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INDY RACING LEAGUE MEDIA CONFERENCE
July 14, 2010
PAUL KELLY: We appreciate your patience. It's been a very busy day today for the four gentlemen who are our guests today on the teleconference but we welcome you and our guests to this IZOD IndyCar Series teleconference in which we will talk about a very, very big day for the series.
First, to introduce our guests: Randy Bernard, the chief executive officer of the IZOD IndyCar Series; Brian Barnhart, the president of competition and racing operations for the IZOD IndyCar Series; Gil de Ferran, an ICONIC Committee member, co-owner of the de Ferran Dragon Racing in the IZOD IndyCar Series and the 2003 Indianapolis 500 winner; and Tony Purnell, also an ICONIC Committee member, founder of Pi Research, former technical representative to the FIA and the former head of Ford's premiere performance division.
Before we open it up to questions, a brief review of the momentous news today from Indianapolis and that is that the IZOD IndyCar Series unveiled its new car strategy are to the 2012 season and beyond, featuring a rolling chassis with an enhanced safety cell produced by long-time series partner Dallara that will be covered in changeable body work created by various manufacturers.
Known as the IndyCar safety cell, it will be manufactured as a new facility in Speedway, Indiana, and it will serve as the base of the new car. Various manufacturers can produce an aero kit to produce the car with different body work including front and rear wings and engine covers and more.
Randy, this is such a significant announcement for the IZOD IndyCar Series. Talk about what this means for the series moving forward and also about the tireless work of the ICONIC Committee to reach the recommendation, not only for the chassis, but it really was a comprehensive effort.
RANDY BERNARD: If you would have asked me 80 days ago how this process would have gone, I wouldn't have dreamed it would have gone as well as it did.
When we selected the ICONIC Committee members, first and foremost, we wanted true experts that were very well respected within the industry. And we had about 110 names on our list that we looked at, and you know, I think we did a great job of narrowing it down to those seven people.
We had key objectives in what we were trying to do, and I think that -- we talked to a lot of people, we talked to fans, drivers, team owners and auto manufacturers and fans wanted to see more than one race car out on that racetrack. And team owners wanted to see cost efficiency. And, you know, auto manufacturers wanted to be able to see brand identity, if they came on.
So we hoped that we have been able to address all of our major concerns, and I have so much positive compliments to the ICONIC Advisory Committee for really putting their heart and soul and passion into this for the past 75 days.
PAUL KELLY: Brian, while the different visual looks provided by the new aero kits are very, very exciting, cost containment, safety and quality racing are also paramount features in this new pack age. Discuss how this new car strategy achieves all three of those goals so well.
BRIAN BARNHART: Well, that's the beauty of it, Paul. It's something that I think the entire committee is proud of; the solution that we have arrived at that addresses all of these challenges. Because safety is always paramount and priority No. 1, that's where we felt it was absolutely best that we keep the safety cell the same and consistent across the board or everyone, and Dallara has an impeccable safety record, top quality construction and they have been a long-time partner of the series. They were very responsive to our RFP and addressed every issue including moving the facility to Speedway, Indiana to build the cars. It was a logical progression for us, so safety is taken care of.
Yet on the other hand it also allows us because they are the only ones building the safety cell, it enables us to reduce the cost of participation which is what the owners test found necessary to have good value of participation in the series and now the ability for anyone to create the aero kit addresses the fans aspect, creates the competitive environment, allows for different looks out on the racetrack so we really have the best of all worlds combined into one.
As I said it's something that I think the committee is very proud of, the solution we have offered up.
PAUL KELLY: Tony, you mentioned in the ceremony today in Indianapolis that you think this combination of the IndyCar safety cell by Dallara and the aero kit produced by various manufacturers can revolutionize the sport. Can you please expand on that, if you would?
TONY PURNELL: It's clear that we have dramatically lowered the barrier to entry for a manufacturer or a technical company who would like to get involved in this series who would like to enter their own car to do just that.
Instead of giving them the headache of checking the whole car, a technical project needing expertise, we have given them a route to concentrating on the main performance differentiator, which is the aerodynamics body work.
So we are hoping that that will bring a lot of new things, along with their marketing, to improve the buzz and excitement around IndyCar Racing.
But there's possibly a more subtle aspect to it, and that's that for some technical concerns who might go this route, say, a Ford Motor Company, the advertising space on the car is of interest to them. They want the name of the car. So are team not only giving a route to attract all manner of manufacturers and automotive companies into the series, but where there's no clash, we are also giving them a route for additional sponsorship.
So a Ford entry could be sponsored by Target and that the car will be very much -- really opened up the commercial side. I think it's very much what this series needs, because the more interest we can generate, the more people get involved, the more excitement we deliver to the fans.
PAUL KELLY: Gil, you have a very unique position on the ICONIC Committee, because you're on the committee, you're also an IZOD IndyCar Series team could he owner and also a former driver who has driven the current formula cars. From a team owner perspective, what is appealing about the package to you, and you have been out of the seat for a while; what excites you most about the car from a driver's perspective?
GIL DE FERRAN: Well, as you correctly say, I looked at the different questions that we faced from I guess different perspectives that my diverse background afforded me.
Certainly, from a team owner perspective, you know, I have two main interests; one, that my costs are under control, but also, that the sport grows and hopefully potentially with it so does my revenue, you know. I think the formula that we came up with to maintain cost in check, will be very effective. In fact, we are projecting a reduction in running costs of approximately 50 percent, which is really quite astounding. Especially if you take into account that these cars will be quicker, will be more sophisticated, and hopefully will also have some competition.
I think on the other hand, you know, I was very much thinking of the fans, you know, because without fans, really, we won't have a professional sport.
For us to -- for me as a team owner to increase our fan base, was a major priority. And everywhere we looked, every one we heard, their main interest was to, you know, continue to make the cars as fast as they are, maintain the brand of IndyCars as the fastest cars in the world, but also bring some competition, please bring some diversity, please bring some innovation into it.
So this was also extremely important. Like I was saying, on the face of it, the requirement to control costs and also the requirement to open the thing up to competition and innovation apparently are conflicting requirements. But hopefully we came up with a solution that addresses both issues.
And I would also have to say that I was wearing the driver hat most of the time when we were talking about the performance requirements of this new IndyCar, you know. To me, it's a relatively simple matter. An IndyCar has always been a bit of a radical beast, it's always been an extremely challenging car to drive. It's been a car that is, you know, frankly, sometimes a bit scary, and not for everyone.
The bottom line is not everyone can drive an IndyCar. It's difficult, it's challenging, it's powerful and to me as a driver, it was very important that the future IndyCar not only retained those values, but improved to go beyond what they are today, and to make sure the people really understand what IndyCars are all about.
PAUL KELLY: That's great, Gil. I appreciate that.
Q. We have heard so many people saying so much, hopefully Brian would be able to address these two questions. One, I'm still not clear, I thought I heard you say earlier that, yes, it would be possible, for example, for Delta, Lola, Swift, the others who had submitted designs, to take their bodies and put it on this Dallara chassis, and I guess a little more specifically, the designs we have seen from those companies, would they work on a Dallara chassis.
BRIAN BARNHART: Yeah, it won't be those designs put on. There will be some restrictive parameters on it. Obviously with us leaving the under wing on the car, the under wing will somewhat dictate the shape of the side pods. They will have a lot of freedom in the front wings and the rear wings.
The safety cell itself, the rear bulkhead will somewhat dictate the initial shape of the engine cover. But the goal obviously from the league standpoint is to leave the parameters and the boxes open as wide as possible to create and allow as much diversity between designs as possible to make them easily recognizable as different for the fans.
But their existing designs that were submitted in their responses to the RFP, that's not what I mean by putting those body works on. It will have to be something that works on the safety cell that's built by Dallara.
Q. And this may be something, also, that goes into Randy's area, but I heard earlier the pretty resounding invitation, come on Ford, GM, Ferrari, even Boeing and Lockheed. My question, have you had undercurrent or background conversations with these companies to indicate a willingness to do what all of us and all of our experience, what is one of the most expensive parts of motor racing design, which is aero, to make this commitment and then to come up with something that I understand that they will sell for an $85,000 cap. Have you had background conversations that indicate that will you will get a lot of RSVP from that invitation, or, does this amount to one of the great leaps of faith in motor racing?
BRIAN BARNHART: Well, we have had some initial conversations, as well, and interestingly, I think there's a lot of common ground in the aerospace industry, which is a natural challenge.
When Tony Purnell referenced that in his speaking points, it's kind of a natural to challenge that industry to get involved. With regards to the automotive manufacturers, we have had some preliminary dialogues and it has been exceptionally well received.
It's almost one more asset that had not been available in many years, if ever, in open-wheel racing that is actually encouraging their participation, because now it's not just about an auto manufacturer providing an engine for an IndyCar. They have got the ability to brand the car, and showcase their aerodynamic capabilities, as well.
So the preliminary conversations and indications we have had with the auto manufacturers have been very well received and Randy can probably address that more.
Q. So you are inviting the body and engine then?
BRIAN BARNHART: Absolutely, yes.
RANDY BERNARD: Just to reiterate what Brian said, with the auto manufacturers that we have discussed this with have said that it's very exciting that they can create brand identity with their cars.
But we haven't been able to talk to everyone, because we wanted to keep as much possible -- as much confidential as possible, so we were very selective on our first round and I believe Brian and I and Tony and Gil were all planning on a trip to Europe at the end of August to start talking to some of the engine manufacturers in Europe.
Q. Looking at this new car from a strictly commercial standpoint, in an attempt to address your TV issue, and also to provide additional value for sponsor identification, do you envision the dimensions on the body work of this car to be significantly longer than the current package so as to make the cars more easily identifiable for the TV audience, especially on ovals, and also to provide just more space for sponsor commercial ID?
RANDY BERNARD: It's a great question and probably a better one for Tony or Brian. I did ask that question, and when we were going through the process is how much more space will there be on the cars for sponsorship, and I think that, you know, some of the areas that I don't think anybody right now can tell you that there's going to be a tremendous amount more space on these cars. It's going to depend on the aero kits that are designed. But I think that you can see how a fin could be created -- could create more sponsorship elements to it. That would be primarily my answer. Tony or Brian might have a better answer than that.
BRIAN BARNHART: I would certainly agree with Randy. It's certainly been part of our RFP and goal to improve and maximize sponsor exposure and what we are doing. We have a challenge with our cars running 230-mile-an-hour, and as small as they are, it is difficult to get that sponsor signage where we want it, so it's something that's at the top of our list so there's a lot of components that went into this deal.
So certainly going to be part of the package when we as a safety body sit down and draw up the rule book for 2012, we want to leave those windows and those boxes open as much as possible. Yet at the same time, we do want to define them enough so that we get an increase in square inches to improve sponsor visibility.
Q. Randy, Governor Daniels made reference to grants and tax credits from the State of Indiana in order to facilitate Dallara bringing its facility to Speedway. Can you put a total dollar value on the State of Indiana's commitment in terms of these grants and tax credits?
RANDY BERNARD: We started visiting with the governor and his office about two months ago, and Jeff was involved in those preliminary meetings, as well. The governor wanted to make sure that we would ensure that the next manufacturer would locate here in Indiana.
What we did is we had as a mandate in our request for a proposal, we felt that it was great to bring jobs and manufacturers over here from Italy, but we wanted to take it one step further, on how could we retain the different team owner shops here and how could we promote a way to bring more here. We want to make this, again, and renowned for the racing capital for the world.
I think that we addressed that in what the governor presented today; that there will be basically 150,000 per car, per team owner, if you are located here in Indiana. So hopefully it's going to bring some new business, and if you add that up on 28 cars, it should be close to 4.3 million, so that's basically what that part of that grant is.
Q. Is there a ceiling on the amount of funding from the State of Indiana?
RANDY BERNARD: From the State of Indiana, I believe it's at $5 million, but you might want to get that from the Governor's Office.
Q. Are manufacturers going to be allowed to make changes to basically tweak their aero package during the middle of the season, or does it all have to be done up front at the beginning of the season? And also, are you at all concerned that after two years, it will become apparent that one design is better than the other designs and it will become the dominant design in the series.
TONY PURNELL: With the number of updates that you can have, we are imagining that you come up with your update package and you go with that through an approval procedure and you live with that for one season.
I think your second question is very pertinent. If somebody emerges with a better package, is that it, and does the whole grid just buy it? I would like to think not, because I worked in aerodynamic development on race cars for 15, 20 years, and it is utterly remarkable how year on year, the aero guys find more and more advantage; and every year you sit there saying, guys, they have been at this -- they have maxed out, but they never do. At 225 miles an hour, even tiny advantages translate to big gains in track performance.
So I think that the challenge is there for people to take advantage of, and there's no way that people can't be beaten, year on year, a good team with good facilities will be able to out perform whatever is out there.
Q. Obviously with the current state of the economy, every company is learning for a return on their investment; do you feel there is enough benefit in the series as it stands now to entice all of these potential manufacturers to create the aero kits to make them believe that being involved in IndyCar racing and the Indy 500 that they will be able to get a solid profit out of creating these kits to justify their investment in the series?
RANDY BERNARD: I think this is a great starting point. I think now we have to go and visit with them and convince them that we want partners. If they are selling cars and we can help them sell cars, that has to be one of our priorities, as well, and we have to be able to listen to them and understand what they need from a relevance standpoint. The fact that we went from -- up to a V6 Turbo where an inline four has allowed the run, I think is important. We heard from a lot of especially European auto manufacturers, an that inline pole is very important.
We also have to keep this in check in relativity to the fact that we are under a timeline and I'm not sure how many different manufacturers will be able to produce an engine by 2012. But the offer, it's out there right now, and we are sure optimistic and welcome anyone that wants to participate.
Q. The 2012 engine, how will it fit into the chassis? I was wondering if the engine, if you've discussed or made decisions about whether the engine will be a stressed or non-stressed member of the new safety cell.
BRIAN BARNHART: Actually, I think the possibility exists for it to be either. The more conventional would obviously be the stressed member of it, but I think there's some creative ways that it could actually be up being either at this point. I think some of that will be addressed as we make further progress with engine manufacturers that we're in discussions with.
Q. Where do the cost savings come from on the manufacturer of the car, is Dallara taking a 40 percent hidden profit or what?
BRIAN BARNHART: No, Dallara is leaping pretty heavily on the suppliers that are providing the components for them. They will be dealing with the transmission supplier, the brake supplier, the fuel cell provider, the electronics provider, the drive shaft and drive line provider. So they will be leaning hard on those partners, as well, to help achieve this cost parameter and this guideline of where we are at.
So it's certainly not at a product from where they are at. It's more of a function of what the car price was arrived at before. We had a car sold from Dallara, and then the owner, Gil can probably address it as well as anyone; the owner had to buy a set of drive shafts. He had to go get brakes, and he had to go get the fuel cell and he had to go get an electronics system.
By the time you added all of that on top of what you were paying for Dallara, we were approaching $700,000 for a rolling chassis. Our parameters that we set forth in the RFP, we now want that number reduced in the neighborhood, as we said, about 45 percent; and the 385 complete rolling car, includes all of those components, and the burden will be on Dallara to negotiate the deals with the suppliers of those components to help us achieve those prices.
GIL DE FERRAN: I think Brian touched on some very good points, and I think a lot of the reduction, it's in the fact that, you know -- let me answer in a different way.
This is no different than the automotive industry where you guarantee a certain market for your parts so you can dilute the cost of engineering development and manufacturing into a much larger pool of parts without the risk of losing that supply contract.
So there's a lot of issues that go into that cost equation. The number of parts is less, the number of parts in the kits is less, and there is a lot of interchangeability between parts, less than five parts and buying them five parts. You know, there's a lot of creative engineering that's going on in an effort to reduce costs without reducing performance, and that can be done -- I think that is being done, as you say, in a very creative way.
Q. You also mentioned the operating costs you project to be reduced by 50 percent, is that solely upon the parts or are you anticipating smaller crews or is it --
GIL DE FERRAN: No, I think that's purely from a parts standpoint. The number of parts is less. The durability of parts are projected to be higher. So the inventory of parts you have to carry are less and they will last longer.
So essentially, because of those three factors, we expect the running costs of the car to drop in the neighborhood of 50 percent which is a great target. So from a cost perspective, this couldn't come soon enough.
Q. So does this mean the budget for a year would go from 6 million to say 4.5?
GIL DE FERRAN: The budgets, you know, they are not only running costs of the car; you have personnel, you have travel and so on and so forth. But the running costs of the car is a significant portion.
So I would say that the savings are probably in the neighborhood of what you're talking about.
Q. On the engine specifications, do you have any idea how many different engines that there may be available, different companies?
BRIAN BARNHART: Well, we don't have yet. The strategy was announced the first week of June. We just tried to make it clear to everyone that it is an open and inclusive formula. It is a smaller, more efficient package than what we have currently been running which we think is relevant technology and will provide a transfer of technology from the automotive manufacturers.
And that's just step one was announcing what our strategy is. As Randy mentioned earlier, step two is we are going to proactively go out there and make sure these auto manufacturers are aware of what our strategy is, what our policy is going to be, and it's basically a sales job by us to go out to each and every manufacturer we can find domestically and international to make sure they understand what we are doing and how we are doing it and hopefully attract them.
But at this point, we have no idea how that may land, as Randy said, we are probably realistically managing expectations, we are probably only 17 months from 2012, and that's a pretty tight time frame in terms of producing and manufacturing purpose-built race engines.
We are keeping our fingers crossed that potential exists for potential manufacturers coming on board by 2012 but we certainly are more hopeful that we will have multiples, especially by 2013.
Q. Gil, when you were a guest on my race reporter's radio show last year, you described your view of the IndyCar brand as, quote, insanely fast, unquote. Do you envision this new car package to advance your perception of the IndyCar brand as insanely fast?
GIL DE FERRAN: Well, I have to say yes, and perhaps we didn't talk enough about it. Throughout this process, we discussed many subjects about -- I won't even call it a new car. I will call it this new strategy, new concept, and certainly one of them was performance. And when I talk about performance of an IndyCar, I can't help but wear the driver hat. I spent most of my adult life as a professional racing driver, and it's hard to give up that mentality sometimes.
So as a driver, I very much wanted this new generation of IndyCars to not only retain and maintain this kind of, shall we say, this high-speed aspect of it. But I wanted this enhanced. I wanted IndyCars to become more difficult to drive, more challenging to drive; so that frankly not everyone can do it. I think if we make this car such that, you know, a couple of guys when they step out of it, they are a little bit scared; that's a good thing as far as I'm concerned.
The performance targets that were set for these cars, both on road courses and ovals, I think are in keeping with that idea, and I am confident given all of the parameters that were set, and capabilities that I think all of the companies involved have, that these targets will be achieved, and this new generation of cars will enhance that brand value of IndyCar Racing?
Q. Are you saying that you envision these new cars will, in fact, be more difficult to drive, and do you see the potential for this configuration of vehicle to set new track record, speed records at Indianapolis or any place else?
GIL DE FERRAN: I think they will be more difficult to drive from the standpoint that they will be faster. And in my book, any car that is faster is typically more difficult to drive, because you have usually less time to perform the same functions with the same or more precision.
So a faster car will always demand a higher level of skill from a driver. Performance targets in the ovals were to be in the same neighborhood as they are today, however, I think the latitude is there for those performance targets to increase if we can prove that that can be done safely with new safety enhancements that are not only happening on the chassis but in motorsports in general.
So I think the potential is there if we can work out a way to do it safely; but that you will see some improvement in increasing speed in ovals, but I can tell you that you will definitely see that in the road races, too.
PAUL KELLY: With that, we will conclude the teleconference today. We appreciate everybody participating.
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