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The Cost of Competition

The month of May, most synonymous with the Indianapolis 500, has brought to light more than ever the question of open competition vs. cost containment.

The concept is simple. The more “open” a rule book is, the more “cost” is associated with developing and exploiting those rules. The more “closed” a rule book is, in theory, the less room for innovation and therefore less money spent in development and testing. It’s a basic concept that has existed ever since man started racing, but one that in recent years has gravitated more towards a closed rulebook and spec racing, moreso than an open set of diverse rules.

While this is prevalent throughout motorsport as a whole, perhaps the most evident is in the IndyCar series, and most notably the Indianapolis 500. Once considered the hub of innovative racing technologies: the birthplace of the turbine race engine, the development of modern aerodynamics, even the original home of the rear-view mirror, “Indy” has in recent years become much more of a “spec” series. With only two engine manufacturers filling the whole field, every car is fitted with an engine that has matching specification, a 2.2-liter turbocharged V-6, nearly identical chassis, with the only visible differences being minor bodywork differences between the two manufacturers.

The theory toward a very rigorous specification is two-fold: 1. Provide close competition across the field, and 2. Contain costs due to lack of innovation.

dallara-f1-project-at-risk-due-to-external-factors-16809 1The challenge, however, is what do we consider competition and are we actually saving on costs, or simply transferring them?

From a competition standpoint, the scenario is quite simple. Closer-matched cars produce closer-matched racing. Fair point, and accurate. However, is this all that a fan-base seeks in motorsport? Close competition? In an era where fans are showing a decline in interest, perhaps it’s not the closeness of the competition that we need to pursue, but the spectacle behind it.

There’s a misconception that spectacle only live in an exciting pass or a daring drive. Perhaps spectacle comes in seeing the future. Perhaps spectacle comes in seeing technologies and innovation so ahead of their time that a fan has to see it, or hear it, themselves. This is the magic that is lost in the current formula, and with an audience that has a million avenues for entertainment, and a million avenues for educating themselves, should we not move more toward a more sophisticated era of racing rather than less?

Then comes the issue of cost. Again, a sound argument. Less innovation should, in theory, create less development cost.

upf312cHowever, is it possible we are not looking at the transfer of cost? Simply put, the only companies interested in “spec” racing are the suppliers looking to make money. The chassis, brake, and transmission manufacturer who can re-produce hundreds of the same piece and turn that in to profit among multiple race teams. For a major manufacturer, such as an automotive manufacturer, spec racing does little to enhance their product or push any sort of innovation and R&D internally. In other words, racing becomes, at best, a marketing exercise or, at worst, an exercise in making money.

So who pays for all of this? The teams. Gone are the days of “factory support” where half the budget is absorbed by a technical or OEM partner who is interested in using a team as a test and development hub. Race teams are simply customers now.

That equals cost. It also equals cost to the one part of the food chain who has the least access to outside capital, the race team.

What if, however, the innovation allowed was so open that, perhaps, automotive manufacturers saw tangible benefits in being involved? Developing a new hybrid system, testing aerodynamics, being able to create a direct tie-in to your business’s product so that motorsport participation becomes an exercise in both marketing and R&D.

Indy500-AerialPerhaps then you’d have something worth investing in, and this would be investment from companies who have the capital to do it. Now, just maybe, you have partners looking at race teams as genuine partners, not just customers, and in such lessening the financial burden.

By this logic, the cost of competition transfers away from the race teams, and to to the entities who actually have the most capital, the automotive manufacturers and other OEM participants.

It’s a bold world that acts with a lot less certainty, but in an era where the sport is fighting for relevancy, it’s tough to ignore what made the sport good.