, Lola Cars nearly went bankrupt and had to reorganize.
In case his exclusivity agreements proved inadequate (or unenforceable), George had a back-up plan: he had exclusive rights to certain pieces of equipment, like the Xtrac transmission, whose use he mandated on all IRL chassis. Thus, an outside chassis maker like Lola might be able to build a “common” chassis but it could never be used in the IRL without the family’s blessing. The same was true of any potential engine manufacturer, who was required to have their product badged by an official IRL automaker. Again, this policy was put in place so that the H-G family could siphon off most of the auto manufacturer sponsorship that was going to the team owners (in CART for instance), a sum in the hundreds of millions of dollars (in the popular rival series). When Chris Pook announced CART’s common-equipment initiative early in 2002, CART had five committed engine manufacturers signed on but only one was an approved IRL supplier (Toyota). One by one, the potential “badges” were dissuaded by the IMS owners from allying with the CART engine makers. For instance, a disgruntled Honda formed an alliance with Penske’s Ilmor Engineering (one of the committed engine makers) and made it a condition of their partnership that the engines not be made available to the rival Champ car series. Another interested “badge,” Nissan (Renault), withdrew from competition when faced with the daunting prospect of an all-out engine “war” in the IRL between Honda and Toyota. Finally, Toyota reneged on its agreement to sponsor CART teams and looked to balance its IRL budget on the backs of the CART team owners and Ford, disgusted, headed for the door. Only an 11th-hour appeal by Pook to Ford kept the Detroit automaker as a CART engine supplier; albeit on an exclusive basis as a requirement. Hence, George and the IRL were the actual architects of the latter-day CART “spec” series (as a last-ditch effort by it to survive).
The only reason that INDYCAR fans are getting the “exciting” new 2012 Indy cars, assuming they do, is because the Hulman-Georges were guaranteed that the new cars would be half the cost of the old cars; which fits perfectly with their strategy to control the marketplace for their motor sport. However, the initiative is doomed to failure (IMO) because the family could not care less about the desires of the fans but rather see the new formula as expanded opportunities to suck more money out of their sport’s suppliers. For example, the family recently concluded a sponsorship deal with Borg-Warner to become the exclusive turbocharger supplier for the new 2012-2016 Indycar formula. A quick check of the suppliers the last time that the sport featured turbocharged cars (i.e. CART/CCWS), didn’t turn up Borg-Warner as one of its turbo suppliers; Honda used IHI turbos and Ilmor-Mercedes and Cosworth used ones from Garrett. Now, if the H-G’s new formula actually sees the light of day, its engine manufacturer clients will have to try to differentiate the performance of their engines using the same brand of turbocharger (because the family gets a fee for its use). The same is true, as recently disclosed by project leader Tony Cotman, for the trusty (if not tried and true) Xtrac transmission and, of course, Dallara chassis. It is rumored that it was the H-G’s greed and attempt to soak Firestone that caused the tire maker to announce its withdrawal from the ICS in 2013 (and refuse to “co-promote” the series).
In his recent radio interview, Tony George lamented that major ICS sponsors like PVH/IZOD were wasting their resources by sponsoring individual teams (e.g. Penske) and drivers (e.g. Ryan Hunter-Reay) when they should be using the money (in his view) to promote the INDYCAR brand. That, of course, is a euphemistic reference to the option of paying the money instead directly to the Hulman-George family; a practice Tony more than endorses. Yet, in the same interview George also lamented his inability to fund his Vision Racing team because he was unable to secure sponsorship for it! Amazing as it seems, his team’s sponsorship went away with his control over the IRL and its rulebook and officials. Tony doesn’t seem to understand why sponsors would want to back winning teams and drivers (instead of his own losing ones) or use their money to market as they see fit rather than just hand the money to his family as a form of Hoosier baksheesh.
Anyway, it is debatable how “different” the new Indycars are going to be when the H-G family controls its specification and development and are shopping every identical nut and bolt of it to the highest bidders in order to line their pockets.
Back on topic, it is a commonly held belief in our sport (and especially among the Gomers) that governance of the sport by team owners was an unmitigated disaster. That tired notion couldn’t be further from the truth, IMO. It is often overlooked that CART was modeled after Formula One’s F1CA/FOCA (Formula One Constructors Association) and that both premier open-wheel series arguably reached the heights of their popularity and prosperity worldwide when they were governed by their team owners. Here it should be remembered that Bernie Ecclestone was merely the spokesman/agent for his fellow team owners until he managed to get his lawyer, Max Mosley, to persuade the FIA to sell the commercial rights to the sport to him in 2000 without competitive bid and on scandalously easy terms. This had been made necessary by Bernie’s attempt to take his FOM companies public, which required him to make financial disclosure about the inner workings of his F1 empire. When his fellow team owners found out how much he had been skimming from the sport, supposedly at their behest, they made plans to buy the sport themselves and dump the rapacious Ecclestone and Mosley. The Gruesome Twosome barely beat them to the feeding trough. The point being that however much Eccelstone or Penske actually pulled the strings in their respective motor sports, the sports were actually operated by associations of team owners when they achieved their greatness. The proof of the collective team owners’ not-inconsiderable influence is the extraordinary escape plans that both el supremo and The Captain had to avail themselves of when their fellows discovered that they had been skunked.
Further, I don’t think we should forget that any human enterprise, no matter the purity of its intentions, is subject to corruption; especially one organized for the financial benefit of its members (as was CART and FOCA). When Penske opened the series floodgates to auto maker sponsorship of the teams with first, Chevrolet, and then Mercedes-Benz, he made the team owners self-aggrandizing representatives of the car manufacturers. Honda had done wonders in CART with a relatively modest budget and large doses of innovation. An internal study by rival Japanese manufacturer Toyota in the 1990’s highlighted Honda’s success in CART as one of the keys to its sales success in North America; where Honda’s share of the market was roughly equivalent to that of Toyota (at around 10%). This was remarkable because at home in Japan, Honda was usually considered an “also ran” in comparison to giants like ToMoCo (the Nippon GM) and Nissan. On the basis of the study, Toyota’s leadership decided to declare “war” on Honda and make the focus of their attack Honda’s participation in the CART series.
On entering North America’s premier open-wheel motor sport, Toyota’s greatest asset was its massive capitalization. Toyota initially tried to take Honda’s approach to the sport with its alliance with Dan Gurney’s All-American Racers; but without much success. Gurney attributes Toyota’s lack of results to its meddling with his efforts. Honda’s CART campaign was being run for the most part domestically by the motorsport arm of American Honda; whereas Toyota insisted that TRD in Japan oversee Gurney’s efforts (especially with respect to their engines, which were an embarrassment). Finally, Toyota decided to take the gloves off and BUY victory over their rivals in CART. The opening salvo was their purchase of Target Chip Ganassi Racing’s four-time championship team (with Honda powerplants) for a rumored $40 million and then their representation of TCGR’s championships as their own. This so incensed American Honda executives that one had to be restrained at the Detroit Auto Show – where the TCGR cars with Toyota livery were on display – from physically attacking the visiting president of Toyota!
In any event, it is debatable if ANY democratic institution could have withstood corruption when a special interest group with such vast resources targeted it with literally hundreds of millions of dollars in “sponsorship.” I’m going from memory but if it serves, in the last years of CART participation by the major engine manufacturers, Toyota’s budget was said to be around $110 million annually (and an unknown sum under the table); with Honda at around $80 million and Cosworth at about $60 million. Ganassi became the de facto Toyota bagman in CART and used its wealth to buy votes on the CART franchise board (which had conveniently been made separate from CART’s corporate Delaware Board and oversaw all technical developments in the sport). I think it was relatively easy for certain team owners – now divorced from series governance by the IPO – to convince themselves that taking money to vote Toyota’s agenda would have little effect on the sport. In point of fact, it ended up destroying it; as the Ganassi-delivered Toyota ultimatums destabilized the series and enraged Honda (who was unable to match Toyota spending on corruption) to the point where it left the sport for the IRL but, more importantly, decided to destroy CART as an act of revenge for its betrayal of the carmaker.
If the Champ car sanctioning body had not been embroiled in a deadly “war” between itself and the IRL (going on seven years), it might have been able to curb the manufacturers’ abuses of the system with measures akin to the government’s campaign spending reforms but it had the IMS owners actively aiding and abetting the turmoil in CART (“I bring a hammer to work every day”); and it ran out of time and sponsorship. Much is made of the fact that CART had $100 million in the bank (from the IPO) when Pook began to fight back in 2002. Overlooked is the fact that the Hulman-George family spent at least six times that much to win its war. Moreover, the H-G’s started and ended the conflict with two renewable sources of income – the Brickyard 400 and Indy 500 – whereas CART lost much of its income-generating assets with Penske’s defection.
So, say what you will about CART under the leadership of its democratic team owners; the proof was in the pudding (and CART’s once-soaring popularity). As Winston Churchill remarked: ” It has been said that democracy is the worst form of government except all the others that have been tried.”
In any event, one fact of which I am positive is that our sport will never prosper and/or regain its popularity as long as it is a captive of the would-be royal family from Terre Haute.
JMO
Monday, June 6, 2011
Memo to a groundhog
(by Obi wan crapwagon.com 6-6-11)
I feel the need to address a matter that is so patently obvious that most Gomers have missed it completely. That is the fact that Tony George and the rest of his Hulman-George family do not support the sport of INDYCAR racing.
“Sport” in this instance refers to American open-wheel racing; the series of motor sport events comprising the remnants of the American National Championship (as created retroactively by the AAA in 1909).
There is no need to take my word for it but instead one need only look to what Tony George has said.
The press release announcing the formation of the Indy Racing League – “a new auto racing series to run in concert with the Indianapolis 500 beginning in 1996” – was subtitled: “Maintaining the Greatest Race Course in the World.”
In case that is too subtle a statement, as it seems to be for 99% of Gomers, it means that the purpose of the new auto racing series (IRL) was “maintaining” the Indianapolis Motor Speedway (i.e. “the Greatest Race Course in the World”) and its Indianapolis 500 race. Period. In simple terms, the new series exists to serve one race track, not the other way around. If there is a conflict in their respective needs, those of the race track come first.
With everything that occurred during the dozen years of war in American open-wheel racing that formation of the IRL precipitated, is it possible that Tony George and his family changed their intention?
In one of his only interviews during his short time in exile after his family ousted George as CEO of IMS and he resigned as head of the IRL, dated May 4, 2010, Tony said:
HC: What are some of your proudest accomplishments during your 20-year tenure with the Speedway and in founding the Indy Racing League in 1994?
TG: I'm proud of our leadership in investments in the safety of the sport. I am proud of the Hulman Family's commitment to community and philanthropy.
Obviously, once the decision was made to expand our racing events at the Speedway, being a part of bringing world-class events like the Brickyard 400, MotoGP and F1 USGP to fruition; but with that said, the IRL for sure. It has so much potential and it truly is who we [Hulmans] are, we can influence its direction; build it as a brand leveraging both the IMS and the 500 for which it exists.
Much has been speculated, wildly inaccurate, about how much was spent to build the IRL. I am proud that we have spent a lot less than it would have taken to buy a professional sports team in the NFL, MLB, NBA or even the NHL -- and we own the whole league.
So, at a time when Tony George had separated himself from all formal connection with the IMS and the IRL, and hence any conflicts of interest, and three years after the war in AOWR was concluded, George is clear that the purpose of the IRL (i.e. “for which it exists”) is still to “leverage both the IMS and the 500.”
In this brief quote, Tony also betrays his incongruous thinking about the operation of the sport (i.e. “the whole league”). He compares his investment in it with the purchase of “a professional sports team in the NFL, MLB, NBA or even the NHL.”
The conflict that George has never acknowledged, apparently even to himself, is that a professional sports team for the most part can be operated separately from the sport of which it is a part and for the exclusive enrichment of its owner(s) -- as contrasted with the owners of other teams in the sport -- whereas the sport must be operated (in order to succeed) for the benefit of ALL the teams and their owners. Thus, Tony maintains (by extrapolation) that a sport like major-league baseball could be successfully operated by, say, the owners of the NY Yankees and exclusively for their benefit; when obviously it cannot. The results of this sort of erroneous thinking are painfully obvious in the ruined remnants of our sport.
If any doubt remains about the exact meaning of Tony George’s words and intentions, he concluded his two-part interview with this assessment of the worth of the IRL:
There is great value in the Indy Racing League; it exists to support the institutions of the Indianapolis Motor Speedway and the Indianapolis 500 Mile race; and I am proud of its contributions to the sport.
Besides the simply stated purpose of the IRL (now ICS), note if you will its relationship to the sport: it is a contributor to the sport, not the sport itself. This is something that the Gomers have yet to realize.
Given all the Hulman-George family’s rhetoric about “maintaining” and “protecting” the IMS and the 500, it is ironic indeed that they have almost single-handled brought both to near ruin; such that it is widely believed that IMS must be sold soon in order to save it and its once-iconic 500-mile race. Now you know why.
JMO
I feel the need to address a matter that is so patently obvious that most Gomers have missed it completely. That is the fact that Tony George and the rest of his Hulman-George family do not support the sport of INDYCAR racing.
“Sport” in this instance refers to American open-wheel racing; the series of motor sport events comprising the remnants of the American National Championship (as created retroactively by the AAA in 1909).
There is no need to take my word for it but instead one need only look to what Tony George has said.
The press release announcing the formation of the Indy Racing League – “a new auto racing series to run in concert with the Indianapolis 500 beginning in 1996” – was subtitled: “Maintaining the Greatest Race Course in the World.”
In case that is too subtle a statement, as it seems to be for 99% of Gomers, it means that the purpose of the new auto racing series (IRL) was “maintaining” the Indianapolis Motor Speedway (i.e. “the Greatest Race Course in the World”) and its Indianapolis 500 race. Period. In simple terms, the new series exists to serve one race track, not the other way around. If there is a conflict in their respective needs, those of the race track come first.
With everything that occurred during the dozen years of war in American open-wheel racing that formation of the IRL precipitated, is it possible that Tony George and his family changed their intention?
In one of his only interviews during his short time in exile after his family ousted George as CEO of IMS and he resigned as head of the IRL, dated May 4, 2010, Tony said:
HC: What are some of your proudest accomplishments during your 20-year tenure with the Speedway and in founding the Indy Racing League in 1994?
TG: I'm proud of our leadership in investments in the safety of the sport. I am proud of the Hulman Family's commitment to community and philanthropy.
Obviously, once the decision was made to expand our racing events at the Speedway, being a part of bringing world-class events like the Brickyard 400, MotoGP and F1 USGP to fruition; but with that said, the IRL for sure. It has so much potential and it truly is who we [Hulmans] are, we can influence its direction; build it as a brand leveraging both the IMS and the 500 for which it exists.
Much has been speculated, wildly inaccurate, about how much was spent to build the IRL. I am proud that we have spent a lot less than it would have taken to buy a professional sports team in the NFL, MLB, NBA or even the NHL -- and we own the whole league.
So, at a time when Tony George had separated himself from all formal connection with the IMS and the IRL, and hence any conflicts of interest, and three years after the war in AOWR was concluded, George is clear that the purpose of the IRL (i.e. “for which it exists”) is still to “leverage both the IMS and the 500.”
In this brief quote, Tony also betrays his incongruous thinking about the operation of the sport (i.e. “the whole league”). He compares his investment in it with the purchase of “a professional sports team in the NFL, MLB, NBA or even the NHL.”
The conflict that George has never acknowledged, apparently even to himself, is that a professional sports team for the most part can be operated separately from the sport of which it is a part and for the exclusive enrichment of its owner(s) -- as contrasted with the owners of other teams in the sport -- whereas the sport must be operated (in order to succeed) for the benefit of ALL the teams and their owners. Thus, Tony maintains (by extrapolation) that a sport like major-league baseball could be successfully operated by, say, the owners of the NY Yankees and exclusively for their benefit; when obviously it cannot. The results of this sort of erroneous thinking are painfully obvious in the ruined remnants of our sport.
If any doubt remains about the exact meaning of Tony George’s words and intentions, he concluded his two-part interview with this assessment of the worth of the IRL:
There is great value in the Indy Racing League; it exists to support the institutions of the Indianapolis Motor Speedway and the Indianapolis 500 Mile race; and I am proud of its contributions to the sport.
Besides the simply stated purpose of the IRL (now ICS), note if you will its relationship to the sport: it is a contributor to the sport, not the sport itself. This is something that the Gomers have yet to realize.
Given all the Hulman-George family’s rhetoric about “maintaining” and “protecting” the IMS and the 500, it is ironic indeed that they have almost single-handled brought both to near ruin; such that it is widely believed that IMS must be sold soon in order to save it and its once-iconic 500-mile race. Now you know why.
JMO
Monday, May 16, 2011
We still have plenty of nails
(by Obi wan crapwagon.com 4-8-11)
"If NASCAB really wants to kill the EARL, move the Hickyard to Kentucky, that cuts off half of their cash flow. However, NASCAB probably doesn't consider the EARL enough of a threat to even bother on those grounds....it'd have to be because they can get more fans and better ratings elsewhere." - Brake L8
In his most recent interview, Roger Penske was asked about the possibility of NASCAR expanding into Canada with a Cup race in Montreal. Penske responded that the oval cartel had overbuilt (in terms of seating) the tracks already on its Cup schedule and that NASCAR should look after its current track owners/promoters before it thinks of adding another race anywhere else. With respect to public perception, which is very important for the publicly traded oval cartel companies, he said: “[When] you’ve got a 160,000-seat stadium and you have 120,000 (in the stands), it looks like you’re in trouble.” He is alluding to tracks like Speedway Motorsports Inc.’s ½-mile Bristol Motor Speedway, which is the 4th largest sports venue in America, and the 8th largest in the world, housing up to 165,000 people.
Penske is not alone in thinking that overexpansion in both track seating and the number of races on the Cup schedule are partly responsible for NASCAR’s “oversaturation” of its marketplace. Analysts have been advising NASCAR for more than a decade that it needs to pare down the number of annual Cup races (currently at 36) on its calendar. The problem with this is that the two titans of the oval cartel – International Speedway Corporation (ISC) and Speedway Motorsports Inc. (SMI) – own the rights to the vast majority of Cup races and neither one is in a financial position to give up even one of its races. Which likely means that any contraction of the schedule has to come at the expense of the “independent” track owners. Until very recently there were a handful of independent tracks which NASCAR could give the axe to, but then SMI went on a track buying spree and bought up all but three of the indies (Dover Downs, Pocono, and Indianapolis).
Meanwhile, ISC – the France family’s holding company – has been consolidating its monopolistic hold over stock car racing. NASCAR won a very important case against Kentucky Speedway which reaffirmed that it has the right to deny a Cup race to anyone outside the cartel no matter how qualified their track might be to host one. Kentucky had tried the ploy of declaring that it was building a speedway specifically for the purpose of hosting a Cup race and then hoped that the federal anti-trust laws would force the Frances to give them a race. Just to make sure, ISC began a process of shutting down and/or bulldozing its smaller tracks (Rockingham, Nazareth, Pikes Peak) to both reduce the number of potential NASCAR tracks in the U.S. and reduce its visibility with the trust busters. Basically, this has resulted in NASCAR being able to monopolize its industry like the auto makers control theirs: through economies of scale. Simply, no outsider can afford to build a modern speedway capable of hosting a Cup race without first getting a guarantee for a race (which the Frances obviously won’t give them).
With two companies having total control of stock car racing, the best way of reducing the number of races – which also has the benefit of reducing expenses for the teams without downgrading the quality of the racing – without affecting their bottom lines is to simply drop the independently-owned races from the schedule. Of the three track owners in the crosshairs, the most vulnerable is the Indianapolis Motor Speedway. It got its Cup race last and hence it has the least claim of seniority AND the family that owns it also owns a rival motor sport (INDYCAR) to stock car racing. To add icing to the cake, the clueless former leader of the family threatened to knock NASCAR “off its pedestal” as the nation’s most popular motorsport. So, the Hulman-Georges and IMS are competitors to the oval cartel, not members of it. Additionally, the Hoosier family sold its stake in another NASCAR Cup track (Chicagoland) to the Frances, so they are no bigger or more invested in the sport than the other two independents.
Another reason that the Brickyard 400 is probably not long for this world has to do with ISC increasing its profitability at a time when the popularity of NASCAR is waning. If the company were disinclined to reduce the number of Cup races – for instance, if the number was integral to getting the maximum amount from multiple TV broadcasters for the rights to air the races – another way of increasing ISC’s stake would be take some or all of the independent Cup races in-house; by either reassigning them to ISC tracks or buying out the tracks themselves. Here, Dover Downs had been purposely structured to sell to ISC; they would like nothing better than to have ISC buy them out. Similarly, the owners of Pocono (the Mattioli’s) have several times offered to sell Pocono to the Frances. Thus, the only independent track owners NOT willing to sell to ISC/Frances is IMS/Hulman-Georges; which should make them the prime target.
For one or all of the various reasons for which the Frances/ISC might wish to destroy IMS/Hulman-Georges, the Daytona Mafia is perfectly positioned to do it. The contract for the Brickyard 400 is annually renewable, so they can strike (by withdrawing the race) on such short notice that the Hoosiers will have little time to react. Arguably, the perfect time to hit the Hulman-Georges would be 2012. Their motor sport will be in the process of re-making itself, so in a sense it won’t exist yet. If it fails, this could be determined to be as much the Hoosiers’ fault as the stock car cartel. Moreover, the Frances would have millions of witnesses and a solid historical record to show that the Terre Haute dimwits did it to themselves.
Back in 2001 Penske rightly determined that his defection to the IRL would be perceived by the auto companies and big name sponsors to be a vote of no confidence in the future of Champ Car racing. Overnight, our motor sports’ biggest sponsors deserted it in favor of the IRL or just to leave. There is little doubt that Penske’s defection tipped the domino that would lead eventually to the collapse of CART. Now, the shoe is on the other foot. Penske and Ganassi have the only well-funded teams in the ICS; the only ones with national name brand sponsors. How long will those sponsors stay in place if NASCAR’s ruling family withdraws its support of IMS and the Hulman-Georges? I’d wager not long. The Hoosier family has made 2012 the point of new beginning for their motor sport; conveniently it could just as easily end there.
Recently this forum had a kamikaze Gomer who asked, “How many nails do you guys have?” s/he then went on to point out that despite our predictions of the imminent demise of the ICS, it is still here. I answer that by saying that no rational person could have expected that the Hulman-Georges would have expended nearly all their inherited wealth (on the order of $600 million) and destroyed what was once one of the world’s premier motor sport events for…what? It still makes no sense. Not one of the rationales offered up by the Hoosier family or its representatives for their past behavior makes any sense. What it all comes down to is that the ICS will last only so long as the Hulman-Georges are willing to pay for it. They are basically free to do this until they are admitted to the poor house.
However, the other stakeholders in the sport – from the car companies to IZOD to the team owners – don’t approach the sport from an irrational point of view. One way of looking at the recent Firestone debacle is that the Hoosier family and their minions were irrationally willing to let the tire company go and the team owners rationally recognized that its leaving could destroy the sport; so, for once, the rational people in the sport won the day. It won’t take very many more of those irrational decisions before the stakeholders with their heads on straight head for the exit. Again, 2012 will be the perfect time. Everyone in the paddock except Penske will have invested nothing in the new-look motor sport; what better time to leave than before one has to mortgage the house to buy new equipment?
If the Frances pull the plug on the Brickyard 400, the Hulman-Georges will have ONE race with which to balance their books. By their own account in fourteen years they haven’t managed to break even once; and that’s with a one-time vastly profitable NASCAR race to supplement I500 revenues. The moment the Brickyard 400 expires, we can post a deathwatch on the Hoosier’s family’s bank account. There’s no point in watching for the demise of the IRL/ICS, it has been among the walking dead since its founding. Its heart, the only thing keeping it going, is the Hulman-Georges’ wealth; and we are VERY close to seeing the last of that.
IMHO
(by Obi wan crapwagon.com 4-9-11)
"one minor point: the Family has never said they didnt make money from the speedway, etc, only that the iRl is a money loser" - Bommerblaste
I don’t believe I said that IMS was a money loser; but without the Brickyard 400 it very well could be.
Also, the Family – actually Fred “Bagdad Bob” Nation – has said more than the IRL is a money loser. In 2002 Nation told Sports Illustrated reporter Ed Hinton that not only did the IRL never make a dime of profit but that Brickyard 400 funds had been needed to keep it afloat. Nation and other IMS bigwigs were apparently opening up because they thought the defection of Toyota and Honda from CART to the IRL was finally going to help the League “turn the corner” toward profitability. It’s easy to see why they thought that; at the moment that Nation spoke the IMS/IRL had the support of GM, Nissan, Toyota, Honda and they thought Ford would soon follow. The auto manufacturers in CART had most recently been subsidizing the sport to the tune of approximately $200 million annually. Unlike CART, however, where the car manufacturers’ support went primarily to their teams, IMS demanded that they pay a tariff directly to the Speedway and additionally commit to do a certain amount of promotion for the IMS/IRL.
The Gomerati at CrackForum and other motorsport discussion forums were aghast that Nation had let the cat out of the bag with respect to lack of profitability of the IRL. They immediately tried to assert that every property within Hulman & Co. was a separate entity and against all logic claimed that Brickyard 400 money had been tapped at random to support the IRL, but that the Indy 500 was still vastly profitable. The Idiot Grandson tried to cover his ass and give the Gomerati something to hang their fantasies on by mumbling a vague comment to a reporter that within Hulman & Co’s motorsports division funding of its various parts (i.e. IMS, Indy 500, Brickyard 400, USGP) was simply a matter of “transferring money from one [Hulman & Co.] pocket to another.”
Of course, as with most of the Gomers’ arguments, that made no sense. The Indy 500 and the IRL are integrally tied together; they can’t operate the one without the other. Hence, if any separate funds within the motorsports division were going to be tapped to support the money-losing IRL, they would obviously (per accounting practice) come from the profits of the Indy 500; not those from the Brickyard 400. So, the import of Nation’s admission was clear: the IRL black hole annually consumed ALL the profits of the Indy 500 and then Brickyard 400 money had been required to cover the remaining short fall. Thus, Nation had not only admitted that the IRL was a money pit but he gave a means to approximate the size of the financial drain. In its heyday the Indy 500 had been estimated to return between $20-30 million to the Family. By 2002 the cracks were just beginning to show at Indy, so a generous estimate would be that it was generating a $25 million revenue stream. Hence, the IRL was probably losing MORE than $25 million annually if it gobbled up the Indy 500 profits and then ate into those of the Brickyard 400.
Validation for these estimates came most recently from a column about the IRL’s profitability by Anthony Schoettle in the IBJ. In response to an attack by Uber Gomer “Defender” the reporter said:
"Defender, my sources are consultants that have worked directly with and for the series. These sources are solid, or I wouldn't use them. I've been a reporter for 22 years, and there's way too much at stake with something like this to use unreliable sources. I was told the series lost $22 million in 2009 and $15 million in 2010. I've never had one series official call me to the carpet on those numbers. Which tells me, either they are conservative or spot on. Actually, given the increased investments in the series that are planned for 2011, I'd say closing the gap by $3 million (from the 2010 loss) is pretty good." - Anthony Schoettle
With declining attendance and television ratings, the Indy 500 is nowhere near as profitable as it has been in the past; so while the IRL/ICS may be reducing its losses, the amount of money from the Indy 500 to cover those losses is declining right along with it. The same is true of the Brickyard 400 NASCAR race. There was a time in the late 1990’s when it was rumored that IMS did not sell general admission tickets to its infield during the Cup race because it was fearful that its attendance might eclipse that of the Indy 500. At the same time it was estimated that the profits from the BY400 were approaching those of the I500 (i.e. around $20 million). Those days are long gone. According to NASCAR estimates, attendance at the BY400 has steadily declined from 270,000 in 2007 to an estimated 140,000 in 2010. Television ratings for the race have also declined. Last year the IBJ estimated that profits from the BY400 were about $10 million.
In his most recent interview (see above post), Roger Penske commented on the perception of declining attendance at NASCAR Cup races: “[When] you’ve got a 160,000-seat stadium and you have 120,000 (in the stands), it looks like you’re in trouble.”
If Pimpski thinks that looks bad, how about 140,000 (in the stands at 2010 BY400) in a stadium with 257,325 permanent seats and room for 100,000 or more in the infield?
With an estimated loss of $15 million in 2010, the deficit from the IRL/ICS is getting very close (one way or the other) to the probable take from the 2010 Indy 500. The Hulman-Georges have been kidding themselves that cutting the cost of the base 2012 Dallara in half from its cost in 2011 and putting a cap on the cost of engine leases, tires and body kits will have such an impact on the estimated $5-10 million per car budgets of the teams that they will be able to buy all-new equipment in 2012 without need of a sizeable subsidy from the Family. I think that comes under the heading: “Dream On!”
If or when NASCAR pulls the plug on the Brickyard 400, the only thing that will be keeping the ICS on life-support will be the Hoosier family’s ever-dwindling bank account. A few days ago on this forum a “hater” wrote that s/he wanted to see the demise of the IRL/ICS drag out until it had cost the Hulman-Georges their very last dime as punishment for what they’ve done to the sport (and also, I assume, to assure that they are incapable of ever trying it again). Well, s/he may well get their wish in the not too distant future.
IMHO
"If NASCAB really wants to kill the EARL, move the Hickyard to Kentucky, that cuts off half of their cash flow. However, NASCAB probably doesn't consider the EARL enough of a threat to even bother on those grounds....it'd have to be because they can get more fans and better ratings elsewhere." - Brake L8
In his most recent interview, Roger Penske was asked about the possibility of NASCAR expanding into Canada with a Cup race in Montreal. Penske responded that the oval cartel had overbuilt (in terms of seating) the tracks already on its Cup schedule and that NASCAR should look after its current track owners/promoters before it thinks of adding another race anywhere else. With respect to public perception, which is very important for the publicly traded oval cartel companies, he said: “[When] you’ve got a 160,000-seat stadium and you have 120,000 (in the stands), it looks like you’re in trouble.” He is alluding to tracks like Speedway Motorsports Inc.’s ½-mile Bristol Motor Speedway, which is the 4th largest sports venue in America, and the 8th largest in the world, housing up to 165,000 people.
Penske is not alone in thinking that overexpansion in both track seating and the number of races on the Cup schedule are partly responsible for NASCAR’s “oversaturation” of its marketplace. Analysts have been advising NASCAR for more than a decade that it needs to pare down the number of annual Cup races (currently at 36) on its calendar. The problem with this is that the two titans of the oval cartel – International Speedway Corporation (ISC) and Speedway Motorsports Inc. (SMI) – own the rights to the vast majority of Cup races and neither one is in a financial position to give up even one of its races. Which likely means that any contraction of the schedule has to come at the expense of the “independent” track owners. Until very recently there were a handful of independent tracks which NASCAR could give the axe to, but then SMI went on a track buying spree and bought up all but three of the indies (Dover Downs, Pocono, and Indianapolis).
Meanwhile, ISC – the France family’s holding company – has been consolidating its monopolistic hold over stock car racing. NASCAR won a very important case against Kentucky Speedway which reaffirmed that it has the right to deny a Cup race to anyone outside the cartel no matter how qualified their track might be to host one. Kentucky had tried the ploy of declaring that it was building a speedway specifically for the purpose of hosting a Cup race and then hoped that the federal anti-trust laws would force the Frances to give them a race. Just to make sure, ISC began a process of shutting down and/or bulldozing its smaller tracks (Rockingham, Nazareth, Pikes Peak) to both reduce the number of potential NASCAR tracks in the U.S. and reduce its visibility with the trust busters. Basically, this has resulted in NASCAR being able to monopolize its industry like the auto makers control theirs: through economies of scale. Simply, no outsider can afford to build a modern speedway capable of hosting a Cup race without first getting a guarantee for a race (which the Frances obviously won’t give them).
With two companies having total control of stock car racing, the best way of reducing the number of races – which also has the benefit of reducing expenses for the teams without downgrading the quality of the racing – without affecting their bottom lines is to simply drop the independently-owned races from the schedule. Of the three track owners in the crosshairs, the most vulnerable is the Indianapolis Motor Speedway. It got its Cup race last and hence it has the least claim of seniority AND the family that owns it also owns a rival motor sport (INDYCAR) to stock car racing. To add icing to the cake, the clueless former leader of the family threatened to knock NASCAR “off its pedestal” as the nation’s most popular motorsport. So, the Hulman-Georges and IMS are competitors to the oval cartel, not members of it. Additionally, the Hoosier family sold its stake in another NASCAR Cup track (Chicagoland) to the Frances, so they are no bigger or more invested in the sport than the other two independents.
Another reason that the Brickyard 400 is probably not long for this world has to do with ISC increasing its profitability at a time when the popularity of NASCAR is waning. If the company were disinclined to reduce the number of Cup races – for instance, if the number was integral to getting the maximum amount from multiple TV broadcasters for the rights to air the races – another way of increasing ISC’s stake would be take some or all of the independent Cup races in-house; by either reassigning them to ISC tracks or buying out the tracks themselves. Here, Dover Downs had been purposely structured to sell to ISC; they would like nothing better than to have ISC buy them out. Similarly, the owners of Pocono (the Mattioli’s) have several times offered to sell Pocono to the Frances. Thus, the only independent track owners NOT willing to sell to ISC/Frances is IMS/Hulman-Georges; which should make them the prime target.
For one or all of the various reasons for which the Frances/ISC might wish to destroy IMS/Hulman-Georges, the Daytona Mafia is perfectly positioned to do it. The contract for the Brickyard 400 is annually renewable, so they can strike (by withdrawing the race) on such short notice that the Hoosiers will have little time to react. Arguably, the perfect time to hit the Hulman-Georges would be 2012. Their motor sport will be in the process of re-making itself, so in a sense it won’t exist yet. If it fails, this could be determined to be as much the Hoosiers’ fault as the stock car cartel. Moreover, the Frances would have millions of witnesses and a solid historical record to show that the Terre Haute dimwits did it to themselves.
Back in 2001 Penske rightly determined that his defection to the IRL would be perceived by the auto companies and big name sponsors to be a vote of no confidence in the future of Champ Car racing. Overnight, our motor sports’ biggest sponsors deserted it in favor of the IRL or just to leave. There is little doubt that Penske’s defection tipped the domino that would lead eventually to the collapse of CART. Now, the shoe is on the other foot. Penske and Ganassi have the only well-funded teams in the ICS; the only ones with national name brand sponsors. How long will those sponsors stay in place if NASCAR’s ruling family withdraws its support of IMS and the Hulman-Georges? I’d wager not long. The Hoosier family has made 2012 the point of new beginning for their motor sport; conveniently it could just as easily end there.
Recently this forum had a kamikaze Gomer who asked, “How many nails do you guys have?” s/he then went on to point out that despite our predictions of the imminent demise of the ICS, it is still here. I answer that by saying that no rational person could have expected that the Hulman-Georges would have expended nearly all their inherited wealth (on the order of $600 million) and destroyed what was once one of the world’s premier motor sport events for…what? It still makes no sense. Not one of the rationales offered up by the Hoosier family or its representatives for their past behavior makes any sense. What it all comes down to is that the ICS will last only so long as the Hulman-Georges are willing to pay for it. They are basically free to do this until they are admitted to the poor house.
However, the other stakeholders in the sport – from the car companies to IZOD to the team owners – don’t approach the sport from an irrational point of view. One way of looking at the recent Firestone debacle is that the Hoosier family and their minions were irrationally willing to let the tire company go and the team owners rationally recognized that its leaving could destroy the sport; so, for once, the rational people in the sport won the day. It won’t take very many more of those irrational decisions before the stakeholders with their heads on straight head for the exit. Again, 2012 will be the perfect time. Everyone in the paddock except Penske will have invested nothing in the new-look motor sport; what better time to leave than before one has to mortgage the house to buy new equipment?
If the Frances pull the plug on the Brickyard 400, the Hulman-Georges will have ONE race with which to balance their books. By their own account in fourteen years they haven’t managed to break even once; and that’s with a one-time vastly profitable NASCAR race to supplement I500 revenues. The moment the Brickyard 400 expires, we can post a deathwatch on the Hoosier’s family’s bank account. There’s no point in watching for the demise of the IRL/ICS, it has been among the walking dead since its founding. Its heart, the only thing keeping it going, is the Hulman-Georges’ wealth; and we are VERY close to seeing the last of that.
IMHO
(by Obi wan crapwagon.com 4-9-11)
"one minor point: the Family has never said they didnt make money from the speedway, etc, only that the iRl is a money loser" - Bommerblaste
I don’t believe I said that IMS was a money loser; but without the Brickyard 400 it very well could be.
Also, the Family – actually Fred “Bagdad Bob” Nation – has said more than the IRL is a money loser. In 2002 Nation told Sports Illustrated reporter Ed Hinton that not only did the IRL never make a dime of profit but that Brickyard 400 funds had been needed to keep it afloat. Nation and other IMS bigwigs were apparently opening up because they thought the defection of Toyota and Honda from CART to the IRL was finally going to help the League “turn the corner” toward profitability. It’s easy to see why they thought that; at the moment that Nation spoke the IMS/IRL had the support of GM, Nissan, Toyota, Honda and they thought Ford would soon follow. The auto manufacturers in CART had most recently been subsidizing the sport to the tune of approximately $200 million annually. Unlike CART, however, where the car manufacturers’ support went primarily to their teams, IMS demanded that they pay a tariff directly to the Speedway and additionally commit to do a certain amount of promotion for the IMS/IRL.
The Gomerati at CrackForum and other motorsport discussion forums were aghast that Nation had let the cat out of the bag with respect to lack of profitability of the IRL. They immediately tried to assert that every property within Hulman & Co. was a separate entity and against all logic claimed that Brickyard 400 money had been tapped at random to support the IRL, but that the Indy 500 was still vastly profitable. The Idiot Grandson tried to cover his ass and give the Gomerati something to hang their fantasies on by mumbling a vague comment to a reporter that within Hulman & Co’s motorsports division funding of its various parts (i.e. IMS, Indy 500, Brickyard 400, USGP) was simply a matter of “transferring money from one [Hulman & Co.] pocket to another.”
Of course, as with most of the Gomers’ arguments, that made no sense. The Indy 500 and the IRL are integrally tied together; they can’t operate the one without the other. Hence, if any separate funds within the motorsports division were going to be tapped to support the money-losing IRL, they would obviously (per accounting practice) come from the profits of the Indy 500; not those from the Brickyard 400. So, the import of Nation’s admission was clear: the IRL black hole annually consumed ALL the profits of the Indy 500 and then Brickyard 400 money had been required to cover the remaining short fall. Thus, Nation had not only admitted that the IRL was a money pit but he gave a means to approximate the size of the financial drain. In its heyday the Indy 500 had been estimated to return between $20-30 million to the Family. By 2002 the cracks were just beginning to show at Indy, so a generous estimate would be that it was generating a $25 million revenue stream. Hence, the IRL was probably losing MORE than $25 million annually if it gobbled up the Indy 500 profits and then ate into those of the Brickyard 400.
Validation for these estimates came most recently from a column about the IRL’s profitability by Anthony Schoettle in the IBJ. In response to an attack by Uber Gomer “Defender” the reporter said:
"Defender, my sources are consultants that have worked directly with and for the series. These sources are solid, or I wouldn't use them. I've been a reporter for 22 years, and there's way too much at stake with something like this to use unreliable sources. I was told the series lost $22 million in 2009 and $15 million in 2010. I've never had one series official call me to the carpet on those numbers. Which tells me, either they are conservative or spot on. Actually, given the increased investments in the series that are planned for 2011, I'd say closing the gap by $3 million (from the 2010 loss) is pretty good." - Anthony Schoettle
With declining attendance and television ratings, the Indy 500 is nowhere near as profitable as it has been in the past; so while the IRL/ICS may be reducing its losses, the amount of money from the Indy 500 to cover those losses is declining right along with it. The same is true of the Brickyard 400 NASCAR race. There was a time in the late 1990’s when it was rumored that IMS did not sell general admission tickets to its infield during the Cup race because it was fearful that its attendance might eclipse that of the Indy 500. At the same time it was estimated that the profits from the BY400 were approaching those of the I500 (i.e. around $20 million). Those days are long gone. According to NASCAR estimates, attendance at the BY400 has steadily declined from 270,000 in 2007 to an estimated 140,000 in 2010. Television ratings for the race have also declined. Last year the IBJ estimated that profits from the BY400 were about $10 million.
In his most recent interview (see above post), Roger Penske commented on the perception of declining attendance at NASCAR Cup races: “[When] you’ve got a 160,000-seat stadium and you have 120,000 (in the stands), it looks like you’re in trouble.”
If Pimpski thinks that looks bad, how about 140,000 (in the stands at 2010 BY400) in a stadium with 257,325 permanent seats and room for 100,000 or more in the infield?
With an estimated loss of $15 million in 2010, the deficit from the IRL/ICS is getting very close (one way or the other) to the probable take from the 2010 Indy 500. The Hulman-Georges have been kidding themselves that cutting the cost of the base 2012 Dallara in half from its cost in 2011 and putting a cap on the cost of engine leases, tires and body kits will have such an impact on the estimated $5-10 million per car budgets of the teams that they will be able to buy all-new equipment in 2012 without need of a sizeable subsidy from the Family. I think that comes under the heading: “Dream On!”
If or when NASCAR pulls the plug on the Brickyard 400, the only thing that will be keeping the ICS on life-support will be the Hoosier family’s ever-dwindling bank account. A few days ago on this forum a “hater” wrote that s/he wanted to see the demise of the IRL/ICS drag out until it had cost the Hulman-Georges their very last dime as punishment for what they’ve done to the sport (and also, I assume, to assure that they are incapable of ever trying it again). Well, s/he may well get their wish in the not too distant future.
IMHO
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
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
Friday, May 13, 2011
2012 car unveiled
(by Obi wan crapwagon.com 5-11-11)
The first time that O. Bruton Smith’s Speedway Motorsports Inc. (SMI) was the main support of the IRL (with oval races at Charlotte, Atlanta, Las Vegas, and two in Texas), Smith opined to the press that Indy cars needed bumpers to enhance both their safety and popularity. He implied that if the Idiot Grandson did not comply with his “suggestion” and put bumpers on the cars, that he might deem the cars too “dangerous” for his speedways. Of course the Pagoda was aghast about the NASCAR mogul’s sacrilegious demand but George and IRL director Leo Mehl were afraid to alienate the only member of the oval cartel supporting them; so they avoided making public comment themselves and trotted out unofficial IRL mouthpieces A.J. Foyt and Eddie Cheever to publicly shoot down the idea. Smith, however, wouldn’t give up on his notion and a meeting was held between Smith, George, and Mehl to discuss the matter. The public was never told the result of the meeting, other than a quick comment afterward by Mehl that “everything’s cool.”
Perhaps not so coincidentally, shortly after the meeting SMI track manager Humpy Wheeler – widely viewed at the time as Smith’s anointed successor – decided that the IRL was not a good “fit” for his Charlotte speedway and dropped their race from his schedule. Of course, plummeting attendance may have had a lot to do with it – Dover Downs dropped its IRL race for the same reason – but it was interesting timing, especially since Smith more or less simultaneously informed George and Mehl that henceforth his Atlanta and Las Vegas speedways would be track rentals. The only SMI track manager to stay on board with George and the IRL and actually pay the league a sanction fee was TMS’s odious Eddie Gossage.
This is the same Gossage who was part of the seven-man MORONIC rubber-stamp committee who “recommended” the 2012 car and who was no doubt delighted to pass on Smith’s “told you so” and possibly his renewed demands for bumpers on Indy cars. I don’t know for certain but Eddie probably reminded the Pagoda of what happened at Atlanta Motor Speedway during the IRL’s last race there in 2001. Specifically, a spectacular fiery crash on the 53rd lap that took out 11 drivers (and cars) at once, including the league’s Great White Hopes Al Unser Jr. and Sarah Fisher. Flying dentist Jack Miller’s car burst into flames and hurtled through the air, as did Casey Mears (minus the flames), and Robbie Buhl joined in the pyrotechnics when his car also caught fire when he slammed into the wall. The press proclaimed it a “miracle” that Miller was the only driver seriously hurt and transported to the hospital; where he was treated for a concussion and assorted bumps and bruises.
Amazingly (for anyone but the IRL), race officials decided not to bring out the red flag, even though debris was scattered all over the track. The yellow was out for 35 laps, slowing the average winning speed to 133.647 mph. At the end, only 13 of the 27 starters were still running. The next year Smith declined to rent his Atlanta and Las Vegas tracks to George and the IRL.
Now, flash forward and Smith and SMI have once again become the main oval cartel support of the League That Dares Not Speak Its Name – with races at their Texas, New Hampshire, Infineon, Kentucky, and Las Vegas tracks – and guess what? The new 2012 Indy cars have bumpers! Fancy that.
JMO
Thursday, May 5, 2011
Pimpski leading the new revolt
(by Obi wan crapwagon.com 5-4-11)
From the moment the Idiot Grandson was appointed the Speedway president in January 1990 by his grandmother and mother, the Hulman-Georges tried to use their ownership of the Indianapolis Motor Speedway and its once-iconic Indy 500 to leverage ownership of the entire sport. Well, with that (and perhaps $700 million of the family fortune) they succeeded in a hostile takeover of the sport in February 2008 but virtually destroyed it in the process.
Also destroyed was the economic basis for the success of their centerpiece race. For most of its history the 500’s main claim to fame (and the participation of the sport’s best teams/drivers) was that it offered the richest prize purse in all of motorsports. That ended in 2001 when the Daytona 500, NASCAR’s centerpiece race, posted a total purse of more than $11 million in comparison to Indy’s $9.6 million. From there the gap between the two race purses widened until by 2007 the Daytona purse was richer by nearly $8 million! Last year Daytona still paid out $5 million more than the total take at Indianapolis.
More significant (IMO) than the total rewards available in the two premier races was the changes in the requirements to attempt to win a piece of them. In Championship racing it used to be that the sport’s sanctioning body (AAA, USAC, CART) published the broad technical outline for it along with a rule book by which to interpret its specific application. The sanctioning body managed the sport, inventors innovated within its bounds, and individual promoters/track owners (like IMS) posted a prize purse to try to attract the best and most popular drivers/teams to their particular race. At IMS this model continued until 1981 when for all intents and purposes the Hulman puppet organization USAC lost the first war in AOWR to the team owners of CART. From that point until 1997 when the Idiot Grandson replaced his grandfather’s creation with one of his own (i.e. the IRL), the Indy 500 was the only National Championship-caliber race sanctioned by USAC.
However, the reality of the situation at the Indy 500 was such that while USAC theoretically controlled the technical specifications for the race and its own one-race “Gold Crown Championship,” the Speedway needed the team owners of CART in order to stage a successful race. Between 1979 and 1981 the Speedway and USAC refused to allow the 500 to be counted as a “points paying” race toward the CART national championship. After they were sued and lost their case in federal court in 1979 for attempting to ban certain CART team owners from the May classic, IMS and USAC changed the 1980 Indy 500 to an “invitational” race in an effort to control the teams that could enter it (and have a chance at its rich prize purse). The folly of this tactic was revealed at the June 1981 USAC Championship race at Pocono when the majority of the CART teams boycotted the race and USAC had to flesh out its field with converted dirt track cars; causing the race to be deemed a failure. The message being sent by CART was clear: if you attempt to technically control the National Championship and divide CART’s ranks by picking and choosing entrants to the rich Indy 500, we can do the same thing to the 500 that we did to Pocono. The Speedway management wisely allowed the CART sponsor PPG Industries to broker a deal whereby the 500 would remain under USAC (i.e. Hulman) sanction but would become a race counted as part of the CART championship in terms of points. This compromise essentially limited the extent of IMS/USAC control over the sport’s technical specifications.
I am of the belief that the CART boycott of Pocono was the one of Tony George’s nightmares; the “threat” to the IMS and its attempted control of the sport that he often alluded to during his tenure as head of IMS and the IRL. The next time that IMS refused to allow its race to be counted toward the CART championship was 1996 when it counted instead toward Tony George’s revival of the USAC National Championship, the Indy Racing League. As with the earlier organization, the purpose of the IRL was to establish its dominance over the sport’s technical outline and rule book; which was accomplished in part with the issuance of a significantly different IRL formula and rule book in 1997. Previous to this, George had already reinstituted the exclusive invitational status of the 500 with 1996’s “25-8 Rule.”
My point is that by seizing control of his sport’s technical specifications and rulebook, Tony George significantly altered the economy of the Indy 500. Specifically, the number of choices that a would-be participant could make in equipment was greatly limited and the range of his/her financial options narrowed. Very quickly, George’s 1997 “production-based” engine formula gave way to purpose-built racing engines and in 2003 CART’s brand of leased racing powerplants was back; and every step of the way the cost of Indycar racing was increasing. Between 2003 and 2006, CART’s economic model was somewhat in place in the IRL in that a would-be 500 entrant had the possibility of manufacturer subsidies/sponsorship to help defray the cost of competing in the big race.
That all changed in 2006 when the IRL became a Dallara-Honda “spec” series. Except for a couple of legacy teams (from CART) there were no more “factory teams” or manufacturer subsidies. Now, anyone hoping to get a piece of the stagnant I500 prize purse had few options; the only equipment choice was a Dallara-Honda and the only available subsidies were from the series itself and contingent on a team participating for the whole IRL series of races (generally for a loss). The absolute cheapest one could expect to operate a one-car shoestring operation was an estimated $5 million (with no real chance of winning) and the top teams were spending $7-10 million or more per car. If one wanted to do an Indy “one-off,” everything (especially engine and tire leases) was more expensive because they were not subsidized. The people who brought this stifling, failed economy into being weren’t the “evil” team owners of CART but rather Tony George and his family and their obsession with owning (in preference to just controlling) the sport.
A good example of the radically changed economy of the 500 can be seen in the person of the Indy 500’s Top Single Race Driver Payoff leader: 2009 I500 race winner Helio Castroneves. For his win, HCN took home a record $3,048,005 record purse (which he had to split with his team). In order to get it, however, it cost Team Penske no less than $12 million (and probably more) to field his car for the season (which was required to get its TEAM subsidy). What kind of a “business” requires an expenditure of $12 million to get back revenues of $3 million? The answer is a losing business. If it were not for Team Penske’s sponsors, it would be operating at a significant loss. Moreover, Team Penske is one of only three teams in the entire IICS with meaningful sponsorship. This is in no small measure a result of Tony George’s control of his motor sport.
Under his tenure the IRL/ICS and most particularly his once-premier race went into free-fall with regard to their popularity and consequently they offer less and less incentive for sponsorship every passing year. Additionally, in a desperate attempt to stem the red ink hemorrhaging from their family bank accounts, the Hulman-Georges have been diverting to themselves every major sponsor who shows an interest in their boutique motor sport. It was a minor miracle that Team Penske managed to horn in on the family’s IZOD sponsorship; but Roger is the only person who could accomplish it.
Now, the H-G’s have taken the final step in the total destruction of Indycar’s economy (IMO). They have undertaken to specify and cause to be manufactured all-new, expensive equipment for the 2012 season without consultation with their team owners; but fully expect them to pay for it. Additionally, they have announced a further reduction in their TEAM subsidy program for the team owners. On the face of it, the sponsorship they have been able to secure from IZOD has been squandered. There’s no telling what they’ve done with their part of it (i.e. “Tony Tax”) but the portion spent by PVH on “activation” and marketing of the sport has obviously been wasted. Race attendance and television ratings are at all-time lows; discouraging any would-be new sponsors and surely giving PVH second thoughts.
This year, for the first time in memory, Roger Penske was not able to sell primary sponsorship for his IICS team. He had to use his extensive b-t-b contacts to arrange different multiple “associate” sponsorships for each of his cars. His is the only team in the IICS paddock who will not accept ride buyers and that is because he is the only team owner who managed to secure adequate sponsorship. So, if Penske is the IICS’s “best-case scenario,” what does this say to his objection to buying new aero kits (when his is the flagship team for GM!). It says the ROI potential for the 2012 IICS is no longer viable and its economy is close to the point of collapse.
In his last published interview in May 2010 before returning to the family fold, Tony George was asked: Was It Worth It?
"HC: Given all that you know now -- all that you have been through -- was it all worth it to form the Indy Racing League? And why?
TG: That is a very broad, open question and the only thing I can do is reiterate what I said earlier, but perhaps say it another way.
There is great value in the Indy Racing League; it exists to support the institutions of the Indianapolis Motor Speedway and the Indianapolis 500 Mile race; and I am proud of its contributions to the sport.
[What he said earlier was:]
TG: Much has been speculated, wildly inaccurate, about how much was spent to build the IRL. I am proud that we have spent a lot less than it would have taken to buy a professional sports team in the NFL, MLB, NBA or even the NHL – and we own the whole league."
In those comments you have the Hulman-Georges’ complete rationale for destroying our sport:
One, they wanted to own the entire sport so they paid perhaps half the cost of buying the New York Yankees to found a motor sport that earns far less that the Indianapolis Indians, the city’s AAA club;
And, two, their motor sport “exists [only] to support the institutions of the Indianapolis Motor Speedway and the Indianapolis 500 Mile race," and has largely succeeded in doing irreparable harm to both.
JMO
From the moment the Idiot Grandson was appointed the Speedway president in January 1990 by his grandmother and mother, the Hulman-Georges tried to use their ownership of the Indianapolis Motor Speedway and its once-iconic Indy 500 to leverage ownership of the entire sport. Well, with that (and perhaps $700 million of the family fortune) they succeeded in a hostile takeover of the sport in February 2008 but virtually destroyed it in the process.
Also destroyed was the economic basis for the success of their centerpiece race. For most of its history the 500’s main claim to fame (and the participation of the sport’s best teams/drivers) was that it offered the richest prize purse in all of motorsports. That ended in 2001 when the Daytona 500, NASCAR’s centerpiece race, posted a total purse of more than $11 million in comparison to Indy’s $9.6 million. From there the gap between the two race purses widened until by 2007 the Daytona purse was richer by nearly $8 million! Last year Daytona still paid out $5 million more than the total take at Indianapolis.
More significant (IMO) than the total rewards available in the two premier races was the changes in the requirements to attempt to win a piece of them. In Championship racing it used to be that the sport’s sanctioning body (AAA, USAC, CART) published the broad technical outline for it along with a rule book by which to interpret its specific application. The sanctioning body managed the sport, inventors innovated within its bounds, and individual promoters/track owners (like IMS) posted a prize purse to try to attract the best and most popular drivers/teams to their particular race. At IMS this model continued until 1981 when for all intents and purposes the Hulman puppet organization USAC lost the first war in AOWR to the team owners of CART. From that point until 1997 when the Idiot Grandson replaced his grandfather’s creation with one of his own (i.e. the IRL), the Indy 500 was the only National Championship-caliber race sanctioned by USAC.
However, the reality of the situation at the Indy 500 was such that while USAC theoretically controlled the technical specifications for the race and its own one-race “Gold Crown Championship,” the Speedway needed the team owners of CART in order to stage a successful race. Between 1979 and 1981 the Speedway and USAC refused to allow the 500 to be counted as a “points paying” race toward the CART national championship. After they were sued and lost their case in federal court in 1979 for attempting to ban certain CART team owners from the May classic, IMS and USAC changed the 1980 Indy 500 to an “invitational” race in an effort to control the teams that could enter it (and have a chance at its rich prize purse). The folly of this tactic was revealed at the June 1981 USAC Championship race at Pocono when the majority of the CART teams boycotted the race and USAC had to flesh out its field with converted dirt track cars; causing the race to be deemed a failure. The message being sent by CART was clear: if you attempt to technically control the National Championship and divide CART’s ranks by picking and choosing entrants to the rich Indy 500, we can do the same thing to the 500 that we did to Pocono. The Speedway management wisely allowed the CART sponsor PPG Industries to broker a deal whereby the 500 would remain under USAC (i.e. Hulman) sanction but would become a race counted as part of the CART championship in terms of points. This compromise essentially limited the extent of IMS/USAC control over the sport’s technical specifications.
I am of the belief that the CART boycott of Pocono was the one of Tony George’s nightmares; the “threat” to the IMS and its attempted control of the sport that he often alluded to during his tenure as head of IMS and the IRL. The next time that IMS refused to allow its race to be counted toward the CART championship was 1996 when it counted instead toward Tony George’s revival of the USAC National Championship, the Indy Racing League. As with the earlier organization, the purpose of the IRL was to establish its dominance over the sport’s technical outline and rule book; which was accomplished in part with the issuance of a significantly different IRL formula and rule book in 1997. Previous to this, George had already reinstituted the exclusive invitational status of the 500 with 1996’s “25-8 Rule.”
My point is that by seizing control of his sport’s technical specifications and rulebook, Tony George significantly altered the economy of the Indy 500. Specifically, the number of choices that a would-be participant could make in equipment was greatly limited and the range of his/her financial options narrowed. Very quickly, George’s 1997 “production-based” engine formula gave way to purpose-built racing engines and in 2003 CART’s brand of leased racing powerplants was back; and every step of the way the cost of Indycar racing was increasing. Between 2003 and 2006, CART’s economic model was somewhat in place in the IRL in that a would-be 500 entrant had the possibility of manufacturer subsidies/sponsorship to help defray the cost of competing in the big race.
That all changed in 2006 when the IRL became a Dallara-Honda “spec” series. Except for a couple of legacy teams (from CART) there were no more “factory teams” or manufacturer subsidies. Now, anyone hoping to get a piece of the stagnant I500 prize purse had few options; the only equipment choice was a Dallara-Honda and the only available subsidies were from the series itself and contingent on a team participating for the whole IRL series of races (generally for a loss). The absolute cheapest one could expect to operate a one-car shoestring operation was an estimated $5 million (with no real chance of winning) and the top teams were spending $7-10 million or more per car. If one wanted to do an Indy “one-off,” everything (especially engine and tire leases) was more expensive because they were not subsidized. The people who brought this stifling, failed economy into being weren’t the “evil” team owners of CART but rather Tony George and his family and their obsession with owning (in preference to just controlling) the sport.
A good example of the radically changed economy of the 500 can be seen in the person of the Indy 500’s Top Single Race Driver Payoff leader: 2009 I500 race winner Helio Castroneves. For his win, HCN took home a record $3,048,005 record purse (which he had to split with his team). In order to get it, however, it cost Team Penske no less than $12 million (and probably more) to field his car for the season (which was required to get its TEAM subsidy). What kind of a “business” requires an expenditure of $12 million to get back revenues of $3 million? The answer is a losing business. If it were not for Team Penske’s sponsors, it would be operating at a significant loss. Moreover, Team Penske is one of only three teams in the entire IICS with meaningful sponsorship. This is in no small measure a result of Tony George’s control of his motor sport.
Under his tenure the IRL/ICS and most particularly his once-premier race went into free-fall with regard to their popularity and consequently they offer less and less incentive for sponsorship every passing year. Additionally, in a desperate attempt to stem the red ink hemorrhaging from their family bank accounts, the Hulman-Georges have been diverting to themselves every major sponsor who shows an interest in their boutique motor sport. It was a minor miracle that Team Penske managed to horn in on the family’s IZOD sponsorship; but Roger is the only person who could accomplish it.
Now, the H-G’s have taken the final step in the total destruction of Indycar’s economy (IMO). They have undertaken to specify and cause to be manufactured all-new, expensive equipment for the 2012 season without consultation with their team owners; but fully expect them to pay for it. Additionally, they have announced a further reduction in their TEAM subsidy program for the team owners. On the face of it, the sponsorship they have been able to secure from IZOD has been squandered. There’s no telling what they’ve done with their part of it (i.e. “Tony Tax”) but the portion spent by PVH on “activation” and marketing of the sport has obviously been wasted. Race attendance and television ratings are at all-time lows; discouraging any would-be new sponsors and surely giving PVH second thoughts.
This year, for the first time in memory, Roger Penske was not able to sell primary sponsorship for his IICS team. He had to use his extensive b-t-b contacts to arrange different multiple “associate” sponsorships for each of his cars. His is the only team in the IICS paddock who will not accept ride buyers and that is because he is the only team owner who managed to secure adequate sponsorship. So, if Penske is the IICS’s “best-case scenario,” what does this say to his objection to buying new aero kits (when his is the flagship team for GM!). It says the ROI potential for the 2012 IICS is no longer viable and its economy is close to the point of collapse.
In his last published interview in May 2010 before returning to the family fold, Tony George was asked: Was It Worth It?
"HC: Given all that you know now -- all that you have been through -- was it all worth it to form the Indy Racing League? And why?
TG: That is a very broad, open question and the only thing I can do is reiterate what I said earlier, but perhaps say it another way.
There is great value in the Indy Racing League; it exists to support the institutions of the Indianapolis Motor Speedway and the Indianapolis 500 Mile race; and I am proud of its contributions to the sport.
[What he said earlier was:]
TG: Much has been speculated, wildly inaccurate, about how much was spent to build the IRL. I am proud that we have spent a lot less than it would have taken to buy a professional sports team in the NFL, MLB, NBA or even the NHL – and we own the whole league."
In those comments you have the Hulman-Georges’ complete rationale for destroying our sport:
One, they wanted to own the entire sport so they paid perhaps half the cost of buying the New York Yankees to found a motor sport that earns far less that the Indianapolis Indians, the city’s AAA club;
And, two, their motor sport “exists [only] to support the institutions of the Indianapolis Motor Speedway and the Indianapolis 500 Mile race," and has largely succeeded in doing irreparable harm to both.
JMO
Wednesday, May 4, 2011
Pimpski leading the new revolt
(by Obi wan crapwagon.com 5-3-11)
Think R.M.S. Titanic; the fourth water-tight compartment has just flooded and the ship is going down. The question is: do you (a) buy stock in the White Star Line, the ship’s owners, or do you (b) stand as close as you can get to one of the few lifeboats?
It’s called minimal exposure.
The Hulman-Georges made all the decisions where the new car was concerned; they didn’t consult the owners (i.e. the customers) but instead specified the entire 2012 car themselves to meet their own perceived needs. Cotman finally admitted a couple of weeks ago that the aero kit “business” was a sham; instead it’s an elaborate “branding and marketing” scheme to promote the Hulman-Georges’ troubled property. According to Cotman there was only enough actual business for one firm to make a profit and the Family decided long before the rubber-stamp MORONIC committee was formed that Dallara would get the business. The Italian car maker has been handed the chassis and aero kit business on a platter; having been guaranteed the entire chassis (“safety cell”) business for good and the aero kit business until at least May 2012. For everyone else it is a money-losing proposition, which according to Cotman “must be entered into for the right reason” (that being costly advertising).
Pimpski is just giving them a dose of reality. In a quasi-free-market economy it is the customer who is usually in charge of purchasing decisions. In the skewed world of the arrogant Hulman-Georges, they want to make all the decisions for “their” motor sport but have the team owners pay for them. That isn’t going to happen with businessmen like F@tassi (of the DeltaWing) and Pimpski. Now the shoe is on the other foot: the tyrants at 16th & Jonestown and their allies in Italy are going to have to sweat it out and see if the owners are going to buy the 2012 car; if not, it is the H-G’s name on all the contracts and it is they and their cronies (like Dallara) who will take a financial bath.
No aero kits until 2013 means no owner/manufacturer commitments until much closer to 2013 and no $200,000-$250,000 fees paid to the Pagoda. That sum pales in comparison, however, to the $5 million+ that a committed aero kit manufacturer would have had to sink into its product; which they can now “save.” Now, the Pimp and his clients get to stand on the sideline and see if the Rodeo Clown can manage to save the league before they invest a dime in new equipment. As I said last week, all Pimpski has to do to topple the league is refuse to buy the 2012 car for himself and GM. Then Berkman and Honda will “disappoint” themselves to the exit sign and save a ton of money better spent on disaster relief in Japan.
One interesting tidbit in the article is that John Judd’s company is apparently going to supply the “Lotus” engine, and not Kalkoven’s Cosworth. So, not even the turncoat Amigo was stupid enough to invest his own skin in the H-G's rigged game.
Lovin’ it!
JMO
P.S. HPD's Berkman is blowing smoke; Honda was the last manufacturer to "commit" to making an aero kit. This was only a couple of weeks ago. Berkman (and HPD) is another Pagoda favorite who was going to get a leg up on all the other manufacturers by having a Honda engine power the testing prototype. Thus, the (production) prototype would be tailor made for the Honda powerplant and everyone else would have to play catch-up. My guess is that Berkman et al planned on keeping the current Honda-Dallara arrangement; with the stock Dallara used as the "Honda" with the judicious application of some decals and/or stickers.
Think R.M.S. Titanic; the fourth water-tight compartment has just flooded and the ship is going down. The question is: do you (a) buy stock in the White Star Line, the ship’s owners, or do you (b) stand as close as you can get to one of the few lifeboats?
It’s called minimal exposure.
The Hulman-Georges made all the decisions where the new car was concerned; they didn’t consult the owners (i.e. the customers) but instead specified the entire 2012 car themselves to meet their own perceived needs. Cotman finally admitted a couple of weeks ago that the aero kit “business” was a sham; instead it’s an elaborate “branding and marketing” scheme to promote the Hulman-Georges’ troubled property. According to Cotman there was only enough actual business for one firm to make a profit and the Family decided long before the rubber-stamp MORONIC committee was formed that Dallara would get the business. The Italian car maker has been handed the chassis and aero kit business on a platter; having been guaranteed the entire chassis (“safety cell”) business for good and the aero kit business until at least May 2012. For everyone else it is a money-losing proposition, which according to Cotman “must be entered into for the right reason” (that being costly advertising).
Pimpski is just giving them a dose of reality. In a quasi-free-market economy it is the customer who is usually in charge of purchasing decisions. In the skewed world of the arrogant Hulman-Georges, they want to make all the decisions for “their” motor sport but have the team owners pay for them. That isn’t going to happen with businessmen like F@tassi (of the DeltaWing) and Pimpski. Now the shoe is on the other foot: the tyrants at 16th & Jonestown and their allies in Italy are going to have to sweat it out and see if the owners are going to buy the 2012 car; if not, it is the H-G’s name on all the contracts and it is they and their cronies (like Dallara) who will take a financial bath.
No aero kits until 2013 means no owner/manufacturer commitments until much closer to 2013 and no $200,000-$250,000 fees paid to the Pagoda. That sum pales in comparison, however, to the $5 million+ that a committed aero kit manufacturer would have had to sink into its product; which they can now “save.” Now, the Pimp and his clients get to stand on the sideline and see if the Rodeo Clown can manage to save the league before they invest a dime in new equipment. As I said last week, all Pimpski has to do to topple the league is refuse to buy the 2012 car for himself and GM. Then Berkman and Honda will “disappoint” themselves to the exit sign and save a ton of money better spent on disaster relief in Japan.
One interesting tidbit in the article is that John Judd’s company is apparently going to supply the “Lotus” engine, and not Kalkoven’s Cosworth. So, not even the turncoat Amigo was stupid enough to invest his own skin in the H-G's rigged game.
Lovin’ it!
JMO
P.S. HPD's Berkman is blowing smoke; Honda was the last manufacturer to "commit" to making an aero kit. This was only a couple of weeks ago. Berkman (and HPD) is another Pagoda favorite who was going to get a leg up on all the other manufacturers by having a Honda engine power the testing prototype. Thus, the (production) prototype would be tailor made for the Honda powerplant and everyone else would have to play catch-up. My guess is that Berkman et al planned on keeping the current Honda-Dallara arrangement; with the stock Dallara used as the "Honda" with the judicious application of some decals and/or stickers.
Sunday, May 1, 2011
CEO Bull has the "Vision"
(by Obi wan crapwagon.com 5-1-11)
I believe they have eight more years (until 2018) on the Vs contract.
No doubt he is talking about the I497.5 contract with ABC, which is up in 2012. The Gomers are hoping against hope for a bidding war between major networks but it is unlikely to materialize (IMO).
Here’s why: Circa 2008 ABC/ESPN was paying the Pagoda $10 million for the broadcast rights to the I497.5 and the rest of the ICS schedule of 18 races. However, almost all the races but Indy were losing money hand over fist with ratings less than a third of an average NASCAR Cup race (if they were lucky; Motegi, for instance, repeatedly scored the rare double-goose egg (0.0). From what I heard the Idiot Grandson was having to increasingly sweeten the pot for ABC/ESPN by picking up production costs and guaranteeing a certain amount of advertising (which the Pagoda could then try to sell themselves). Finally, even that didn’t make the broadcasts profitable and ESPN decided to take a pass on the races (13) that they were showing on ESPN2; they offered a little less than $4 million for the broadcast rights to Indy and five races of their choice. That left the IG holding the bag on 13 races with no network remotely interested in paying him to broadcast them.
When Vs, for reasons known only to them, actually offered money (about $60 million over 10 years; but probably with performance clauses) for ESPN’s unwanted races; and the IG must have thought that he died and went to heaven. Between the two broadcasters, the Pagoda was able to almost financially stay in the same place with almost $10 million in combined deals. They couldn’t brag about going up but at least they didn’t have to lie (too much) about going down.
However, as was suspected at the time, it was a deal made with the Devil: the Family got the same amount of money they were accustomed to but in return their boutique motor sport disappeared off the face of the Earth (pretty much). There is no way that NBC/Vs are going to increase their investment in the IICS without a demonstrable increase in its ratings and just the reverse is happening. With PVH/IZOD and Vs pouring more marketing and promotion behind the league than at almost any other period in its history, it seems to be actually driving the customers away. More and more people are getting a first look at the IICS and they don’t like what they see.
The Gomers, being Gomers, have convinced themselves that the fact that NBC/Vs just paid $2 billion for the rights to broadcast the NHL means they are about to get the same kind of deal (completely ignoring the fact that their contract still has 8 years to run). Even if it didn’t, the NHL is doing what was expected of the IICS -- steadily increasing its ratings – whereas Indycar’s get worse with almost every race.
Even if the IICS didn’t have abysmal ratings the NHL deal would likely have worked against it. For example, Rupert Murdoch’s News Corporation owns the SPEED Channel; they bought it when it was the Speedvision Channel and showed a diverse schedule of motor sports from Le Mans to the Reno air races as well as special interest shows of interest to a wide variety of auto/motorcycle enthusiasts. Then Murdoch/NC/FOX paid an ungodly sum of money for the rights to broadcast about a third of NASCAR’s Cup races and it was decided that every division in the company had to do what it could to make the investment profitable. Overnight, Speedvision became the SPEED Channel; which is the de facto NASCAR Channel 24/7/365. Almost all other motor sports were pushed out by the need to capitalize the networks’ huge investment. I see no reason why NBC/Vs sizeable investment in hockey won’t have the same negative effect on other sports on Vs (especially those that aren’t pulling their weight).
Additionally, the Hulman-Georges have finally been hoisted on their own petard. For decades they kept the Indy broadcast contract to themselves and thereby weakened the value of the broadcast rights to the rest of the sport/series. No major network is going to invest big in a motor sport whose premier and defining race is the property of a rival broadcaster. The primary reason that CART ended up on ABC/ESPN is because no other major broadcaster was going to put money into promoting the series when ABC would end up reaping the rewards with the 500. At the same time, ABC/ESPN knew they were in the cat bird seat with their separate I497.5 contract, so they never paid CART what it was worth (if its broadcast package had been monolithic like NASCAR’s).
Now the broadcasters that the Rodeo Clown are hoping will go into a feeding frenzy over the Indy contract (plus five regular IICS races) are facing the identical situation with the “unified” IICS: meaning a divided broadcast package.
To make matters more dismal for the league, the last I497.5 had the worst ratings and attendance since the race was first broadcast live in the early eighties; so unless there is a dramatic improvement, ABC is unlikely to be bullish about the next Indy contract and NBC is unlikely to enter into a bidding war to buy ABC’s trouble. As for any other major network … forgetaboutit; TWO other networks own pieces of the IICS – why risk big bucks for a part of the whole.
As if that wasn’t enough to make major network CEO’s head for the hills; try the fact that bedrock IICS sponsor Firestone is for sure gone (along with its advertising) in 2013 and word on the street is that the 0.2 IICS ratings on Vs have PVH/Vs looking for a way out at the end of the year (or sooner).
All in all, the Rodeo Clown would probably have better luck with the visions he could get from peyote or shrooms than the second-hand ones from the Idiot Grandson and his Mommy.
JMO
I believe they have eight more years (until 2018) on the Vs contract.
No doubt he is talking about the I497.5 contract with ABC, which is up in 2012. The Gomers are hoping against hope for a bidding war between major networks but it is unlikely to materialize (IMO).
Here’s why: Circa 2008 ABC/ESPN was paying the Pagoda $10 million for the broadcast rights to the I497.5 and the rest of the ICS schedule of 18 races. However, almost all the races but Indy were losing money hand over fist with ratings less than a third of an average NASCAR Cup race (if they were lucky; Motegi, for instance, repeatedly scored the rare double-goose egg (0.0). From what I heard the Idiot Grandson was having to increasingly sweeten the pot for ABC/ESPN by picking up production costs and guaranteeing a certain amount of advertising (which the Pagoda could then try to sell themselves). Finally, even that didn’t make the broadcasts profitable and ESPN decided to take a pass on the races (13) that they were showing on ESPN2; they offered a little less than $4 million for the broadcast rights to Indy and five races of their choice. That left the IG holding the bag on 13 races with no network remotely interested in paying him to broadcast them.
When Vs, for reasons known only to them, actually offered money (about $60 million over 10 years; but probably with performance clauses) for ESPN’s unwanted races; and the IG must have thought that he died and went to heaven. Between the two broadcasters, the Pagoda was able to almost financially stay in the same place with almost $10 million in combined deals. They couldn’t brag about going up but at least they didn’t have to lie (too much) about going down.
However, as was suspected at the time, it was a deal made with the Devil: the Family got the same amount of money they were accustomed to but in return their boutique motor sport disappeared off the face of the Earth (pretty much). There is no way that NBC/Vs are going to increase their investment in the IICS without a demonstrable increase in its ratings and just the reverse is happening. With PVH/IZOD and Vs pouring more marketing and promotion behind the league than at almost any other period in its history, it seems to be actually driving the customers away. More and more people are getting a first look at the IICS and they don’t like what they see.
The Gomers, being Gomers, have convinced themselves that the fact that NBC/Vs just paid $2 billion for the rights to broadcast the NHL means they are about to get the same kind of deal (completely ignoring the fact that their contract still has 8 years to run). Even if it didn’t, the NHL is doing what was expected of the IICS -- steadily increasing its ratings – whereas Indycar’s get worse with almost every race.
Even if the IICS didn’t have abysmal ratings the NHL deal would likely have worked against it. For example, Rupert Murdoch’s News Corporation owns the SPEED Channel; they bought it when it was the Speedvision Channel and showed a diverse schedule of motor sports from Le Mans to the Reno air races as well as special interest shows of interest to a wide variety of auto/motorcycle enthusiasts. Then Murdoch/NC/FOX paid an ungodly sum of money for the rights to broadcast about a third of NASCAR’s Cup races and it was decided that every division in the company had to do what it could to make the investment profitable. Overnight, Speedvision became the SPEED Channel; which is the de facto NASCAR Channel 24/7/365. Almost all other motor sports were pushed out by the need to capitalize the networks’ huge investment. I see no reason why NBC/Vs sizeable investment in hockey won’t have the same negative effect on other sports on Vs (especially those that aren’t pulling their weight).
Additionally, the Hulman-Georges have finally been hoisted on their own petard. For decades they kept the Indy broadcast contract to themselves and thereby weakened the value of the broadcast rights to the rest of the sport/series. No major network is going to invest big in a motor sport whose premier and defining race is the property of a rival broadcaster. The primary reason that CART ended up on ABC/ESPN is because no other major broadcaster was going to put money into promoting the series when ABC would end up reaping the rewards with the 500. At the same time, ABC/ESPN knew they were in the cat bird seat with their separate I497.5 contract, so they never paid CART what it was worth (if its broadcast package had been monolithic like NASCAR’s).
Now the broadcasters that the Rodeo Clown are hoping will go into a feeding frenzy over the Indy contract (plus five regular IICS races) are facing the identical situation with the “unified” IICS: meaning a divided broadcast package.
To make matters more dismal for the league, the last I497.5 had the worst ratings and attendance since the race was first broadcast live in the early eighties; so unless there is a dramatic improvement, ABC is unlikely to be bullish about the next Indy contract and NBC is unlikely to enter into a bidding war to buy ABC’s trouble. As for any other major network … forgetaboutit; TWO other networks own pieces of the IICS – why risk big bucks for a part of the whole.
As if that wasn’t enough to make major network CEO’s head for the hills; try the fact that bedrock IICS sponsor Firestone is for sure gone (along with its advertising) in 2013 and word on the street is that the 0.2 IICS ratings on Vs have PVH/Vs looking for a way out at the end of the year (or sooner).
All in all, the Rodeo Clown would probably have better luck with the visions he could get from peyote or shrooms than the second-hand ones from the Idiot Grandson and his Mommy.
JMO
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