Disciple of INDYCAR Weblog

August 4, 2010

Assignment for Business Writers Who Continuously Portend Doom for IMS, IRL, etc.

Filed under: The Disciple Blogs — Disciple of INDYCAR @ 12:32 am

The Indiana Business Journal employs a Hoosier blogger named Anthony Schoettle who writes critical columns about Indy Car and the Indianapolis Motor Speedway with alarming frequency. The ‘sky-is-falling’ theme of his prose generally follows one path: The IMS/IRL is losing money and had better do something positive or something very bad will happen. Specific sources are rarely cited, but Anthony and others like him are always very defensive about being ‘well sourced.’

Most of the time writers such as Schoettle claim that Indy Car has LOST between $400 million and $600 million since Tony George launched it in 1996. I am no economist, but let’s think about the math for a moment. Through the end of last season the Indy Car Series ran 187 races over 14 seasons. If you average the speculation of obsessed pundits, cumulative losses of around $500 million might be considered normal. That is a HALF BILLION dollars.

That would mean that the IRL LOST $35,714,286 every single season. At an average of 13.35 races for each season, that would also mean Indy Car would have to lose $2,675,227 every single race. Let’s run the numbers sans 14 Indianapolis 500s, because you would have to be a full-fledged imbecile to believe those are not all wildly profitable. In that instance each non-Indy race becomes a $2.9 million loser? Honestly, who is that gullible/stupid?

Here is my challenge for Anthony or any other writer with such IRL/IMS-critical proclivities: PROVE IT. Prove it with hard numbers from credible sources. Credible sources do not necessarily include spurned aspiring IRL CEOs who did not get the job. Those people generally suffer from what I call ‘Troy Harrison Syndrome,’ which results in vulgar, bitter behavior following failure to land a job in Indy Car they really wanted. Other writers who dislike Tony George do not count either. Jeff Belskus would be a credible source. Randy Bernard would be a credible source. Those responsible for fulfilling contracts might be good sources. Disgruntled employees running their yaps generally have credibility gaps.

Avoid ‘now there is speculation,’ ‘sources close to the IRL,’ ‘motorsports business experts’ and ‘most with knowledge of Speedway finances.’ Professional writers should know better.

As you set out to prove the Indy Car Series has LOST between $400 million and $600 million over the course of its life here is what you need to do:

Give us an accounting for the losses. What was the money spent for? Itemize the list. Then itemize revenue, including:

-Television rights

-Radio rights

-Advertising revenue

-Sanctioning fees

-Sponsorship revenue

-Stadium signage

-Ticket sales

-Corporate underwriting

-Concessions

-Merchandise

-Manufacturer subsidy

-Creative taxation

-Miscellaneous B-to-B deals

Measure itemized revenue against itemized expenses. Then prove to us how it is physically possible to lose $2.9 million dollars per race for every non-500 without making anyone fall over on the floor from laughter.

In the future, I would also appreciate at least an effort to view IMS or the IRL in the context of the bigger picture. The vast majority of sports and entertainment venues in the country are doing far worse than they were ten years ago. Choices and technology have increased dramatically. As a matter of fact the way in which people communicate with one another has fundamentally changed. The rest of the world has not fared much better than Indy Car. At least recognize the obvious as you hunt witches.

If you truly want to destabilize Indy Car more than it already has accomplished by itself, expose the corruption that is said to exist at the highest levels of the organization. There is plenty to keep any writer worth his/her salt busy for hours.

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5 Comments »

  1. You make the claim that Anthony is wrong but you yourself provide no evidence. If he’s wrong why don’t you do your due diligence and provide some facts to prove him wrong, you often claim to be an insider, now is your chance to prove it.

    Editor’s Note: A couple of salient points (other than where Anthony’s ‘evidence’ is). (1) I am not employed by a reputable local business publication. I am an unpaid blogger who simply tries to keep the mainstream honest. (2) The numbers bantered about by the Indy Car obsessed are so far beyond ridiculous that any reaction other than laughter gives such speculation far more credit than is deserved.

    Comment by Reverser — August 4, 2010 @ 2:20 am | Reply

  2. Spot-on, Defender. It’s scary that I’m actually agreeing with a lot more of what you write, isn’t it?

    Comment by Thesmartestguyintheroom — August 4, 2010 @ 3:02 am | Reply

  3. When CART was a public company they were burning through IPO generated cash reserves at the rate of $1 million per event. That was during a more favorable economy and at a time when CART events had higher attendance and ratings than Indycar is currently experiencing. Projecting operating losses of $1 million per event combined with the $27 million required to support TEAM funding will get you into the ballpark of $40 million in losses per year.

    Unless you can come up with a rational explanation of who Indycar could be losing less money per event than CART was in the early 2000’s then you may have to actually accept the fact that the series stands to lose $30 million this year even after the $10 million infusion from IZOD. That certainly puts the average loss of $35 million per season right in the realm of possibility.

    Editor’s Note: Indy Car certainly ain’t cart, and they don’t go trotting all over the globe unless the entire freight is paid; e.g., Motegi. Between TV and radio rights, title sponsorship and sanctioning fees, between $30 and $35 million arrive into the coffers before even one ticket is sold. I have never claimed there are not losses, but the size being bantered about by those who should know better are utterly laughable.

    Comment by Scott — August 4, 2010 @ 10:38 pm | Reply

  4. CART was posting those losses at a time when FEDEX was still covering those transportation costs, and tv ratings were higher than those of Indycar. Explain to me how indycar/irl’s television and radio rights, sponsorships and sanctioning fees can produce more revenue for indycar when those values are directly related to the number of viewers and attendees.

    The only difference between what CART lost from 1999 to 2001 and what the IRL lost is that CART only had $100 million of runway from the IPO. Once that money was gone the party was over. The IRL on the other hand generated that much cash every 2-3 years from the 500 and Brickyard revenues so the runway looked like it it would go on forever. That is the reason that penske, chip and green/Andretti knew the future was not in CART.

    It does not take a CPA looking a the books to understand that the Burn rate is every bit as high as Schoettle estimates. And it is getting worse. The value of viewers and attendees at Kansas would not generate enough sponsorship revenue to pay for the hospitality booths, much less everything else that goes into making that event happen.

    There is a reason that Tony George told the world there might not be a 2013 for the series. If you think that the series has made any progress so far, your head is buried in a lot of sand.

    Editor’s Note: cart has been completely irrelevant for years. The economy of the entire world is completely different. Technological advances have made any comparison to anything cart had completely pointless. The Indy Car Series of 2010 generates a lot of revenue from multiple sources. Those who run the series admit it is not profitable, but it is close. The primary difference is support the series receives from IMS. My primary point; i.e., anyone who actually believes total losses add up to an average 2.9 mil per non-Indy 500 race is mentally challenged, stands.

    Comment by Scott — August 5, 2010 @ 12:30 pm | Reply

  5. Those who run the series consider the league to be close to profitable only when including revenue from the 500. By those I mean Tony George specifically. This is the root of his statement that there would be no series in 2012 if the series continued to chew up more than it made. The family requires income from this asset and experiences none.

    Tell me what is happening to all of the 500’s revenues if the losses per event are not close to that number?

    If the family were actually netting 30 million for the 500 and that money wasn’t going directly back into the series do you think Tony would have been removed? No because they would be too busy swimming in cash to care what he did b

    Editor’s Note: The 500 makes more money than anyone outside can fathom. Tony George did what his grandad did. Plowed profit back into the plant, which began including the Indy Car Series in ’96. When Tony Hulman was alive, plowing profit back in was never an issue. With the sisters, some of who are said to have lost money in the markets/Madoff, evidently no longer feel that way. Belskus is rapidly allowing the plant to deteriorate to ISC-owned levels.

    Back to the original point: No way in hell is Indy Car losing 2.9 mill per non-Indy 500. It just ain’t happening. Get past that concocted bit of unproven fiction.

    Comment by Scott — August 5, 2010 @ 4:06 pm | Reply


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