PARTICIPATING vs. COMPETING
“If someone says a series is low cost, you
should ask yourself, which cost is low? The
cost of winning, or just being on the grid?”
TWO- Time CART indy CAR
2003 indiAnApOlis 500
WinneR uch of the recent debate has focused on costs, sponsorship and the financial issues in
Cost & Budget
our sport. Frankly, a lot of the commentary
I’ve seen shows a lack of understanding
of how the economics of motorsports
really work. So, with no further ado...
Let’s begin by characterizing two different
costs from taking part in a championship
or event, namely cost of participation and
cost of being competitive, i.e., winning!
Cost of participation is the minimum
cost necessary to enter a competition.
Buy your car, consumables, logistics,
minimum personnel, driver, etc., and
you’re on the grid. However, there’s no
guarantee you’ll rise beyond the bottom
10 percent if you don’t take into account
the competitive landscape, the budget and
capabilities of the guys consistently winning.
They set the cost of being competitive.
you should ask yourself, which cost is
low? The cost of winning, or the cost of
just being on the starting grid?
The effect of rules on cost
If you’ve had the misfortune of reading or
hearing my nonsense in the past, you’ve
probably heard me profess that the cost of
going racing is largely a function of supply
more than anything else. Let me explain...
If you’re a full-on competitive animal
(and if you’re serious about succeeding in
racing, you should be), what do you do if
you get beaten on a consistent basis?
Well, you either go home, or you invest.
Invest in speed: find a better driver, better
engineers, mechanics, parts; more testing
and development. You have to do
something. You can’t be accepting of defeat.
How much do you invest? As much as you
have, or can afford, until you get the desired
outcome. As in life, not all investments yield
the desired return, but you have to try!
It’s this relentless desire to be
competitive by very resourceful people that
drives costs up. So, as a mental exercise,
lets think of the following fictional scenario:
Let’s imagine there’s a series for a little
one-make car called a RACER. It’s much like
a kart – simple, fun, inexpensive. In fact, you
can buy a RACER and run the 10-round U.S.
National RACER Championship for $100k.
Now, let’s imagine that on Feb. 31, it’s
announced that the reward for being
National RACER Champion is a guaranteed
three-year deal to compete in IndyCar with
Team Penske. Let’s also imagine that, by
The recent plight of
the Caterham and
Marussia teams in
Formula 1 has put a
spotlight on the cost of
going racing. But cost,
i.e., how much a team
can and will spend on
speed, is determined
to a large extent by
the racers themselves.
By the way, this isn’t me saying that, if
you have the same (or similar) budget,
you’re guaranteed success. You have to
take into account how efficient the team is
in turning dollars into car speed, and how
good the driver is in turning car speed into
lap time. But from a planning perspective,
it’s useful to understand how much the top
dogs are spending. I know that if I’m close
on the finances and have a good driver and
a capable team, I should be in their vicinity.
Depending on the series, the cost of
participation and the cost of being
competitive can be vastly different. So
when someone says a series is low cost,