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IndyCar outlines cost-cutting moves for teams, highlighted by new body kit
http://www.sportsbusinessdaily.com/.../06/Leagues-and-Governing-Bodies/IndyCar.aspx
http://www.sportsbusinessdaily.com/.../06/Leagues-and-Governing-Bodies/IndyCar.aspx
IndyCar has provided its teams a blueprint for how it’s working to save them money, highlighted by a new body kit that will cut tens of thousands in annual costs.
As teams face a challenging sponsorship market and spiraling costs, motorsports series including IndyCar are examining and tweaking their business models. That was the motivation behind IndyCar’s “2018 Car Plans” team presentation, which was provided to SportsBusiness Journal.
IndyCar is rolling out a simplified body kit next season to cut costs and improve racing. The new kits, produced by Italian chassis manufacturer Dallara, will be used from 2018 to 2020, allowing teams to plan in a three-year increment where previously it was year to year. The previous aero kits that were sold to teams by Honda and Chevrolet starting in 2015 proved to be exorbitant, brittle and overly complex.
“I’ve never seen anything like this done, where we handed the teams a blueprint of, ‘Here’s what it’s going to cost, here’s who to call, here’s what to do,’” said Jay Frye, IndyCar’s president of competition and operations. “You can plan for three years out now; you know what it’s going to cost to convert it upfront.”
The presentation starts with a breakdown of the one-time costs that teams will incur to convert an entry’s primary and backup cars to the specifications for the new kit. For 2018, teams based in Indiana will receive two free body kits from Dallara, which received a grant as part of the state’s drive to support the motorsports industry. Each kit after that will cost $90,000. This compares to the old kit’s cost of between $125,000 and $165,000, meaning teams will now save $35,000 to $75,000 per kit under those estimates. And that doesn’t take into account investments on spare parts, updates for new parts or research and development testing.
“When you think of all the damage that the old kits took — those rear bumpers which didn’t do anything but fall off and cost the teams money, those are gone,” said Bobby Rahal, co-owner of Rahal Letterman Lanigan Racing. “So maybe the initial benefits [when buying the new kit] are around $50,000, but if you look at the lack of pieces on this kit compared to the old one, I think that’s where teams will really see the benefit.”
The switchover will cost teams money up front, as teams will pay approximately $38,000 per car, or $76,000 per entry, for a one-time conversion to the new kit. But through the cost savings realized with a simpler car, and through receiving two free kits, IndyCar estimates that teams will save about $216,000 per entry for 2018 from what it would have cost if it had kept the old kit.
Among other key reasons why savings could be more in the end are that under the new kit, there will be no annual parts updates from one year to the next. That’s something that previously cost teams $15,000 to $20,000 per car, IndyCar said.
“There’s no updates now, so you can run the same car for three years,” Frye said. “You think about testing, simulation — you’re going to be able to use the same stuff, whereas before you had to start over because of updates and things.”
