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News & Analysis
Stop me if you’ve heard this story before. There is a new IHRA headed up by yet another ownership group and their hand-picked CEO that is going to turn the IHRA into a profitable business. Under the new leadership, however, nothing changed and the first two seasons under the new owners have been money losing disasters for a variety of reasons.
Unfortunately for the new owners -- like most of the previous new owners of the IHRA -- they found out the reality of running a drag racing sanctioning body profitably requires a special skill set that few have, including the newest IHRA management group and its current CEO. Since IRGSE bought the IHRA from previous owner Feld Entertainment, according to a quote from CEO Chris Lencheski, it has lost millions of dollars per year including the 2015 and probably the 2016 season. And that happened under the leadership of two different CEO’s and Presidents.
How the “new” IHRA got to where it is today is a story worth reviewing.
Jason Rittenberry, working for the owners of Palm Beach International Raceway and Memphis International Raceway, was somehow able to convince the venture capital Texas Pacific Group (with assets reported over $75 billion) to guarantee a $40 million loan to buy the IHRA in late 2014. He not only bought the IHRA and was named CEO of the sanctioning that year but he also negotiated the purchase of Cordova Dragway Park and Maryland International Raceway. As CEO he hired CDP president Scott Gardner to be the IHRA president and Royce Miller, former owner of MIR, to assist Gardner. Both of those men had been hugely successful as track owner/operators and were tasked with reorganizing the IHRA with the goal of returning to a profitable and a viable alternative to racing with the NHRA.
A combination of bad weather and unrealistic pro purses guaranteed that in 2015 the IHRA lost money. Basically the same scenario repeated in 2016. The IRGSE not only wasn’t seeing any return on the original loan to buy the IHRA, but saw no progress in turning the IHRA into a profitable business. Unlike the NHRA the IHRA isn’t a not for profit organization -- it is supposed to make money.
Unhappy with the losses the IRGSE board fired Rittenberry and hired Chris Lencheski, whose previous experience in motorsports was limited to supplying marketing and sponsorship for NASCAR teams in addition to developing sponsors and other revenue streams. He had absolutely no experience listed in his extensive and impressive resume pertaining to running a sanctioning body nor anything related to professional drag racing, which evidently qualified him in the eyes of the IRGSE board to hire him as a turn-around specialist.
When Lencheski took over the IHRA he made two bizarre moves: 1. He decided to replace Scott Gardner as the president with former NHRA Top Fuel driver and ESPN commentator Mike Dunn, who like Lencheski, had no training for the job he accepted; and 2. With great fanfare Lencheski announced that the centerpiece of his plan to make the IHRA profitable was to develop an International Top Fuel circuit called D-1 with possible races in Mexico, Brazil, Canada and Australia.
He proposed this new IHRA sanctioned world-wide Top Fuel series despite the fact that NHRA has a 24-race Top Fuel schedule, Australia a 4-6 race national event schedule, and in Europe the FIA also has a set series. In the case of the NHRA series the major sponsored teams are contractually obligated to attend ALL NHRA events.
All of those series have a shortage of Top Fuel teams available to them and none of those series currently can guarantee a full Top Fuel field at any event. Where did or does Mr. Lencheski think he can find 8-10 first tier Top Fuel teams that can afford to spend $2.5 million to build a team, another $500,000 for a crew chief and crew members, and pay for them to travel around the world?
Unless the IRGSE is willing to put up another $35 million to build and support their own teams they are going to be hard pressed to achieve Lencheski’s goal of an international premier drag racing series racing on three continents.
Mr. Lencheski’s decisions regarding the IHRA itself are hard to understand. Despite the IHRA national event series losing money in 2015, he opted to make no changes for the 2016 season, saying that there just wasn’t time to make any.
Then there is the simply inexplicable decision by Lencheski to move the World Series of Drag Racing from IRGSE’s renamed Cordova International Raceway where it has been an annual event for 60 years (and as near a lock to make a profit every as there is in the motorsports business) and move the race to Memphis, Tenn. The question is why? The World Series of Drag Racing was an established major event in the Quad Cities area.
I interviewed Scott Gardner after the 2014 event and I asked if the race had been profitable over the years. He said that unless the race was totally weathered out it had always been profitable for him.
Mr. Lencheski has been quoted as saying his decision to move the race from the Quad Cities to Memphis was to move the historic event to a centralized location that can withstand the growth potential and bring in even more racers, fans, vendors, live music and much more. Just for the record, the average income in the Memphis area is $32,000 while the average in the Quad Cities area is $53,000, which is the National average. Which area offers more citizens with disposable income to buy tickets to a drag race?
He also said, “The World Series of Drag Racing will become a lifestyle event similar to what Comic Con is for fans of Sci-fi/Comics in San Diego. We plan to continue the existing traditions and add some new exciting elements to drag racing’s premiere fan event.”
It is obvious that Lencheski probably never attended that race or he would have known the World Series has always been promoted as the oldest continuous NATIONAL EVENT in drag racing history. The exhibition cars weren’t the sole attraction at the event, there was real racing going on.
His comparing a race with 63 years of history to Comic Con absolutely demonstrates that Lencheski knows nothing about the business of drag racing or drag racing fans.
What Mr. Lencheski did accomplish was essentially to dismantle an IHRA-owned track with an annual event that made a six-figure profit yearly, ruin the IHRA’s relationship with the Quad Cities fans and business, and then move the race to Memphis.
Based on the number of pro cars and my own experience as a race promoter, I have a good idea what it cost the IHRA to book the pro cars and it was significant. In order to get NHRA Pro Teams to be at Memphis and then in Indy three days later means they are going to get a premium rate. Based on that and the almost complete lack of fans, I’m guessing the IHRA lost around $300,000 at Memphis and a couple of hundred thousand dollars the race probably would have made the IHRA had it stayed at Cordova.
To add to the problems, the IHRA’s final event was cancelled because Dragway 42 in Ohio was not ready to open. The 2016 IHRA season ended Aug. 13 at Martin, Mich., followed two weeks later by the debacle at Memphis.
So, the question for most racers, fans and advertisers is what happens to the IHRA next?
I simply don’t have any idea. I’ve heard that Mr. Lencheski told the IRGSE board and his racers that the IHRA might operate at a loss in 2016 and the board would live with a loss. That is a distinct possibility, especially if he convinced the board that his proposed D-1 International Top Fuel series would be in place and ready to deliver name racers, big sponsors and big races by the end of the 2016 season.
Unfortunately, as I write this IHRA hasn’t released a schedule of any kind for next season. No races or dates announced for the D-1 series, no television deal yet announced, not one T/F team, and no sponsors.