Monday, December 17, 2018

Exploring INDYCAR’s Laguna Seca Agreement

INDYCAR's agreement with the County of Monterey regarding the proposed INDYCAR Monterey Grand Prix is publicly available. | Photo: Andy Clary / Spacesuit Media

It’s clear that INDYCAR’s return to WeatherTech Raceway Laguna Seca is all but assured thanks to the availability of a partially executed event agreement, a document the sanctioning body usually keeps under lock and key.

Because the track is owned by Monterey County, public disclosure requirements and the upcoming vote at the July 17 meeting for the county’s Board of Supervisors combined to make the document publicly available via the county’s website.

A tweet from the track sparked online discussion and led sleuths to the 41-page PDF that contains the agreement, three additional exhibits and a board report recommending that the agreement be approved. The main document outlines a three-year deal between the track and INDYCAR to put on the INDYCAR Monterey Grand Prix beginning in 2019.

Digging into the agreement itself, one of INDYCAR’s primary concerns is the condition of the track. The sanctioning body has demanded improvements, as outlined in Exhibit C, including changes to curbing, gravel beds, braking markers, tire walls and debris fencing. Any failure on the track’s part to comply with the requirements without an acceptable resolution will result in a material breach and subject the track to a steep fine amounting to either one or two years’ worth of sanctioning fees depending on the timing of the breach.

With a variable sanction fee for 2019, a potential breach of contract could invoke different penalty amounts depending on the scheduling of the new race. In relation to the IMSA WeatherTech SportsCar Championship event at Laguna Seca which falls on the weekend following Labor Day, INDYCAR is giving the track a $300,000 break if its race is scheduled on the weekend before or the weekend after IMSA’s date.

At $1.2 million, the fee is still significant even with the discount but INDYCAR’s willingness to provide it to secure one of the two dates points to its interest in having the track become the new season finale by placing it on the weekend currently occupied by Sonoma Raceway’s Grand Prix of Sonoma.

Scott Dixon, Ryan Hunter-Reay and Alexander Rossi on Detroit GP podium
An IndyCar race at Laguna Seca in 2019 would feature veteran drivers with open-wheel experience at the track plus the series’ newest names. | Photo: Andy Clary / Spacesuit Media

The agreement also reflects INDYCAR’s preference for date equity, the notion that the same date for an event year after year will help build familiarity and provide consistency for fans. If the date needs to be changed for television or due to a scheduling conflict and either INDYCAR or the track do not consent, the agreement can be terminated without invoking a costly penalty. Since INDYCAR does not want to lose its sanctioning fee or the potential to earn an early termination fee, the implication is that it will strive to maintain date equity, pointing to 2019’s date lasting through the event’s three-year duration.

Making money is important, and several sections of the agreement highlight ways in which income might be generated.

While the document identifies the race as the INDYCAR Monterey Grand Prix, responsibility for securing a title sponsor for the event falls to the track itself. Any revenue from title and other sponsors as well as ticket sales to offset the sanctioning fee. The other title sponsorship that’s up in the air — that of the IndyCar Series — is mentioned in the agreement but only relating to the possibility of one being identified, thus altering certain aspects of the agreement.

To ensure proper marketing of the event, the track and INDYCAR will work together in the half-year leading up to the inaugural race on a jointly agreed-upon marketing plan which will include regular meetings and milestones leading up to the race weekend.

Concurrent with the marketing plan’s implementation, the track will be required to furnish ticket sales reports to INDYCAR on a monthly basis, ostensibly to monitor both the success of promotional efforts as well as estimate attendance. At the 30-day mark, INDYCAR will receive daily sales reports leading up to race day and, one day after the race, a final ticket sales number.

While INDYCAR’s policy is to keep actual attendance figures derived from ticket sales confidential, the track will be required to furnish actual numbers to the sanctioning body within 30 days of the event. For public consumption, INDYCAR will only offer attendance estimates based upon media reports or aggregated totals that do not reveal actual ticket sales.

Graham Rahal chased by Scott Dixon on Toronto street circuit
Current owners Roger Penske, Bobby Rahal, Michael Andretti, Jimmy Vasser and Bryan Herta experienced success behind the wheel at Laguna Seca with wins at the track between 1962 and 1999. | Photo: Andy Clary / Spacesuit Media

While getting people to the track is one method of bringing in the cash needed to develop a sustainable event, virtual advertising could provide a new revenue stream for tracks and INDYCAR, especially in areas of the track covered by television cameras but not easily accessible to fans at the racetrack. Video insertion technology has been used for years to draw first down lines on football broadcasts and could be in place at Laguna Seca to insert ads for television viewers with revenue split evenly between the track and INDYCAR.

The importance of ethanol to the series — and the money brought in by its fuel partners — extends beyond the Iowa Corn 300 as evidenced by a specific clause in the event agreement regarding the primacy of the series ethanol providers. While the event is allowed to obtain a sponsor related to fuel, it is barred from ascribing any relationship between the sponsor and INDYCAR.

Finally, video games might have an increased role in the future given a provision contained within the agreement. For the mere sum of $3,500, the agreement gives INDYCAR the ability to use the event in “electronic games.” The provision includes the track in virtual form as well as event-specific content that would identify it as the INDYCAR Monterey Grand Prix in a virtual environment. Unlike the agreement itself, the electronic gaming license extends two years beyond the expected end date of the event in 2021 — ensuring that the track will live on in electronic form until at least the end of 2023.

Beyond offering a look into how IndyCar events come to be, the agreement between the sanctioning body of North America’s premier open-wheel championship and the County of Monterey previews changes that lie ahead for both the classic Laguna Seca circuit and even the series itself.

Ben Hinc
Ben Hinchttp://www.benhinc.com
Ben Hinc, managing The Apex as executive editor, has frequented media centers at racetracks across North America since 2014. Hinc's multi-decade passion for technology has resulted in a broad skillset that keeps The Apex running fast and without error.

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