Chevrolet, Honda to provide engines for 10 cars each?

[zako85]

AUTO RACING - INDYCAR: Limited Engine Supply In 2012? (http://auto-racing.speedtv.com/article/indycar-limited-engine-supply-in-2012/P1)

[beachbum]

Nothing new here. Honda indicated that Indy Car required each manufacturer to be able to supply 40% of the field. Since the expected car count is 24 - 25, that is 10 each. Lotus / Judd will pick up the remainder after Honda and GM

[nigelred5]

10/10/4-6 sounds about right based on the previously announced teams, the current pecking order and each engine manufacturers likely resources and budgets. I don't expect the Judd to be able to shoulder as much as the other two unless Proton is really going to pony up a serious budget for the lotus badgded engine.

[Oli_M]

Where are we at the moment with what has been announced?

HONDA
Ganassi - 4 Cars
Foyt - 1 Car

CHEVY
Penske - 3 Cars

LOTUS
None officially announced, but given the current large sponsorship, assuming KV will use Lotus branded engines - so 3 Cars?

Will be interesting to see where the other teams go - I wonder how much will be a team saying "We want to use X engines" versus the engine companies saying "We want X team to use our engine"?

[Chamoo]

LOTUS
None officially announced, but given the current large sponsorship, assuming KV will use Lotus branded engines - so 3 Cars?

I wouldn't get too comfy thinking the Lotus engines would end up at KV.

[Dr. Krogshöj]

There was a rumor that KVRT actually wants Honda engines. It all depends how much money is actually involved in the Lotus branding deal. If it is not a significant sum I can see KVRT run three cars with Honda; with the bulk of the sponsorship already coming from GEICO, PDVSA, and in Sato's case, Honda itself (through Panasonic and Formula Dream).

[00steven]

If engine suppliers are limited to 10 cars, I doubt that Honda would use 3 on KVRT. I'm sure they would rather have Andretti or Newman-Haas instead.

[SoCalPVguy]

What this implies to me is that JUDD is expected to default (and I personally think there is a really good chnace of this) and not supply engines in 2012, so Honda and Chevy want to be on notice they will not or can not supply the entire field. This also implies that if (or when) Judd backs out, the IndyCar fields may be limited to 20 cars, down from the 26-28 we are seeing now. This IMHO is a very bad thing.

[beachgirl]

Yep. Right back to the "old" days.

[Marbles]

If memory serves correctly, Judd powered some backmarkers many moons ago in CART and F1. To be honest, I can't see things changing much now IF they can answer the bell. Has Judd ever produced a dominant engine?

I can't believe Cosworth doesn't have their chips in the game especially with Kalkhoven in the mix. He and Forsythe still own it? Possible contractually restricted because of their F1 participation? Perhaps nobody's interested in badging it and they don't want to go it on their own?.

[DBell]

If memory serves correctly, Judd powered some backmarkers many moons ago in CART and F1. To be honest, I can't see things changing much now IF they can answer the bell. Has Judd ever produced a dominant engine?

I can't believe Cosworth doesn't have their chips in the game especially with Kalkhoven in the mix. He and Forsythe still own it? Possible contractually restricted because of their F1 participation? Perhaps nobody's interested in badging it and they don't want to go it on their own?.

I remember Kalkoven saying Cosworth would only be interested if it made financial sense and that would mean a manufacturer to badge the engine. My guess is Lotus wasn't offering enough money for them to do it. Maybe they have hopes that Ford will come back and tie up with them.

[Marbles]

I remember Kalkoven saying Cosworth would only be interested if it made financial sense and that would mean a manufacturer to badge the engine. My guess is Lotus wasn't offering enough money for them to do it. Maybe they have hopes that Ford will come back and tie up with them.

Thanks. Ford is doing fairly well these days as a manufacturer and after all the cost cutting it would be nice to see them dip their toes back in these waters. A Lotus Ford Cosworth to return to Indy??? Wholly Whannah! I think it would be a welcome site to a lot of motorsport fans to see Ford\Cosworth on the grid again. They have quite a history together.

http://www.youtube.com/watch?v=jfXBuwSjhWch

[anthonyvop]

Since the expected car count is 24 - 25, that is 10 each.

You are being very optimistic.

How many teams are in the financial/Sponsorship situation where they can toss their current cars, spares, specialty tools and data and replace them with all new product?

Penske, Ganassi, KV, Andretti(Doubt will see a 4 car Andretti team next year), Panther.......a 20 car grid next year would be astounding.

[beachbum]

You are being very optimistic.

How many teams are in the financial/Sponsorship situation where they can toss their current cars, spares, specialty tools and data and replace them with all new product?

Penske, Ganassi, KV, Andretti(Doubt will see a 4 car Andretti team next year), Panther.......a 20 car grid next year would be astounding.That was the expected car count from Honda and Indy Car. Personally, I would expect less, but....

Unlike what happened in another series, it seems many teams have been planning on the expenditures for some time. The weaker teams like Conquest or Dragon may have problems stepping up to the plate, and some teams like AA will probably cut back, but everyone else has expressed a determination to be back - even Coyne.

[zako85]

You are being very optimistic.

How many teams are in the financial/Sponsorship situation where they can toss their current cars, spares, specialty tools and data and replace them with all new product?



Perhaps, but the new product will cost less. The current Honda engines leases cost something like one million per year. The 2012 engines will cost a few hundred thousand less, leaving some spare money for new chassis.

[zako85]

If memory serves correctly, Judd powered some backmarkers many moons ago in CART and F1. To be honest, I can't see things changing much now IF they can answer the bell. Has Judd ever produced a dominant engine?

I can't believe Cosworth doesn't have their chips in the game especially with Kalkhoven in the mix. He and Forsythe still own it? Possible contractually restricted because of their F1 participation? Perhaps nobody's interested in badging it and they don't want to go it on their own?.

I remember reading somewhere that Lotus justified not partnering with Cosworth because Cosworth is a big company and everyone supposedly would be calling their engine Cosworth and not Lotus.

[DBell]

I remember reading somewhere that Lotus justified not partnering with Cosworth because Cosworth is a big company and everyone supposedly would be calling their engine Cosworth and not Lotus.

You never know, this may be true. But it does sound like a weak excuse. Judd is well known in Europe and in racing circles. Why won't people refer to it as a Judd? I still think it may have been that Cosworth didn't think the budget that Lotus would bring would allow for a competitive program. Cosworth would then be available for a more attractive manufacturer at a later time by not tying themselves to a contract they didn't like.

But I'm no insider. This is speculation on my part.

[chuck34]

You are being very optimistic.

How many teams are in the financial/Sponsorship situation where they can toss their current cars, spares, specialty tools and data and replace them with all new product?

Penske, Ganassi, KV, Andretti(Doubt will see a 4 car Andretti team next year), Panther.......a 20 car grid next year would be astounding.

So the anouncement that Foyt (a very low budget team) is seriously considering running a two car team next year means nothing? These teams have been planning for this switch for at least a year, probably longer. Most (that have any sort of good managment) will have money socked away for this. Plus the chassis are going to be fairly cheap, and the engine leases will be much more cost effective. Sure we'll probably loose a few teams/cars, but 20 cars is more than doable.

[nigelred5]

man have we heard all of this before............. wonder what type of creative financing/lease arrangements we'll ultimately hear about this time around to get the car count up above 16 or so cars.......

[Chris R]

man have we heard all of this before............. wonder what type of creative financing/lease arrangements we'll ultimately hear about this time around to get the car count up above 16 or so cars.......

glad you said it before me - I have to agree - my expectations are pretty low - I hope to be pleasantly surprised...... As for those who think they have been squirreling money away.... As a small business owner, none of that has been going on or the past 5 years or so it is all about immediate survival - not long term planning...... I doubt there is much money allocated for the switch - however, costs should be going down more or less - so it may be ok...... also as a small business owner, I can say that if you are in a business, there probably is not something better to do with your time or money right now so you'll probably find a way to get by......

[chuck34]

glad you said it before me - I have to agree - my expectations are pretty low - I hope to be pleasantly surprised...... As for those who think they have been squirreling money away.... As a small business owner, none of that has been going on or the past 5 years or so it is all about immediate survival - not long term planning...... I doubt there is much money allocated for the switch - however, costs should be going down more or less - so it may be ok...... also as a small business owner, I can say that if you are in a business, there probably is not something better to do with your time or money right now so you'll probably find a way to get by......

So as a small business owner, if you know that there is going to be a major expense that you must cope with to keep your doors open, and you're given 2 years to plan for it, you aren't going to do everything in your power to put money away? Sure maybe not 100% of the needed cost, but you would do what you can, wouldn't you?

[Chris R]

So as a small business owner, if you know that there is going to be a major expense that you must cope with to keep your doors open, and you're given 2 years to plan for it, you aren't going to do everything in your power to put money away? Sure maybe not 100% of the needed cost, but you would do what you can, wouldn't you?

yes and no, if you know there is no way you can do it without extraordinary aide you might not be bothering instead opting to hope for the best..... Also, as you said, if you can't save enough for that purpose, why save any - pay down your debts (personal and business) so that you can exit as whole as possible.....

I would also add, we are coming off a long time period where the way to plan for capital expansion/ re-fitting has been to plan to take on new debt. I am not sure too many Indycar teams are in a position to take on new debt both because of the downturn in their specific business and the general tightness in the credit market for risky endeavors without much chance of a high yield.....

I am not saying these are ideal business practices, but I am saying that the economic realities are a bit more dismal than any of us would hope for or would have imagined back in business school or in the boom times that have been mostly prevalent since the 80's (this is really the first truly prolonged economic downturn for many of us....)

At any rate, I could be way off base - only time will tell.......

[chuck34]

yes and no, if you know there is no way you can do it without extraordinary aide you might not be bothering instead opting to hope for the best..... Also, as you said, if you can't save enough for that purpose, why save any - pay down your debts (personal and business) so that you can exit as whole as possible.....

I would also add, we are coming off a long time period where the way to plan for capital expansion/ re-fitting has been to plan to take on new debt. I am not sure too many Indycar teams are in a position to take on new debt both because of the downturn in their specific business and the general tightness in the credit market for risky endeavors without much chance of a high yield.....

I am not saying these are ideal business practices, but I am saying that the economic realities are a bit more dismal than any of us would hope for or would have imagined back in business school or in the boom times that have been mostly prevalent since the 80's (this is really the first truly prolonged economic downturn for many of us....)

At any rate, I could be way off base - only time will tell.......

I don't know, just seems to me that if I know that I will have a capital expenditure staring me in the face that I MUST pay to keep the doors open, I'd try to do everything I could to prepare for that. But I don't know the specifics of any teams' books, so who knows?

[Jag_Warrior]

I don't know, just seems to me that if I know that I will have a capital expenditure staring me in the face that I MUST pay to keep the doors open, I'd try to do everything I could to prepare for that. But I don't know the specifics of any teams' books, so who knows?

Not to speak for him, but I think Chris is saying that a small business owner (which is what most of these teams are, best case) will do all that is practical. But at some point, one has to face facts and either fish or cut bait.

Remember what makes up the majority of the revenue for the teams: sponsorship. Sponsors get more involved in team expenses than some fans realize. And at times they can get more involved than even some team owners realize. ;) I'm not in the mood to get nasty or threatening PM's from "new members", so I'll just suggest that people look up the past situations surrounding Adrian Fernandez Racing, Morgan McClure Racing and Rahal-Letterman to better understand that if you're attempting to use sponsor money as "retained earnings", best to make sure that you're VERY transparent about what you're doing.

My guess on how these new cars will get paid for: I figure the big teams have the coin and the smaller teams may have to go to the league to help them (whether its debt guarantees, leasing or something else). Sun Trust has done this in Grand Am, and there may be a bank that, with enough legal guarantees from the series/IMS, may be willing to help out with loans or form lease deals. I don't know. But given how they've been living hand to mouth for the past several years, I would be surprised to learn that many of the small fish have been able to squirrel away any meaningful amount of money.

[Chris R]

Not to speak for him, but I think Chris is saying that a small business owner (which is what most of these teams are, best case) will do all that is practical. But at some point, one has to face facts and either fish or cut bait.

Remember what makes up the majority of the revenue for the teams: sponsorship. Sponsors get more involved in team expenses than some fans realize. And at times they can get more involved than even some team owners realize. ;) I'm not in the mood to get nasty or threatening PM's from "new members", so I'll just suggest that people look up the past situations surrounding Adrian Fernandez Racing, Morgan McClure Racing and Rahal-Letterman to better understand that if you're attempting to use sponsor money as "retained earnings", best to make sure that you're VERY transparent about what you're doing.

My guess on how these new cars will get paid for: I figure the big teams have the coin and the smaller teams may have to go to the league to help them (whether its debt guarantees, leasing or something else). Sun Trust has done this in Grand Am, and there may be a bank that, with enough legal guarantees from the series/IMS, may be willing to help out with loans or form lease deals. I don't know. But given how they've been living hand to mouth for the past several years, I would be surprised to learn that many of the small fish have been able to squirrel away any meaningful amount of money.

Jag, thanks, well put and pretty much on my point...

I am curious as to what you are referring to with the retained earnings issues with those teams?? I am guessing that they counted unpaid sponsorships as assets - but I am not familiar with the situations.....

[Jag_Warrior]

More like squirreling away substantial amounts of money over and above the costs of operation. The owner's retirement fund perhaps? Putting the money aside wasn't the issue so much as it was well hidden in the books.


^^^ This.

Buying new uniforms for the crew is OK. Buying extra sets of wheels for the car is OK. Buying a bunch of extra carburetors, cams and cranks, and selling the old ones to "friends of the team", is OK (even though the "old" ones only had one run on them). Heck, when the money was freely flowing back in the day, using sponsorship funds to "entertain" was OK. But buying farm land with sponsorship funds? That's kinda hard to explain... or so I heard. ;)

There's nothing wrong with racing teams making a profit. In fact, that's what they should be aiming to do. And I have NO IDEA what the financial situation is with any of the current IRL teams. I simply find it hard to believe that the smaller teams have built up any bank over the past few years. I think Chuck is correct (they want to - just like there are things that I want, but can't afford). But the days of sponsors writing million dollar checks for really, really small decals has long since passed. I'm not trying to be a Debbie Downer... I just don't see where the money would come from with these smaller teams (other than a loan or the owners' personal bank accounts).

[nigelred5]

I suppose that's not too much of a problem when the teams have ongoing multi year sponsorship deals, but these days it appears some of if not most of the teams seem to be on race to race deals that cover expenses, and little more. Wasn't it Fernandez that was basically called out on the floor and then dropped by his sponsors for taking quite a good sized chunk of the sponsorship money they intended for race related things?

[chuck34]

I fully understand what you guys are saying. I really haven't been trying to argue the point that you are making, that some teams will have a hard time buying new equipment next year. Of course they will. No one can deny that. But the lower costs (if they stay as low as advertised) will make it easier for many teams to buy in.

Think of it like this. If team X signed sponsor Y last year to a 3 year deal (I don't know if many of those exist), and didn't include in that sponsorship at least a portion of the capital expense for buying a new car, then that team is run by some really poor business men who have no skills for planning. As such they will probably be closing their doors sooner or later anyway, with or without a new car.

[Chris R]

Chuck, you are right on in your analysis - but I think the problem is that right now, all but Penske and Ganassi are pretty much "price takers" not "price setters". The nature of the general economy and the AOWR economy in particular means I doubt very few (if any) teams are able to demand a sponsorship package that allows for savings and re-investment... It is not good business practice - but it is survival to take what you can to get by for now... Heck, Penske is pretty much self-sponsoring 2 cars for that matter - so the money he is putting into his team is more or less strictly for recreational purposes (not good business but good fun if you can afford it). He is being smart for not undervaluing his sponsorship to "outsiders" - but he is also burning through personal money.....

I know, in our business (we grow woody ornamental shrubs) - the market has been so trashed since 2008 that we were purposefully taking below cost prices just to get rid of inventory and reduce operating/overhead costs - a stupid longterm move but one that was necessary to get through short term... Now that we have sold through our excess inventory we are not selling below cost but since the market has been hurt so bad, we are barely selling enough to generate the cash flow we need to keep plugging away.... To compound the problem, it is not like we can close up shop and go work for a larger operation (they are hurting just as bad or worse), we can't sell our assets for anything close to a reasonable price, and there are minimal other job opportunities out there - so despite the issues we are best to continue on our current course and more or less hope the market begins to correct itself both on the macro and micro levels because we have pretty much used every trick in our bag to get to where we are.... To further compound issues, since this is such a prolonged downturn, it is not like there are additional resources available for my family as owners - our personal "holdings" (our business, homes and modest market investments/savings) have fallen in value and/or have already been invested back into the business to keep afloat.... The bottom line is, I know exactly what I need to do to survive and prosper - but knowing what I need and getting it are two different things....

Anyway, I tell this story because, it is more or less the place I envision many Indycar teams to be - I think a larger number of teams than the pessimists think will answer the bell because they have no choice but I think a smaller number than the optimists think will be back because they are just plain busted.... I also think the days of the paddock being dominated with people with wads of cash in their pockets are over - these guys are pretty much just like the rest of us with a few exceptions.......

20 cars is probably where we will end up - but 16 is a distinct possibility (and if we don't get this mess in Washington worked out asap it could be 50 Indianapolis taxi cabs (the real deal, not NASCAR) running the 500 next year.....

[alyoder]

It's interesting because back when the IndyCar website hosted their own forums, all you ever heard about there was people complaining about the lack of diversity and how one engine, one look, one configuration racing was ruining everything.

But now (and I realize this is a different forum) that we're talking about multiple engine, multiple look, multiple configuration racing almost all the comments I read are gloom and doom about how its going to be terrible...

*throws up his hands*

[Chris R]

It's interesting because back when the IndyCar website hosted their own forums, all you ever heard about there was people complaining about the lack of diversity and how one engine, one look, one configuration racing was ruining everything.

But now (and I realize this is a different forum) that we're talking about multiple engine, multiple look, multiple configuration racing almost all the comments I read are gloom and doom about how its going to be terrible...

*throws up his hands*

I don't think anyone here does not think the move to a new car is a good/great idea..... My personal doom and gloom has a lot more to do with the general economic conditions that go well beyond Indycar than anything else..... Given the circumstances, I think Indycar is making all the right moves in regards to the new car (it is too "spec" for some but...). However, I think it is a mistake/overly optimistic to expect this year's generally large fields to carry over to next year - I do not think the economy will provide the resources for a 26 car field every week next year....... (and that is fine as long as it is not 16 every week)....