Newgarden set to launch first salvo of IndyCar silly season

To properly grasp what’s in store for Team Penske’s Josef Newgarden as he explores free agency, we need to understand the seismic shift that’s recently occurred in the IndyCar driver marketplace, how it will influence Newgarden’s value, and whether he will be on the move to a new team in 2025.

The story starts with Colton Herta, who’s said to have signed a five-year deal with Andretti Global that pays a market-leading $7 million per season.

Other than to tell RACER, “That sounds like a great number,” Herta hasn’t been interested in discussing his personal finances since that sum started making the rounds last year in the IndyCar paddock, nor has his team owner felt compelled to reveal the amount he pays his drivers. But it’s a vitally important number to know.

It’s changed the financial dynamic in the IndyCar paddock in ways that we haven’t seen since the 1990s, and with a few more high-profile drivers like Newgarden up for bid entering 2025, Andretti’s big spending has radically altered the way elite IndyCar drivers are approaching the negotiating table.

And to be honest, it doesn’t really matter if that starry number of $7 million is real. What is important to know is that Herta’s alleged annual income has become accepted as fact by many of his rivals, and that $7 million revelation has weaponized all significant contract discussions since that number came to light.

Regardless of what Colton Herta is actually making at Andretti Global, the perception of his current deal is already driving the conversation. Josh Tons/Lumen

His teammate Kyle Kirkwood received an extension last year that’s rumored to be worth $3.5 million and hew hire Marcus Ericsson is said to have negotiated something similar — in the $3 million range — to make Andretti Global the team with the highest average annual salaries in the series.

Herta’s huge-for-IndyCar deal is the new and leading dollar amount to seek, and that’s been a positive development for drivers. As recently as 2022, one IndyCar champion was being paid just $850,000, and for many of the best in the top half of the field, anywhere from $1.25-2.5 million was the well-established framework most teams were willing to work within for salaries.

In speaking with a few driver managers who look after some of IndyCar’s biggest earners, the massive infusion of money received by Andretti — an estimated quarter-billion dollars from his business partner Dan Towriss and the companies he leads — is what has allowed the team to double or triple what a Herta, Kirkwood, or Ericsson would have been paid prior to the nine-figure investment.

The knock-on effect has seen a single team move the driver salary bar to new heights and caused most of the drivers who aren’t in the upper tier of remuneration to use Andretti’s numbers as a bargaining tool.

“There’s definitely been an uptick triggered by the Andretti salary levels,” one veteran manager, who asked to not be named, told RACER. “They seem to be the ones who moved the goalposts. But it’s been atrocious with how poorly IndyCar drivers have been paid. In general, we haven’t seen salaries like this since the mid-to-late ’90s when Michael and those top guys were on close to $10 million. And those numbers have not been anywhere near that for a long time.

“Still, there’s maybe three or four guys on the big numbers and the rest aren’t, but they’re now trying to get there after seeing what Michael and Dan are paying people.”

Of all the key things to know about the $7 million rate for Herta, it’s how the sum has always been spoken of as an elevated retainer Andretti and Towriss paid for him to be the future leader of their Formula 1 team.

With the door to F1 currently welded shut for Andretti, Herta’s grand salary has become an outlier — a fantastical expenditure — in a series where the majority of teams aren’t ready to elevate the accepted $1.25-2.5 million to $3 million or more across the board.

“It’s not always that driver salaries match where the sport’s at,” said Pieter Rossi, who manages his son Alexander and others in the series. “I have to be really sensitive in my position because team owners need to be able to operate a team at a high level and the cost of doing business in motorsports has gone up in the last four years. Inflation has hit everywhere, teams have budgets, and it’s costing more to operate the cars to be at the same level to win races. And it doesn’t always necessarily match being able to pay a driver what they’re worth at that time. You hope it does.”

Between three-time Indy 500 winner and four-time IndyCar champion Dario Franchitti and his teammate, six-time IndyCar champion and 2008 Indy 500 winner Scott Dixon, the Chip Ganassi Racing drivers were regarded in the late 2000s, through their final on-track season together in 2013, as the two highest-paid drivers in IndyCar with rumored salaries in the $3 million range.

Dixon maintained that top-salary distinction afterwards, with something in the vicinity of $3.5 million spoken of as the best of his generation’s base annual retainer that’s carried into the 2020s.

The question facing drivers and teams today is whether the market can bear a widespread spike in retainers — one that would take the previous income peak paid only to the best few drivers and normalize it as the new standard sought by half the field.

“What I’m seeing in IndyCar at the moment is that salaries are definitely increasing,” Rossi added. “At the same time, it’s got to match with what the teams are able to pay at that given time because each owner has a different playbook. If you look at the top four teams in McLaren, Andretti, Ganassi and Penske, they all are able to succeed at a very high level, but they have a different playbook on how they approach things. Some teams don’t have enough to pay the top-line drivers. And then you have other teams that have the resources to that and are able to contract the drivers at a high level.”