INDYCAR: Revenue Sharing Plan Set for 2008

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Written by: Robin Miller Indianapolis, Ind. – 9/11/2007
Courtesy of Speed TV

In an effort to help its smaller to mid-level teams and possibly attract new ones, SPEEDtv.com has learned (gofastnews.com has borrowed) the Indy Racing League will implement a revenue-sharing plan in 2008 that pays guaranteed money to IRL regulars but race purses would be eliminated except for the Indianapolis 500.

And it’s believed there will be an increase to next May’s Indy purse with the winner receiving $2 million and 33rd place paying no less than $300,000.

It remains a work in progress, but it’s believed the current plan calls for a team to receive $1.3 million for every car committed to the 17-race schedule. In other words, if you’re a two-car team, you receive $2.6 million spread out over 12 months.

This year, for example, the Honda engine lease was $1.1 million and the Firestone tire bill roughly in the $250,000 neighborhood for one car, according to IRL team managers. Obviously, it costs more than $1.3 million to operate an Indy car for six months and a one-car effort runs the spectrum from $4 million to $10 million – depending on your budget.

But this money is guaranteed regardless of the number of full-time competitors.

Currently, all IRL purses except Indianapolis are $1 million with 20 percent taken off the top of each car’s share (per race) for the IRL point fund but, starting next season, there will no longer be a 20 percent deduction because there will no longer be a point fund.

However, the 2008 IRL champion will still collect $1 million.

The champ will still get a big check, but it is believed the new purse structure will eliminate a point fund.

Brian Barnhart, the president of IRL competition and operations, has spent the past few weeks presenting his plan to teams but could not be reached for comment on Tuesday. Yet, for the most part, his idea has been well received.

“I think it’s a good thing for the health of the series,” said Robbie Buhl, the former IRL driver who co-owns the two-car Dreyer & Reinbold effort with Dennis Reinbold. “We need to have 20-plus cars and we can’t be short-sighted – we need to be stronger.”

Mike Hull, longtime team manager for Chip Ganassi, echoed Buhl’s thoughts.

“Increasing revenue to the teams is vital to the long-term success of the series and it’s a big step forward in a series that already pays good prize money,” said Hull. “If you know coming in you’re guaranteed $1.3 million, then a smaller team can work backwards and go out and find somebody to support the rest of the program.

“It’s a positive situation.”

Scott Roembke, who calls the shots for Rahal Letterman Racing, also gave the proposal a thumbs-up.

“In basic principle we’d be for it and I think it’s a good move to try and shore up the teams from top to bottom,” said Roembke, whose 2-car effort with Ryan Hunter-Reay and Scott Sharp sports major sponsorship from Ethanol and Patron tequilla. “As a team we don’t budget the prize money, because obviously it fluctuates year-to-year and we end up spending it on crash damage or whatever. So, whether you had a bad or good year, you would know what’s coming in, so that’s a good thing.”

For an original IRL member like Greg Beck, who couldn’t keep up with the rising costs of competition, this guaranteed revenue could put him back in play.

“It has the potential to get us back full-time because it provides a financial anchor and it makes it easier to go back to old sponsors when you’re already to X point,” said Beck, whose last full campaign was 2001 with Billy Boat, when they finished fourth in the points on a one-million budget and three full-time employees. “It makes it more equitable for a smaller team.”

A.J. Foyt, who fields one of the last one-car operations in the IRL, wasn’t convinced it’s the best thing.

“I haven’t talked to anybody from the IRL. I think Larry (Foyt) has so I’m not really sure how it’s structured, but I think I’d prefer to keep the purses because they’re decent,” said Indy’s first four-time winner. “That’s how drivers get paid.”

Many drivers nowadays receive guaranteed salaries, some run for a percentage of the purse and some get both.

Since its shift to the old CART format of road courses and street circuits to go with short ovals and superspeedways, the IRL has been dominated by three teams – Andretti Green, Target/Ganassi and Penske. This season, six drivers from those three teams won all 17 races, led 90 percent of the laps and totaled over $10 million in purse winnings.

Under the proposed revenue sharing system, AGR’s four-car armada would take a pay cut since Dario Franchitti, Tony Kanaan, Danica Patrick and Marco Andretti earned more than $7 million in 2007 and would receive “only” $5.2 million in 2008.

Foyt’s one-car team with Darren Manning collected just under $1 million in purse money this season while Buddy Rice and Sarah Fisher earned just shy of $2 million for Dreyer & Reinibold.

“It may not be what everybody wants based on past performance, but putting in more money is a good deal for this series,” said Hull, whose duo of Scott Dixon and Dan Wheldon raked in $3.5 million in ’07 but would get only $2.6 million in the new deal.

As for Indy, this year’s total purse was $10,668,815 with winner Franchitti earning $1.6 million and 32nd place-finisher Jon Herb getting $193,395. A restructured purse that might pay $300,000 for positions 20-33 and $2 million to the winner would be appreciated, although not nearly enough to offset the costs of spending a month in Indianapolis.

And it likely won’t be enough of an increase to entice an influx of Indy-only teams. But it’s a start in the right direction to try to restore Bump Day and get 45 cars going for 33 spots.

Thank you Speed TV; speedtv.com; speed channel!