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Trying to make sense out of the IndyCar buyout rumor

by Brian Carroccio
Tuesday, October 16, 2012

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Tony George
What on earth is Tony George up to?  While Indianapolis Motor Speedway president Jeff Belskus has repeatedly insisted the Izod IndyCar Series is not for sale, every time you look up, it seems old TG wants to buy the thing.  Sure, I understand George is less than thrilled with INDYCAR CEO Randy Bernard, and has supporters particularly amongst fellow Chevrolet car owners (remember, George is a not so silent partner in Ed Carpenter Racing).  Sure, I understand George wants back in, after being unceremoniously voted out of power three years ago, after twenty years at the helm of IMS.

And if you believe Friday’s Sports Business Journal report, George has in fact, put together a group of investors, and made a cash offer to purchase INDYCAR.  Complicating matters, of course, is the fact George is a member of the Hulman and Co. board of directors, which owns the series.  So, theoretically George could be voting on the sale of a property he is bidding on.

Of course, this is more than just a little ironic, as George, during his tenure as chief of IMS, created the forerunner of the Izod IndyCar Series, the Indy Racing League, as a means of bringing a viable Indy car series under the IMS umbrella.  Thus, if the rumors are to be believed, George has in essence, submitted a proposal that would separate the series from the Speedway, an action completely contrary to what he spent an estimated $700 million of Hulman money doing.  Yes, George has long been somewhat difficult to figure out, but this one is, even by his lofty standards, a head scratcher.

Also, it is hard to gauge what exactly George would gain in purchasing the series?  Certainly, George would increase his influence within the sport, but keep in mind this: the deal as currently proposed does not include the Indianapolis Motor Speedway, which George’s mother Mari Hulman George has repeatedly stated is not for sale.  Were George to buy the series it would be without the sport’s greatest asset, the Indianapolis Motor Speedway. 

And even if a bid was made, why would Hulman and Co., want to sell the IndyCar Series?  Sure, the series is not a moneymaker, but it does act as a moat of sorts around the Indianapolis 500, their hallmark event. Further, why would the Hulman board consider selling a vital piece of their business, to someone they voted out of power three years ago, because they believed he did a lousy job of running the business?

Yes, it’s a convoluted, tangled web of power struggles, bizarre family dynamics, bad business, conflicting interests, and whatever else.  And although, IMS has repeatedly stated the Speedway is not for sale, the rumor simply will not go away.  Still, unless Hulman and Co., gets an offer that absolutely blows them away, the notion of selling the Izod IndyCar Series to George, makes zero sense for either side.

Now I’ll concede, ceding the series to George might make for a nice cash infusion.  But at what cost?  Remember, during his time at the helm of the Speedway, George did not, how do I say this nicely, display the world’s greatest business acumen.  Further, arguably the best thing that did in fact, come out of George’s two decade reign as head of IMS, it was that the Speedway and Indy car racing were brought under one roof.  Why would IMS exchange one of the few positives from the George era, for a return of the negative?

Of course, a commonly floated thesis goes something to the effect of “the sisters are getting tired of spending money.”  The sisters, of course, would be George’s sisters Nancy, Josie and Kathi, who voted their brother out of power three years ago, after they reportedly became frustrated with his reckless spending.  Many have speculated that “the sisters,” have over the past few years, grown tired of the distressed asset that is, INDYCAR.

And I suppose this may have some merit.  After all, the Speedway has existed and thrived, albeit not recently, without a formal connection to a bona fide Indy or Champ car racing series.  George’s grandfather, Tony Hulman, considered to be the savior of the Speedway, after purchasing it in 1945, never actively managed a racing series.  Hulman viewed himself as the steward of the great Indy 500, a role he embraced seemingly out of a sense of civic duty. 

Theoretically, “the sisters,” could be viewing the series in such a light.  In other words, why do they need to deal with the money drain that is the IndyCar Series, when they have the cash cow that is the Indy 500?

Simple, really.  The Izod IndyCar Series insures there will always be an Indy 500.  The series is the moat around the great castle.  While it is not an ideal moat, it is a moat nonetheless.  So long as they own the series, the series will work in conjunction with and on behalf of the Indianapolis 500.  Surrendering that control, means surrendering the assurance the series will work on behalf of IMS and vice versa.

As for George, it would seem, purchasing the series, sans the Speedway, would be a disastrous business practice.  Yes, George will get the race contracts, TV deals, licensing, a few haulers, and I suppose the IndyCar Fan Zone.  But basically, that’s it.  He would simply be receiving the distressed assets of Indy car racing, without the sport’s greatest asset, the Speedway. And let’s face it, TG does not exactly have a resume indicating he has a brilliant business plan that will turn things around.

Of course, purchasing the series could be about more than a business endeavor. As previously mentioned, George was unceremoniously dumped from his position as head of IMS, three years ago, and it has long been known that he wants to return to a position of leadership.  Certainly, purchasing the series would do that.  And to what extent this is about George validating his view of Indy car racing, versus George making a genuine business decision is hard to say.

Certainly, a return to power would give George the temporary euphoria of being able to kick Randy Bernard to the curb.  Still, in fairness, it will take a much more thorough business plan to solve what ails the sport.  Bernard has been involved with IndyCar, relatively speaking, a few minutes, but ineptitude has been around for decades.  After all, Dick King, Doug Melvin, John Frasco, John Caponigro, Bill Stokkan, John Capels, Andrew Craig, Bobby Rahal, George, Chris Pook, Joe Heitzler and Dick Eidswick to name a few, who have, like Bernard, all held prominent leadership positions within the sport over the last few decades.  Indy car racing's problems did not begin with Bernard, and they certainly would not end upon his removal.

One far-fetched theory is that George wants to buy the series and turn it back towards more ovals because his stepson, Ed Carpenter, is a slug on road courses
Also, if George purchased the series, minus the Speedway, would anything stop IMS from pulling at TG on TG, by starting their own series?  In other words, if IMS became disenfranchised with the direction of George, what would stop them from say, starting the (insert sponsor name) North American Indy Car World Series, or something of the like?  What would prevent them from giving George a taste of his own medicine, by leveraging the Indy 500 as a pawn to get their new series started?  Now, that would be rich.

Still, at the end of the day, this one doesn’t add up.  Clearly, the Hulman board made its peace with George’s departure a few years ago, and have made clear the series is not for sale.  While the rumored buyout story seems to have an eternal life span, and George clearly wants back in, this one makes no sense for either George or the Speedway.

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