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Sports Business

IndyCar inks multi-year extension with Honda

February 2, 2016
KEYWORDS Sports Business

The IndyCar Series on Tuesday extended a deal with one of its biggest and arguably most important partners.

Honda agreed to an extension to be one of the open-wheel series' two engine manufacturers through 2017 with an option to extend through 2020. Other terms of the deal were not disclosed.

The deal took nearly 18 months of negotiations to get done. During those discussions, Honda officials voiced concerns over technical and competitive issues concerning the series, said sources familiar with the talks. Much of the talks also centered on how much Honda would spend in advertising during races and to otherwise promote the series.

The deal means the Japanese car maker will continue to spend millions of dollars annually to promote the series. Sports marketers estimate Honda spends as much as $5 million annually to promote the series and its relationship with it.

“We’re grateful for Honda's longstanding partnership with IndyCar the last 13 years,” Mark Miles, CEO of Hulman & Co., the parent of the IndyCar Series and the Indianapolis Motor Speedway, said in a statement. “Racing is a part of Honda’s DNA and its continued investment in the Verizon IndyCar Series—technically on the competition side, but also through sponsoring of events and additional activation—is instrumental to the success and continued growth of our sport.”

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.

Honda spokesman T.E. McHale told IBJ 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.”

Honda has collected 217 IndyCar race wins in more than two decades as an engine supplier. Honda-powered cars have scored 10 victories in the Indianapolis 500.

Honda will be in competition with Chevrolet for the fifth consecutive season in 2016. Additionally, beginning in 2015, both Honda and Chevrolet developed aerodynamic bodywork kits for their respective teams—supplying a road course/street course/short oval aero kit and a separate kit for superspeedway tracks.

The aero kits both teams supplied had some issues with breaking apart into many pieces upon impact, some of which flew into spectator areas. Modifications to those aero kits were made later in the 2015 season.

Honda had a bit of a tough year in 2015: Graham Rahal was Honda's highest-placed driver, finishing fourth overall with two wins. James Hinchcliffe and Carlos Munoz clinched a sole victory apiece for Honda.

It’s important to note, McHale said, that Honda won only two of 16 IndyCar races in 2003—its first in the series. Then in 2004, Honda-powered cars won 14 of 16 races and won 12 of 17 in 2005 competing against Toyota and Chevy. Honda officials have promised to close the gap created by Chevy's relative mastery of the aero kits, even if it costs them millions more in research and development, as is expected.

"In the 13 years that Honda has been a part of IndyCar, we've had a great deal of success, both against strong competition from other auto manufacturers and as single engine supplier," Art St. Cyr, president of Honda Performance Development said in a statement announcing Tuesday's deal. "Honda is pleased to be part of the Verizon IndyCar Series, as it provides both a technical challenge for our associates and a showcase for Honda products worldwide."

In addition to continuing as a manufacturer in the IndyCar Series, Honda retains title sponsorship rights for three events on the schedule: the Honda Indy Grand Prix of Alabama at Barber Motorsports Park, which is the fourth race on the 2016 schedule, April 22-24; the Honda Indy 200 at the Mid-Ohio Sports Car Course, July 29-31; and the Honda Indy Toronto, sponsored by Honda Canada, July 15-17.


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