SBJ/March 18-24, 2013/Leagues and Governing Bodies

IndyCar steers toward a new plan for future

The IndyCar Series ended last season in turmoil. In the span of a few months, its board fended off a hostile takeover, ousted its CEO Randy Bernard and elevated former ATP executive Mark Miles to CEO of its parent company, Hulman & Co.

But as the series prepares to open a new season this Sunday in St. Petersburg, Fla., the tumult of last year has faded. Miles has introduced himself and listened to everyone from owners to drivers to promoters over the last three months, Boston Consulting Group has completed an assessment of its business operations, and the search for a new CEO is expected to be completed by this spring.

Mark Miles’ immediate focus is on completing a strategy and hiring a new CEO to carry it out.
Photo: AP IMAGES
“It is calmer,” Miles said. “Life goes on and people want to pull together and grow this sport. We have a chance to do that in the way people are embracing us and the way we’re diving into discussions about where we want to go.”

Miles’ immediate focus is on finalizing a strategy for the next three to five years and hiring a new CEO to implement it. The organization, which is handling the executive search independently, has narrowed its list of candidates to six people. The ideal candidate will have a mix of motorsports experience and a track record of business success.

Rather than becoming the CEO of the IndyCar Series, the new CEO likely will become the head of a new entity called Hulman Racing. The company would oversee both the IndyCar Series and Indianapolis Motor Speedway, and it would report to Miles and the Hulman & Co. board.

The idea of creating a single company to run both operations has been discussed in the past, but Miles said Hulman & Co. is considering it again as a way to cut costs and improve operations.

“Over time, IndyCar and IMS have built similar organizations,” Miles said. “Each have heads of sales, marketing and communications. They have a different focus, but if you can create a superb marketing and sales organization, it’s going to be hard to find two of those people to lead two organizations, and I think it’s repetitive and costly, so we’re looking at the possibility of largely combining those organizations.”

Miles added that the new CEO and combined company will concentrate on improving IndyCar in three areas: improving fan engagement, strengthening staff and operations, and creating “shared economic interest among teams and track and the league.” He wants the series to create revenue pools and share those with tracks, so that if attendance grows for races, the series and tracks both share in the upside. He also raised the idea of pulling sponsorship signage, selling it across the series and sharing that money among all the tracks.

“Tracks might read that as we want their money,” Miles said. “We don’t want that. There has to be growth [of revenue], not redistributing existing money. It’s hard to do, but there ought to be a way to share these revenues, and that ought to get us better aligned with everyone executing on the same objectives.”

It’s an idea that promoters are open to but cautious about.

“It just needs to make sense,” said Terry Angstadt, president of Green Savoree Racing Promotions, which promotes the St. Petersburg and Toronto IndyCar races. “There’s a formula that has to be followed to make individual events more sustainable. If that gets bigger, then let’s open and share. It has to be good for everyone.”

Jim Michaelian, president of the Long Beach Grand Prix Association, who hasn’t spoken to Miles about revenue sharing, said that other sanctioning bodies have found ways to share revenue by developing a formula around ticket sales, hospitality and program advertising. He suggested that IndyCar look at that model because events like his, which is a full weekend and includes seven races and two concerts, make it difficult to determine how much a ticket buyer is paying for the IndyCar race.

“Those are much more clearly defined and do represent what the sanctioning body brings to the event,” Michaelian said. “That might be a more accurate formula to begin to develop some type of a financial relationship as opposed to taking it off the gross of the weekend or Sunday’s activities.”

In addition to revenue sharing, Miles wants the series to begin to develop a marketing platform that all of the tracks can use, so that there would be consistency in how drivers and the sport are promoted from market to market. Currently, promotions are handled by each promoter and vary from race to race.

Posters and banners have been provided to promoters in the past, but support for media and TV spots and other materials haven’t, said Angstadt, former president of IndyCar’s commercial division.

“Give us the materials,” Angstadt said. “Even better, buy the media. We have significant spends in marketing these events, so if there is an interest, bring it on.”

Miles and Jeff Belskus, IndyCar’s interim CEO, shared some of the ideas from the Boston Consulting Group study with drivers and team owners last week. The meeting followed a report by The Associated Press that the consultancy recommended Hulman condense the 15-race IndyCar schedule into 19 weeks and create a new marketing strategy promoting IndyCar’s “daredevil drivers.”

They emphasized that the AP story was based on an early version of the Boston Consulting Group’s work, and Miles said that they are using the consultancy’s report as a guide as they talk to constituent groups and finalize a long-term strategy. There was time at the end of the discussions with drivers and teams for questions.

Miles said the questions ranged from what IndyCar would do to boost TV ratings to what role the schedule and dates of races have in attracting fans.

“BCG did a great job and presented us with their thinking about the best answers to all of those,” Miles said.

NBC Sports Network will increase the amount of coverage it offers of IndyCar to 13 races, up from nine races in 2012. The increase in the number of races follows the 2012 season when IndyCar pulled its lowest viewership to date on NBC Sports Network. The series, which moved from ESPN to NBC Sports Network (then Versus) in 2009, averaged 292,000 viewers over nine races in 2012, down 27 percent from 402,000 in 2011 and 62 percent from the 778,000 viewers it averaged during its last year on ESPN in 2008.

Bernard publicly criticized NBC for not promoting the races more last year, and the relationship between the series and broadcaster was strained. But Robby Greene, who was named president and chief operating officer of IndyCar early this year, has worked to improve the relationship. He met with NBC last week and was involved in the network’s identification of new talent for this season. NBC Sports Network’s races will be called by Leigh Diffey, in his first year covering the sport; analyst Wally Dallenbach Jr.; and IndyCar driver Townsend Bell, a newcomer.

“As you’ve seen, there have been appointment changes on the commentary team, and those sorts of things are signs of progress,” Miles said.

Miles declined to comment on the future of IndyCar’s title sponsor Izod. The series last year began looking for a presenting sponsor to replace Izod, which has a deal that runs through at least 2015. But he did say that IndyCar and IMS have “a lot” of inventory to sell, including a presenting sponsorship or naming-rights deal for IMS. He added that the series is more focused on new inventory it can create than on what categories it can sell.

IndyCar constituents are pleased with what they’ve seen from Miles so far and are encouraged about the start of the season and the future of the sport.

“If nothing else, the series is focused on getting more concentrated on what it’s going to take to get the series running as opposed to the personality who is running the series,” Michaelian said. “With Mark and Jeff, we’re seeing two people who are focused on trying to respond to the challenges that IndyCar faces, and that’s what we’re all excited about and waiting to hear from them.”

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