Apex-Brasil Comes To Iowa

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When the IndyCar Series arrived for their initial visit to Iowa Speedway in 2007, it was amidst a feeling of harmony and a sense of the beginning of something special. The series had switched from methanol to corn-based ethanol to power their cars. This was to present a huge boost to the state’s economy as the ethanol push was at its height and the Iowa corn growers stood to benefit greatly. What a difference two years and a changing economy can make.

As corn prices shot through the roof affecting most food costs, there was a growing concern that corn may not be the most cost-effective means of producing alternative fuel. Fearing a political backlash if things really turned against ethanol production, the IRL began to re-think their enthusiasm for corn-based ethanol and started exploring other means.

Enter Apex-Brasil, a huge Brazilian concern. You’ve seen the commercials…many times. Apex-Brasil was started as an agency of the Brazilian government to create and implement significant changes to Brazil’s trade promotion policies. Since 2003, it has acted as an independent organization to work with the Brazilian Ministry of Development, Industry and Foreign trade. Apex-Brasil also has a tie-in with UNICA (the Brazilian Sugarcane Industry Association). Initially, they will help the IRL partner with a US based corn ethanol producer, but eventually they will supply the IndyCar Series with sugarcane-based ethanol. Their mission is to introduce the message that regardless of the various sources used to make ethanol, the end product is the same.

Where does this leave the Iowa corn farmers? Well…furious, from what I’m told. It has made for a very icy relationship with the league. Just a few years ago, the late Paul Dana had embarked on a crusade to bring corn-based ethanol to the forefront. After Dana’s fatal accident at Homestead at the beginning of the 2006 season, Jeff Simmons was chosen to fill the seat of the Rahal-Letterman Ethanol sponsored Panoz. Simmons made the obligatory trips to Iowa and made commercials for the ethanol industry, just as Ryan Hunter-Reay did after he replaced Simmons. All was seemingly well in corn land.

But when ethanol became more widely used during last year’s record-high gas prices, the cracks in the corn-ethanol production industry began to surface. I am neither a chemist nor an engineer. I don’t want to venture out of my comfort range and discuss the process of ethanol production, because I won’t know what I’m talking about. Let’s just say that corn-based ethanol was no longer loved as it had been.

I know less about sugarcane. I’m not really sure if I would even know sugarcane if I were to see it – unlike an ear of corn. But from what I’m told, it is much more abundant and cheaper than corn, and would not create a spike in sugar prices if it were used to produce ethanol instead of corn. Assuming all of this is true – does this make good business sense? Yes. Is it good for American Corn Growers? No.

And that’s the problem. The IRL has enough to worry about with trying to grow their own brand and identity, without having to prop up the American farmer. The IRL is seeking to be identified as being on the leading edge of future technologies. If corn-based ethanol is not the future of alternative fuels, then the IRL needs to distance itself from it. That is not a popular stance with the corn-growers, but strained economic times make strange bedfellows.

I can understand both sides of this equation. The corn-growers are upset that the IRL has abandoned its backing of their product. The IRL, on the other hand, has to look at the future of ethanol in its series. Plus, Apex-Brasil and the IRL are in the process of creating a partnership providing more than fuel to the series. From what I hear, serious negotiations are underway to have the organization involved on several different levels, which could bring a significant cash infusion to the league.

Which brings us back to this weekend’s race in Iowa. This is the last year of a three-year contract with the track. The race was a yawner two years ago, but was vastly improved last year. The track layout should lend itself to decent racing this year, which would be a first for an oval this season. I have never been to the track, but I understand it can be hard to get to. Problems of standstill traffic that lasted for miles before and after that first race, were apparently rectified for the second race.

It would be an iffy proposition in normal times for the IndyCar series to return to Iowa, but with the frosty relations that have developed between the ethanol producers in Iowa and the IRL, renewing the contract may prove to be difficult.

Personally, I hope Iowa stays on the schedule. It is more unique than some of the other cookie-cutter ovals the IndyCars visit. Plus, I have a soft spot in my heart for smaller markets trying to keep their race…especially since we in Nashville lost ours after last year. I also don’t want to see another oval drop off. We’ve seen that happen too often, lately. My ideal mix of tracks would be no less than 50% ovals with the remainder composed of road courses and street courses. I like natural terrain road courses but don’t care for street courses, although I understand how financially essential they are. If Iowa were to be replaced with another street/road course, we would be getting dangerously close to that 50% threshold.

This will be an interesting race to watch this year. Given the nature of the strained relations between the league and the region, it should make for a curious backdrop. I would like to be there, not only to watch the action on the track, but also to see the crowd reaction when that Apex-Brasil Green Flag flies to signal the start of the race. That might be the highlight of the day.

George Phillips

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4 Responses to “Apex-Brasil Comes To Iowa”

  1. I think you’re reading waaaaaay too much into the switch from corn- to sugar-based ethanol. The American ethanol trade group that had the deal with the league to sponsor a car and supply the fuel decided it wasn’t generating the required ROI, so they decided not to renew. Apex Brasil was willing to step in. I think that was the entire breadth of the decision process and it had zero to do with the effects of associating with corn-based ethanol on the IndyCar brand. The Brazilians offered free fuel AND tons of money. The Americans offered neither. Tough call. I think you’ll see 40,000 fans at Iowa, all of whom paid at least $55 for their seat. I suppose if the race loses its presenting sponsor (Iowa Corn Growers) it could go away, but I can’t imagine why IndyCar or Iowa Speedway would want to walk away from renewing a race that so many are willing to pay real money to attend.

  2. Regarding your point regarding last years good race, it’s not inconceivable (so far more than likely) that this race could also see a downturn in passing.
    If on the off chance, Iowa lost the race, I would like to see it replaced with another oval – however if that were not possible, I’d love to see Road America step in; but then again I always say that!!).

  3. As pressdog said above. It has been publicly confirmed through press and interviews that EPIC (american corn-ethanol) pulled their sponsorship of the Rahal Letterman car and Series and expected the series to suddenly pay them for all the fuel and still give EPIC all the same mentions as previous.

    APEX Brasil jumped in with essentially the exact same deal EPIC originally had with the league for the previous 2 years (free fuel in lieu of sponsorship) so the league decided it better to continue not having to pay for fuel.

    And now it looks like since then, its developing into a possible international race or 2, and from talk I’ve heard around the industry, a bunch of possible associate level sponsor coming to teams in 2010; but before all that it was simply an issue of EPIC pulling out on sponsorship and IndyCar finding a new one; and then EPIC going public with a different story that has since been refuted many times.

  4. Agreed, EPIC (I guess) is falling apart…they are trying to convince us that Ethanol has nothing to do with the cost of food, but farmers are planting corn for Ethanol rather than people, causing the supply to drop.

    Corn based Ethanol is not a great fuel either.

    Now the Feds want to mandate 15% Ethanol in our gasoline, most of our cars cannot handle that level of Ethanol. Feds don’t care, because the lobbyists do.

    Would I rather have an American group sponsoring ICS, YES! But not if they are just money grubbing businessmen…

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