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September 22, 2011

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DZ

I love you man. *raises glass*

To PressDog!

Pat W

Given the hoo-haa for months (years?) beforehand from the online community and actually also from many in the paddock, about "how we should be back at Loudon", I was amazed at the lack of attendance. I suppose they must've been talking about the style of racing rather than any perceived demand from the area.

I wondered if this was the sort of event which was a 'grower', once it was in place for a year or two people would start to attend, yet along comes Baltimore which was an immediate success. Again, not comparing oval vs street, but comparing demand for an IndyCar race in a particular area.

I also agree about the new car. It will help with a lot of problems but people shouldn't act surprised after the first few races when it hasn't made all of IndyCar's problems go away (and no doubt go on to proclaim it an awful car as a result).

Roggespierre

This is good analysis, Dog. I would be interested in your analysis of WHY the market is behaving as it is. Market assessment is the first step in the marketing process. I doubt that anyone at IndyCar has seriously tried to do it.

Perhaps you are the right man for the job.

I would suggest the following.

1. IndyCar as a product does not target fans of oval racing. It is an international road racing series. Most of the drivers are from outside the United States. They drive "formula" cars that are much more popular internationally than domestically.

After all, there must be a reason that 100K show up to watch Cup and only 28K turn out for IndyCar at the same location.

2. The Cup races are profitable primarily due to revenue sharing with NASCAR. Where does that revenue come from? Domestic television rights fees. Why does NASCAR get domestic television rights fees? Because it is a relatively popular option among domestic TV viewers. IndyCar is a very unpopular option domestically. It therefore has no rights fees to share with promoters.

3. Temporary circuits have nothing to do with the market because they are subsidized by governments. We know that this is the case because we have read the old Northlands annual reports that indicated that the Edmonton race lost millions of dollars every year. In economics this is called a non-market solution. If the Edmonton race were market-driven, then it would not exist. The same is true of Barber and several others.

That's a good way to collect temporary paydays, but it might not be such a good way to build a racing series in the long term. One might suspect that the collective experience of CanAm, CART, and Champ Car would provide sufficient evidence.

Apparently not.

Simona Fan

Great post, but you confused me with the buyer and seller thing. If IndyCar is the seller, and the tracks are the buyer, and the current market favors the track, then it's a buyer's market. "Seller's Market" means that the the seller has the advantage.

Zachary

I’ve noticed your adherence to IndyCar seems a bit less as of late, pdog. I don’t want to say “going through the motions”, but it’s definitely seemed like the enthusiasm in your writing for it hasn’t been there. I hope whatever “entertainment merits” would be able to reverse that for you happen sooner rather than later.

Cheers, and thanks for speaking your mind.

pressdog

Roggespierre: I agree with your analysis. I have long and loudly begged IndyCar to do market research to figure out what race ticket buyers/watchers want. I have no idea if they do that. Maybe yes, maybe no. At this point I figure I've made the suggestion (15 times) so they can do research or not as they see fit. All you can do is suggest.

Simona Fan: SHIT. You're right. I somehow thought oval tracks sold their services, which they do not. Duh. Corrected it. Thanks for pointing out the idiocy.

Paul Henry

Once again, SPOT ON, professor. Are you listening, Randy? RANDY??? This is econ 101 folks!

pressdog

I'm quite sure Randy and IndyCar are aware of the economic realities more than any of us, so this was not aimed at them. More of a discussion among fans who aren't in the business.

FTHurley

PDog, that was art. An absolute piece of art! Well done, sir. I especially liked the part where you reminded everyone that super-focused bloggers aren't actually the core fan base. It's easy to forget when getting apoplectic over some decision or another. There's an entire list of crap that most people who watch the occasional IndyCar race just don't care about that we get super frothy over. Oi.

pressdog

Thanks FT. I guess a few things make me crazy. One is the idea that IndyCar can just pull up to any track and be welcomed with open arms. Another is the idea that it's the customers' fault for not buying a ticket. And the third is the tendency to assume us blogger-types are the same as the mass of fans. As you say, there's a "entire list of crap" that light us all up that most fans don't give a shit about.

GeorgeK

Agree with your position 'Dog, but it's deeper then having a choice of what I elect to spend my money on.

In a healthy economy I have to believe Indycar could rebuild it's fan base and popularity, including track attendance.

It really is about the economy and the lack of customer disposable income for entertainment purposes. Or more directly the customer's reluctance to spend on anything not necessary when the future is so uncertain. It's not about selecting between various choices of entertainment, it's about spending nothing because of concerns for the immediate job future.

It's what helped keep this country in the tank for ten years after the "Big One" in 1929. I believe (as do some economists I've read) that until the economic future of the country develops a positive trend, new jobs start getting created, and there is long term job security for the average working Joe, there will be no big growth for Indycar as the average Joe is not going to dispose of his income if he's concerned about paying his mortgage next month.

And for what it's worth Louden is one of those locations that "you can't get there from here". You really need to be a dedicated fan to put up with the stresses of coming and going to attend any race there, which is what NASCAR has.

Jack The Root

Hopefully the next incarnation of Indy Car Racing (that will replace this complete mess we have now) will give a rip about oval racing and the oval racing fans.

Pressdog is just saying what some of us are all thinking...the series is full of whogivesashit drivers and lame-ass races that are beyond horrible to watch on TV. Its a terrible TV product and will never get better.

CART 2 will be dead in 2 years. Bernard will be long gone. Penske and all of these old fossil owners will retire. The Hulman Family will say the hell with this and the next Indy Car Series will be the NASCAR Indy Car Series. The France's will own it and Tony George will run the series. You can book that.

Leigh O'Gorman

OK, here goes.......

You're quite right PDog, although I will add, there is potential that the new car will help the product a lot; however that will not market the show to a wider audience.
There is one other possibility that may need to be considered.

Several years ago, snooker used to be huge in the UK – really massive, until the ‘90’s when interest simply faded.

A number of the classic snooker stars retired and were replaced with some equally good players, but… as the like of soccer – which was already a national sport – became more commercially prominent, snooker began to drop away from the attention of the masses.
When the English Football Association replaced the old Football League system and replaced it with the Premier League, backed by Rupert Murdoch’s Sky Sports, the face of commercial sport in the UK was changed forever.

In the meantime, snooker still holds a good deal of the qualities that it had in its classic days, but commercially it is a non-entity and there is little sign of this changing any time soon.
Beyond the Masters tournament – its Indy 500 if you will – snooker barely garners a whimper in the media. It is simply not relevant anymore.

Indeed, one could argue that the social atmosphere in which snooker flourished – working mens clubs and older pubs – are now tough to find, and often when you do, they tend to be rather bare of people (or simply packed with aging couples that attend out of habit, rather than enjoyment per se).

And maybe that’s the answer. Maybe the social environment in which IndyCar once flourished no longer exists, rendering it a relic; forgotten like so many other sports and activities that have fallen from memory.
If you watch so many adverts around the Indy 500, so many of them are about the innovation of the automobile and how they filtered through to motor racing, but let’s be honest – that kind of innovation ceased long, long ago.

This is sport. This is TV. A piece of entertainment like any other. Formula 1 adapted – it had to – it barely pretends to be innovative anymore, they’re all about entertainment.
The things that go “Ba-Zing !!” in the sparkling lights. NASCAR does it – in fact, they take it a bit too far for my tastes, but for the general public, it works.

Maybe the new car will be the factor that finally takes IndyCar into the Entertainment Age? Maybe, who knows?

Simona Fan

No problem. Glad to help. Always enjoy reading your thoughts.

To your point about what people want to see, I think one thing that is never mentioned but is always in play is the inherent danger involved with auto racing. No one would ever say "I hope someone gets hurt or killed." However, there's an entertainment thrill given to a spectator to know that drivers are right on the edge of control at crazy speeds, risking their own neck to be the fastest. And you don't have to be an IndyCar blogger or insider to get that rush. NASCAR lost a lot of fans when they went to their COTs. They are so safe that drivers (Carl Edwards to name one) are wrecking each other at 180 mph on purpose out of spite. It's a huge signal to the fan base that the racing is no longer dangerous and the drivers have gotten petty. Viewing de-hanced.

One reason I stopped watching the IRL was because the cars were such dogs. Compared to the CART cars, they were go-carts: Underpowered and poor performers. Honestly, the only reason I got back into IndyCar last year was because of the promise of a new car and to go away from the spec Dallara and one engine choice. But it looks like now we'll have another spec Dallara with a few engine choices. If the car is noticeably faster, if it can be driven right up to the edge where you can see the elite drivers getting more out of it than other drivers, if it makes the crowd awe that it can get through a corner at a speed no other car could, then IndyCar has a chance. But if it's another lock-step-a-thon, driving 10 mph off the track record with unknown drivers complaining about a no-blocking/no-defending rule and driving to a fuel mileage number, then IndyCar will continue to have trouble filling seats.

My $0.02.

Dylan

It seems like the problem is Indycar's sanctioning fee. The AMA and ALMS race Road America, and ARCA gets to go to almost every major oval. Indycar is in better shape then all of them. The main difference then is sanctioning fee. It would help also if Indycar considered either Tony Bucks (well, Hulman bucks) or revenue sharing with the Versus/ABC money. I also thought that 2012 would mean the automakers would pay for some track signange and maybe even title sponsorship. Something needs to happen because it's also "unlikely" that a street course heavy series is going to be something a ton of people want to watch.

Don

Exactly why Champ Car went all Road and Street. There wouldn't be an Indy 500 either if only 10K tickets sold. Keep going where you're wanted and can generate enough revenue, whether it be Road Course or Oval. Financial health is more important than a balanced schedule, if the only people that want to watch oval racing prefer the boring cabs.

Roggespierre

Dog - you're right. I've seen your suggestions in the past. I believe that IndyCar THINKS that it's doing market research. Perhaps it really IS doing market research.

The problem likely runs deeper than that. IMO, there are too many sacred cows. In other words, too many entrenched interests are protected. For example, the focus on "high tech" tends to increase the cost that racing teams incur for materials and highly skilled labor. This protects the interests of Dallara, multiple high tech vendors, and highly skilled race engineers.

Unfortunately, it also forces most team owners to sell their rides to drivers who can finance the team's operations. Typically, that means international road racers who are not likely to attract a domestic audience at the races or on television.

Just look at the EPIC debacle. Is it not ironic that the "team owner" member of that distinguished body could not afford to be a team owner this season? But the interests of Dallara, Honda, Ilmor, and Ganassi were preserved.

I don't blame Randy Bernard simply because I don't believe that he matters all that much. He's in a no-win position. He needs to put together a schedule every year. Subsidized races on temporary circuits are rapidly becoming his only option. Unfortunately, much like expensive equipment, street races tend to attract international road racers who are unlikely to resonate with a domestic audience.

Bernard is, in a word, screwed. He has no control over his product. He's left to try to sell cheeseburgers in Israel, not exactly a kosher proposition.

EPIC was all about product development. Unfortunately, the only customers and potential customers that were considered were those whose desires meshed with the entrenched interests. Eddie Gossage said as much and was lambasted for it.

I don't blame you for your fading interest in IndyCar. My own is down to two weeks in May. IndyCar's product development efforts indicate that it is not interested in my particular market segment. That's okay - lots of products succeed without my patronage. Will IndyCar be one of them? I doubt it but I could be wrong.

Tim in Independence

Sorry I don't agree its the product, the product has been great this year, its a 12 year split followed by 2 years with leadership that couldn't take advantage of the buzz of the split. We finally have a competent leader who's knows how to market but its going to take time. The public knows little of the ICS outside of the month of May. Its a bit depressing. But as Cavin noted, RB and the ICS is taking there sweet time coming out with the schedule for this main reason that they didn't want to lock themselves into anything. I can only hope RB, Belkius and the HG family will sit down and figure out what they need to work on to make ovals financially viable for everyone involved

Roggespierre

Tim - you could be right. I can't deny that those factors are true.

But I do wonder why IndyCar TV ratings and attendance at existing events actually dropped following the split?

I suspect that the split was even more significant than we believe, if that is in fact possible. It effectively cut a single market into two.

I'll use myself as an example. I watched CART regligiously prior to the split. I didn't like the direction it was going, but I could live with it because, well, it was IndyCar racing and I grew up loving IndyCar racing.

When the split happened, the IRL took the course that I preferred. In my opinion, racing simply doesn't get any better than Indy cars on oval tracks.

There was, of course, a segment of the market that completely disagreed with me. Those folks had watched CART religiously just as I had. The difference is that they continued to do so.

Thus, one market became two. Unfortunately, the split markets were not big enough to support the products.

The IRL changed over time in order to attract CART's clearly superior teams and financiers. I recall being very upset when the IRL announced that it would race on the streets of St. Petersburg. I asked an IRL official why; he said that "our teams (mainly the former CART teams) want it." I said who cares what they want - you guys own the series and ultimately take all of the risk. He did not have an answer.

Mergification managed to be the worst of both worlds insofar as it gave both markets what they didn't want. IRL folks got international drivers and races, road racing, and temporary circuits. CART/ChampCar folks got the Hulman George Family and spec cars that were clearly inferior on road courses and street circuits.

Thus, the sum of the two markets that had been split was significantly less than it had been prior to 1996.

The product is now one that I don't care to see. The races might have been good this year; I really don't know because I'm not interested in watching them. It seems that many others share my sentiments.

That's a product problem. Bernard has proven to be an outstanding leader in the past, but the relevant question is whether or not he shall be allowed to lead IndyCar as he sees fit. I suspect that this is not the case simply because the Hulman George Family and entrenched interests that gave us Can-Am, CART and ChampCar are still running the show.

Gary

What do Indycar apologists and Cub fans have in common? "It'll be better NEXT year" is the most commonly used phrase to describe their poorly performing product. Been hearing that for several years now (CART teams coming will save the day, more street parades will save the day, racing gimmicks will save the day, new spec car will save the day). Call me when it actually improves, and then I might come back if I haven't already found something else to spend my money and time on. Been played too long. I hate the players and the game.

ThatGuy

From Murphy The Bear's recent tweet, the Baltimore event lost approximately $2M. AND THAT WAS A "SUCCESSFUL" EVENT.

Leigh O'Gorman

@That Gu,
Baltimore may have lost $2m in direct sales of tickets against the sanctioning fee, but they probably made five or ten times that from tourism, etc over the whole weekend.

Leigh O'Gorman

Sorry, that should be "ThatGuy"

Gary

Leigh, last time I checked, the "tracks" or 'promoter' were the ones that had to make a profit to succeed. The same claim (money from tourism, etc.) could be used for any event anywhere. That doesn't mean that the people directly involved with the cash outlay (ie. track owners/promoters) are having these events for the greater good of the community. They MUST make a profit to stay alive.

ThatGuy

Yeah, that total tourism $ number is helpful in getting repaid the $2M short you were on ticket sales by the city fathers. Unfortunately for the Mayors and Councilpeople who make these deals, they tend to be called "boondoggles" or worse at election time, which is why these events often have short lifespans. The Champ Car race in San Jose was a major factor in ruining the political career of that town's previously popular mayor.

FTHurley

Part of the problem is IndyCar racing spending 20 years (and I mean all forms of the sport, on both sides of the split) acting like their sport was a national treasure that fans would flock to out of devotion and a sense of history, all while technology and changing tastes opened up countless competing forms of entertainment to consumers.

I mean, as of June of this year, World of Warcraft had over 11 million PAYING subscribers paying each month for access to the game. Twenty years ago lots of those people would have spent weekends flipping through a limited number of channels.

Part of selling to customers is identifying what those customers actually want, and I'm not sure IndyCar has really found a way to do that yet. Sure, they listen to a subset of the fans (hence the Milwaukee debacle), but does anybody actually know if that desire for historic short ovals with no banking can actually be extrapolated out into the general sports-watching public??

Allen Wedge

Great piece Pdog. I think the other issue at play here for hardcore oval fans that they've forgotten is that Randy Bernard has been instructed to get the series to make a profit. That means there is a lot less negotiating room on sanction fees.

If Randy didn't have to care about the bottom line as much then Nashville Superspeedway and Motegi are back on the schedule, because they hold a distinction that New Hampshire, Kansas, Chicagoland, did not; those 2 were actually packing the house when they got removed from the schedule, but either the house wasn't big enough (Nashville) to generate more revenue or the profit margin was just cutting it too close for comfort (Motegi).

Brian McKay

excellent blog post -- and comments from some

redbull

Isn't there a chance that there just aren't the customers to support ovals anymore? It's not that it isn't worth the $100 ticket but that people who think it is worth any ticket are in short supply? Don't blame the customers is correct but could it be there just aren't that many customers there? And as someone under 30 who lives in an urban area their aren't going to be that many fans for the kind of series people want because NASCAR has it capitalized. Could it mean that a road/street series with multiple support races and city events might actually be the future of INDYCAR? It might be green, diverse, and fast which means INDYCAR is killing itself by appealing to a customer base that isn't there. Pdog is of course right not to watch such a series because it doesn't appeal to him, but it might actually have a viable future. But if I'm INDYCAR I keep taking the payday from the demographic that doesn't want to move on while preparing for the future.
Also, as far as how much marketing effects our decisions read The Social Animal by David Brooks and Malcolm Gladwell's stuff. We might like saying I make the choice all by myself between Wal-mart and Target but neuroscience says that isn't quite as true as we might believe it to be.

Chad

Bill, another post worth reading and pondering.

You (probably deliberately) left out a third party, the promoter. For purposes of your example, you assumed the track is also the promoter. But in many situations, IndyCar does its deal with some other business, and that business treats track rental as just another expense along with advertising and the like.

This is why Milwaukee is having problems. No one is willing to step forward to rent the track and cut a deal with IndyCar to stage an event, because past promoters have taken a bath and the Fairgrounds are uninterested/unwilling to take on the promoter's job. Unless the city is willing to help subsidize the event (like Baltimore apparently was), there'll be no race.

It took me a long time to figure that out, because the promoter is usually in the background, and like it that way.

Will Schilling (SactoIndyFan)

Bill, spot on. I attend the Sonoma race every year (save this one as I had a conflicting work event). I do that because I can drive 75 mins from Sacramento to Sears Point one way. The racing is lousy at Sonoma, but because its close, I attend in person.

I do not attend Long Beach because the racing is lousy because the course is way too narrow for RACING (a la Sonoma). Plus, I have to foot overnight expenses and just don't see a C/B analysis for myself when all I can is maybe 300 ft of the track (at best) at any one time.

Now, however, I will attend Fontana because its wide enough for RACING and I prefer ovals. I am willing to foot the overnight expenses because at 400 miles (it should be 500 miles, period, why the Hulman-George's are afraid of more 500 mile races is insane, but that's another argument), the race length for the main feature is long enough with the action on the track for me to justify the ticket price. For the record, the tickets are $30-60 for Fontana on race day and $70-80 for Long Beach. Plus, Fontana is offering free parking where is LB is charging $15. So at a minimum, I could spend $30 for Fontana for 2.5 hour race, or $85 min. for a 1 hour 45 min race....hmmm, I wonder what choice will I make!

You are right, its about economics!

Dick Jones

Why are people just figuring this out now? Open wheel Oval racing and open wheel racing in general has been heavily subsidized for the last 25 years. Marlboro, GM, Ford, Honda, Toyota, Motorola, Chevron, Texaco, Valvoline, MacDonalds, etc, all bought huge blocks of tickets for years and years and now they don't. When the big wigs say "This sport is sponsor driven" they're not just talking about the budgets of the teams. People always talk about how they hated CART's 33% road course, street course, oval schedule, but probably didn't realize that it was out of necessity to survive as a business, they had nothing else to fall back on. What people are seeing today is free market open wheel, and it's only going to get worse.

redcar

Much like our economy, I don't think most of us realized how far the state of open-wheel American racing had sunk nor how long it may take to rise again. As some have stated the stands were papered by sponsors and the series propped up by Hulman family money. Well, no more.

But I'm more optimistic than most and while it make take time, I think the series is getting better all the time (Bernard, Chevy, Indy, Iowa, Street races, new car, new future aero, great young drivers, NBC & ABC etc.)and will in time find a profitable and decent audience. At least I hope it will, if only to continue frustrate the folks who've been predicting it's demise every year for the last 15 years or so.

Dex

I live in the region, I'm a marketing professional.

The event was marketed abysmally by the promoters.

GeorgeK

Economic P.S: With the DJA dropping 700 points this week alone, there will be even less disposable income to go around. Damn hard to decide how to spend my D.I. when the choice is spend it on a race or save it for the economic shit storm about to go down.

And few seem to correlate the lack of support for OW racing with the seemingly total withdrawal of the BIG corporate sponsors (except for Dick Jones above), especially the car-centric groups and engine manufacturers.

Where there are BIG sponsors there is BIG marketing and advertising as well as competition. That's when the series was always in the public's eye and at its peak.

Little to pick on with the venues (road or ovals) even less with the owners, or Randy; everyone can agree we need a new car (economics yet again).

As race fans we are in for a LONG haul that will be directly tied to the state of the economy, and I'm not optimistic about either doing well, at all.

pressdog

Super appreciate the volume and tone of all the comments here. It's awesome to have people with varying opinions discuss issues discussed without trollish flame wars breaking out. So much love and manly tears for all commenters. I agree with much that's said here. I agree that the general economic conditions are a factor, especially with in-person attendance, but bad economy doesn't explain crappy TV ratings. Of course TV ratings discussion opens the whole Versus TV limited reach can of worms as well. But even on ABC IndyCar is pitiful compared to even Nationwide races. In theory, if people stay home from tracks due to bad economy TV viewership should go up. And perhaps it has with VS ratings improving for many races. So that's as complex as the rest of it. But I do get a little concerned when people pull out the general economic condition because it could be used as a "nothing we can do about it!" excuse. Just throw you hands up and say "economy sucks!" Definitely not what GeorgeK above is saying, but I think the "bad economy" has been used by some as a get out of jail free card. Bad economy has been an excuse for about three years now. Seemed to me it delayed the new car several years.

John S

Good Work Here 'Dog. So many comments I thought it was an article about Danistar. I too no longer watch very lap just because it is indy cars.

CoyoteFan14

Great post and impressive, mature comments from so many.

I forwarded your blog to a friend who's a long time IndyCar fan who offered these observations (posted here with his permission).

Three things that he didn’t mention that I think are worth a thought. (I’ll let you pass them along to him if you’d like).

1. It’s important to go where the customers are but that raises venue questions. One reason Indy car racing succeeded in the old days was that the Championship series was run on dirt. Indianapolis cars were purpose-built cars for the 500. The rest of the championship was determined on dirt, often at state fair tracks in conjunction with events that already drew thousands of people. I watched Jimmy Bryan and Rodger Ward and that generation of drivers at Springfield and DuQuoin. I watched the superteam of Al Sr., Mario, and Joe Leonard and that generation at Sedalia. It was always part of the driver introductions for the PA announcer to mention where the driver had finished in the most recent 500, which meant that the 500 was (a) promoted and (b) promotable as the premier racing event and venue in America. That has changed but there might be cross-marketing juice left in that orange. So taking the product to the people was part of its success in my younger days. It’s much harder to do with today’s cars and technology. Sprint car racing remains popular because it’s where the people are---unfortunately the Indycar system makes it almost impossible for the guy I watch on Saturday night to drive in the 500.
2. The CART/IRL split destroyed heroes. Part of the appeal of athletic contests is the hero, the person who has been performing well for some time, the rivalries between individuals, and so on. Indycar lacks the heroes of the stature we had in the years before the breakup, And since it kept many good drivers from racing at Indianapolis, it kept many drivers from getting the credentials they needed to become draws elsewhere. Think of the drivers before the split and compare them in their standing in the mind of race fans with the standing of drivers today. The split disrupted the entire flow of hero-development. Today’s Indycar is starting all over in establishing people who are known for their individuality more than they are known for their commercial marketability. It will take years to rebuild the star system that we once knew in the sport. Of all the drivers who were caught and most severely damaged in their careers, Paul Tracy sticks out in my thinking. He was on the verge of becoming a great Indycar driver and maybe a 500 champion. But the split took him away from the one place where he could have achieved the kind of status that would have made him a heroic figure. So far, Indycar has not developed the kinds of easily-identifiable characters of the kind we all knew about. If you look at the lines at autograph sessions of 500 winners, I imagine you’d be likely to see far more people lined up to get Johnny Rutherford’s autograph that Buddy Rice’s autograph. Or Gordon Johncock’s autograph before getting Kenny Brack’s signature. It’s generational and this generation of race fans that came along during the split doesn’t have that quality of driver to identify with.
3. Will the new car help? If the variety of aero producers materializes and if a variety of engines produce competition and promotion, it will. I hope it brings back that competition among sponsors and manufacturers. Right away, I know that the series will become more interesting to people who drive Chevrolets who otherwise haven’t cared about a Honda-powered car.

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