IndyCar Series: Radio Activity

On Saturday July 17, I submitted two questions to "IndyCar Weekly" host Mike King. Mr. King was interviewing IRL CEO Randy Bernard on his radio broadcast, and read the following questions to him verbatim. The first:

"In light of the ICONIC announcement, 2011 will bring no changes to the equipment or the competitive balance on the race track. Teams will invest the bare minimum for research and development, and parts inventories, for a race car that will be worthless at season's end.
 
Reduced costs of production at a domestic facility would enable Dallara to drop parts prices for the old chassis, same as the new one. Why will teams not have the option of continuing to race their current cars beyond 2011 ? Why has the value of existing inventories been mandated by the IRL as worthless on the day the 2011 season ends?"

Randy Bernard: [I unintentionally missed the first word or two when recording this answer]

"...I felt that this new car is going to be faster and better, and lighter, so they figured that they wanted to make sure that everybody starts fresh. And because of the Governor stepping up to the plate and making sure that the $150,000 per car as provided, you're being able to buy a chassis at $235,000, which is unheard of. I mean..[it's] $690,000 today."

"And I think that the last thing we want to do was create this unbelievable new safety cell, and have three or four great aero kits, and then no one compete. And we felt economics was one of the biggest things we could do for these team owners, and we've reduced it by a minimum of 42 percent and I believe it will get up to as high as 50 percent."

My evaluation of that answer isn't important; it's a question of what the team owners think about it. The ICONIC announcement identified the $150,000 subsidy discount for a total of 28 chassis, applicable to Indiana-based teams only.

Every one-car team presently needs two complete chassis, plus spares. No doubt that these line items on the team budget will be reduced, but the dollar amount of new capital investments required for each team is not clear. 

On the original broadcast, Davey Hamilton went on to offer that the current Dallaras will be very valuable as show cars. None of the other points raised in the question were addressed.

The second question I submitted, read:

"The financial and political advantages of a partnership with Dallara had assured their selection long before the ICONIC committee was convened. Why wasn't the committee tasked with writing full specifications, establishing protocol for the "technical advisory committee", or proposing regulations to reduce the remaining 80% of the current race team budget?"

Mike King: "I think Andy is implying that it was fixed".

Randy Bernard: "Yeah, I think that's a really simple answer. The first thing I did was I went out, 12 days into the job, we started talking about a single spec series, and I felt that I didn't have enough knowledge to make any decisions at that point. I was reaching out to fans, I was reading blogs, I was talking to team owners, I knew really quickly that most people wanted to see more than one car out there on that track, so I decided that I was not in position to make that decision."

"I felt that we needed to bring in seven key people: and those seven experts, I think I talked to 110 people, I felt I picked the best seven people out of those. Gil De Ferran was actually voted on by the team owners. I put Brian Barnhart on there, some were saying Brian Barnhart wanted Honda and Dallara. I'm a big fan of Brian, I think Brian's passion and heart and soul is into this sport and does a great job and I don't care who you put into the Chief Steward's position, somebody's not gonna be happy, and whether it's NFL with the Ref or it's in every sport, it's in our sport. I put Tony Cotman, who was with Champ, and helped write the rules on that, so there was a balance there, either you liked Brian or you liked Tony, typically."

"So then I took Tony Purnell: I can't say enough about how smart this guy was. Neil Ressler who was in the auto manufacturing world. And then Rick Long, who owns an engine company right here in Speedway Indiana. So I mean I really kept it diverse, but very, very quality and I think that to top it off, I said, I felt I didn't want anybody thinking that this was fixed or anything and I went out and I asked General Looney, a four star retired general, where his integrity is as good as any man you will ever meet in your entire life and I asked him to be the moderator of this."

"And I can tell you, I he would have felt, or anyone else would have felt it was fixed, there wouldn't have been a unanimous decision in that room. There would have been people walking out saying "I'm not getting involved with this". And I want to also mention Eddie Gossage: if anyone knows Eddie Gossage, he's gonna tell it how it is. And he's not gonna wait, he's gonna walk out of that room and go right straight to the camera or right to the radio."

"I think anyone that says that is not giving the sport enough justice for the credibility that they really put this through, and I would hope that the entire industry really supports what this committee has done because I think it's what they asked for".

Regardless of what Mr. King thinks, my question did not cast dispersions on anyone's integrity. Slamming Brian Barnhart or praising people I do not know has nothing to do with the issues raised, and has nothing to do with my opinions or my questions. The reader has lots of other places to look for that kind of fodder.

Brian Barnhart, February 5, 2010:

"Finally, we have stipulated that the new chassis must be made in the United States, preferably Indiana, to take advantage of more competitive pricing and the existing American supplier network for parts and protect our team from issues with currency fluctuations."

It was very clear that all of the constructors who submitted a proposal were keenly aware of this last requirement in the IRL list of bullet points. In each subsequent press release and interview, the importance of local Indianapolis production and subcontractor supply was emphasized by all of the participants.

At the ICONIC strategy announcement on July 14, the executive director of the town of Speedway Redevelopment Commission, Mr. Scott Harris, made the following statement: 

"In early December I was invited by Dallara's U.S. partner to travel to a small town outside of Parma, Italy. I had the opportunity to visit their state of the art design facility and saw within walking distance the cluster of component suppliers. It was a buzzing epicenter of technology."

This was not a fix, or a scheme based on some imagined kickbacks or subterfuge. This was a business deal. Dallara made their intentions clear in the public statement by Mr. Toso in February 2010 (reprinted in my previous article).

All of the other constructors had a full opportunity to match or exceed the concessions negotiated by Dallara, and in the end the decision went to Dallara. That's business, nothing more. In my opinion, it was good business.

Whether the final decision was made by Droid on July 14, or in March when Mr. Bernard had first assumed his CEO position, or at some other point...that's up to you to decide.

As for the question that was presented, perhaps I'll have a better way to ask it next time. None of the inquiries raised have been resolved or discussed to date.

If the ICONIC timetable proceeds as planned, and the team owners have sufficient budgets to cover new equipment costs and all of the other accompanying expenses, all will be well in Speedway.  

I don't know who asked the following question at the ICONIC press conference, perhaps he is a reader here:

So does this mean the budget for a year would go from $6 million to say, $4.5?

GIL DE FERRAN:  "The budgets, you know, they are not only running costs of the car; you have personnel, you have travel and so on and so forth. But the running costs of the car is a significant portion."

"So I would say that the savings are probably in the neighborhood of what you're talking about."

The maximum total reduction in team budgets will be about 25%. That's the estimate I calculated and have been using since last fall which includes the proposed reduction in the engine lease costs.

The rest is up to the team owners.

I'd like to repeat my note of thanks sent to both Mr. King and Mr. Bernard for accepting these questions and discussing the issues.