While a high-profile Netflix docuseries and the glitzy Miami Grand Prix have helped Formula One attract a significant amount of media attention recently, IndyCar is quietly finding its own footing ahead of its most high-profile race, the Indianapolis 500.
Mark Miles—the president and CEO of Penske Entertainment Corporation, which owns the Indianapolis Motor Speedway and the Indianapolis 500 race—said IndyCar’s total media audience has increased in the high single digits over each of the last few years, TV viewership this season is up 34% YoY (through May 15) and the racing circuit is close to operating in the black–noteworthy for a sport that required ‘significant annual investments’ a decade ago.
Editor’s note: The Indianapolis 500 race and the Indianapolis Motor Speedway are owned by Penske Entertainment Corporation, which is a subsidy of Penske Corporation, owned and operated by Roger Penske. Sportico is owned by Penske Media Corporation, operated by Jay Penske, Roger’s son. PMC operates independently of Penske Corporation.
Penske has tried to position IndyCar as “accessible” and “authentic,” Miles said, since it acquired the circuit in November 2019—a different approach than the one taken by F1 owner Liberty Media Corporation. “[IndyCar is] essentially a North American series, and North American tastes in some ways differ from European tastes,” Miles said. The former ATP CEO pointed out that while tennis’ most successful events during his tenure often had “caviar everywhere in the hospitality area,” that wasn’t always as popular in the U.S.
“[The U.S. fan] wants great racing, teams and drivers they can admire and relate to, and access to the cars and drivers at the races,” Miles said. “Increasingly they want more compelling digital content and the ability to connect with the sport when and how they want.”
JWS’ Take: Formula One’s increasing popularity in the U.S. has been a tailwind for IndyCar, despite their philosophical differences. The global series has helped to shine a spotlight on motorsports and because F1 and Indy cars are both open-wheel, they look similar to a lot of new racing fans.
Penske tries to convey a different image than its open-wheel counterpart. “We tend not to be as elite or elitist. We [try] to be very accessible to our fans. Going back to Bernie’s [Ecclestone] days, you could not get into the Paddock Club unless he gave you or sold you the pass. We want people to be able to go through the garages, get out to the pits and be close to the drivers and the show. There’s a bit of a culture difference and it’s intentional,” Miles said.
IndyCar is capable of drawing big crowds and putting on the party-like atmosphere of F1 races. The Grand Prix of Long Beach drew a couple hundred thousand fans over two days in April. At least 300,000 fans are expected to be at Indianapolis Motor Speedway on Sunday for the 2022 Indy 500, the most since the 100th running of “the greatest spectacle in racing” in 2016.
IndyCar’s 34% YoY increase in viewership is noteworthy. But the stat should come with an asterisk. The sport has more network broadcasts this year than it did last year (13 vs. 9) and now gives fans a streaming option. “We’re going to do better on network than we are on cable and then you add Peacock [viewership] to the total audience,” Miles said. Just one live race will air exclusively on the OTT service in ‘22 (Toronto).
Considering the momentum behind auto racing, its growing international fan base (races air in approximately 200 countries) and the abundance of private equity that currently exists to invest in sports at a league level, the series would seem primed for expansion. Remember, IndyCar was the predominant global racing series as recently as the mid-90s. But Miles pumped the breaks on that possibility: “In terms of racing, for now, we’ve decided not to pursue [markets] outside of North America.” He sees the sport is growing rapidly on the continent, believes it has a leg up on the competition here and wants to consolidate that position before going abroad.
Penske is not looking to take on any outside investment capital, either. Miles did say he could envision a scenario where established teams are granted an opportunity to take an LP stake in the series.
If international expansion is not in the plans, it is reasonable to wonder how Penske plans to meaningfully grow series revenues. Domestic media rights are expected to be the main driver. “There is an opportunity the next time around for a really healthy increase,” Miles said. The existing broadcast pact with NBC Sports expires in 2024.
Ed Desser (president, Desser Media) did not sound as sure. While he acknowledged live sports are in demand, he noted, “We are in this period where the big money is going to the big guys and it just leaves everyone else in a fight for scraps. I’m skeptical that [IndyCar is] going to get a big increase unless they are willing to have many of their non-Indy 500 races on a streaming platform, especially as F1 figures to be getting a nice raise.”
A second media rights valuation authority who asked to remain anonymous suggested a 20%-25% increase could be feasible, though he expects a material portion of the compensation to come in the form of production subsidies.
The media landscape is changing so quickly that Miles was hesitant to project when the sport might be willing to move the bulk of its races exclusively to a streaming service. But it doesn’t sound like it’s going to be in the next media rights agreement. The Penske executive sees the fan base growing as a result of exposure on NBC, understands the sport’s reliance on sponsorship dollars and doesn’t believe there will be a digital platform capable of delivering comparable reach in the short-term.
Liberty Media CEO Greg Maffei recently suggested in a Bloomberg conference that Sky Sports’ F1 coverage is superior to NBC Sports’ IndyCar programming. But Miles doesn’t see it that way.
“He’s right that one far exceeds the quality of the other, and it is NBC over Sky,” Miles said. “[NBC Sports does] a really good job for us all year. But they go all out [for the] the 500. It’s one of their major events and they treat it like that in terms of production and the attention [they pay] towards telling the stories.”
While Penske waits for IndyCar media rights to come up for renewal again, it will work to keep sponsorship revenues climbing (about a 30% increase over the last three years). Miles said rising television viewership and race attendance figures have led to more consumer brands entering the sport, which has subsequently resulted in a lift to the top line.
Increased interest from consumer-facing brands has enabled IndyCar to package and sell assets easier (and presumably for more money) than it had been able to do in the past. For example, Hy-Vee will be the title sponsor for this summer’s race in Iowa. The Graham Rahal team sponsor has also bought time on NBC and “will end up with some assets here at IMS and maybe elsewhere on the series,” Miles said.
Miles sees the sport’s increasing role as a promoter helping to drive revenues too. In addition to promoting races at IMS and the Detroit Grand Prix, Penske has taken over the promotion of the Hy-Vee double-header weekend at Iowa Speedway this summer.
“We’re the risk-takers. We are selling the tickets,” Miles said. And naturally, there is financial upside to taking on the added risk and responsibility.
To be clear, IndyCar is not planning to promote every race on the championship circuit moving forward. But Miles believes the sport “can bring resources [to help existing promoters] and have a better ability to pursue opportunities and new markets [if it operates as a promoter] than if [it] were reliant on not only finding a new market but finding the promoter to do it.” Last year the circuit ran its first race in Nashville. The tour stop was widely considered a success.