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New parameters could change landscape

7/7/2005

KANSAS CITY, Kan. – Honda Performance Development and Ilmor, Inc. have
collaborated on a successful IndyCar Series engine program since
2003. But the two companies currently in partnership may soon find
themselves competing against each other, either on track or for the
contract to serve as the series' exclusive engine supplier for 2007 and
beyond.

While the frenzy over Danica Patrick's rise to front-runner status
has captured the IndyCar Series spotlight in recent months, the league's most
important news story continues to slowly unfold behind the scenes. In
short, what will the IndyCar Series pursue in terms of its engine specification and supply for 2007 and beyond? And which manufacturers -- if any -- will participate?

The IndyCar Series got bad news on a couple of fronts last week that placed even
more significance on its future technical direction. On June
27, Toyota publicly confirmed that it will withdraw from the IndyCar
Series at the end of the 2006 season, following Chevrolet's departure
at the end of this year. And IndyCar president Brian Barnhart admitted to
ESPN.com that Honda has informed the circuit that it too will say
"sayonara" following next year's campaign.

However, Barnhart said the Honda's letter was a regulatory formality
and that he is optimistic Honda will extend its relationship with the
IndyCar Series into 2007 and beyond. IndyCar rules require manufacturers that would like to compete in the series in 2007 to inform the series of their intentions by April 1, 2006.

"Yes, Honda has given their annual notification that they are out for
2007, but they certainly don't ask us to make that public," Barnhart
commented. "We've had an awful lot of meetings with them involving
the future engine specifications and policies, and they have a lot of
people committed to the design and build of those specifications and
a lot of resources already committed. Technically, they are not in,
but on the other hand they sure seem to be putting forth a lot of
effort in a way that would seem to indicate that they are going to
continue."

Honda Performance Development president Robert Clarke agreed that the
door remains open for the manufacturer to continue in IndyCars in
2007 and beyond -- and perhaps expand into other American-based racing
series.

"We've made a substantial investment in U.S. open-wheel racing over
the last 12 years with CART and the IRL," Clarke said. "To just
walk away from that, as Toyota is going to do, seems foolish because
you lose all of that investment.

"We came to the IRL in the belief that we could make a difference and
make it better," he added. "If we were to walk away too, we could do
serious damage to the series, which is not what we came to do. We are
awaiting the IRL future rules and an understanding of the structure
of the league going forward. My feeling is that we need to stay
regardless of the scenario. But that's not my decision to make."

A number of factors cloud the issue. First and foremost, the IndyCar Series has
not revealed the parameters of its 2007 engine program. Series
officials are concerned about the way engine costs rapidly escalated
since Toyota and Honda entered competition in 2003. Honda, like
Chevrolet and Toyota, has concluded that the tens of millions of
dollars it is spending on subsidizing teams and marketing the series
isn't making much of an impact on the public.

Barnhart said that the IndyCar Series is close to making its intentions for the
future public, and he agrees that the series has a long way to go in
terms of increasing its market penetration.

"We have 95 percent of the package finished and have communicated
that to the people that are expressing interest in participating in
2006 and longer," he said. "The delay has been trying to balance all
the things that are in play on the business side and on the political
side. Sorting the tech specs hasn't been very difficult because the
reliability the manufacturers have brought to the game and the
improvement in the product on the racetrack since their arrival. It
would be foolish to mess with the success that we've had on the
racetrack. We're not going to stray too far from our existing formula
because it's working too well.

"To me, the point is that we have a lot of options, engine-wise, with
or without Toyota or manufacturer support."

Clarke, who has functioned as the point man in recent efforts to
bring the IndyCar Series and Champ Car together for a unified open-wheel series,
said that Honda's investment in HPD is significant enough that the
engine-building concern must branch out in order to survive -- even if
that means bending the parameters of "The Honda Way."

"Now is the time to expand into multiple series because we need to
keep our people fully occupied," Clarke said. "We need to explore
other categories of what I would term 'racing business' -- Grand Am,
drag racing, or maybe ALMS [American Le Mans Series] -- not so much to promote the Honda brand
but to support HPD itself. HPD has always competed in one series at a
time, but the company has grown substantially and it needs business
to meet its own objectives and those from Honda.

"If the IRL becomes a single brand, maybe it falls into that 'racing
business' category, though I don't feel it could be considered a
premier level of racing without competition," he continued. "As a
single make, it may be difficult to achieve all of our multiple
objectives, but it's not like there's no value because there's still
the Indy 500."

Roger Penske Penske

If the IndyCar Series can't entice Honda to stay, it appears to be putting a
backup plan in place that would utilize Ilmor to service and supply
the field -- reportedly using a pool of approximately 200 previous
generation, 3.5-liter GM IndyCar motors. Ilmor co-founders Roger Penske and Mario Illien (along with the estate of deceased Ilmor partner
Paul Morgan) recently took full control of Ilmor's U.S. operations
and they could be positioning the company to power the IndyCar grid.

"I think that's an option down the road, maybe after 2006, '07 or
'08," Penske reponded. "But that's up to the IRL. You'd always like
to have manufacturers in because it supports the teams but at this
point, it's still too far out to make a specific decision. They're in
the engine business so it's certainly something they would look at."

"We have a lot of options for people who can build and maintain
engines for us under these specifications," Barnhart noted. "A lot of
existing engines are already out there."

Honda piggybacked onto the Ilmor IndyCar program in late 2002 after
pulling out of the Champ Car series. Since then, HPD has taken
over most of the design and development work on the engine that has
dominated IndyCar Series competition for the last two years. The
partnership has worked well for nearly three years and Clarke doesn't
expect that to change over the balance of the contract.

Meanwhile, Jim Aust, president of Toyota Racing Development, stated
that no matter what engine formula the IndyCar Series chooses for the future -- or if by some chance there is a unification with Champ Car -- Toyota is getting out of American open-wheel racing at the end
of 2006.

"This is a decision the company has looked at long and hard and felt
this was the way to proceed," Aust said. "It's always a tough
decision when you look at continuing a program. This is an issue we
had been looking at for quite awhile and we knew that eventually the
day was going to be before us. Our plans are to focus on this program
as much as we have and also to continue to run in the Craftsman Truck
Series. Anything beyond that at this point is totally speculative.

"Any kind of reorganization or joining doesn't look like it would
make it an option for us," he added. "We've been in open-wheel racing
in the United States for going on 12 years now and I think the
program had run its course. The decision was made to look at some
other options and we're still looking at those."

John Oreovicz covers open-wheel racing for National Speed Sport News and ESPN.com.