More than meets the eye with CART's turbo move

 by Mark Cipolloni
June 18, 2002

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CART's move to stay with the 2.65 L turbo engine platform was made for some obvious reasons, and some not so obvious.  The obvious reasons were spelled out in CART's Sunday press release - i.e. cost savings, equal engines for everyone, stability, and the retention of a key part of CART's heritage - the wonderful sound of the turbo powerplants.  However, it's the not so obvious reasons that may surprise you.

First a little factual background.  Although we were not in attendance at the now infamous CART Franchise Board meeting last October in Houston, whereby it was voted that CART would switch to an IRL-like 3.5 L normally aspirated engine, we have been told by multiple sources in attendance that Roger Penske fought vehemently for the IRL 3.5 L engine, and threatening to leave CART for IRL if the change was not approved.

So compelling were their apprehensions and fears of losing Penske, arguably their #1 team, and key sponsor Marlboro, the other Franchise Board members likely felt the need to vote for the change.  In spite of the fact that this vote was past CART's March deadline for announcing new engine rules for 2003, and knowing that  Honda lobbied strenuously for CART to retain the turbo engine formula until 2004, CART knew they were risking Honda's alienation.  Because they were past the March deadline, the vote needed to be over 75% in favor to pass.  And pass it did, that is how much the team owners wanted to keep Toyota and Marlboro Team Penske in their fold.

Toyota said they would only supply CART a 3.5 L N/A engine in 2003, and CART didn't want to lose them either, so one certainly can't place the entire blame on Penske's influence.   However, the Franchise Board knew they were in jeopardy of  either losing Honda, or Toyota and Penske.  The vote for the 3.5 L engine was basically the lesser of the two evils.  Then, with the 3.5 L vote he wanted, Penske waited a few weeks and did exactly the opposite of what he promised the other Franchise Board members, he announced he would leave CART and move his team to the IRL.

At that time, it was totally unknown that Penske apparently had already decided to move to the enemy camp months earlier.  During Penske's surprise birthday party in May at IMS, given by his wife, Roger thanked everyone for joining in the celebration.  In addition, he made special mention of his 'friend' Tony George and the fact that his decision to switch to the IRL was made a year ago.  This is about the same time (June 2001) rumors first surfaced that Penske would move to the IRL.  It should be remembered that on numerous occasions, Penske called for a merger of CART and IRL.  He felt strongly that the two series should be one if they were to survive and prosper.  Almost everyone agreed.

However, as we have noticed recently, Penske's comments have changed.  He has now been quoted in the media that only one series can survive, and we would know the answer within the next 18 months.  No longer was he calling for a merger or unification.  He had clearly chosen sides, and that side was the IRL series, the series run by his 'friend' Tony George, and aided and abetted by ISC.  Remember that Penske is a major stockholder in ISC and a prominent member of their Board of Directors.  It's clear to everyone in the industry that ISC is not a friend of CART's.

So why the sudden change by Penske, and why CART's sudden engine reversal?

Consider that if Honda or Acura were willing to badge the Ilmor engine in 2003 for CART, and/or if Toyota had committed to CART, CART would have likely retained the 3.5 L N/A engine. However, when no 'major' car manufacturers were willing to get behind CART for 2003, and faced with engines with names that the average consumer would not identify with (i.e. Ilmor, not Honda; TRD, not Toyota; and Cosworth, not Ford), CART reverted to Cosworth's common 2.65 L turbo engine proposal.
It was also clear that CART's 'Olive Branch approach' in adopted the 3.5 L spec engine was to facilitate bringing IRL and CART closer together.  Subsequently it became obvious that Tony George absolutely wanted CART dead ("I bring my hammer to work everyday" was his recent comment, when asked if he had put another nail in CART's coffin), and faced with having an engine spec that their 'enemy' (as recently stated by Chris Pook) dictates, it was not in their best interest to continue down the 'common equipment' path.  The last straw for CART was when it became obvious that Honda and Toyota would not support the CART series, and would only permit TRD and Ilmor to sell their engines to CART teams for a profit.  By so doing, CART owners in effect would be subsidizing Toyota's and Honda's IRL engine program.

In my judgment, CART's enemies wanted common equipment with no manufacturer 'badging' to eliminate the flow of money to CART.  By so doing they could make the CART product a clone of the IRL product. Once accomplished, CART would be nothing more than an IRL series, sans major engine manufacturer money.  Therefore, with the teams already having the same equipment, it would be that much easier to induce them to switch to the rival IRL series.

Under this scenario, CART would find itself in a battle with entities with no short term profit goals (Tony appears to have a bottomless pit of money to support the IRL), who will give away their product for free if need be to achieve their long term agenda. That agenda is the total elimination of CART and the much ballyhooed promised land of a single U.S. open wheeled series.

In Business Strategy 101 class, you are taught that if your adversary wants you to commoditize your product with his, he does so for a reason. The reason is simple and obvious. It makes you easier to destroy. You are also put in the unenviable position of having your foe dictate the direction, degree and pace of change for your product.
Do you think your adversary would sit still? Copy his product and just when you think you have commonality he makes another costly change,  forcing you to follow, in this case to keep your equipment the same as the IRL so your teams can use it for the Indy 500.  Under this scheme, your ability to play offense is eliminated, and you are forced into a series of defensive strategies; each time struggling to save face with the public, who think you are a puppet being controlled by your adversary, and costing your teams more money to keep current with your adversary's whimsical changes.

Certainly, the spec turbo engine is much lower cost for the CART teams than the 3.5 L N/A engine. From my perspective, this was reason enough for CART to change. 

However, realize that CART's decision to change had as much to do with saving its teams money, as it had to do with protecting its teams and controlling and ensuring its own future.

The author can be contacted at markc@autoracing1.com

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