Penske Entertainment Group Announcement Bombshell

By Lewis Franck, Special to Kickin’ The Tires

Penske Corp’s subsidiary Penske Entertainment Group’s purchase of IMS, IndyCar, IMS Productions and others is the biggest and most positive bombshell dropped in US racing in decades.

To get a better idea of just how important it is, let’s take a trip in history. The first part is a once-over, lightly, overview to show in context, how we arrived here. Later in the piece is my take on the news.

From its earliest days, the venerable Brickyard was an endurance challenge for drivers and machines from around the World. In fact, from the first 500, it was called the Indianapolis International Sweepstakes.

After World War II ravaged Europe, it no longer provided many of the cars and drivers. Yes, there were exceptions, but, not until the rear-engine revolution of the mid-1960s did it start to return to the International flavor it once had.

During those same 1960s NASCAR was maturing into its’ glory, but, mostly as a sport in the Southeastern United States. American car manufacturers started to adopt the win on Sunday sell it on Monday philosophy.

The 1960s were also famous for the time when cars stopped driving like your father’s or grandfather’s or great grandfather’s living room sofa. We were horsepower crazy. Until the early 1960s sports car racers seemed to be folks in flat caps, smoking pipes while driving under-powered, spindly, cars like crazy on road courses and the occasional disused airfields of the 1940s.

To fill America’s need for speed, Henry Ford II sought to buy Ferrari, the exotic high-powered Italian make but was rebuffed at the last minute by the mercurial Enzo Ferrari. So he decided if Ford couldn’t buy Ferrari he would beat them at their own game.  As an aside, there’s a movie debuting this month taken from the A.J. Baime book which chronicles that development. I can’t wait to see it.

Long story short, Ford used the great minds of NASCAR engine builders to eventually to, literally, overpower the Ferraris at the 24 Hours of LeMans. In 1965 Scotland’s Jim Clark was the winner of the Indy 500 the first victor in a rear-engined car. Coincidentally, it was powered by a Ford V-8.

That signaled the biggest change in Indy car racing as the home-built front-engined Indy roadsters could not compete with the new designs.

Little-by-little IndyCar became more Euro-centered except for the marvelous turbine cars of Andy Granatelli which almost blew out reciprocating engines. But, that just another aside for another time. 

As Indy-type racing became more and more specialized the costs of racing soared, but, were underwritten by national sponsors. Still, NASCAR was in its’ early days of growth. Very popular in the Southeast, but, virtually unknown to the rest of the US.

Meanwhile Formula One was also building into a global powerhouse with multi-million dollar budgets. Bernie Ecclestone came along and united the garagistes (the small UK-based teams) and unified them into something similar to NASCAR’s Race Team Alliance. 

Back to the US. The problem for car owners like Roger Penske, Carl Haas (no relation to Gene Haas), Pat Patrick and others was that the small purses paid by USAC (then the Indy 500 promoter) at every race except for the 500 would not support the high-priced budgets for the IndyCars.

Based on Ecclestone’s idea Championship Auto Racing Teams (CART) was formed, after Dan Gurney’s ground-breaking White Paper suggesting a Formula-One-like business structure, in 1979.

While the France family had tight control over NASCAR teams these CART owners appeared to be a palace coup to the Hulman George family who preserved and promoted the Indianapolis Motor Speedway from the post-World War II era. It was like the inmates were running the asylum.

Then, through the 1980s, CART flourished bringing in sponsors from across the US while NASCAR was starting to spread out in the US, but, the Indy 500 was the defining American race to most of those in the US.

By the mid-1990s the cost of fielding an Indy 500 entry was reaching for one million dollars just to run the month of May. Worse, grassroots American racers had virtually no shot at making the 33-car starting grid due to the high costs.

The CART owners thought that everything was fine, but Tony George and USAC had had enough and the Indy Racing League was announced in 1994. The CART owners rebelled at the idea and said they would continue to run their own series while the IRL debuted in 1996.

The problem was that the Indy 500 was still the most famous open-wheel race in the US. When the IRL announced under a cloud, called the 25 and 8 rule, where only eight drivers outside of the IRL would be permitted to race in the 500 CART teams boycotted the event and ran the US 500 at Michigan International Speedway on the same day.

As the 1990s drew to a close, bad marketing policies in CART drew potential sponsors over to NASCAR where they were welcomed by open arms. And the modern image of a stock car driver, Jeff Gordon “The Kid” as the late Dale Earnhardt called him, garnered new fans to NASCAR as the Frances and Smiths started building tracks across the United States.

As the new millennia dawned NASCAR became the hot marketing property powered by familiar names with big sponsorship. Indy car viewers and sponsorship slowly withered. NASCAR built and likely overbuilt their racetracks seating to what appeared to be a never-ending growth spurt.  The seminal moment for NASCAR was the multi-year television contract which brought live racing to most of American homes for the entire season.

So now let’s fast forward to this decade. With the development of computers, the Internet, streaming video, video games and stick and ball sports running longer than their old-traditional season there are many more choices for entertainment dollars auto racing has a smaller piece of the economic pie than previously.

The Indy Racing League, now called IndyCar, was spending money like a drunken sailor to support its’ series. The Brickyard 400 was not the money-maker it was previously. Although the 500 had regained some of its luster due to the 100th-year-anniversary celebrations I imagine the Hulman George family found that doing business now was a battle they no longer wanted to fight.

The once not-for-sale IndyCar franchise faced an existential question, what to do next?  The best person to carry on the heritage of Indy cars and the business acumen to make it happen was and is Roger Penske. The Hulman George family made the extremely difficult (as you can see from Tony George face during Monday’s press conference) it was time to sell after seven decades of stewardship.

Of course, you’ll know that Penske is heavily involved in NASCAR (as well as IMSA and Australian Super V-8s). While the Captain, as he is known, is a ferocious competitor he also appreciates that all motorsports are connected now better than ever before.

I believe that Roger, through his companies, employees and sponsors, wants to leave a legacy that auto racing deserves a special place in our hearts. Because of his global business and sponsorship his company is a natural conduit to help return big support back to the IndyCar series and the Indy 500.

Okay. Now forget everything I wrote above. What we should take away from today’s announcement is the Penske Corp’s subsidiary, the Penske Entertainment Group. Focus on the keyword “entertainment”. In fact, Roger stressed that word during an interview on the business cable network CNBC.

I bring this to your attention because if one thought of racing sanctioning bodies and promoters are in the racing business that would be wrong. They’re in the entertainment business competing with the likes of the gamers like Fortnite, the networks like Netflix and all the new other streaming services and whatever else is out there.

Race teams will take care of the cars while our hero drivers will thrill our fans, but auto racing must consider itself in the entertainment business, not the racing business if it is to thrive in the future.