Addressing Cost Escalations In IndyCar Via Growth
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IndyCar is facing extreme cost escalations
In a recent article for Racer.com, Marshall Pruett gave some hard data to back up the assertion that cost escalations are hitting the heritage racing series hard.
In his piece, Pruett writes that 2024 IndyCar budgets soared as teams faced substantial cost increases—from 20% to over 40%—driven by new components, rising driver and crew salaries, and stiff competition for top talent.
While hybrid powertrains were often named as a culprit, owners also cited labor expenses as the biggest burden, with some paying premium wages to retain employees.
Despite hopes that costs might stabilize in 2025, many anticipate further hikes due to continued inflation, upgraded car parts, and an ongoing struggle to secure skilled personnel.
IndyCar is not alone
While these cost escalations are unfortunate and notable for their magnitude, they are not exclusive to IndyCar. Indeed, cost increases continue to be a talking-point in all major racing series, and certainly at the grass-roots levels where teams do not have the backing of larger organizations behind them.
These cost increases can broadly be categorized into three areas:
Nominal inflation: This is the inflation that occurs “naturally” in a healthy economy, where 2% is usually targeted by central banks under the assumption that some rise in prices is preferable to a deflationary price environment. It is this inflation that ensures that, as team owner Dayle Coyne states, "nothing goes down.”
Technical inflation: This is cost inflation driven by regulation changes in pursuit of some larger goal, such as increasing safety, increasing the quality of the on-track product, or serving manufacturers’ goals (such as marketing the use of alternative power production systems).
Market inflation: This is the inflation that occurs in a competitive market, above and beyond the nominal baseline. Team owners in the Racer article refer to this several times with regards to the labor market, in which competition for the best people has pushed costs upwards sharply following a period of relatively depressed salaries.
Cost cutting may not be the way out
While there are certainly theoretical solutions to alleviate the pain felt in the areas listed in the article, they tend to be difficult to implement in practice.
These hypothetical measures, if not very carefully considered and applied, can produce undesirable secondary effects which make for a less satisfying racing experience. In this case, even if teams and the IndyCar series manage to cut costs, they may drive away fans, creating a deflationary spiral in which, yes, costs do decrease, but so does the audience for IndyCar.
The most glaring issue however is more general, and is applicable to any business in any industry trying to manage its finances: there is only so much that one can cut. While it is always important to operate efficiently and be vigilant to organizational “cost creep”, the most long-lasting solution to controlling costs is to outrun them with increasing market size and revenues.
Fighting cost increases with revenue growth
In the January 7th 2025 episode of “The Race IndyCar Podcast”, in response to the issue of driver sponsorship (itself tightly entwined with rising costs) Indy 500 runner-up JR Hildebrand stated the following:
“I’ve had a hell of a time, just to be frank, finding sponsorship for IndyCar, going IndyCar racing and the question that that begs for me is…yea it would be nice if the number I was asking for was less…if I could go ask for 450 instead of 800, that would be nice, but really the the thing that would make a difference is if this was actually just worth 1.5, if the value proposition for doing this was clear and elevated.”
This quote touches succinctly on two very important points. First, the external cost environment is colliding with IndyCar’s difficulties in creating a perception of value in-line with its objectively phenomenal heritage.
The second point is that fueling growth rather than imposing - or more realistically, attempting to impose - austerity measures is likely the more sustainable path to addressing the current cost escalations.
The path to doing so lies in issues that many industry insiders have been highlighting for years, the most pressing of which are as follows:
The age and makeup of IndyCar fans, which at the moment skews heavily towards older, white men.
The age of the IndyCars themselves, with the Dallara DW12 embarking on its 14th season as of 2025.
The tenuous nature of manufacturer involvement. Only Honda and Chevrolet provide engines for the IndyCar chassis in 2025, and according to quotes by Marshall Pruett on several occasions, the former may already have one foot out the door.
These are very serious structural issues, which would be problematic in any cost environment, but which become more so when the internal problems facing IndyCar - a so-called “spec” series whose very nature is supposed to be cost-mitigating - collide with the inflationary environment facing the entire world in the mid-2020’s.
High-level proposals to increase the long-term value of IndyCar
Given the nature of IndyCar’s problems, there are no “silver bullets”; the harsh reality is that no measures taken to address its structural issues will yield instantaneous results.
This reality is more stark when one considers that the issues listed above have been going on for years, so their negative impacts have been compounding over that time frame.
However, if serious work is done to address them, it is possible that over time the results will compound positively season after season, so while costs may continue to increase, IndyCar itself would grow in such as a way as to mitigate the perceived severity of these cost increases.
Below are several broad areas which IndyCar could explore to boost its profile and, in doing so, counter-balance the cost issues that currently face every team owner.
Address the competitive labor market via growth
Labor costs are listed repeatedly as a driver of cost escalation, due to a shortage of qualified personnel which has led some teams to have to source expertise from abroad.
Rather than force relief by attempting to cap salaries or compensation growth, it would be beneficial to grow the pipeline of qualified professionals over time, thereby growing the supply side of the supply/demand balance, and thus over time providing some downwards pressure on personnel costs.
The first step to doing so would be to strengthen recruitment pipelines as much as possible at both the team and IndyCar series level. This would entail developing structured, IndyCar-backed training programs to grow new talent rather than relying on a limited pool of existing experts.
Ideally, this pipeline would be diverse, and new entrants to the IndyCar labor pool would go on to “evangelize” the series to their peer groups, thus helping to diversify IndyCar’s current and future fan bases.
Draft every regulation with manufacturers in mind
The WEC and IMSA have experienced healthy growth recently as a result of a ruleset which allows cars from one series to compete in another, and which provides substantial freedom to manufacturers in how they design their cars.
While the nature and technical goals of those series differ strongly from IndyCar, the philosophy that underpins their rulesets is still applicable to the latter.
Indeed, if cost barriers are lowered (not eliminated necessarily, but lowered) and manufacturers have some leeway in pursuing their own growth agendas, they will come.
This (and a Balance of Performance) is how you end up with a series where a Peugeot 9x8 relies heavily on the brand’s design language and looks completely different from an Aston Martin Valkyrie, whose V12 engine is the only non-hybrid design and is meant to signal the parent company’s commitment to enthusiast-focused automobiles.
The results speak for themselves: manufacturers keep signing up (Hyundai’s Genesis brand is set for a 2026 WEC debut, Ford has just announced plans to join the series, and McLaren and AMG keep coming up as potential new entrants as well).
This in turn creates a virtuous circle whereby more and more fans show up to events and the momentum behind each series builds.
While IndyCar’s regulations may not look at all like those of its endurance-focused counterparts, there is no doubt that serving manufacturers’ interests in addition to addressing teams’ concerns about rising costs must be top-of-mind for IndyCar.
Create a wide “on-ramp” to IndyCar
No discussion about growing a racing series would be complete without mentioning Netflix’s “Drive to Survive”. The hit series, with its slick production and accessibility via the highly popular Netflix platform, will likely become a case-study in marketing, and rightly so.
Though some F1 “purists” have disagreed with how the show creates drama between drivers, there is no denying the role the series has played in growing F1’s audience, particularly in the lucrative US market.
New IndyCar broadcast partner Fox has made strides with its well-received, driver-focused promotional campaign (which was given Super Bowl airtime), but it’s hard to see how these rather sporadic spots will have the same impact in activating new fans as a long-running, compelling series which is perpetually available on a juggernaut streaming platform.
While “Drive to Survive: IndyCar” edition may not be the final form of an “on-ramp” initiative, Netflix’s effort surely provides a very solid template.
Never miss out on a marketing opportunity
Again, Formula 1 sets a template for others to follow in how it approached the unveiling of teams’ 2025 liveries. For the first time ever, the series organized a star-studded event in London where all the teams unveiled the look of their newest cars. While it’s too early to know the long-term impact of this event, it got people talking and only served to build up excitement for the 2025 season.
This event is particularly relevant in the context of IndyCar, whose current spec chassis is a decade and a half old, and which has still not been revealed to the public in anticipation of its 2027 on-track debut.
Hopefully IndyCar will provide all the fanfare such a debut requires, but more generally speaking, IndyCar should (and presumably is…) looking at any and all opportunities to engage the broadest and most diverse demographic possible.
Under the hypothesis that young and diverse fans will help the sport grow, any and all options to meet those future customers where they congregate should be on the table: music, sports, and fashion among others.
The currently under-the-radar status of IndyCar works in its favor because at this point, it is behind Formula 1 in cultural crossover and the options available to it are for all intents and purposes limitless.
Conclusion
This article only scratches the surface of what IndyCar could do to mitigate its cost troubles, but the good news is that its core product, the racing, is fantastic.
F1 commentator Will Buxton recently left that series to join the IndyCar broadcast team, calling this series’ racing action “the greatest racing on Earth”. It’s hard to argue with him, as the on-track action is always fast and unpredictable, combining the science of an F1 race with a little bit of the chaos that makes NASCAR so appealing, and that’s not even accounting for the fact that IndyCar is home to the legendary Indy 500.
If IndyCar can leverage its rich history successfully, it should be well set to grow and mitigate - if not entirely eliminate - the cost inflation which is presently generating headlines.
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Image credit: Sydney Rae via Unsplash
Disclaimer: No affiliation is implied with any team and/or series whose name and/or logo appear(s) in this article, they are cited and/or displayed for illustrative purposes only.