Is Back In The Black Noteworthy?
Despite the fact that there could be some serious spin in the article, the Sports Business Journal reporting that the Motorsports Division of Hulman & Company finished 2014 in the black for the first time in years – has to be interpreted as good news. I believe the actual quote says that “The IndyCar Series and Indianapolis Motor Speedway are on track to be profitable for the first time in more than five years.”
I interpret that to mean that the Indianapolis Motor Speedway had an even better year than usual, with the Grand Prix weekend added in; and that IndyCar didn’t lose as much as it usually does. Therefore, the two entities combined probably showed a slight profit. I seriously doubt that the series was profitable.
Still, good news is good news. The Motorsports Division of Hulman & Company had been bleeding red ink for years. Attendance had previously been down for the Indianapolis 500 in the latter part of the last decade. It was significantly down for the Brickyard 400 in recent years, and Formula One had been a financial burden in the last decade.
Some feel that there is way too much emphasis placed on the Indianapolis 500 compared to the other events on the IndyCar schedule. That’s a debate for another day, but if you are an IndyCar fan, you want every single event at the Indianapolis Motor Speedway to be a financial success. Be it the Indianapolis 500, the Brickyard 400, the Moto GP or even the Vintage race – anything that brings profitability to IMS, is cash to sustain the Verizon IndyCar Series.
Mark Miles is facing his third season at the helm of the series, when the 2015 season kicks off at a site yet to be determined. It is now his baby. 2014 was dubbed a “transition” season. So far, the jury is still out as far as I’m concerned. To date, his biggest move is to bring Verizon on board as the title sponsor of the series. He also was able to unload the Indy Lights Series, which was struggling under the IndyCar banner.
Miles has alienated fans, however. His insistence on continuing to end the season before Labor Day, which I was originally for – has irked fans who resent the fact that the calendar says it is still summer, but the season has now been over for a couple of weeks. Regardless of how much fans and tracks are miffed, Miles has made it clear that this is the way to go. Mark Miles may very well be proven right, but an olive branch of some sort to the fans may not be a bad idea. The 2015 schedule, in general, doesn’t appear to be coming together as fans had hoped, either.
Another source of fan concern is what appears to be a lack of promotion that fans feel is needed to grow the series. With his team of Jay Frye and CJ O’Donnell on board, there may be a lot of things working in the background – but we fans aren’t seeing anything tangible. The bunker mentality that was prevalent in the Tony George era, seems to have returned. Fans don’t know what’s going on, so they get concerned. Transparency does not seem to be a virtue of the Mark Miles era.
But while we’re bashing Mark Miles, let’s remember one thing. He was charged to stop the bleeding, first and foremost. Tony George had an open checkbook to support his pet project – the Indy Racing League, now known as the Verizon IndyCar Series. His sisters grew weary of seeing their family fortune continually dwindle, while he bolstered the series and upgraded IMS into a world-class facility.
Randy Bernard was brought in. He had a long-term vision to grow the series by getting new fans through excessive promotion. That took a hefty investment on the front-end. After a sea of red ink from the Tony George era, the board wasn’t too keen on giving Bernard the same open checkbook that George enjoyed. After some shady maneuvering by some cowardly owners, Bernard was kicked to the curb and Miles was brought in.
His vision was totally different. Miles was focused on the here and now. He saw a hemorrhaging balance sheet and slashed budgets, eliminated positions and cut costs wherever he could. Two years later, he can claim to be in the black. But at what cost?
The ledger looks healthier than it has in years, the TV ratings are showing some improvement and attendance was up for events at Indianapolis. But Fontana took a predictable beating in the ratings and attendance, while attendance at Pocono took a nosedive, Milwaukee was disappointing and several others were mostly flat.
One of the biggest concerns from fans has been the high sanctioning fees that IndyCar is charging tracks. So many tracks that fans covet have said that they cannot make money on an IndyCar race under the current structure.
I don’t claim to be a business analyst, but those who are much more in the know than I am insists that the business model that IndyCar is using needs to be blown up and completely redesigned. The theory is to charge tracks a lower fee, thereby making ticket prices lower. Attendance would rise, with more people to buy merchandise, food and beer. It looks great on TV to have full stands and that leads to more people taking interest.
But if you read the article, Miles says he actually wants to raise sanctioning fees. Isn’t there a simple business practice known as supply and demand? While we hard-core fans all love the product, we are currently in the vast minority. There is not a huge demand for IndyCar in the public’s mind. How will higher sanctioning fees improve that?
In my very limited wisdom, I think Mark Miles should take one of his eyes off of the bottom-line and look into the future. There is a big difference in keeping the series in the black and growing the series. It takes promotion and some keen minds that can read the latest market trends. What was popular in 1990, has no bearing on today. Personally, I don’t care for a lot of today’s trends, but I don’t want to see my passion wither on the vine either, just for the sake of tradition.
Maybe the crack marketing team of Frye and O’Donnell are working on a long-term plan and are on the verge of launching something really big. The problem is, the bunker mentality doesn’t even give fans a glimpse. Therefore, we get frustrated.
But give Mr. Miles his due. He has restored financial order to the Motorsports Division of Hulman & Company. The board is now happy and the Hulman-George family is now happy. Maybe now, it’s time to make the fans happy.