Cutting costs nothing new to IRL
The stagnant economy has impacted the IndyCar Series just like any other major racing league. Good thing the IRL has been in cost-cutting mode for years.
If there is one constant in every form of racing, it's that teams will spend every penny of their budget -- if not more.
So in tough economic times, sanctioning bodies have something of a responsibility to save those teams from themselves. The Indy Racing League certainly recognizes that fact.
"The economy will be the big story in sports business [this year]," said IRL founder and CEO Tony George, speaking recently at a motorsports forum sponsored by the Sports Business Daily.
"A lot of things are on the table right now because of the economy, and everybody's trying to do the right thing, the responsible thing," he added. "We've really focused on going forward."
George should know. For the past four years, he has moonlighted as a team owner in the IndyCar Series under the Vision Racing banner. Unable to find sponsorship for A.J. Foyt IV's entry, Vision laid off a dozen employees in December and might run only one car in 2009, for George's stepson Ed Carpenter.
One of the founding tenets of the Indy Racing League was a desire to cut costs for teams, and in that regard, the IRL has stayed ahead of the downward economic curve. Thanks to strict rules regarding car development, a competitive entry can be fielded in the IndyCar Series for $5 million to $8 million, about half of what it cost to run up front in the CART/Champ Car World Series in its heyday in the 1990s and a fraction of today's top-tier NASCAR budgets.
In 2008, in an effort to boost its smaller teams, the IndyCar Series introduced the TEAM (Team Enhancement and Allocation Matrix) program, guaranteeing full-time participants at least $1.3 million in prize money -- about the same as a second-place finish in every race. That figure has been cut to $1.24 million for 2009 because of the cancellation of the Detroit Belle Isle Grand Prix, itself a casualty of the current recession.
"From a team standpoint, [the TEAM program] is a good thing because you can budget," said Rahal Letterman Racing co-owner Bobby Rahal. "It's like having a sponsor, in effect. The reality is you have to have teams. If there are no teams, there are no drivers. That has to come first."
Ironically, Rahal Letterman's participation in the IndyCar Series in 2009 is very much in question because its principal backer, the Ethanol Promotion and Information Council, recently ceased operation. It's a sign of how tough the current sponsor market is when a former Indianapolis 500 winner (and three-time Indy racing national champion) can't find the money to operate.
The IndyCar Series marketing department is working hard to try to pair teams with potential sponsors. Because those sponsors are few and far between right now, the league also is making an effort to cut operational costs for participants in a variety of ways, and teams were invited to participate in a series of meetings over the past four months to aid in the process of cost cutting.
“A lot of things are on the table right now because of the economy, and everybody's trying to do the right thing, the responsible thing. We've really focused on going forward.
” -- Tony George
"It's been an interesting experience working with the other owners and the IRL to try to curtail costs," said Panther Racing co-owner John Barnes. "The league has always been a benchmark for containing costs with its teams. But in these extreme times, it's allowed us to look at all aspects of our business and try to compete."
So far the changes include further restrictions on team development of suspension components, wings and brakes as well as cutbacks in the number of individual test days and miles.
All teams will be allowed six days of private testing. A one-car team can run as many as 800 miles; two-car teams can run as many as 1,200 miles; and Andretti Green Racing will have 1,600 test miles to share among its four drivers. Teams that field entries in the Firestone Indy Lights development series can earn additional test days and miles.
"Our 2009 testing policy strikes a fair balance between controlling costs and maintaining a level playing field," said Brian Barnhart, president of competition and operations for the IRL. "It's important to give our drivers and teams the chance to keep improving and maximize their performance, and we also think there is a tremendous incentive for teams to give opportunities to the next generation of IndyCar Series drivers."
Another key change on the horizon is cutting even more race weekends back to two days of on-track activity, possibly including road-racing events. Last year, seven of the IndyCar Series' oval tracks hosted two-day events.
"I think the IRL is trying hard to meet the demands of the economy," observed Rahal Letterman Racing general manager Scott Roembke. "These cars are expensive to run, and every day we're not running is a day we're not spending money.
"For this last wave of changes, they solicited a lot of input from the teams and owners," Roembke continued. "They have tried to react, and I think what they have done will help. Some people will think that it's not enough, and some people will think it's too much. Whether they have done enough will be determined by how many cars show up for their races and at Indy."
Rahal, who still hopes to source funding to allow his team to extend its 17-year history in open-wheel racing, believes the IRL generally has done a good job of making moves to stay a step ahead of the economic crisis.
"I think there has been some movement there to help, though there can always be more," he said. "It's difficult anytime to make decisions of this nature because there is a lot of politicking. A lot of teams that have good resources don't want to see [cutbacks] because they think that's an advantage for them to have the resources. Other teams who don't have the resources look at it as a way of ensuring that they can continue in the series.
"It's a real balancing act between the two, and it's not a decision that is lightly made or without consideration," he added. "I do think there are some other things that could be done. In particular, there is an opportunity come 2011, when the new chassis comes out, to put more meaningful ideas in place -- longer-lived engines and things of that nature."
John Oreovicz covers open-wheel racing for National Speed Sport News and ESPN.com.
