Behind the battlelines: Dallara versus IndyCar's teams

The interior of the Dallara truck in the IndyCar paddock doesn't look much like the headquarters of a powerful villain - it's light, orderly and welcoming, with a small but potent espresso machine taking pride of place in the back office. Darth Vader never had an espresso machine.

But based on comments from some of the team owners in recent weeks, this white trailer is the Death Star, and its planet-obliterating laser is targeted directly at them. Or, more precisely, their budgets. The Italian constructor has been hailed for hitting all its targets with the DW12 chassis in delivering a car that is both better and cheaper than its predecessor, but those initial savings came with a caveat...

In the past, teams could build or source many spare parts independently, a scenario that supported an entire cottage industry within the American motorsport scene. Now, teams must buy those parts from Dallara, and at prices significantly higher than they had been paying previously. As well as being catastrophic for the small suppliers that had previously served the series, teams say that it has pushed their running costs to the point of being unsustainable.

Teams say having to buy only from Dallara has made running costs soar © LAT

The owners have joined forces to demand a 40 per cent reduction in costs. But progress in finding a solution has been slow over a number of meetings with the series.

The situation has reached a point where, unless something can be sorted out in the next few weeks, the teams have threatened to take matters into their own hands: one unnamed owner told the Speed website that they're considering trying to force the series' hand by having the entire field turn up to a race with independently-sourced parts, and let IndyCar disqualify them all if it dares.

Throughout all this, Dallara has remained quiet - until now. Stefano de Ponti, who oversees the Italian company's US arm, believes that the teams are not seeing the bigger picture.

"I'm sure that this year the teams saw a substantial spend, because obviously they had to buy new equipment," he said.

"You have to divide the acquisition costs from the running costs. The acquisition cost is the car, the new equipment that you need to run the car... obviously for them, it was a substantial number of dollars that they had to spend.

"But we have reduced the cost of the parts themselves, and then we see from the number of parts we have sold... Basically, we did a calculation of that number times 25 cars, and what they spend with Dallara is equal to five to six per cent of their budget. So if you consider an average budget of $6m per car, it's about $300,000 per car for spare parts."

One of Dallara'a arguments is that even though the individual price of some parts has gone up, the overall cost should be lower because the DW12 was designed to need fewer parts than its predecessor. Teams no longer need to buy separate mechanical kits for ovals and road/street courses, and all parts have been engineered to have a longer life. Additionally, Dallara has taken on the burden of holding the parts inventory - roughly $6.5 million worth - rather than the teams having to keep stocks of parts that they may never need.

Dallara's Dw12 hit all its targets, but the initial cost savings came with a caveat... © LAT

"On top of that we have engineering costs, costs for the mould, costs for the personnel, costs of the service, costs of the insurance," de Ponti says. "It's these costs, for us, that make up the price. That's not considered by the teams."

The teams would argue that this isn't the point. They've gone from having a degree of self-determination in whose parts they use and how much they pay for them to having to abide by a contract that gives Dallara a monopoly over the whole lot. Sam Garrett, whose many roles at Dallara include acting as a technical liaison, admits that the contract isn't ideal, but says that it was the flipside of being required to deliver the DW12 to such a low price point.

"The ICONIC Committee [which IndyCar installed to steer the 2012 chassis project] wanted it done for a certain price, and we told them, 'Yes, we can do that, but our upfront investment is more than we will recoup from the sales of the cars, so how are we going to get our money back?'" Garrett explains.

"So the agreement was that we'd get exclusivity on spares for a fixed period of time, and we have a limit of how much we can mark them up.

"In the end, we've made a huge investment to design the car, to do all the testing and, whether you like the looks of the car or not, or the spec nature of the car, I think we did a good job. The performance is good, the reliability is good, and we've had good racing. Now, we have to have some way to recoup that investment, and we didn't get it from the sale of the cars. So if we're not allowed to have the exclusivity that we were guaranteed in our contract, then how are we supposed to make our money back? It's a business. We entered into a contract, and we have done what we promised to do in our contract.

"Some of the team owners are upset because they think something else should have been done, and perhaps they're right. But two years ago we entered into a contract, and we're fulfilling our end of the contract. There is a little wiggle room here and there, but you can't say, 'OK, you gave us the car for cheap and now go away, and too bad about your investment.' Why should we subsidise [their racing]?"

Dallara says the demand for a 40 per cent reduction in costs is impossible © LAT

While Dallara has said that it's willing to renegotiate its contract, de Ponti is adamant that a 40 per cent cut is out of the question.

"We can't match that," he says. "We are willing to help. We are working with IndyCar every day, and that's what we have been doing since March, trying to find the best compromise. A 40 per cent reduction is an impossible percentage for us. Everybody has to stay in business; everybody has to make enough funds to survive. Unfortunately, there is this idea that we are a goldmine at Dallara. We are not. We are just operating a business, trying to reinvest in what we do, and helping out as much as we can."

IndyCar president of race operation Brian Barnhart has been charged with acting as the intermediary between the teams and the rest of the paddock. He is adamant that the series is committed to easing the burden upon the teams, although he thinks that it's unfair to single Dallara out.

"I don't think anyone should point their finger directly at Dallara," he says. "Our responsibility in listening to the owners is, we've got to reduce expenses. And we have got to find ways to do that with every manufacturer and supplier we have, not just Dallara.

"You've got to look at testing. You've got to look at the number of days in events that you're running. We went through this exercise a long time ago and started to make a lot of the ovals two-day shows to cut costs. So, do you start doing that with some of the road courses as well? That has a direct reduction on their travel expenses in terms of hotels, and rental cars, and per diem. Our responsibility has got to be to listen to the owners and then across the board look at what we can do to achieve what they're looking for."

Barnhart has looked at measures such as limiting crew member numbers © LAT

Barnhart said that he has also looked at measures including limiting the number of crew members on each team (according to Dallara, fewer personnel are required to run the DW12 than the previous car), although he has concerns over how such a measure would be policed. Other possible devices, such as a salary cap for drivers, could end up weakening the series by forcing the best drivers to go elsewhere.

"Let's say that we tell teams that they can only travel with 10 crew guys," Barnhart says. "Who knows how many people they have back at the shop? How do you know that they don't have somebody walking around the paddock [in plain clothes]? So how do you enforce that?

"You do everything you can to help the owners, and while you view your role as a sanctioning body to kind of protect them from themselves to some extent, some things you simply can't control. Some things, I'm not sure you should - another big part of their budget is how much they pay their drivers. If you want the best drivers, you've got to pay. So if this guy is paying a lot of money to get some of the best drivers in the world in your series, that's who you want. We have an obligation and a responsibility to look at the measures that we can actually control and that we have a direct influence over. And that's across the board."

Barnhart has spoken with the series' other technical partners such as gearbox supplier Xtrac and brake firm Brembo to negotiate a similar price-cut to that being thrashed out with Dallara ("Obviously, none are real excited about it," Barnhart says. "But they're all good partners and we've had good conversations with them."). Dallara, meanwhile, points to the fact that while teams are unhappy about spending more for standard components, they'll happily shell out for parts that impact performance.

Competition has inevitably led to a surge in spending along the grid © LAT

"All the cars have to have dampers, but you don't have to have unlimited damper programmes," say Garrett. "Our original proposal did include a spec damper, which was quite a bit cheaper than what they have now. They would have gotten a set with the car, and the replacement price was going to be somewhere around $1000 a piece for a damper, or $3000 for a set for a car. Instead, they're all spending $15,000, $20,000 for a set of dampers, trying to get the latest, greatest, better thing that everybody else.

"They want to spend as much money as they have to try to beat the other teams, and as little money as they have to on the things that give them parity with everybody else. Perhaps that's natural, but it doesn't do anything to control the costs of the series."

With patience wearing thin on all sides, a middle ground has to be found sooner rather than later. De Ponti and Garrett both claim to be sympathetic towards the plight that the teams are in, but Garrett believes that a solution could be found quicker if the teams were able to see beyond the confines of their own garage.

"The teams are just unrealistic about what it takes to design and build a car and parts so that everybody has the pieces they need when they need them," he says. "For a team it's really easy to say, 'I can build one car-set of those, no problem.' Yeah, but you can't build 60 car-sets in a short period of time. We're trying to see their point, and we hope that they're trying to see ours. But it's difficult."