The Penske Entertainment Corporation, a subsidiary of Penske Corp. (which also controls the publicly traded Penske Automotive Group), has announced the purchase of Indianapolis Motor Speedway (IMS), the IndyCar Series and IMS Productions, assets that have been under the control of the Hulman-George family for the last 74 years. Former chairman Tony George said the family had “taken [the businesses] as far as we can. Roger Penske’s resources will only take [them] to another level.” Financial terms of the deal (which is expected to close in January) were not disclosed. However, a pair of motorsports insiders pegged the purchase price at under $1 billion.
Howie Long-Short: While whispers about a prospective sale began to circulate amongst Indianapolis based businessmen late last week, the team owners we spoke to were surprised by Monday morning’s announcement (which came via email at the same time that the media version went out).
Perhaps they shouldn’t have been. Hulman & Co. has been unloading assets since family matriarch Mari Hulman George passed away in November ’18. Remember, the company sold its baking powder business Clabber Girl to B&G Foods for $80 million back in May. We explained at the time that the sale was significant because it provided CEO Mark Miles with “optionality.” No one considering the purchase of “the world’s most famous race track (Indianapolis Motor Speedway), the single biggest event in the world on a given day (Indianapolis 500) and a [racing] series (IndyCar)” – and certainly not Roger Penske – would also have interest in taking on a baking support business.
The general feeling within IndyCar circles is that the racing circuit will benefit from Penske’s ownership. “There isn’t a greater steward of IndyCar and Indianapolis Motor Speedway than Roger and no one knows the business of motor racing better than he does. He’ll find ways to improve and expand the sport as he does with everything he touches.” Fans of Formula One know that having an owner who gets the product is critical to a sport’s success. The international racing series has struggled on a variety of fronts (see: no teams are currently signed up beyond the 2020 season) since U.S. based Liberty Media took it over.
Formula One’s misfortune presents IndyCar with the opportunity to gain overseas market share. For those who do not recall, there was a time not too long ago (see: mid ’90s) when IndyCar was the predominant global racing series. The disastrous decision to split the series into two circuits (Indy Racing League and CART) back in ’96 drove international fans off to F1 and those here in the U.S. over to NASCAR.
Team owners have yet to be briefed on Penske’s plans, but it reasons to believe that there will be an investment in infrastructure at IMS. “There’s been a ton of deferred maintenance, the place needs work. But there’s also an opportunity to build an entertainment complex. There’s a lot of untapped revenue [in the venue].” Bringing more events to the track – including a Formula One race – sounds like it’s certain to be part of the strategy. Penske said he envisions turning IMS (which already has a golf course and museum in addition to a race track) into “the entertainment capital of Indiana.”
It’s certainly no surprise that the three assets were sold as a package, because the racing series still doesn’t make money. Unloading the world-renowned track by itself would have made it difficult to sell IndyCar and its production arm. One team owner explained that, “no one is going to buy the league without having control over its biggest property. There’s only one event that makes money and that event props up the series.”
Fan Marino: Team Penske (runs 3 cars) is the most successful IndyCar team (driver Josef Newgarden was the ’19 champion), so naturally there are concerns about a potential conflict, but those worries are probably unwarranted. ‘The Captain’ is stepping down from his role as ‘race strategist’ on the team and this isn’t the first time the racing icon has mixed track and team ownership, he’s owned both Michigan International Speedway and California Speedway during his half century in the sport.
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