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The Score - Anthony Schoettle

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Sports Business

Despite bumpy negotiations with IndyCar, Honda likely to return next year

June 24, 2015
KEYWORDS Sports Business

Negotiations to renew Honda as an engine supplier and one of the IndyCar Series’ biggest sponsors are coming down to the wire with only six races remaining in the 2015 season.

If Honda leaves, it would be an eight-figure annual blow to the open-wheel series. Honda, which joined the series in 2003, and Chevrolet are the series’ two most important corporate sponsors from a financial and marketing standpoint.

Even though discussions between Honda and IndyCar have dragged on since October and have hit more than a few bumps, Honda officials told IBJ Tuesday there’s reason for optimism.

“The characterization that our return to the series is 50-50 I think exaggerates the drama,” said Honda spokesman T.E. McHale. “We do have a few concerns, but IndyCar has been open to discuss those concerns. If I was going to handicap the possibility that Honda will return to IndyCar next season I’d say it’s more like 70-30 or 80-20.”

Honda officials’ displeasure with happenings at the Indianapolis 500 in May have fueled speculation Honda would exit the series.

When several cars outfitted with Chevy aero kits went airborne at the Indianapolis Motor Speedway in May, Hulman & Co. CEO Mark Miles and his lieutenants made aero kit changes rules changes for Indianapolis 500 qualifications after a meeting with Chevy officials in which Honda officials were not included.

“Our problem was with the process,” McHale said. “We feel like we had that shoved down our throat. It was a little difficult to take as a significant partner of this series.”

But McHale said “that was an isolated incident,” adding that Honda officials are still bullish on the IndyCar Series.

Teams outfitted with Chevy engines and aero kits this year have been kicking the butts of teams running Hondas. That’s led to some tough talk from several owners running Honda-powered cars.

The much ballyhooed aero kits, which have been talked about for at least four years, were supposed to differentiate the cars and bring in more attention and fans to the series. Several team owners said those gains haven’t materialized.

Two weekends ago at the IndyCar race in Texas, team owner Sam Schmidt called the aero kits a waste of money—for team owners and the manufacturers. He wondered aloud if the additional expenditure would send Honda racing from the series. Honda has already spent tens of millions of dollars on aero kit development and, if it’s going to close the gap on Chevy the company, will likely have to spend millions more.

“If we lose a lot of Honda team sponsorships it’s going to be really a bad thing,” Schmidt told reporters at the Firestone 600 in Fort Worth.

Andretti Autosport owner Michael Andretti painted a bleaker picture, calling the situation with the aero kits “a total mess.”

“This is going to break the series if we continue going the way we are going,” Andretti, whose team runs Hondas, told Fox Sports earlier this month. “It’s getting ridiculously expensive for the manufacturers and is totally ridiculously expensive for the racing teams.”

Supplying engines and aero kits to IndyCar teams is a multi-million dollar money-losing proposition for Honda and Chevy. In theory, the car making companies shoulder losses in hopes of getting a return through the exposure they gain racing in the series.

McHale said that’s still a good proposition for Honda.

“We think the IndyCar Series is the purest form of racing,” McHale said. “With the diversity of courses, we think it’s a much better test of driving skills and performance than other series. It gives Honda a great opportunity to demonstrate our capabilities.”

And Honda officials want to be clear:They’re not running from the idea of the aero kits—which debuted this year—because Chevy is beating them so badly this year.

“We recognize the thought behind having aero kits and don’t challenge the concept,” McHale said. “Fundamentally, being able to tell the difference between a Honda and Chevrolet on the track is a good thing.”

So far, IndyCar officials have given no indication that aero kits will be discontinued—as Andretti has called for—next season. That’s all right with Honda officials.

Though costs of developing IndyCar aero kits has become “unwieldy,” McHale said Honda officials are committed to making big improvements this off-season.

It’s important to note, he said, that Honda won only two of 16 IndyCar races in 2003—its first in the series. In 2004 Honda-powered cars won 14 of 16 races and 12 of 17 in 2005 competing against Toyota and Chevy.

“We have seven months this offseason to take a good, hard look at the issues we have,” McHale said, “and get it right next year, which I have all the faith we will.”

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