Thursday, July 15, 2010

2012 The More I THINK the More I LIKE

Editor's Note...I have been thinking about this post all afternoon and as I have finally settled in to pound away on the keyboard, I am listening to the Trackside Podcast. I suppose great minds think alike...

So I was sitting at Quiznos at lunch yesterday (because Potbelly has yet to come to Indy) feverishly updating my Droid’s Twitter app, when the dreaded word “Dallara” began to show up, repeatedly and without the company of Swift or Lola to soften the blow. And I began thinking “What sort of idiots purposefully alienate the last bastion of fans they have?”. To which I tweeted about the production value of the announcement as being “lipstick on a PIG”. Fortunately the twitter stream started mentioning stuff like “Custom Aero Packages” and “open to all interested developers” and the day turned less gloomy. Questions remained, “Is there enough margin in a $70k aero kit to make it economically viable to interest a company in developing in the first place?” “will Penske get back into the parts/car business?” “how do you make sure that an aero kit, as a point of design, does not devastate the wake for the following car” “is the engine stressed?” and so forth.

Last evening I streamed the presentation and my questions about the uncertainties were replaced by imaginings about the possibilities. Frankly, there are many and they are above and beyond the obvious benefits of some infusion of innovation and variety of car design balanced with cost efficiencies for teams. There is now another platform for sponsorship available in the car itself. Historically, only the engines and tires represented an opportunity for sponsor involvement though the car that raced. The chassis manufacturers were specialized makers of racing gear and as such had no benefit from their products being branded for a wider audience. But now the aero package has the potential to be marketed as a meaningful asset. I don’t however think that the aero packages are likely to be sponsored by car companies. 30 years ago we could possibly have seen a Chevy Engine hidden under an aero package by Fisher, but those days are gone.

The aero package introduces a whole new different list of potential manufacturers participating. The name dropping of Boeing and Lockheed Martin was not accidental but nor do I believe either is a likely participant. But aerospace is the target, and here are a couple entities within the realm of IndyCar’s influence who could be interested.

Bombardier – Historically this company has sponsored the Texas race each year. But given the current state of affairs, the sponsoring of a single race has a pretty short reach and unless you are throwing a party for airline execs in one of the TMA suites, probably is not money well spent. Unless you are talking the 500, a sponsor is going to capture a pretty small number of people with a single race sponsorship, the people who show up to the track and the couple hundred thousand that happen to catch the race on Versus. Whereas if they were to move their involvement to an aero package, their marketing now reaches everyone who attends any one of the 18 races or who watches any of the races on TV. Now they would have 18 races to entertain multiple clients. Most importantly they are involved with the 500 w/o being an official Pagoda or anything for that matter. In addition, for Bombardier it doesn’t even have to be all about the airplanes – Learjet or Canadair – they could use something like the aero package to support something that defies classification like their CanAm Spyder Roadster.

Embraer – The maker of the most comfortable regional jet in the sky (the 175 that is - the older smaller ones –meh..) also happens to be a dues paying member of the Apex Brasil organization. You might recall from the second Apex commercial, where Tony does his “not all Brazilians have rhythm” dance that one of the industries prominently mentioned was…Aerospace. So here’s a question, why would Embraer get involved with a racing series? Simple, in the land of Boeing if a person has the choice of Airline A flying a Boeing 717 and Airline D flying a Embraer 175 familiarity with the Embraer name helps bridge the gap for a passenger concerned about the airplane with the funny name. Here’s another possibility, if Target throws some of their vendors an occasional bone by painting the 10 car with the vendor’s colors, then Embraer could write a check to a team to run their aero package and slap the name “Delta” on the sidepod in order to reward the issuing of a large aircraft contract.

Now do these companies design and make the Aero packages? Do the airplane engineers work on a side project during lunch breaks? Probably not. So who does? Well, at least one of group comes to mind. Bruce Ashmore mentioned that while BAT probably would not be interested in designing Aero kits, his own existing company would be. But he probably has a problem, where do the funds for development come from? Suppose it takes $2m of R and D to create and test the aero package, To simply recoup those costs at $70 a kit, you need to sell 28 kits simply to recoup development let alone cover production of the kit themselves. So how does he come up with those funds? Bruce meet Embraer, Embraer meet Bruce. Likewise, Bombardier meet Swift, Swift meet Bombardier. Or more simply, Swift could support their own Airplane business with IndyCar participation. Much like the racing engine manufacturers badge the racing engines with a production nameplate, the aero packages can now be badged marketing opportunities.

Is all this hopeful thinking? Perhaps. But I don’t think the committee would have gone down this path without some very warm leads for participation. Build it and they will come may work for the movies, but smart businessmen won’t leave such things to chance. I am very optimistic that there will be 4 or 5 available packages by the time 2012 comes along. The Base Dallarra, Lotus Seems interested, an Ashmore design badged as an airplane manufacturer, Swift as themselves or another Aerospace company, at least one team creating something on their own intuition.

Similarly, I don’t think opening the Engine spec’s to include 4 cylinder engines was an accident. Someone is on the hook. Honda, Ford badged Cosworths, and either Mitsubishi or Mazda dropping their existing 4 cylinder racing engines into the mix seems likely to me (next time you see that Mitsubishi ad featuring the Eclipse with the Paddle shifter ask yourself why is that ad running THERE…in such a niche broadcast like an IndyCar race, ad placement is not an accident).

Engines…Aero Packages…as fun as silly season can be for drivers, the next 18 months will be a lot of fun for the creation of car combinations. 2012 is looking better and better the more I think about it…

2 comments:

  1. Excellent point about a small aerospace company, especially Embraer, sponsoring Mr. Ashmore's efforts. I hadn't thought of that, but it could make for a very valid marketing plan.

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  2. JP,
    Optimism...shame on you. Don't you know that optimism isn't cool?

    Right there with you. The numbers aren't so big that they're crazy. If Ford (or Bombardier or whoever) wanted to pay $5 million to Ashmore to do an aero kit...isn't that kind of chump change, in the scheme of advertising? If that kind of money can give you a 50% chance of being able to say "we won the Indy 500"...isn't there a chance that a couple of companies will be real interested?

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