IndyCar maybe or maybe not
By Jim Gandolf
May2025
Looking into IndyCar racing?
Maybe not the Racing series only seems to care about two teams Chip Ganassi Racing, or Roger Penske team team Penske! In reality, why would somebody invest $14 million a year to always lose or someone like myself that can invest close to 20 million a year but cannot find the fact to do so unless l am introducing a well planned rollout of a new system or new product.
Fascinating and complex aspect of modern motorsports, particularly in spec series like IndyCar. The idea that a "spec" series forces you to purchase, but then one team "owns the league" and can leverage data to progress further, brings up several crucial points:
The "Forced to Purchase" Aspect for New Billionaires
You're absolutely right that in a spec series, the core chassis and engine options are predefined. A new billionaire looking to enter IndyCar would indeed have to purchase Dallara chassis and lease engines from Chevrolet or Honda. This is different from a "pure" open-wheel series like Formula 1, where teams design and build their own chassis (though even F1 has increasing standardization of components).
The idea behind spec components in IndyCar is to:
* Control Costs: Reduce the astronomical R&D costs associated with designing entirely new cars each year, theoretically making it more accessible for teams.
* Promote Parity: Ensure that success is more about team execution, driver skill, and setup work, rather than who can outspend the competition on car development.
However, as we discussed, "spec" doesn't mean "equal." The devil is in the details, and that's where the financial resources still play a huge role.
The Data Advantage and "Owning the League" Perception
This is perhaps the most contentious point I have raised, especially with Roger Penske owning both Team Penske (a racing team) and Penske Entertainment (which owns IndyCar and the Indianapolis Motor Speedway).
Here's a breakdown of the data situation:
* Telemetry Data: Every IndyCar is packed with sensors that gather enormous amounts of data (tire temps, engine performance, G-forces, driver inputs, etc.). This data is streamed in real-time to the teams during sessions and stored for later analysis.
* Team-Specific Data: While certain broad telemetry data might be available to all teams from the series (like the NTT DATA-powered app for fans), the truly granular, proprietary setup data, damper characteristics, and simulation outputs are fiercely guarded by individual teams. This is their intellectual property and a major source of competitive advantage.
* Technical Alliances: This is where data sharing does happen more significantly. As you mentioned, powerhouse teams like Ganassi and Penske often form "technical alliances" with smaller teams.
* How it works: In these alliances, the larger team might sell chassis or provide engineering support, and in return, they get access to the smaller team's data. This effectively gives the larger team more cars on track to gather data from, more scenarios to test, and more points of comparison, all without having to run additional entries themselves. For the smaller team, it can provide crucial engineering expertise and potentially access to better components or insights they wouldn't otherwise have.
* Examples: We've seen alliances like Ganassi-Shank and Penske-AJ Foyt Racing. These partnerships are legal and common in motorsports.
But in reality that’s only four teams and the last time I looked, there’s more teams than that so the other teams suffer while one team gathers the information and the other doesn’t.
* Roger Penske's Dual Role: This is where the "owning the league" perception comes in. When Roger Penske purchased IndyCar, he explicitly stated he would separate his team operations from the series operations to maintain integrity. However, recent controversies (like the push-to-pass penalties in 2024 involving Team Penske cars, which led to personnel changes within IndyCar's race control) have certainly fueled the perception that a conflict of interest exists or that the playing field isn't truly level when the owner of the series also owns a dominant team.
Why New Billionaires Might Be Hesitant
My point about new billionaires being deterred is valid for several reasons:
* Perceived Rigged Game: If a potential owner believes the top teams have an insurmountable advantage due to data leverage (through alliances) or even perceived favoritism from series ownership, it makes the investment less appealing. Why spend tens of millions of dollars to compete if the deck feels stacked?
* Estimates for annual team budgets range from $2 million for smaller teams to up to $13 million per car for larger teams. A full two-car operation for a competitive team could easily be $20-30 million a year, not including the initial investment in equipment.
* Difficulty of Entry and Immediate Competitiveness: It's incredibly difficult to build a top-tier racing program from scratch, even with unlimited funds. It takes years to assemble the right personnel, build institutional knowledge, and develop those subtle advantages in areas like damper development and setup expertise. The spec nature reduces some barriers, but the "game" still requires immense technical sophistication.
* Return on Investment (ROI): Motorsports is an expensive endeavor. Billionaires typically invest where they see a clear ROI, whether it's through marketing exposure, brand building, or simply the thrill of winning. If winning seems unlikely against entrenched competitors, the ROI diminishes.
* Data Security and Espionage: While outright "stealing" data from other teams is illegal and generally not how it works, the sophisticated data analysis and technical alliances mean that the overall knowledge base of a top team grows faster and more comprehensively. A new team would be starting from a deficit in this accumulated knowledge.
IndyCar's Challenge
IndyCar faces a constant balancing act:
* Controlling Costs vs. Allowing Innovation: They need to keep costs reasonable to attract new teams, but also allow enough areas of development to keep the technical challenge interesting for engineers and manufacturers.
* Promoting Parity vs. Rewarding Excellence: They want close racing, but they also don't want to penalize teams that genuinely excel through hard work and smart engineering.
* Managing Perceptions: The Penske ownership situation, while legally separated, will always invite scrutiny and requires absolute transparency and impartiality from the series.
In conclusion, you're tapping into the core challenge of modern spec racing. While the intention is to create a level playing field, the reality is that financial resources, engineering talent, and the ability to leverage data (especially through technical alliances) still create significant advantages for established powerhouse teams, which can indeed deter new, well-funded entries if they feel they can't genuinely compete for wins and championships.
I have pinpointed one of IndyCar's most significant and long-standing challenges: the engine manufacturer dilemma. Even if a new billionaire had the funds to buy a team, chassis, and all the equipment, securing an engine supply from either Chevrolet (Ilmor) or Honda (HRC) is not a given, and it's a major barrier to new entries and grid expansion.
Here's why:
* Limited Manufacturers: IndyCar currently only has two engine manufacturers: Chevrolet and Honda. This duopoly creates a bottleneck. In contrast to F1, where engine manufacturers generally want to supply as many teams as possible (within limits) to gather data and for marketing, IndyCar's current model is different.
* Cost vs. Marketing Value: For both Honda and Chevrolet, their participation in IndyCar is primarily a marketing and R&D exercise. They lease engines to teams at a significant loss because the actual cost of developing, building, and maintaining these high-performance engines far exceeds the lease fees they charge teams (which are around $1.45 to $1.6 million per season per car, but the true cost to the manufacturer can be much higher, estimated at $9 million or more per year per car). They subsidize this through their overall motorsport budgets and the value of brand exposure.
* Strain on Current Manufacturers: Chevrolet and Honda are already stretched to supply the current grid of 25-27 full-time cars. They have a finite capacity for production, development, and trackside support. Adding more teams means they would need to significantly increase their investment without necessarily seeing a proportional increase in marketing value or return.
* Reluctance to Take on More Leases: Both manufacturers have publicly expressed their desire for a third engine supplier to join the series. Without one, they are effectively shouldering the entire burden of engine supply for the entire field. They are hesitant to commit to supplying more cars because it increases their already substantial financial outlay and logistical strain.
* The "Engine Pool" and Allocation: Engines are leased to teams, not sold outright. The manufacturers manage a pool of engines, and teams generally get an allocation of 4-5 engines per season per car (with mileage limits and penalties for using too many). This system ensures consistent performance and reliability across the grid, but it also means the manufacturers maintain control over supply.
* The Hybrid Engine Delay: The long-delayed introduction of the new 2.4-liter hybrid engine (now a hybrid unit mated to the existing 2.2-liter engine) was partly due to the manufacturers' concerns about the increased cost and development burden, especially without a third OEM to share the load. They wanted to ensure the new formula was sustainable.
Consequences for New Teams/Billionaires:
* No Guarantee of Supply: Even with a blank check, a new team cannot simply walk into Honda or Chevrolet and demand engines. The manufacturers prioritize their existing customer teams and would need to be convinced (or incentivized by IndyCar) to take on a new customer.
* Increased Costs: If a manufacturer were to agree, they might demand a higher lease fee to offset their increased costs, making the program even more expensive for the new team.
* Limited Choice: The new team wouldn't have a choice of engine supplier; they'd have to take whatever is available, potentially limiting their ability to partner with a specific manufacturer or technical partner.
* Impact on Grid Size: This engine supply bottleneck is a primary reason why IndyCar's full-time grid hasn't significantly expanded beyond its current size, despite interest from potential new entries.
In essence, IndyCar's biggest vulnerability isn't necessarily the spec chassis or the dominant teams, but the lack of a third (or fourth) engine manufacturer. Until another OEM commits to the series, securing an engine supply will remain a major hurdle for any new team, regardless of their financial backing, reinforcing your point about the difficulty of truly "buying in" and having an impact.
No Financial gain for a new team:
This is another major financial hurdle for any new team or existing smaller team in IndyCar: race prize money is rarely enough to cover operational costs, and consistent winnings are far from guaranteed.
Here's why this is such a problem:
* Reliance on Sponsorships: Unlike some sports where a significant portion of a team's revenue comes from league payouts (like TV rights or profit sharing), IndyCar teams primarily rely on sponsorships. A typical single-car team needs several million dollars a year to operate, and that money almost exclusively comes from corporate sponsors who want their brand visible on the car and driver.
* Prize Money Distribution:
* The Indy 500 is an Anomaly: The Indianapolis 500 has a massive purse (e.g., over $18.4 million in 2024, projected higher for 2025). The winner takes a substantial share (over $4 million in 2024), and even those finishing lower down the field can get a decent payout (hundreds of thousands for top-10, six figures for most finishers). This race is crucial for many teams' annual budgets.
* Regular Season Races: For the other 16-17 races on the calendar, the prize money is significantly smaller. While specific race purses aren't always publicly disclosed for every event, they are a fraction of the Indy 500's payout.
* Progressive Payouts: Prize money is heavily weighted towards the top finishers. If a new team consistently finishes in the back half of the field (which is highly likely for a new, unproven team), their prize money earnings will be minimal, perhaps just a few tens of thousands of dollars per race. This won't even cover the cost of tires, fuel, or travel for that weekend, let alone salaries or engine lease payments.
* No "Guaranteed" Income for Most Teams: There isn't a traditional revenue-sharing model in IndyCar that guarantees a baseline income for all full-time entries, similar to how some stick-and-ball sports leagues operate, or even NASCAR's charter system (though IndyCar has discussed or implemented a charter system, it primarily impacts Indy 500 payouts and not a guaranteed revenue stream for every race). Teams have to earn their money through on-track performance and, most importantly, attracting and retaining sponsors.
* The Vicious Cycle:
* Need Sponsors: To run a competitive team, you need significant funding from sponsors.
* Need Performance for Sponsors: Sponsors want to be associated with winning or at least competitive teams that get TV time and media exposure.
* No Guaranteed Performance: A new team, especially one without the top-tier talent, engineering depth, and technical alliances of a Ganassi or Penske, will struggle to be competitive immediately.
* No Winnings, No Exposure: If they don't perform, they don't earn prize money, and they don't get the valuable TV time that attracts and satisfies sponsors.
* Difficulty Retaining/Attracting Sponsors: This makes it incredibly hard to secure or renew major sponsorship deals, creating a constant struggle for financial viability.
* Driver Contributions (Pay Drivers): In some cases, teams rely on "pay drivers" – drivers who bring personal sponsorship or whose families contribute significant funds to secure a seat. This is a common practice in many racing series, especially at lower levels, and it helps smaller teams fill out their budgets. However, it means the team isn't solely reliant on prize money or traditional corporate sponsorships.
So, yes, I am entirely correct. A new team, even with a billionaire owner, faces immense financial pressure. The prize money from most races won't even cover the expenses for that single weekend, and the path to consistent high finishes (and therefore significant prize money) is arduous and costly due to the dominance of the established powerhouses and the inherent challenges of starting a top-tier racing program from scratch. This makes the investment even riskier for a new team owner group or person.
There is away to make this work.
I am confident in this statement.
I say,”Maybe!”
By Jim Gandolf
May2025
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