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The Indianapolis Motor Speedway Corporation is a family-owned enterprise whose main business is the operation of the Indianapolis Motor Speedway and the Indy Racing League. One of the most famous races in all of motor sports--the Indianapolis 500--is run at IMS every Memorial Day weekend. The Indy Racing League began in 1996, with Tony George promoting U.S. open wheel drivers on oval tracks. The league had a slow start, but is attracting more fans and, more importantly, more sponsorship and television money.
A Tool to Sell Automobiles
The idea behind the IMS was as a marketing tool to sell cars. The original financial backers--Carl Fisher, James Allison, Frank Wheeler, and Arthur Newby--were local businessmen who envisioned people coming to see tests of the latest automobiles, then heading to the car showrooms to buy the latest models.
The track was made of crushed rock and tar and was a rectangular-shaped oval that was two and one-half miles long. The turns had 9 degrees and 12 minutes of banking. The track was built for auto manufacturers to test new car models and the owners planned races, so people could see the different manufacturers products run against each other.
The opening races of August 1909 did not go as planned, as the surface of the track was too rough on the tires and cars themselves. Soon after, the owners had over 3 million bricks brought in from western Indiana and the surface of the track was repaved in brick.
Birth of the Indy 500
In 1910, the group of businessmen scheduled three racing events, but attendance continued to be below what they had envisioned. For the next year the group decided to concentrate all of their efforts into one race. They decided to make it a long race--500 miles--and offer a large purse to the winner, $14,250.00.
The first 500 took place on Memorial Day, May 30, 1911, and was a huge success. Spectators flocked to the racetrack and the race enjoyed widespread and favorable press coverage. From 1911 until 1994, the only race ever run at IMS was the Indy 500, with the exception of one race run in September 1916.
The other business interests of the original backers of IMS grew and took their attention, so the group sold IMS to a group led by Eddie Rickenbacker in 1927. Rickenbacker was a World War I flying ace and had participated in several Indy 500s.
Although the bricks were a better surface than the original stone and tar, the surface continued to extract damage from the cars. In 1936, asphalt was used to cover rougher parts of the track and all but the main straightaway was covered in asphalt by 1941. By the fall of 1961, even that was covered, leaving only a portion of bricks at the start/finish line, hence the nickname "The Brickyard."
Soon after purchasing IMS, Rickenbacker had an 18-hole golf course built on the grounds of the Brickyard. Known as The Speedway Golf Course, most of the 18 holes were inside the famous oval and players took shots across the yard of bricks to complete the course. There was also a nine-hole course outside the oval. In 1991, the course was redesigned and renamed the Brickyard Crossing and for a time was the host site for the Brickyard Crossing Championship, a Senior PGA Tour event.
Postwar Rejuvenation
Since racing was suspended during World War II for four years, the track was shut down and fell into disrepair. Rickenbacker was concentrating on building a commercial airline, Eastern Airlines, and had little time or money to invest in IMS. The track was on the verge of being sold to real estate developers after the war, when three-time Indy 500 winner Wilbur Shaw went looking for someone to rescue the track.
Anton Hulman, Jr., better known as Tony, was a businessman from Terre Haute, Indiana. His grandfather began Hulman & Co. and developed and sold the Rumford brand of baking powder. Hulman & Co. later produced Clabber Girl baking powder. By the end of World War II, Tony was successfully running the family business, and owned newspapers, television stations, radio stations, a gas company, and Terre Haute's largest hotel.
Shaw spoke to Hulman and in 1945 Hulman purchased IMS from Rickenbacker's group for $700,000. Shaw was made president of the speedway until his death in a plane crash in 1954, when Hulman took over the day-to-day operations of IMS. Hulman died in October 1977. After Hulman's death, his daughter Mari Hulman George became Chairman of the Board and the day-to-day operations were passed to Joe Cloutier, who started as a cashier at Hulman & Co. in 1926 and went to work for IMS when Hulman purchased the business. After Cloutier's death in 1990, Tony Hulman's grandson, Tony George, assumed responsibility for the company. The new owner and president set about having the track cleaned up and repaired and the first post-World War II Indy 500 ran in May of 1946.
When Tony George took over the family business, he wanted to add races to IMS. He felt the name Indianapolis Motor Speedway was synonymous with racing and felt the potential for revenue was too great to let the track go unused 11 months of the year. George also felt that in order to provide fans with the best in racing and facilities it would take more money than the Indy 500 brought in.
NASCAR (National Association for Stock Car Auto Racing) debuted at IMS in July 1994 with the Brickyard 400. The event was sold out--the largest crowd to watch a NASCAR event--and continued to sell out every year after. The Brickyard 400 awarded one of the top three purses in motor sports, the other two being the Indy 500 and the Daytona 500.
The stock car event was so successful the IMS began hosting an IROC (International Race of Champions) race in 1998. IROC races features drivers from different motor sports circuits, competing in identical stock cars.
Construction on a 2.606 mile Formula One (F1) track began at IMS, which is a road course, as opposed to an oval course. In September 2000, the United States Grand Prix put on the first Formula One race at IMS, the first F1 race in the United States in nine years. Although there were no American drivers in the event, about 220,000 fans (about 100,000 less than for the Indy 500), mostly from countries other than the United States, witnessed F1's return to U.S. soil.
Innovations in the 1990s
In 1995, George decided to start his own open wheel racing league in the United States, called the Indy Racing League (IRL). IRL's first race was held at the Walt Disney World Speedway in Florida, also owned by IMS.
The new league came from a philosophical disagreement with CART (Championship Auto Racing Teams) over the number of American drivers in the league. Most American racers grew up in motor sports racing on oval tracks and George felt racing on mostly road and street courses, as CART did, kept American drivers at a disadvantage. George also envisioned an open wheel league where the racing teams had nearly comparable equipment. Most big name open wheel teams and sponsors decided to stay with CART, where they felt technological development by the teams was rewarded.
The IRL did not take off in popularity as fast as George would have liked. Over the leagues first years, 1996 through 1999, the schedule of races failed to grow. Part of the reason was the IRL raced exclusively on oval tracks in the United States, limiting the number of venues the IRL could compete. Although oval tracks abound in the United States, open wheel cars needed certain conditions to race, so speeds are kept down.
Once the Indy 500 no longer featured CART drivers, beginning in 1996, television ratings dropped 30 percent for the big-time event, and fans' interest dropped as well. IMS never releases attendance figures, but media that covered the event year after year estimated attendance for all events related to the 500 had fallen after the split with CART.
In 1998, George decided to part with tradition and make the Indy 500 a two-week long event, instead of a month long event. The changes in the events leading up to the big race and cooling of tensions between CART and IRL led to larger ticket sales in 1999.
In 1999, controversy again swirled around the 500. George revoked the Indy 500 credentials of "Sports Illustrated" writer Ed Hinton. George felt that Hinton's coverage of past 500s was unfair and that the writer was insensitive in his coverage of a crash at an IRL event in May 1999 that killed three spectators. Faced with a boycott of sports writers, George finally relented, allowing Hinton to cover the 1999 Indy 500. The media commented that the boycott threat showed the 500 has lost some of its stature.
Pep Boys, an auto parts and service store chain, was a title sponsor of the IRL until the end of the 1999 season. The IRL felt that Pep Boys did not live up to its end to promote the league. The partnership dissolved in December 1999.
Northern Light, a technology company, signed a five-year, $50 million title sponsorship deal with the IRL in January 2000. The company was best known for it's Internet search engine, http://www.northernlight.com. Northern Light was pleased at the sponsorship decision after the first year. The company added web pages to its site to promote the IRL. It also hosted giveaways with other IRL sponsors on the Web site.
During the first year of the sponsorship, Northern Light CEO David Seuss took an active role in promoting IRL. Some analysts felt this helped to increase the exposure and popularity of the IRL in 2000. It was agreed the partnership was a good fit, with Northern Light promoting the league on its Web site and the IRL directing its fans to the site, increasing Northern Light's traffic by 40 percent.
The partnership was in trouble a year later as Northern Light decided not to purchase an advertising contract with ABC-TV, as the IRL deal called for. This saved Northern Light $1.5 million at a time when the U.S. economy was slowing and many dot-com companies were in financial trouble. Although Northern Light was quick to say it's support for the Indy Racing League had not diminished, some observers felt the sponsorship would continue to decline. Sponsorships fund racing leagues. For the 2000 racing season, IRL collected $143 million in sponsorship money, compared to $492 million by CART and $558 million by NASCAR.
Future of IRL
When the IRL was launched, IMS employees handled all aspects of the league. At the end of the 2000 season, IMS separated the league from itself and opened separate offices for the league. It was located on the IMS complex and staffed with employees dedicated to the league full-time.
In 2000, the IRL had nine races in ten months, with a month and a half break between the first and second races and the same break between the eighth and ninth races of the season. With the exception of two races in June, the rest of the races were scheduled about a month apart. This made it difficult in relation to marketing and television. It was also hard for the league to keep fans interested and the excitement going from one race to the next. For the 2001 season, IRL scheduled 13 races over six months, spacing the races about every two weeks or so. It was hoped this would help in building a fan base and make marketing the league easier.
In 2000, CART drivers Juan Montoya and Jimmy Vasser competed in the Indy 500 for the first time since the CART-IRL split. More CART teams were deciding to race in the IRL event in 2001, including Michael Andretti and Gil de Farran. The IRL got another boast in 2001 when CART driver Al Unser, Jr., signed up with an IRL team.
Most of the races in 2001 were at racetracks in and around the Midwest, with five within easy driving distance of Indianapolis. Several venues that had hosted races in the past--such as Las Vegas, Nevada; Charlotte, North Carolina; and Loudon, New Hampshire--did not schedule IRL events for 2001. The league scheduled a race in Miami for the first time since 1995 and aggressively marketed it, with lower ticket prices and commercials. The hope was the positive campaign would attract more fans outside of the IRL's midwestern stronghold.
George and IMS joined forces with the International Speedway Corporation, owned by Bill France (who also owns NASCAR) to form Motorsports Alliance. MA built a racetrack, a one and a half-mile oval, in Joliet, Illinois, and controls 15 other racing facilities in the United States. MA would like to build a track in the New York area, and has had discussions with Donald Trump to build one.
Officials at IMS have aggressively marketed their products and have been creative in creating partnerships. The company marketed the usual apparel and collectibles, plus the leagues and events they run. In one example, IMS signed an agreement in 2001 with Hat World to make all the hats worn by the over 4,000 Safety Patrol and Fire Crew. The promotion included cross marketing with Jiffy Lube, who displayed hats at their retail locations. Also in 2001, agreements were signed with Pepsi Cola, Infinity dealerships, and Publix supermarkets in Miami, where customers were given a chance to win a pace car. Apparel and collectibles were still the cornerstone of marketing efforts, with IMS looking to reach the causal race fan, as well as the serious one.
IMS sat on 559 acres in 2001 and continued to be a privately run family business, with Mari Hulman George as Chairman of the Board and Anton "Tony" George as President and CEO. Although rumors continued to fly about a merger with CART, IMS continued to state that George's vision of open wheel oval racing was taking off and gained momentum. IMS felt their product was a good one and they hired 30 new people in the marketing department to spread the work and gain new fans.
In order to further reduce costs for Indy League teams, the series eliminated awarding points to pole sitters and second and third place qualifiers. This meant that teams didn't need to spend so much money on engines used only for qualifying. The Indy League felt the change would also make teams concentrate on putting the best product on the oval for the race.
Principal Subsidiaries: Hulman and Company.
Principal Operating Units: Brickyard Crossing; Indy Racing League.
Principal Competitors: Championship Auto Racing Teams (CART); National Association for Stock Car Auto Racing (NASCAR); Federation Internationale de l'Automobile (FIA).
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