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2/25/04
What? Me Worry? Naw!
raham Light, NHRA senior VP of Racing Operations, recently
told me a story regarding the NHRA management team's decision
to make VP Racing Fuels and the manufacturer Angus the official
supplier at NHRA for nitromethane. What he told me, and
later said in meetings with the Top Fuel and Funny Car owners,
was that some time ago the NHRA management team met to determine
what they had to do to guarantee the future of NHRA's nitro-burning
classes. They listed items on a blackboard and then started
erasing the ones that weren't absolutely necessary for drag
racing to continue. Eventually they ended up with three
words on the chalkboard: nitro, tires, and insurance. According
to Light (and I happen to agree with this), "We felt we
had to make sure that those three items would always be
available."
Evidently, the solution they came up with to ensure the future of those critical items was to do away with competition and award a single manufacturer the exclusive right to make and sell tires and nitro. I don't know about insurance.
Now to be fair, NHRA isn't the first major sanctioning body to do this. NASCAR made Goodyear their official tire supplier, with the blessing of most teams, shutting out the Hoosier Tire Company after it became obvious that tire wars were both expensive and detrimental to Cup racing. They also named an official fuel supplier decades ago to eliminate exotic fuels. Both of these moves have proved to be the right thing for NASCAR. However, the jury is still out as to whether they will be the right things for NHRA.
There is still a lot of negotiating going on behind the scenes concerning NHRA's decision to bestow a "nitro monopoly" on the folks at VP Racing Fuels making them the sole supplier for nitromethane at NHRA national events. Seems like some of the major team owners have taken exception to NHRA's move, despite their explanation of why they took the action.
I've been informed that NHRA will allow teams to use the "other guys" nitro for testing this weekend and that both the Goodguys and IHRA will allow their nitro racers to purchase and use nitro imported and sold by Jim MacMonagal and Don Schumacher after determining that their nitro has exactly the same quality as the "official" NHRA nitro.
But here is one little factoid that everyone should keep in mind. Fuel Funny Car team owner Don Skuza dropped me a line to remind me that when the Goodyear Tire and Rubber Company was made the official supplier for Top Fuel and Funny Car the cost of a set of slicks was $435 and currently the price is around $1,100. That's almost a 300 percent increase in cost.
The price of nitro jumped from about $650 a barrel to around $800 overnight when NHRA named an official and sole supplier. Supposedly there is a structured price program in place, but with only one "official supplier" the price of nitro could just keep going up. Maybe the cost of building tires and refining nitromethane just keeps going up and the companies are just maintaining a reasonable profit margin, but when you have a monopoly the definition of "reasonable profit" sometimes can vary. What happens when the refiner of nitromethane in the U.S. decides that $1,500 a barrel is what they have to charge? I wouldn't want to the job of going to NHRA racers with that bit of news.
Oh yeah, one more thing: over at NASCAR where they have a spec fuel, the racers get all of the product they need for FREE!
Suppose, just for the sake of argument, that Goodyear suddenly came to NHRA one day and said, "If you don't make us the sole supplier of tires for all of the classes in NHRA drag racing we are going to quit making tires for Top Fuel and Funny Car tomorrow!" While that probably won't happen -- Goodyear has proven to be a very good friend for the sport of drag racing -- in today's business environment where just making a profit can be a difficult proposition, what's to keep a CEO who's under pressure from stockholders to show profits from deciding that the only way to keep making a reasonable return on the investment they have in NHRA drag racing is to sell all of the tires?
What's next? Will NHRA award one of the insurance companies a monopoly? Will racers have to show they bought insurance for their trailers and cars from the "official" insurance company before they get a license to compete or a membership? I sincerely doubt that would happen, but what's to stop NHRA from trying if the current carrier threatened to withdraw.
Don't misunderstand me. I'm not bashing NHRA. I absolutely believe that their management team made the decision to give single companies a monopoly in the tire and fuel business with the best of intentions and secure in the knowledge that they were doing what they needed to do to protect the sport. I don't believe there was any collusion of any sort here.
I do think, though, that they may not have thought the process through. Instead of guaranteeing the class's future, it may actually put it in danger, in my opinion. They need an option in case a refinery blows up or a change of management at a tire company results in them getting out of racing. The history of racing is full of examples of large companies that have withdrawn from competition with little or no notice. Wouldn't it make good sense to have a fallback position?
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