Is the IRL circling the drain?
IRL CEO Randy Bernard, who took his post on March 1, is hopeful the open-wheel series can break even in 2011 and reach profitability in 2012.
“I’d like to believe that, but it sounds optimistic,” said Tim Frost, president of Frost Motorsports, a Chicago-based motorsports business consultancy. “I like what Randy is doing, but he has a steep hill to climb.”
George, before his ouster, said the series must be profitable by 2013 or there would be no 2013.
Though the tight-lipped Hulman-George clan has never divulged financial information, motorsports business experts have estimated the IRL has lost more than $400 million since its inception in 1996.
Sources close to the IRL said the series lost $22 million in 2009 and is headed for another eight-figure loss this year. IRL officials have cut $2 million in overhead in the last year, have raised $3 million in cash annually with a new title sponsorship deal with Izod, and tallied $2 million in profits from the series’ popular Brazil race, said motorsports business experts. That still leaves a $15 million hole to close.
Bernard is busy trying to find new markets and raise sanctioning fees to keep the series above water.
Since the IRL’s inception in 1996, the board, which is four-fifths Hulman-George family members, has used Brickyard 400 profits to support the open-wheel series. But now the Brickyard’s raging revenue stream has slowed considerably.
A feud among board members over money following the 2009 Indianapolis 500 led to the departure of former IMS and IRL boss Tony George. Now there’s speculation the diminished financial firepower of the Brickyard 400 could lead to other changes.
“The balance sheet is what led to Tony George’s ouster, so you know the balance sheet has [the board's] attention,” said Zak Brown, president of Just Marketing International, a local firm that represents some of the biggest sponsors in motorsports.
“All the money goes in the same bank account, and they’re writing a lot of checks for IndyCar. You have to believe they’ve set a firm amount on what they’re willing to spend on the open-wheel series.”
Most with knowledge of Speedway finances think that amount is directly related to what the Brickyard 400 generates in profit.
Belskus said the Brickyard 400 and IRL are “evaluated separately,” but, he added, “a healthy Indianapolis Motor Speedway is good for the Indy Racing League.” IBJ.com