Thursday, March 25, 2010


Honda sponsorship unlikely to save Indy
Automaker to be announced as new title sponsor for Edmonton event

They will be announced this afternoon as the new title sponsor of the July 25 IndyCar race, a move that completes a Canadian package deal of sorts as they already have their brand on the Toronto Indy event that precedes Edmonton's by a week.

But the sad fact is this; major financial wreckage at City Centre Airport cannot be avoided under the current business model with or without Honda's vital and welcome input. Under Northlands' inconsistent stewardship and Rexall's title sponsorship contribution of about $400,000 per year, the race lost $5.3 million in 2008 and $3.9 million last year. Near as anyone can figure, and that's admittedly a bit of a sketchy enterprise given the Indy Racing League doesn't release attendance numbers and Northlands issues historically inaccurate budget projections, the 2010 race is due for another whopping splash of red ink. It could be something in the neighbourhood of $3 million, which is not a nice neighbourhood at all.

The cumulative loss would be $12.2 million in Edmonton taxpayer dollars to subsidize three weekends' worth of racing. Ouch. There is a cost of doing business but that cost has been exceeded twice over and shows no sign of significant improvement should this event go forward under its current incarnation, and that's appearing less and less likely. Which makes you wonder why Honda jumped on board.

Whatever. Taxpayers are in no mood for massive losses on entertainment ventures, those taxpayers will be going to the civic polls in October and Mayor Stephen Mandel is running again. Now, another whopping Indy loss in July will not cost Mandel his cushy chair at City Hall in October. However, there is every chance he and prospective councillors will be likely to distance themselves from such a publicized dumping of taxpayer dough in the coming months. The current deal between Northlands and the IRL expires after this race and Council is certainly not going to underwrite another lengthy contract when it so obviously burdens the race promoter with so much overhead. There was loose talk about a two-year extension last summer but that vague promise went up in so much tire smoke once the $3.9-million loss had been reported.

Three years of running this event into the ground has convinced those well-meaning but completely overmatched folks at Northlands that the financial model is a wreck. They're right. They're also, as aforementioned, in over their heads. They are not race promoters. Seriously, it's four months exactly until race day and the event has next to no presence in the city.

But as of today it has a title sponsor, a major multinational company in fact, and that represents significant progress. Word is Northlands had outside help in procuring Honda's corporate involvement, and that too is a good thing. Mandel said months ago that the race could come close to breaking even with the right amount of corporate support and while he's probably too optimistic by half, he's been listening to the 16-member Go Indy Committee of local movers and shakers who have ideas and connections. They surely warrant a listen.

But with or without Honda, the bottom line is still the same; the race needs a new business model and new, private-sector promoters. Because, even if you build in the cost of mistakes Northlands made and won't make again, it just cannot be done here under the current conditions without the citizens taking a bath at the end of the weekend.

With "$4.2 million in upfront costs, this is a very challenging business model for Northlands to proceed with. It is difficult to make this profitable," Northlands spokesperson Brian Leadbetter told reporters earlier this year, after a closed-door information session with city council.

"We're committed to reducing expenses further in 2010. That will be a significant exercise for us this year, while looking for new revenue opportunities while we can."

Leadbetter would not comment on Wednesday, but said recently Northlands is indeed beating all the bushes and has applied for $1 million in federal grant money. However, if they are successful in obtaining the grant, it cannot simply be applied to the bottom line, as it is earmarked for new initiatives only, and he wouldn't say how that might be relevant to their race plans.

Northlands is also desperately cutting costs, an act that includes scaling back the amount of those pricey temporary bleachers this year.

In a recent conversation, Leadbetter wouldn't say how many bleachers would be eliminated since it would in some way amount to a breach of their confidentiality agreement with Indy on those ultra-secret attendance figures.

It would also show Edmonton taxpayers how serious Northlands is about cutting the deficit. But hey, a secret is a secret.

It is no secret that the future of the race is tenuous at best and that sad fact may overshadow everything good that happens in late July.

Paul Tracy is allegedly going to race here again for KVR. The Ganassi/Penske duel will continue and Danica Patrick will headline a small clutch of female drivers.

All interesting enough, but because the race is a perennial bleeder, the airport land is in play and the IRL isn't exactly married to Canada, what with U.S. and South American markets beckoning, the suspect future will dominate track talk.

If Edmonton cannot make it work, the IRL may well be ready to move along in 2011.

But nobody in Edmonton or Indy will be saying that today, because there is mercifully a title sponsor to unveil and at least one Honda Indy Edmonton to run

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