4: Costs and Dallara concerns

Smiles have been hard to come by for IndyCar CEO Randy Bernard over the past week. Until he and the angered owners sit down to resolve their differences, the situation will only get worse. (LAT)

I’d estimate that half of every conversation I’ve had for this piece involved costs, Dallara, and the expectation for owners to get reamed on back end profits.

“They’ve been selling everybody on the point that the 2012 car will be a big cost reduction,” one owner said. “The car is going to be less money than we currently pay, and the lease will be less. We’re going to save on the initial hit, but they aren’t going to do that on the rest of the components. That’s where they make their profits. That’s just common business sense. You don’t need an MBA to figure that out. The bid they submitted was low, they got the contract, and there’s no way they’ll ever make money on selling the cars alone. All that money gets made by hiking up the prices on the individual parts. After the first year, all of the money you’ve saved on the chassis and lease will be eaten up by buying spare parts and to replace whatever you crash. That’s a losing deal for us. They don’t tell that part in the sales pitch.”

I listened to a number of people at Sonoma as they expressed their concern about the 2012 car making everything they have on the current Dallara obsolete. One team principal reiterated those concerns during a call this week.

“Tony Cotman has been hired to determine if some of the current components can be carried over. Wheels, some suspension parts, damper parts and gearbox parts. Based on the conversations we had with him on Friday at Sonoma, he said that a new gearbox will be required to meet the lower weight they’ve outlined. It’s a major area of cost. We have no issues with the current gearbox. Failures almost never happen. Everybody has spare parts, drawers full of gear ratios…but now we’ll have to throw them away because the series needs the cars to lose 200 pounds, and this is an easy way for them to do it. How does that benefit us? Or the fans? Will fans care about a newer, lighter gearbox? The people that will have to pay for them sure don’t.”

Cotman couldn't speak in specifics; he’s still assessing which components can be re-purposed, but he says that the series will try to carry over as many parts as possible.

“If we didn’t look at what teams currently have and can be useful, we wouldn’t be doing our job properly. That doesn’t mean everybody will be happy; it’s probably going to be 50/50. One thing that we need to put in the forefront is that I’m representing the teams in this process. I need to present a good business case to the teams on whether we should carry something over or do something all new. We’ll come up with a rational decision on what needs to be done. It’s fair to say we’re looking at everything, and yeah, it’s a new car, but that doesn’t mean everything on it needs to be new.”

Moving on to what I’ve received as a universal criticism -- Dallara’s spare parts prices, one owner made his thoughts very plain on what many in the paddock fear. If you want to watch a team owner turn red with anger, just mention the words ‘Dallara’ and ‘spares.’

“You want to know what scares the hell out of us? Dallara has been given everything. They have the contract to produce the entire car, to choose the vendors and to sell all of the parts. All of them. They get to make everything, and it will cost us a pretty penny. And, there’s zero innovation from the team side. It’s more of a spec car than what we have now. Nobody can build their own components. Not Penske, not KV, not us. Nobody.

“To give you an example, and let’s use suspension, right now we are allowed to build our own suspension to a specification set by the series. So I have my line item budget. In my budget right now, my line item for suspension – something we build ourselves – is right at 100 percent cheaper than if I bought it from Dallara. There are specialist vendors who build suspensions as well. If I go to them, I can buy suspension parts for about 50 percent less than Dallara. With their [2012] plan, all of the areas we use to save money and reduce our budgets with the car are gone. Illegal. Can’t do it. And it puts the specialist guys out of work, too, or takes a healthy chunk of their income away. They gave the keys to the kingdom to Dallara. This one is going to bite us in the behinds, big time. Just watch.”

Bernard says that it’s easy to give into fears of what things were like in the past, but until Cotman solidifies the 2012 rules and establishes pricing, the outrage is premature.

“We can’t get caught up about things we still have to address. I’ve committed to the owners that we will reduce costs everywhere possible, and Tony [Cotman] understands how critical it is for us to bring costs down everywhere, not just on the chassis purchase or the engine lease. Everything is being reviewed and making parts more affordable is a big focus for the series.”

5: Rules and prices, now

It has been said too many times to need further explanation: team owners want to see the 2012 car rules and overall regulations ASAP.

There is a palpable nervousness in the air during this period of limbo while the rules are being formed. If we could fast forward the clock about three months to when the rules are expected to be finished, I’d bet we’d have a greater sense of calm.

Team owners have the major costs penciled in for 2012, but with the rest of the balance sheet filled with question marks or guesstimations on the prices that will be set, anxiety is running high.

“The owners are upside down because they sat down with what the series says will be the 2012 budget, went through it line by line, added in the real costs, and it’s a losing proposition," shared one championship-winning entrant. "Once you start lifting up the rocks to see what’s under them, things aren’t so rosy. Let’s assume there will be 24 new cars for 2012. You’ll need two cars per driver, engines and spares. That will set you back about 1.5 million dollars. Multiply that times 24 drivers and the series expects the owners to drum up 36 million dollars in the next year to 18 months? There’s no longer low hanging fruit to find out there. New sponsor dollars are almost impossible to find. That’s why we’re so upset. We want to know how investing almost 40 million dollars in the series out of our pockets is going to help us. Right now, they can’t answer that to our satisfaction.”

More than being concerned about the specific costs of the transition to a new car and engine, some teams owners I spoke with are worried about what they see as a disconnect between fantasy and reality by IndyCar’s CEO.

“I don’t think Randy has a real grasp for what kind of financial pressure his paddock is under. I think he believes that we’re doing fine, that the big guys are great and the little guys are getting by OK, and that’s ridiculous. The 2012 stuff is based on everyone having more money – more sponsorship dollars – than we really have. That’s just a fact. It costs most people four to five million dollars to run a single entry all year. Most people are able to attract about two million in sponsorship, maybe three. Do the math. That still requires a lot of us to fund things out of our pocket. Fix that. We can’t use our TV ratings to get big dollars.

“They’re saying we will save money in 2012, but to do that, we first need to spend more than a million dollars to see it happen? I already have a Dallara-Honda. I own it. It’s paid for. I’d rather stick with what we have and wait for them to make the series financially viable for us to ditch the current cars. Until we know what everything else costs…you’ll need to show me how we aren’t going to get murdered on everything else for me to believe it. Show me. Until they do, I won’t believe it.”

The “I already have a Dallara-Honda” statement was the most repeated line of the week. It was like a chant. It was usually followed by “so why do I need a new Dallara-Honda?”

This traces directly back to owners not being involved in the final chassis decision, and also has something to do with DeltaWing. The truth is that many owners can afford new cars, but they want to be given a better reason to fork out the money. That’s a big distinction to be made. We’ll get to that in just a minute, but for now, let’s finish up the costs angle of the uprising.

6: How do we pay for it?

The Indy Racing League helped teams to purchase new chassis when the new-spec era started for 1997, just as the series did when ChampCar folded and IMS spent a massive sum for crossover teams to gain access to new cars at a friendly rate. GRAND-AM did the same thing with their new Daytona Prototype class, working with SunTrust Bank to offer loans with low interest rates and easy payment plans.

With Tony George out of power and the IMS kitty out of Randy Bernard’s reach, forget the series helping to finance the 2012 cars. At the moment, it’s all on the teams. Looking at the relative health of the field, about half of the current entrants could write checks tomorrow to order new cars and engines, but for the other half, some form of assistance is crucial.

Bernard says it’s something he’s actively pursuing.

“I know that’s how the series has helped in the past, and I’ve been having more and more discussions with how to make it happen for the new car. We don’t have anything to announce yet, but it’s an active project we’re working on.”

7: Just admit it...this is all about the DeltaWing

Well, yes, it is. But it isn’t. Maybe the truth is somewhere in the middle.

As many people have suggested, maybe the complaints about the 2012 Dallara are nothing more than sour grapes after the series chose not to give DeltaWing the contract.

One of the more successful team owners pushed back immediately.

“Anybody who thinks this is about the DeltaWing doesn’t understand what’s going on. This has nothing do with telling [IndyCar] we want a different chassis manufacturer. That isn’t the message.”

So what is the message about the 2012 chassis? I’m not clear. There are many.

Every person I spoke with was asked the following question: If the IndyCar Series said they would drop the Dallara and go with the DeltaWing, would this fight end?

While not a single person said yes, I can’t say I fully believe the sentiment that a 2012 DeltaWing wouldn’t brighten a lot of faces in the paddock. There are plenty who don’t want the DW, and others who are completely satisfied with the new Dallara that's coming.

But of those who have reservations about the choice of the current 2012 car, most I chatted with said it was the radical nature of the DW that inspired them to have a new car pressed into service. The new Dallara, for many in the meeting last weekend, isn’t a big enough change from the current car to get them to write checks.

That’s where the “we already have a Dallara-Honda, why pay for a new one” sentiment comes from. “Move the bar higher – come up with something more imaginative and we’ll buy it” was another way the thought was expressed to me. The low level of technology with the 2012 car, as many owners perceive it, is a major detraction. I didn’t get the feeling that most of whom I spoke to wanted a grid filled with DeltaWings, but they did want to see more of the free thinking that went into the DW instilled in the Dallara.

One engineer summed up the similar feelings he’s discussed with many of the people who met with Cotman.

“We are currently racing Dallara-Hondas and can barely afford to do so, except for very few teams. There’s no benefit to the teams to switch to a new package. If they want us to switch, they need to give the men who own the teams something evocative to invest in. Right now, it’s more of the same. None of us are the least bit excited about what the [ICONIC] panel has come up with. It’s boring, and boring doesn’t get bought.

“We need decide what we want to be. Do we want to be green? Low power cars make sense, but 550 horsepower doesn’t do anything for anybody. Do we want to put on a huge show? If so we need 1000 horsepower to grab all the X-Games crowds and everybody else that loves extreme sports. The car needs to look great, needs to sound great and needs to go like a bat out of hell. With a car like that, the sponsor guys have something to sell. With what they showed us last month, it puts us to sleep. Maybe the DeltaWing wasn’t the perfect choice, but damn was it intriguing. That’s missing from the Dallara.”

I can theorize on what I believe would make the 2012 Dallara more interesting for the paddock, but even they don’t collectively know what they want done differently. Too many people are singing from different hymn sheets.

Provided the series is willing to listen, it would be wise for the teams to meet and come up with a list of preferred changes to the car. Even the overall concept has a lot of doubters amongst the ownership ranks. It’s important to understand that what was shown to the public and has since become the subject of a ‘design your own 2012 car’ promotion on Indycar.com, isn’t necessarily how the 2012 Dallara will look. Despite this fact, the visuals, as I listened to repeatedly, leave a lot to be desired.

Not enough is known (or has even been decided) about the 2012 specifications to talk about whether the car will be interesting, innovating or beautiful, but the assumption is that it will fall short of expectation.

“Motivation is key to what we do,” said one veteran of the CART/IRL wars. “If you don’t have a racing car that motivates people –that gets their juices flowing, it will never succeed. What we have with the Dallara we race now is a vehicle that motivates no one. I think what you’re seeing with the owners resisting the new Dallara is that it falls into the same category of the existing car. It holds no one’s interest. Think of IndyCar owners like men sitting at a high-end collector car auction. Bring out a precious Ferrari, and they will part with millions to own it.

“Drive a Toyota Camry onto the stage, and you lose the audience immediately. It’s possible that the IndyCar Series has failed to realize that for a lot of team owners, they are trying to sell Toyotas with the asking price of a Ferrari. Until they correct the appeal of the new Dallara, it will remain a hard sell.”

According to the series, 75 percent of the fans like the 2012 IndyCar concept. I won’t question those figures as their validity isn’t important. What is an issue – one the series needs to accept immediately – is that fans won’t get to see those 2012 Dallaras until the owners pay for them.

Knowing that the series does not have the ability to buy a full grid of cars or to buy enough to stock the field to make up for any teams they might lose, there is a highly symbiotic relationship with the current owners when it comes to bringing the 2012 Dallara to reality.

It’s worth noting that I’m told a running DeltaWing prototype is being built, adding to the possibility of a real live DW seeing on-track action before the first 2012 Dallara turns a wheel. I’ve even heard rumors of an all-DW series being formed, but the car’s designer, Ben Bowlby, tells me such speculation is just that: pure speculation.

One thing is for sure. The IZOD IndyCar Series hasn't gone with DeltaWing, and they won’t be providing cars to the series for 2012 no matter what the owners demand. What happens as a result of the DW hitting the track or any of the rumors surrounding DeltaWing’s future plans remain to be seen.

The paddock should know that no matter how many times they deny it, the series is convinced that their relationship with many of the owners changed – going from warm to a wall of ice -- once the Dallara was chosen over the DeltaWing.

Differing perspectives aside, what we can bank on is that unless the series is willing (or capable) of replacing any of the teams that might refuse to buy 2012 cars, they will need to listen to the concerns of their owners.

I know of four new teams who want to join the series once the new cars arrive, but they would only account for about 25 percent of the grid. Until the series stacks the deck with a majority of new teams to backfill any they might lose, the balance is tipped in favor of the current ownership base.