Q & A with Mark Miles, CEO of Hulman and Company

Mark Miles

THE MODERATOR: Welcome, everyone, to this morning's INDYCAR media teleconference. We are pleased to be joined by Mark Miles, Hulman & Company CEO, the parent of INDYCAR and Indianapolis Motor Speedway. I'll turn the floor over to Mark to begin the call.

MARK MILES: Thank you, all, for dialing in. This call is really a reflection of our belief that we should be accessible and do our best to stay in touch with you all on a regular basis. I don't know if this will end up being a monthly thing or exactly what the pace will be, but it is something we think is important to do more regularly to make sure the lines of communication are really open and our friends in the media have access to us.

I have a list of a few things I was going to make a few comments on and then take any questions.

In no particular order, the first is just a comment about the sense I have in terms of the reactions to our 2016 schedule which we published recently. You kind of hold your breath when you put it out, even though you do your best to communicate with all your stakeholders.

But I think it's been very well received and we're pleased by that. There's probably no better example of our sense of that than what we understand from Phoenix, where we had a media event in conjunction with the announcement, attended by Josef Newgarden, Arie (Luyendyk), Al (Unser) Jr. and Lyn St. James. I understand (Phoenix International Raceway president) Bryan Sperber and his team were pleased with that, the attendance, enthusiasm.

More broadly, we got positive fan reaction. Tickets are on sale and the promoters are pleased with the pace. I may make a comment about our testing regulations which we have finalized and distributed to the teams, but here I would just say we're particularly looking forward to the promoter test in Phoenix scheduled for February 26 and 27. Looking forward to next year and what we think is a great platform for the series.

Related to that, I want to make a comment about Boston, which particularly has been in Boston in the news of late.

First, again, we are really very, very excited about having Boston on the schedule. We think it's a great setup. If you had the chance to use Google Satellite or be in the Seaport District, it's terrific. It's surrounded by water, commerce, high-rises. In the middle of it is the convention center and a terrific hotel. I think it's a great platform for our event.

We were pleased when Ryan Hunter-Reay had a chance to be there and to drive the streets, as they're now configured, and see the plan for the track. He was very excited and had only favorable comments about it. That's really good input. That's in part a result of the significant efforts over months of Tony Cotman, who is the person who led the design of the layout of the track and facilities. He's there right now, as a matter of fact.

I think they're off to a good start commercially as well. They've announced a couple sponsors. They tell us that the economics of those arrangements, the potential for activation of the event and all, have at least met if not exceeded their own expectations and pro formas and the like.

We have seen some coverage of late related to the need of the promoter to conclude agreements with a few important public agencies beyond the city itself. In fact, the city only has a sliver of the streets and the property needed for the event, but the convention center entity, state highway, Massachusetts Port Authority, Massport, there may be another one, all have standing and property that has to come into play for the race to be conducted.

I think the mayor's office is making it clear to everybody that they want this race to happen. That's always been our understanding directly from the mayor and the administration. They think it's important to the city. They think it will be great for the city, a demonstration for the city to pull off sporting events, even complicated ones. That's their perspective.

[adinserter name="GOOGLE AD"]However, I think they're making it clear that they expect everybody to fall in and get these agreements done to eliminate any uncertainties about it happening. So we are in very regular contact with our promoter, their people in Boston, and in regular contact with city officials. That is our direct understanding of the situation. Our expectation is that everything will be worked out and the race will happen and delight INDYCAR fans.

I wanted to make a comment about what in the shorthand we call nine-three. It's really (Rule) 9.3 and to some extent (Rule) 9.2. These are regulations that pertain to aero kits.

Rule 9.3 in the (Verizon IndyCar Series) rulebook, has been in the rulebook, and it anticipated the possibility that one manufacturer would outperform the other to the extent that there was a competitive disadvantage and that that could result in a situation that's detrimental to the series.

So the rule has this two-part test. It says, in the event that an aero kit is not competitive to such an extent that it would be detrimental to the series, then INDYCAR may permit a manufacturer to make modifications in its kit related to what they ran in the various configurations in 2015.

I'll jump ahead for a second. There's another regulation, (Rule) 9.2, which has been in the rules for some time, which has always provided certainty that for next year, 2016, both manufacturers will be able to make additional innovations and changes to their aero kits in three so-called volume boxes. They will choose from I think it's nine volume boxes, any of the three except for one, which they may wish to make changes in to further innovate and further improve their performance.

So that has been planned all along. That is work that I know Chevy and Honda are very engaged in and looking forward to that competition, further competition, next year.

(Rule) 9.3 is about what happened in 2015 and whether one manufacturer deserves an opportunity to begin to catch up with the other as they ran in 2015. So with that in mind, I think we've previously made it known that Honda has petitioned INDYCAR under Rule 9.3 to allow them to make some changes beyond what they can do under Rule 9.2 for next year in order to, in their minds, catch up or at least have an opportunity to catch up in what they perceive to be a deficiency in their kits compared to Chevy.

There was a lot of talk about this. Our view there was a lot of kind of general observations about it. Most observers looked at the situation from the point of view of the on-track results, which one could understand. It was not our view of what the rule says.

So you could look at, and they're not irrelevant, data from qualifying, from laps led, from races won, from results in the championship, all those things, and they provide a perspective.

But our perspective was that we need to know whether the aero kit itself is competitive or not. When you take out all the variables of who the driver is, when the pit closed (during a race), all the other things that happen in a race, engines and the like, what is the situation with respect to the aero kits themselves? That's what we wanted to focus on, is the first test in the rule.

We essentially took control of the 9 car (Scott Dixon’s Chip Ganassi Racing Teams Chevrolet) and the 15 car (Graham Rahal’s Rahal Letterman Lanigan Racing Honda) as they came off the track in Sonoma (after the season finale) and kept control over those cars until they were taken to the Windshear wind tunnel in Charlotte and examined it. I want to thank the folks at Chevy and at Honda and the two involved teams for their considerable cooperation and assistance in this.

In the end, the testing was controlled by our engineers in that wind tunnel. Their task was to examine the data coming off the cars as they were set up in various configurations, including superspeedway, short oval, street and road (courses).

So that work has been done. INDYCAR has notified both Chevy and Honda that our conclusions from that testing and our subsequent thinking about whether the situation is detrimental to the series was that, in part, we are going to allow Honda to make adjustments or changes, or to propose making specific changes under Rule 9.3. That was because the data indicated to us that for short ovals, street and road courses, the Honda kit was not competitive.

However, for the superspeedways, we did not come to that same conclusion. We believe their kits are competitive. So they both have been notified that Honda will have an opportunity, and they are pursuing it, to present parts that they would like to change under 9.3.

This is designed to give them an opportunity to catch up but not exceed the place where the Chevy kits have been in 2015 before both have the opportunity under 9.2 to make additional changes for next year.

So the status is that Honda has provided us with the parts that they would like us to consider approving. This weekend we're going back, our engineers, into the Windshear tunnel and right now are working on how to fit those parts on the '16 car, will examine them in the tunnel and decide how we will reply, whether or not the answer is yes, this works, does not exceed the Chevy performance in 2015, or no, this would give you an advantage we're not prepared to grant, or some combination of potential changes that is less than what they're asking for.

So that is the kind of work that will go on this weekend. That is with respect to what Honda is requesting we consider for short ovals, street and road courses. Because in finding that their kit is competitive with Chevy's, or was in 2015 on the superspeedway configuration, we will not allow them to make changes to the car from the 2015 qualifying and race configurations at superspeedways.

So I am sorry that that is a little bit detailed. I'm sure some of the readers will get lost in the details. But I think the takeaway is that we are following the letter of our rule.

I want to thank Honda and Chevy, who each probably don't agree with everything we're doing, but so far have at least seemed to understand. I think our communication has been good. We are walking the line to follow our rule.

I do want to add a comment about the second part of the rule, which again said that the kits need to be found to not be competitive in order for 9.3 to be invoked, but also that we determine that the situation is detrimental to the series.

So with respect to that test, why is the situation detrimental to the series, I would say that it's our view that both the substance provided by the data and the perceptions of the racing have clearly provided significant hurdles for our teams who are racing (with) Honda. I'm going to make no apologies to anybody for following our rules and implementing them in a way that takes into account the concerns and the situation for all of our teams. We think we're doing that responsibly.

So a couple more things I'll touch on, then I'll be happy to take any questions.

We received data this week from our broadcaster in Canada, which is further support for what we've seen in the United States in terms of the growth of the INDYCAR television audience.

INDYCAR on SN One saw a 101 percent increase from 2014 to 2015, which means it's about a 146 percent increase from 2013 to 2015.

On SN National, an additional platform, they saw growth of 27 percent. The Firestone Grand Prix at St. Petersburg itself, the kickoff for us, was up 18 percent, which is on yet a third broadcaster called City.

Underneath all that data is a really positive point, and that is the 25-to-34 (age) demo increased by more than 300 percent. So again, all these numbers, we look forward to the time when they're all at a higher place, but the trends in Canada are even stronger than the positive trends we're seeing in the U.S. television audience, which we're thrilled about.

Finally, I was just going to mention, for those of you who follow the sport very closely, that we promulgated, circulated this past week, our testing rules for testing for 2016. We would like to have gotten them out a little bit sooner. As I said to the paddock, the timing of the promulgation of the rules is on me. I wanted to make sure that we knew what the 2016 schedule was definitely going to look like, and we could take that into account.

I had an opportunity to get plenty of feedback from plenty of stakeholders' perspectives, which I think we did. The changes eliminate the distinction between in-season and off-season testing which were in place last year and will not be an important distinction for 2016.

Basically, the number of team tests and wind-tunnel tests is about the same. We have added a safety test at the Indianapolis Motor Speedway on April 6. We're calling it that and scheduling it so to the extent that Honda and Chevy can supply 2016 superspeedway aero kits to the teams, they will be run on the track. Obviously it's not exactly race conditions, but we want to do that. We want to do it early enough that if there's anything to be learned about the 2016 superspeedway kits, there is time to make any adjustments so that we have the best possible 100th Running of the Indianapolis 500 imaginable. This is, I think, an important addition.

There are other tweaks that have to do with giving Indy Lights drivers an opportunity to be exposed to IndyCar teams and giving a little bit of a reward to IndyCar teams that also run full-season Indy Lights teams in terms of an additional test. So we're pleased with that.

The feedback has been deafeningly excellent. Our friends at NASCAR and other governing bodies in the sport tell me anytime you get silence, that's a home run. I hope it is well accepted and believe it's the result of the good process to get these rules developed.

I'm going hoarse, you're getting bored, so I'll stop. I'm happy to take any questions.

Q. Mark, now that an agreement has been made to allow Honda to make some tweaks to their aero kit, where does it stand for them to return as an engine supplier, to get that agreement finalized?

MARK MILES: The answer to the question is that it's all systems go. This week we expect to receive a mark-up of the agreement that Honda will be ready to sign and we'll be reviewing that and hoping we can get it done in the next several days.

I do want to elaborate. I was asked earlier (this week) a question, sort of the premise of your question. We never felt like there was a gun placed to our head by Honda. They never said to us, “You've got to deliver this result in terms of an opportunity for us to change our aero kits and accept these changes or we're not staying in the game."

I think they're committed to INDYCAR. It's probably worth noting for the skeptics that they still don't know, we still don't know, we still haven't determined what changes they'll be able to make. We determined they're not making changes to the 2015 superspeedway kit, full stop. But with respect to what they may or may not be able to do for the other configurations, those are still decisions to be made and will only be made after we get back in the tunnel and have the next round of work there.

So they do know we're looking at it. They do know we're going to allow them to propose changes for those configurations (road and street course and short oval). But they don't know what the outcome of that is. We haven't decided.

Q. On the testing rules that came out, you had the approved speedways, the approved facilities that teams can test at. Gateway (Motorsports Park) was not on that list. Can they be added to the list once they make the safety changes that you mentioned in last week's teleconference about the schedule?

MARK MILES: I believe the answer to that is yes. I'd like to check and make sure I'm right before you have that as my answer. I know that we are working with them. We hope to get them approved. I believe that could still happen and have effect for 2016, but I need to make sure I'm right about the timing of that.

[adinserter name="GOOGLE AD"]Q. Mark, this is about the Boston situation. Prior to 1986 when Molson was able to get the Indy car race off and running in Toronto, which is still running and being very successful, there were two attempts prior to that to have Indy car and Formula One races through the streets of Toronto. In both situations, one in '68, another in '77, everything was on side, there were agreements with the city, government agencies, the mayor and council were on side. Both times the races didn't happen because a local ratepayers association raised holy hell. In this letter from Patrick Brophy that's become quite popular in the last couple of days, there is a paragraph in here concerning the outcome of your discussions with local neighborhood and civic and business associations. How concerned are you that the local neighborhood associations might present big problems for this race?

MARK MILES: We and all concerned understand that threading the needles and getting the approvals to have a street race in a major metropolitan area is difficult, difficult to sustain even after you have it. We're aware of the challenges but think that the risk/reward to have the opportunity to do something great in Boston is there.

My understanding is not precise, but I believe that the promoter and in particular one part of one neighborhood association have been engaged in specific detailed discussions. I think there is the hope that there will be a so-called mitigation plan, an understanding between them, about all the things that will be done that they can rely on to ensure that there is a minimum and acceptable level of inconvenience from making sure they have access, what the hours of access will be to their residences, their parking, all of those types of things.

It's complicated and difficult. We're not doing this in a pasture. We're doing it in the Seaport District of Boston. But I believe that the will of the elected leaders, the mayor in particular, and the resources and commitment of our promoter are all focused on getting this done.

I thought it was important that the promoter publicly made it clear that they understand that they will not be receiving public funds from any of these public agencies or the taxpayers, if you will, and that they're prepared to meet all their obligations to successfully stage the race under those circumstances.

That was, at a broad level, a threshold that has been cleared, as I understand it.

Q. Chip Ganassi recently said he'd like to see INDYCAR adopt some sort of a playoff-type championship. We've seen in the NASCAR Chase it's created a lot of intensity and attention. Is that something that's on INDYCAR’s table for next year possibly?

MARK MILES: It certainly has created some intensity and attention recently. No, it isn't (on the table). Frankly, I cocked my head when I read that from Chip. He and I haven't talked about that. I'd be happy to talk with him about it.

From our perspective, the Verizon IndyCar Series championship is a flat home run, if I can mix my sports metaphors, or a walk-off home run would probably be better.

You know the results. It has at least recently come down absolutely to the wire and last year required a tiebreaker. I feel like we could show increases in attention, digital discussions, ultimately television viewers, as the championship was building to the finale. At this point, we have not thought that was something that was broken and needed to be fixed, and haven't really thought there's a better opportunity.

Chip has been around the sport a long time, is a big investor. At some point, I'm sure he and I will have a chance to sit down and I'd love to hear his thoughts about it. But it has not been on our plate as a priority.

Q. Did you see anything from the Mexican Grand Prix Formula One event last weekend and the success of that, how that factors into your hopes of holding a race there in the future?

MARK MILES: I did, it's a great facility. It's a big event, right? It has a big impact in Mexico City. That's a huge market. I hope their success simply further enhances their appetite for open-wheel racing, and IndyCar in particular. They showed they can pull it off. We look forward to continuing conversation with them.

Q. Mark, is there any kind of timeline to name Derrick Walker's successor? Do you have one guy in mind?

MARK MILES: We're close. I'd say in the next couple weeks; could conceivably be next week. I don't expect it to be later than the week after.

Q. Is it going to surprise people? Do we know this person? Can you talk about it at all?

MARK MILES: No.

Q. Will the racing community be surprised?

MARK MILES: Somebody asked me this question earlier and I said I don't really want to play a guessing game because these are personnel matters you have to get right and respect people's needs in the process. I don't want to fuel the speculation. I think I've already said that the person won't be an unknown quantity or a stranger to the sport.

Q. I know when they released the facilities that are on your list for testing, there was Richmond, Loudon (New Hampshire) was mentioned, Watkins Glen. Is the series in conversation with these owners and promoters that perhaps in 2017 they might be able to race at these places?

MARK MILES: I wouldn't rule anything out. I wouldn't look at it as they're on there because they're targeted as future races. Gateway could be an exception. There certainly has been conversation about developing our relationship with them over time. I think that's much less the case with the other examples you mentioned.

Q. Mark, question on Boston. Seems that we have one source spreading constant doom and gloom, at least from the local media outlets. I know that has definitely swayed public opinion based on the amount of constant questions and feedback that comes in. Just curious if you can speak on whether that doom and gloom sense or feeling is shared among other media outlets in Boston you speak with or if you have any thoughts on whether this is maybe a bit of a slanted approach to INDYCAR’s entry into the market next year?

MARK MILES: Well, that is an astute question and observation. I think it was within a couple years of graduating from college that a supervisor of mine told me that it was a good practice to avoid picking a fight with somebody who buys their ink by the barrel, so I won't elaborate a lot in answering your question.

As I said, I think it's an astute observation in terms of the focus of the negative coverage. I don't have any clue as to the motivation. Freedom of speech is important in this country. So be it. But I think it's fair to observe that, as you did in your question, most of the mainstream media I think is covering the story straight down the middle and doesn't seem to be advocating one perspective or another.

My thoughts about our prospects there, I really already covered. I know the mayor wants to see this happen. I know it's important to the city. I believe our promoter has the conviction and wherewithal and focus now to get these agreements done and get on with it.

At the end of the day, what will matter is us having a race and the reaction of Boston fans to IndyCar racing. I expect that we will have that race. I think we'll blow away the crowds in Boston.

Q. Is there any discussion with the folks out in Calgary about having an upcoming street race in Alberta's largest city?

MARK MILES: There has been for some time an ongoing discussion about that. I think, as we've already indicated, the sport has grown in Canada. I would expect for Rogers, both as a broadcaster and as a telecommunications company, a race in western Canada would be particularly interesting, as that is an area where they have great aspirations for growth.

We've got competent people exploring the possibility. I'd be lying if I said there was nothing going on, but you know these things take time. Predicting the outcomes are difficult. Street races are tough in major markets. Lots of things have to fall into place.

Q. Is there any possibility of a return to Watkins Glen at some point?

MARK MILES: To be honest, I don't know of any discussion on that question. At this point I would say I don't think that's in the cards.

[adinserter name="GOOGLE AD"]Q. Looking over all the details of what's been released about Boston and the different quotes from the different parties, the fact that last year Brazil went away and there was no makeup race, do you have plans for potentially, if Boston does go away, to have a makeup race to fill out the schedule to a solid 16 races as opposed to going from 17 races, 16 races, to 15 races?

MARK MILES: Our focus is on doing what we can to support having a great race in Boston, but I understand your question. It would be imprudent of us not to consider a fallback position for us, alternative plans, in the event we're not successful in Boston. I don't want to elaborate. I think there's at least a few scenarios that could be possible.

I don't think we have to have a replacement if that was the case, but it's certainly something that we're thinking about.

THE MODERATOR: Seeing as we have no further questions for Mark, we will thank him for his time today and thank everybody for joining us. That will wrap-up today's INDYCAR media teleconference.