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IndyCar
INDYCAR: Series Proposing Reduction To Leader Circle Contracts
The series offers a guaranteed subsidy in the range of $1.2M for its top 22 entries, but is close to reducing those payouts to help balance its budget.
As IndyCar looks for ways to trim its budgets, its TEAM payouts have been targeted as one of the single biggest areas of savings. (Photo: IndyCar Series)
SPEED.com has learned that for the sixth consecutive season, changes to INDYCAR’s TEAM (Team Enhancement and Allocation Matrix) structure will likely be implemented.
Since 2008, the IndyCar Series has used the TEAM system (also referred to as the Leader Circle program) to guarantee an equal amount of prize money payouts--a subsidy in excess of $1 million for entrants committing to participate in every round--in lieu of establishing large purses for each race (except for the Indy 500).
IndyCar’s system is similar to other payout structures used in top-tier racing series, minus the merit-based element that is most commonly found. Formula One, for example, has a lucrative revenue share system for its competitors that is slanted to pay more to the most successful entrants, while NASCAR has a rich prize money structure where even drivers ranked outside the top 30 in points can generate upwards of $4 million for taking part in every race.
With a select few IndyCar teams garnering most of the prize money, and the majority of its competitors left to fight over the smaller amounts left for those outside the Top-10, the series opted to ensure that all those who committed to race at every round would receive an equal share of the purse through the Leader Circle program. And as the series’ schedule has evolved, so has the value of the Leader Circle contracts.
The number of entries has also been reduced since the inception of this program starting in 2011, with the only the Top-22 cars in the final standings eligible for Leader Circle contracts the following year. For 2013, and with a renewed call from the Hulman George family--owners of the Indianapolis Motor Speedway and the IndyCar Series--to balance the series’ budget, a significant savings is set to come from trimming each of the 22 contracts by 10 percent.
The original 2008 Leader Circle program paid $1.3 million per contract, and spread across 19 rounds, equated to approximately $68,500 per race. A slight downward adjustment to $1.24 million for the 17-race 2009 season saw the number jump to $73,000 per race, and for 2010 it crept up to $1.3 million again for the same 17-race season, bringing the per-round breakdown to $76,500.
Facing the same call to reduce IndyCar’s operating budget, former CEO Randy Bernard reduced the number of contracts from 24 to 22 for 2011, and the value of those contracts was also reduced to $1.2095 million--$71,114 per race in the 17-round championship.
2012’s 16-round season (15 after the demise of China) came with another reduction to the value of each contract--$1.16 million, but still paid out $72,500 per race. (Despite what happened with China, Bernard honored the 16-race figure of $1.16 million per entry.)
For the 19-race 2013 calendar which includes three doubleheaders, interim IndyCar CEO Jeff Belskus has proposed the same 22 contracts at a 90 percent value of what teams received in 2012, or $1.04 million per entry and $55,000 per race, with the expectation that some savings will be achieved for the teams through reduced travel at the doubleheaders.
It does not account, however, for the additional mileage and mechanical component usage associated with those back-to-back races.
From a savings standpoint for the IndyCar Series, the family spent $25.5 million on the Leader Circle in 2012, while 2013’s plan will come to $23 million, an immediate $2.5 million pared from the bottom line.
With the contracts still needing to be formalized, two team owners I spoke with weren’t willing to speak on the record about the 10 percent Leader Circle reduction, yet both understood the reasons behind the move.
Since 2008, the IndyCar Series has used the TEAM system (also referred to as the Leader Circle program) to guarantee an equal amount of prize money payouts--a subsidy in excess of $1 million for entrants committing to participate in every round--in lieu of establishing large purses for each race (except for the Indy 500).
IndyCar’s system is similar to other payout structures used in top-tier racing series, minus the merit-based element that is most commonly found. Formula One, for example, has a lucrative revenue share system for its competitors that is slanted to pay more to the most successful entrants, while NASCAR has a rich prize money structure where even drivers ranked outside the top 30 in points can generate upwards of $4 million for taking part in every race.
With a select few IndyCar teams garnering most of the prize money, and the majority of its competitors left to fight over the smaller amounts left for those outside the Top-10, the series opted to ensure that all those who committed to race at every round would receive an equal share of the purse through the Leader Circle program. And as the series’ schedule has evolved, so has the value of the Leader Circle contracts.
The number of entries has also been reduced since the inception of this program starting in 2011, with the only the Top-22 cars in the final standings eligible for Leader Circle contracts the following year. For 2013, and with a renewed call from the Hulman George family--owners of the Indianapolis Motor Speedway and the IndyCar Series--to balance the series’ budget, a significant savings is set to come from trimming each of the 22 contracts by 10 percent.
The original 2008 Leader Circle program paid $1.3 million per contract, and spread across 19 rounds, equated to approximately $68,500 per race. A slight downward adjustment to $1.24 million for the 17-race 2009 season saw the number jump to $73,000 per race, and for 2010 it crept up to $1.3 million again for the same 17-race season, bringing the per-round breakdown to $76,500.
Facing the same call to reduce IndyCar’s operating budget, former CEO Randy Bernard reduced the number of contracts from 24 to 22 for 2011, and the value of those contracts was also reduced to $1.2095 million--$71,114 per race in the 17-round championship.
2012’s 16-round season (15 after the demise of China) came with another reduction to the value of each contract--$1.16 million, but still paid out $72,500 per race. (Despite what happened with China, Bernard honored the 16-race figure of $1.16 million per entry.)
For the 19-race 2013 calendar which includes three doubleheaders, interim IndyCar CEO Jeff Belskus has proposed the same 22 contracts at a 90 percent value of what teams received in 2012, or $1.04 million per entry and $55,000 per race, with the expectation that some savings will be achieved for the teams through reduced travel at the doubleheaders.
It does not account, however, for the additional mileage and mechanical component usage associated with those back-to-back races.
From a savings standpoint for the IndyCar Series, the family spent $25.5 million on the Leader Circle in 2012, while 2013’s plan will come to $23 million, an immediate $2.5 million pared from the bottom line.
With the contracts still needing to be formalized, two team owners I spoke with weren’t willing to speak on the record about the 10 percent Leader Circle reduction, yet both understood the reasons behind the move.
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