IRL: 2013 or bust

May 4, 2009
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georgeI wrote an article about the Indy Racing League’s long-term future for this week’s IBJ print edition that is getting quite a bit of attention from our readers. There are several reader comments posted under the online version of the story. One comment claimed I took a quote by IRL and Indianapolis Motor Speedway Chairman Tony George out of context. That quote involved George saying the series better be profitable by 2013 or “there won’t be a 2013.”

The anonymous commenter said he was at the New York event where George made the comment, and that George made the comment with a broad smile and a big laugh. The commenter implied that George was not serious about folding the series if it is not profitable by 2013. I was not at the New York event when George made this comment, but I talked to several people who were. They said George seemed pretty serious about getting the series into the black.

Estimates put George’s losses at more than $250 million since forming the IRL in 1996. George doesn’t talk financials. Never has, and I’d be amazed if he ever does. So, the $250 million figure is, just that, an estimate. But it’s an estimate calculated by several motorsports business experts that I think have the insight to peg the figure pretty closely.

Before the anti-IRL corner starts howling about how poorly managed the series is, my print story also points out Champ Car/CART lost money seven of its last eight years. Due to space constraints, some of my CART financial details were cut from the story. So I’ll share those now.

CART’s losses went from $8.5 million in 2001 to $24.7 million in 2002 to a whopping $93.6 million in 2003.

Team subsidies skyrocketed from $15.4 million in 2000 to $60.9 million in 2003. CART didn’t spend a dime to promote races in 2000 and 2001, with that expense falling to host venues. But in 2002, CART paid $9.7 million for race promotions and in 2003 that line item increased to $20.8 million.

In 2000 and 2001, CART brought in more than $5 million in television revenue, but in 2002 and 2003, the series shelled out $11 million and $15 million respectively to buy TV time. CART’s total expenses escalated from $58.8 million in 2000 to $143.3 in 2003.

What can you take away from all of this CART information? It shows the IRL needs to bring in (based on what we know it pays for and is paid for) between $60 million and $75 million to meet expenses.

George wouldn't talk to me for the article, and neither would IMS President Joie Chitwood. But Terry Angstadt, president of IRL’s commercial division, did. Angstadt seemed to take George’s comment seriously. “I’m familiar with the comment,” Angstadt said straight faced when I asked him about George’s statement in an interview last month.

He then detailed the challenges the IRL has faced and must conquer, including the costs of unification. Angstadt added: “I’m 100 percent confident we will have a long-term sustainable model by 2013.”

To get more objective odds, I asked some of my more trusted motorsports business savvy sources to handicap the likelihood of the IRL reaching profitability by 2013. Their answer: 70 percent.

So, what do you think?
  • Loved the article - thanks so much. I am just not sure where all the additional revenue is going to come from.
    TV - Deal already in place with Versus for ten years
    Race Fees - Maybe two or three(tops) more races so not much in terms of additional rights fees
    Race Purse - Teams already complaining about lack of money to win at races and they have to do something about that I think
    Car companies - one or two may bring in more money for the league but not enough to close that gap
  • There are plenty of ways to increase revenue in addition to what you listed.

    Sponsors. If the IRL is able to get a series sponsor, that would go a long way to adding cash. In addition, as the economy improves, the IRL should attract more sponsors which will add to the bottom line.

    Licensing rights. As shown with the Hot Wheels deal, Izod etc.... additional licensing deals can bring in considerable cash. Especially if this China deal works out. The NBA has seen considerable increase in revenue from China with the addition of Yao Ming.

    In addition, there are lots of other areas that can be increased. Something tells me the China deal involves a pretty hefty fee. China is flush with money and wants deals like this. It can be done, it just remains to see if it will be done.
  • CART didn't have a deficit before Tony George started his all-american, all-oval IRL folly?

    Gosh, who'd have thought that with Tony propping up his series with hundreds of millions of dollars that other competing businesses woudn't suffer?

    Answer: Only a fool who doesn't understand business.

    Iimagine if you are a plumber and a competing plumber is not charging customers the normal fees? What do you think would happen to the plumber playing by normal business rules?
  • I remain optimistic that enough will come to pass to accomplish the goal. 70% is much more realistic than not.

    Now we prepare ourselves for the onslaught of the Hatemonger/Gunslingers that will defame and languish. There are about 6 of them. About as worthy and up-to-date as the Jackson 5 plus Michael Jackson. And, as we've seen, their lack of intelligent posts and their lack of compassion, adult behavior and respect abounds!
  • Hal,

    where did you get your info about cart not running a deficit in 1995? Have not seen that info.

    carts business plan was a dog to begin with. Their multiple failures proves that.
  • Sponsorship is key. Viewership is the key to sponsorship. Kind of a catch-22. TG (still a ...) has subsidized way too many teams in past years, especially to get full fields in the 500, and they need to be able to bring in TV viewers/sponsorship dollars so that teams can afford to race full seasons as legitimate threats to win races and not just as space fillers.

    I think this can all happen, but it will take a revamp of the series which won't happen until the current contracts expire. When they get a dynamic schedule and go from being a spec series to one with multiple engine suppliers and possibly multiple chassis suppliers, this could be much more interesting. At least I'm hoping it will get more interesting. If it doesn't, 2013 seems like as good a time as any to give up and cry uncle that they don't know how to get it done. (Or for you taxicab fans: git 'er done.)
  • Hey Hal, seems to me that the fool would be the plumber who didn't react to the market and lower his prices to compete accordingly. Even with my basic understanding of business I can ascertain that someone in that CART organization needed some remedial Business 101.....
  • Cali, if the plumber that was 'competing' was basically a psychopath burning his inheritance, and charging $5, or even nothing, just so he could say he had a viable plumbing business, well yeah, then every other plumber should just lose $100's on every job. Right. You're dumber than dirt.

    Hey Anthony, I put a longer comment in the other thread on here, but I suspect the Jane B. whiner was your typical gomer shillbag that just makes things up because they can't stand the reality that the earl is a steaming pile.

    Also, the $250 million figure came from a story in your publication, the IBJ. I tried searching for it, but could not find it, it was sometime between 2002-2004, and I'm pretty sure it was Fred Nation, or possibly Barnhart, that 'acknowledged' the figure but wouldn't be pinned down on an exact number. I'll have to see if I can find the article somewhere, maybe you have better access to the archives there being an employee.

    Lastly, I've never seen Talkin' Terry, but I have to think that he is a person with an affinity for shiny suits. Yes? :lol:
  • Only a fool who doesn’t understand business

    Or a fool with Grandpa's money.
  • Forgot to mention that Ed Hinton has used the $250 million figure in more recent times, his claim was something to the effect of 'sources in the organization' that he never identified.

    Given the 'leagues' propensity for chronic lying, I'd guess the figure is at least double that, since $250 million is only what they were willing to apparently admit to. Sadly, it does not appear that it made the slightest dent in the Idiot's finances.

    Whatever the number, it's a lot, and all he ended up with was a pile of crap and a cheap fake imitation of the Indy 500. But oh boy, he's got his precious 'control'.
  • Question: if the “earl” is a steaming pile, what exactly is the now defunct CART?

    I love how you dumb gomers obsess with CART. Still. There's a reason for your inferiority complex, it's cause the 'league' sucks. And it ain't un-sucking itself any time soon, if ever. Thank your ... 'leader' the Vishun man for that.

  • The problem is no one wanted the IRL, and now the IRL doesnt even want itself. Preserving oval racing traditions....yeah right. Tony George dumped all that in favor of winning the war. The racing is dumbed down, it has all the charm of cold CART vomit, and no one can see it. There is no vision except the vision of Mr. George's control of the sport, which we all know now, is hollow and empty.

    I for one will never go to Indy again, nor will I ever go to an IRL race. The golden days have come and gone....Mr. Tony George you are to be thanked for that and the fact the Indy 500 has rotted away to nothing. Thanks for nothing....I hope you blow ALL of the Hulman riches on the hapless IRL. It would serve the fans of the sport justice to see that happen.
  • Calm down. Do some of you talk to humans like you write in your posts?
    Your momma's and life mentors and heroes would be proud.

    I'm rooting for open wheel. Yes THG screwed up. Sort of like our war in Iraq, we took a perfectly good country with a slightly crazy leader, who was ultimately very beatable, and screwed it up even more. Goodness, what a mess is left behind: Iraq, and Indy.

    George and the IRL are trying to regain ground lost in a sports-entertainment market already challenged by economic forces and decreased demand. There are simply too many other choices for the sports-entertainment dollar. Tony George took a niche sport and make it more of a niche. I will always be amazed.

    Again, I hope the IRL and the Indy 500 succeed. I enjoy it, it makes this midwest burg a little more interesting, but if it folds -- so be it. The market has decided, the audience, has moved on.
  • Anthony

    I thought we going to agree to a modicum of respect and avoid inappropriate name calling. If that is the case, it would appear that Stan the man, who has more stored up hate than any one else on the planet gets a pass from his post #12?
  • Thanks everyone for your interest in this topic and for the many responses. Interesting perspectives as always. But let's try to keep everything respectful.
  • Stan,

    I think the reason most people compare cart to the IRL is not some longing for the old series, but because if the IRL was never created we would have been dealing only with the cart business model which failed multiple times. In '95, cart had the choice of co existing with the IRL or trying to kill it. Since they had the stars and the cars, the big tracks minus 1, the big time sponsors and the deep pocketed owners, they assumed they could easily kill the IRL and subjugate IMS and the Indy 500 once and for all.

    As has been proven time and again, racing does not work by committee. All of the major racing series has a strong central owner or manager. cart was the only one controlled by the teams and we see what happened to it.

    Hey look, I made my point without having to insult anyone and without having to use pseudo cuss words. It can be done.
  • Fred Nation is the source of the 250million figure.

    And yes, the IRL: everything you never wanted in a racing series, and more! :lol:
  • All of the major racing series has a strong central owner or manager.

    So spending your Grandpa's money because you threw a hissy fit makes you a strong central owner? LOL.

    Car counts down
    Ratings down
    Attendance down
    Sponsorship down
    No title sponsor (again)
    One engine supplier
    One chassis

    Man, that's strong.
  • Anthony

    I thought we going to agree to a modicum of respect and avoid inappropriate name calling. If that is the case, it would appear that Stan the man, who has more stored up hate than any one else on the planet gets a pass from his post #12?

    What a _______ crybaby. Grow up.
  • And Brett says I should grow up. Perhaps you never learned any lessons about being respectuful. Yes, you and your buddy have a right to say what you want. Seems as if, however, as is typical with current generations, that there are to be no consequences for saying anything no matter how degrading or how offensive. Would you get by in saying those words you throw around if it were a black or a gay? I think not.

    I understand how much you despise Mr. Hulman. Nonetheless, that by no means dismisses you from the responsibility to at least be civil. Disagreement gives one no right to use any names they feel like. Am I the one that should grow up or is it you, Brett. Maybe you'll graduate from puberty someday. There's always hope.
  • And again Brett, how does that compare to cart which would have been the alternative if the IRL had not been started? cart was on the road to failure. It had a bad business model. That has been proven several times in the last 15 years.
  • I don't think we have to worry about 2013 and beyond. I just wish people had more patience in 2009.

    Just over one year of unity under the best possible business model open wheel racing can have in North America and in the worst economic year since the beginning of the Depression. Yet, there will be 37 to 41 cars trying for 33 spots at Indy this year and 23 to 25 starters at each race after Indianapolis.

    These are things people in either major open wheel series would have begged for in 2003 when the economy was supposedly good.

    Perspective, people...perspective.
  • Let's get back on topic. Which is (hopefully) _TG pulling the plug on the lifeless, rotting corpse that is the EARL. The Puritanical rantings and hypocrisy of a couple of irl sycophants is nothing but deflection from the topic or is likely mental illness due to a certain posters obsession with puberty and anothers fantasy of being self proclaimed board moderator. Both likely caused by after school homework sessions with Father Phil in the rectory.BTW- I don't despise Mr. Hulman, hes been dead for over 30 years. What planet are you on? I do feel sorry for his dim witted Grandson. It's tough growing up without a Dad, especially when Mom's boyfriend blew him away.
  • Brett, you started by saying let's get back on topic and then veered the topic toward nothing remotely near the topic. I can't help to think you did a Ricky Bobby by insulting the intended target and thinking it is OK because you prefaced it with the phrase With all due respect....

    The topic was established by the author of the column and out of respect to his wishes, please show some decorum.

    Now, on to the actual subject discussed in the article: the long-term growth and direction of the Indy Car Series.

    I was a CART fan and felt the sting of the 'split'. CART had 15 great business minds who did well in other areas of business, had a hobby they wanted to make a business, then failed to understand what made the business popular. In CART's case, they were nothing without Indianapolis and the 500.

    I dealt with that reality and have grown to love the Indy Car Series. The business model for the future is what CART should have embraced in the early 1990s when Tony George started mentioning cost containment and taking on events that bring money to the table rather than require subsidies from the series to survive. NASCAR did not do OK because they had 15 cooks in the kitchen. The Frances rule and it works. In five years, or 2013, I am confident that the emerging business model in place at the moment will be stable and at a growing level of popularity unseen in a few decades.

    I am not a synchophant when I state that I will enjoy watching Scott Dixon take his second Indy 500 in the last Sunday in May, 2013 in a Target sponsored Alfa Romeo. But it will be a shame to see him lose the series championship to Rafael Matos after the 26th race of the season in Miami.

    Perspective...things are much better than you think now if you actually get over the past.
  • I am not a synchophant when I state that I will enjoy watching Scott Dixon take his second Indy 500 in the last Sunday in May, 2013 in a Target sponsored Alfa Romeo. But it will be a shame to see him lose the series championship to Rafael Matos after the 26th race of the season in Miami.

    Thanks for a good laugh!
  • Brett, glad you can at least laugh, oh pompous one!
  • I thought we going to agree to a modicum of respect and avoid inappropriate name calling.

    Plus this: Brett, glad you can at least laugh, oh pompous one!

    Equals= Hypocrite. You've got that one covered. Now take 3 more days and try to come up with something clever to say that you and indyman can giggle about while watching Golden Girls reruns on the futon.
  • Hey Brett, I didn't call you a name, I merely described your seemingly better than thou attitude. There is a difference you know. I believe I learned that in second grade. Sorry you had to repeat first grade. Hey, c'mon, let Blanch rest in peace. Tee hee hee.
  • The point that sailed over your pointy little head is that like a 4th grade girl, you get your frilly little panties in a wad over behavior you don't approve of then do the same thing. It's probably your multiple personality disorder flaring up, ask the Doc to up your Zyprexa.

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