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The devil's in the details as IndyCar works to finalize charter structure
By Marshall Pruett | April 3, 2024 4:51 PM ET
Penske Entertainment is getting closer to presenting its team owners with what it hopes will be the final version of its first charter program.
The company, which owns the NTT IndyCar Series, is aiming to share the initial framework of the charter with its entrants leading into its marquee event at the May 26 Indianapolis 500. Meaningful progress has been made with the initiative, but an equal number of questions and ramifications must be considered before it’s ready to execute.
“There’s been a lot of conversations; we’ll have more,” Penske Entertainment CEO Mark Miles told RACER at the recent Thermal Club event. “I think everybody understands it may not be exactly what every single individual wants, because they don’t all want the same thing. But the important thing is getting it started and hopefully that’s before the 500.”
Modeled in some ways after NASCAR’s charter system, which was introduced in 2016, IndyCar’s charter intends to create monetary value and security for its team owners who populate the series with their entries for the entirety of the annual championship.
In contrast to Formula 1 and NASCAR, whose teams are in a direct business relationship with their series, and whose entries have become highly lucrative commodities for the owners to sell, IndyCar teams have come and gone for most of the century without a price placed on their entries and the related access to the IndyCar field.
The former Carlin Racing IndyCar program was a perfect example of the situation, where the British team bought cars, assembled a respected two-car effort, competed for four seasons, ran out of funding, and sold its cars and equipment to another team. But since its participation took place prior to the formation of a charter system, its entries held no commercial value and they had no access to sell. Carlin disappeared without turning a profit upon its exit.
With an eye to applying a more business-like structure between the series and its independently-owned teams, the formation of a charter system was spoken of as an ambition by Roger Penske when he purchased the series and the Indianapolis Motor Speedway late in 2019. The motivations behind the program were varied.
One major facet was establishing a structured entry process that would reward IndyCar’s long-standing entrants; it would serve as the antidote to allowing newcomers the same opportunity to compete in races like the Indy 500 while having no ‘skin in the game.’ The perceived imbalance was cited as an issue that could be addressed by issuing charters that provided the established entrants with a guaranteed place for their cars on every grid.
Brand-new teams were spoken of as being able to buy their way into the series, provided there were enough charters made available, to tie those teams to IndyCar through investment in the series.
Using charters as a type of deed for team owners to not just hold and use as an ensured gateway to compete in the series, but to sell and profit from upon transferring to another entrant, was the other key point of interest mentioned by Penske.
Towards the end of 2023, Penske Entertainment pitched a previous and more detailed version of the charter to IndyCar owners. It was rejected within 24 hours after the series attempted to take $1 million per entry from the team owners. In response to the harsh rebuke, the initiative was parked for review after the 2024 season was completed.
But the delay to the next offseason was quickly reconsidered, and with renewed enthusiasm to try and implement a charter system by the Indy 500, the series has been proactively meeting with team owners while aiming to launch a more basic charter in the coming months.
“Don’t worry about everybody getting everything that they might have thought should be a component of it; let’s get started,” Miles said. “Then that will require it not trying to boil the ocean. So hopefully we’ll get to that point.”
The latest iteration of the charter system would make 25 charters available for the series’ entrants, with a limit of three charters per team. Determining the eligible entries for the 25 charters has been done by using the results from last season’s Entrants’ championship.
In 2023 and again in 2024, IndyCar has featured 27 full-season entries. Under the three-car limit, only the Chip Ganassi Racing team, which fields five entries, would miss out on having all of its cars covered under the charter program.
In running through the list with two IndyCar officials, both pointed to the new No. 4 Ganassi Honda driven by Kyffin Simpson and the preexisting No. 11 Ganassi Honda driven by Marcus Armstrong, which was the team’s lowest-finishing car of its four full-timers from 2023, as the entries that would not be covered under the 25 charters.
“The concept is no more than three a team. Everybody who ran all year last year, therefore, minus two that didn’t make it because of the limit, would be the 25. They’d have charters,” Miles said.
The 25 would have guaranteed starting positions at every race, with the Indianapolis 500 being the only possible exception. The subject of guaranteed starting spots at the Speedway is the one area Penske Entertainment has balked at discussing since it received a wave of critical responses from fans.
With the Indy 500 starting positions holding as an outlier that awaits resolution, the 25 guaranteed starters would be locked into racing everywhere else on the schedule.
With the possibility of one or more new teams joining the series in 2025, which could extend the full-season entry list to 29 or more, the charter system could also have a significant impact on any regular events where IndyCar it looking to place a cap on how many entries can start each race.
As Miles explains, if the entry list were to grow beyond 27, the non-charter entries would vie for the two open spots and those who are slower than the 27th-fastest qualifier would be sent home.
“We’ll probably have a limit of 27 other than at Indy,” he said. “Twenty-five would be in. So you tell me how many more there are, and if it’s more than two more, they’ll have to qualify.”
Outside of the Indy 500 and its 33 starters, the series has been able to accommodate all 27 entries on the road and street courses, and add a few more at select events. But in some cases, there are only 27 pit stalls available for use – such as at Mid-Ohio and Toronto – which would thrust Ganassi’s two non-charter cars, plus any new entrants without charters, or current teams that elect to add an extra race-by-race entry, into a battle to earn the right to stay and play on after qualifying if 28 or more entries are filed.
Connected to the 25 charter entries is the ability for those 25 to be eligible for Penske Entertainment’s 22 Leaders Circle contracts.
The $1 million Leaders Circle payouts, which serve as guaranteed prize money, have been earned since the program’s formation by those who place within the top 22 in the Entrants’ championship. Except for some light restrictions, almost every entry since the program was started in the 2000s has been allowed to vie for one of the coveted contracts.
Under the charter system, the 22 Leaders Circle contracts wouldn’t be available to non-charter entries.
“The charter gives them the right to annually try to get in the Leaders Circle for the money,” Miles confirmed.
Penske Entertainment is driven by a sense of urgency to finalize the program and bring the charter system to life, but the hardest work ahead must be resolved before it’s ready.
Of the pertinent items to cover, will the series attempt to charge its teams for each charter, and if a charter is sold, would Penske Entertainment receive a share of the sales? At the moment, both have been characterized as being 50-50.
RACER understands the forceful rejection of the last charter concept due to the $1 million price tag per entry has not deterred some within the company from wanting to make another run to get paid for the charters on the front end, and on the back end through an income-generating stipulation where Penske Entertainment would receive a percentage of from every future charter sale.
If the owners’ reaction to the first attempt to charge for charters can be used as a guide, a second attempt is unlikely to succeed.
There’s also the highly anticipated call on whether Penske Entertainment will reintroduce the universally panned “25/8” rule adopted by the Indy Racing League in the late 1990s that guaranteed starting positions for 25 established IRL entries at the Indy 500 and forced all remaining entries to fight for the eight open spots in the field of 33. Like charging for charters, the return of the 25/8 rule at Indy is said to be 50-50.
Then there’s a question of when the charter system would go live.
The month of May and all of the attention that’s drawn during the two weeks of Indy 500 activity would lead to the strong likelihood of wanting to ratify and announce the charter system at the series’ most popular event. RACER has also been repeatedly told by IndyCar that a charter system would not take effect prior to this year’s Indy 500 which, if guaranteed entries at IMS are introduced, would make the 2024 edition of the race the last of its kind.
Although Penske Entertainment has chosen to use the results of last season’s Entrants’ championship to pick the charter entries, it’s worth asking why an arbitrary number of 25 has been selected instead of 22, which would align with the amount of Leaders Circle contracts, or 27, to cover all of the series’ full-time entries?
And as the only team with two drivers exposed under the 25-charter plan, would Ganassi look to move one or more drivers from its three protected to the two unprotected entries based on the investment levels of the paying drivers? Simpson’s family not only supports the No. 4 car he’s driving, but also funds other Ganassi cars through its Ridgeline Oil business and has a long-term plan for the teenager that provides the team with immense financial stability. Is that the kind of driver to keep in an at-risk entry? Would it be smarter to shift two-time champion Alex Palou, who has never come close to failing to qualify, to the non-charter No. 4 and rotate Simpson into the protected No. 10?
Despite being a remote possibility, it’s a bizarre possibility to contemplate and one that can’t be ignored, all due to the current decision to pick 25 as the number for charter protection. On the flipside, there are some teams whose bottom-dwelling cars are a revolving door for drivers and sponsors; being protected could provide a rise in fortunes if better talent and investment were to arrive as a result of having guaranteed entries.
Another question worth asking is whether a team’s tenure should be taken into consideration when awarding charters.
IndyCar has 10 season-long teams, but 11 teams, with the inclusion of the series’ last Indy-only entrant in Dreyer & Reinbold Racing, have been a fixture in its yearly composition. Dreyer & Reinbold was a full-time team for most of its existence, but in the absence of grand funding, it has become a staple each May with its pair of entries. DRR also rates among the series’ oldest teams; 2024 marks its 25th year of IndyCar competition.
Even so, and as it’s written, Dennis Reinbold’s team will not be welcomed into the charter program. If guaranteed entries are employed at Indy in 2025, DRR’s cars would be treated no differently than a first-time non-charter entrant and placed in the pool of at-risk entries.
At present, every Indy 500 entry is at risk of failing to qualify, which makes Penske Entertainment’s desire to protect some from that risk – including the three Team Penske entries — and expose others like Reinbold a curious distribution of favor. According to Miles, DRR’s owner has been vocal about such concerns.
“Dennis has been thoughtful about communicating his views to us,” he said. “And I’m sure that he aspires to run the 500, and more. How much more I’m sure is a function of money for him. The answer is the same for Dennis or any team without a charter. You can come and run; you’re an ‘open’ car and you’re running for prize money. And you’d have to qualify at all races, but again, it doesn’t mean you can’t run.”
Would that be considered as fair treatment for one of IndyCar’s most devout entrants? And how long would DRR remain in IndyCar if its decades-long commitment to the series is dismissed by those setting the subjective invitation list for charters?
Finding sponsorship for the 500 is a routine challenge for Indy-only teams, and charters could bring an end to their involvement. Presented with a chance to sponsor DRR or a charter-wielding team, which direction would a company take? One would imagine the team locked into the Indy 500 would get the nod, and if that starts happening, it would be logical to expect the charter bias to extend to all races, and with drivers who could be reluctant to spend or sign with an at-risk team.
As much as IndyCar’s charter concept is a tool to protect and enrich some entrants, it falls short in protecting all, which could create F1-style problems through limiting growth.
Abel Motorsports, which purchased its first IndyCar chassis — a new Dallara DW12 that was ordered late last year — would face the unenviable task of trying to learn and grow as a new team in 2025 while attempting to beat both Ganassi cars to participate in the races, and two new entries expected to be on the way from Prema Racing.
Given the vast difference in resources and experience between Ganassi and the Abels and Premas, the odds would suggest the Ganassi drivers stand a stronger chance of qualifying for each race. How would that, with the specter of sending Abel and Prema home after qualifying, help those or any other new teams to improve?
Better still, when beating two drivers who compete for Ganassi – the reigning series champions – is the bar of entry in qualifying, why would any new team, be it through sponsors or paying drivers, look to spend $8-10 million per entry to be at grave risk of not racing and eventually losing its sponsors and drivers?
The reaction would be different if new teams had to take on a lesser team to grab the two available spots, but since it’s one of IndyCar’s two best teams who would be gunning for the 26th and 27th starting positions, a daunting proposition would await those who try to make the show.
The easy answer would be for new teams to purchase a charter, but none of the veteran teams have expressed a desire to leave the series or downsize their programs. Barring a change of heart, the recipients of the charters will own the charters for quite some time.
As it’s constructed, the proposed charter system is loaded with benefits for the fortunate 25 and filled with awaiting consequences for teams and entries who wouldn’t be invited into the club.
So, where will Penske Entertainment end up on charging for charters and locking in starting spots for Indy? Assuming team owners won’t reject the latest proposition, when would the charter system commence? And will the results of the 2023 Entrants’ championship hold firm as the basis of who receives charters, or will a more nuanced and inclusive selection criteria emerge?
There are other matters to ponder such as the series’ upcoming broadcast and streaming negotiations and whether profit sharing from IndyCar’s next TV contract will be factored into the charter. The duration of the charters is one more item of interest; teams could be asked to renew their charters every three to five years.
Those subjects are unlikely to be included in the contents of the first and stripped-down charter, but Penske Entertainment does plan to revisit and add to the charters’ contents and coverage at some point after it goes live.
“We haven’t said that every six months we’ll reexamine it, or every year or whatever, but we’ll get it started,” Miles said. “And then we’re off to the races.”
Source: RACER.com
Your opinions about that? IndyCar Series Charter System is like Formula 1's Concorde Agreement system.
