Money Makes the Wheel Go 'Round
There was a time where I equated everything to how much I paid for car insurance. It was a weird quirk, but it helped me compare frivolous purchases to something I needed (and by State law mandated). I don’t feel that INDYCAR fans have a problem understanding that the spectacle before us costs money. Most fans don’t have an understanding of what those costs are. Some of this is because the true dollar amounts have never really been published. The amounts you’ll see in this blog posts are because some journalists have been able to take a peek into different parts of different teams finances. I've listed all sources below, I highly recommend Curt Calvin’s article about the May budget). Despite the secrecy surrounding costs of everything involved in INDYCAR, I believe it’s important for fans to recognize costs. Putting a price, seeing a number, makes everything more real.
The Cost of Championship
The upcoming 2019 season has seventeen races. To best understand a budget of an INDYCAR team, let’s take a look at what May will cost a team. Spoiler alert: it’s easily a million dollars. A team needs a car, an engine; all sorts of parts and of course tires and fuels, that will run approximately $578,300 (I’m not going to lay out what each and every part will cost, we ran through that on our latest episode). Then of course you have to test the car once you have it put together including two types of wind tunnels and shaker testing, that’s $12,500 and you add on an entry fee of, in 2013, $12,000 you’re all ready at $602,800. That is car and parts, testing, and entry fee.
After that you’ll need someone to drive the car and they’ll need to get paid. You’ll need an engineer, a chief mechanic, a data specialist, specialists for different parts of the car, four mechanics, helpers, and of course the pit crew. Maybe you can save some money and your mechanics are your pit crew, as some smaller teams have done, but then again maybe not. They of course cannot do this naked, and you’ll have to get twelve firesuits (which my notes for NASCAR indicate a NASCAR team will pay $40,000 for a team of firesuits). Those who don’t wear firesuits have team apparel so they’re distinguishable and are helping make sure the sponsorship is available. Plus they’ll need to eat, unless you decide not to feed your crew, and a place to stay. This is partially (see the savings’ section below) why a lot of teams are located in Indiana. It’s somewhat central to the different races and for May it means less people you’ll have to board. While lodging may not be a cost during May, it will be a cost at other races, and of course getting everyone and everything to races is a cost.
In May a lot of schmoozing is done, so teams will need suites and catering and tickets for those suits. It adds up pretty quickly to 1 million dollars.
Some other figures we are pretty sure on as far as INDYCAR costs is the cost of fixing a crash. Crashes at IMS will most likely set you back $200,000. And in 2018 the cost of the new aero kit was $90,000.
Other series can give us some other general/fuzzy numbers to consider. A Sports Car team will spend approximately 1 million a year on a full program with a replacement car (which was a weird figure to provide but okay) costing $400,000, entrance fees totaling $10,000 for the season and incidentals such as lodging and transportation running $10,000 per race. NASCAR has given the number that a team will spend 1.4 million dollars a race. However this number includes the amount for a car and a backup car…so that’s weird. The Car itself costs approximately $200,000. As mentioned above firesuits are approximately $40,000 for the team, and incidentals are $125,000.
I’m at a loss how to bring that money into the real world. It’s at numbers that the only place I’ve ever seen those is on my student loan bill (currently owe over $150,000 on that – year for that doctorate degree!), even then it doesn’t even feel real. The amount of money spent on races by teams is more than my house. A crash damaging a car is catastrophic because how do you get that money you need to replace everything? This past season MRTI driver Aaron Telitz (Belardi) ended up selling t-shirts and paintings to raise money to replace a car after he crashed at the season opener.
How things are really paid for
If money makes the world go round, then in INDYCAR (and all motortsports) the catalyst is sponsorship. Everyone, every team, and ever series in motorsports needs sponsorship. Let’s start with the big number; currently the Verizon INDYCAR series is searching for another title sponsor. According to an article, the asking price is $30 million dollars. Which is a lot, it is probable less than what Monster Energy drink paid to be the title sponsor of NASCAR, and comparable to what Mello Yellow paid to be NHRA’s title sponsor.
Stepping down to the team/car when Steak and Shake became Graham Rahal’s primary sponsor for five races, including the Indianapolis 500, in 2015 they paid 1 million dollars for that right. In 2014 companies would pay between 5-9 million dollars for their logo on the side of the car. It’s 1-2 million for something on the front wing, and $100,000 - $300,000 for a decal on a helmet. These of course aren’t the only places where a sponsor may have their image. Tools and tool chests, signage around the pit stall, and firesuits. Quite simply, if you can think of a place a sponsor could put a logo – they’ll put one there.
It’s not really the teams who are getting these sponsors though; most work is done by drivers out there beating on doors to get sponsors. If a driver doesn’t have a sponsor, they pay for their ride (“paid driver”) that is another stream of income to the team. Additionally, teams that are located in Indiana receive all types of tax breaks and in 2018 the Indiana Economic Development Corporation helped each entrant into the Leader’s Circle buy two new aero kits for each Indiana based team (that’s $180,000 per driver).
There exists businesses that can monitor television coverage, calculate the amount of time a sponsor’s logo is on the television and determine what the Return on Investment is. Appears INDYCAR gives great ROI for investors.
Who Gets the Cash
After sponsorship, money is disbursed throughout what I can only imagine is a Gordian Knot of contracts between teams and drivers and sponsors and the series. I’m not Alexander with a sword, so unfortunately I don’t have the details of payments. We do know from that brilliant article down by the Drive that in reality drivers don’t get paid that much. I think there are a lot of reasons for people to live in Indianapolis, but the reason a lot of drivers live here is the cost of living is reasonable.