Hulman & Co. CEO Mark Miles is revving up an ambitious plan to overhaul the IndyCar Series and Indianapolis Motor Speedway management team. He wants to develop a revenue-sharing plan that assures the series and the tracks that host its races are motivated to roll in the same direction.
Miles said his first order of business is finding someone to replace Randy Bernard as IndyCar Series CEO. Bernard was fired following last season—before Miles took his post in December.
Instead of merely naming a replacement, Miles intends to create a new position, CEO of Hulman Racing, to oversee both the series and IMS. The new position could be occupied by two people, Miles said.
“We could have one overseeing competition and one overseeing the commercial side,” he said.
Miles interviewed a candidate for the job in Miami on March 26, but wouldn’t identify the person. Nor would he tip his hand on any of the other finalists.
“There are three or four people I can see fitting the bill if we consolidate the position,” Miles said. “And if we split it, there are three people I see that could fill the role on the competition side and a growing number of people I could see leading the commercial side.”
Those candidates, he added, are all from outside the company. But it is still possible the new CEO could come from within.
Miles hopes to decide on the structure of his management staff by late April and hire a CEO or CEOs by the time the green flag drops on the Indianapolis 500 May 26, “at the latest.”
The first priority for the new CEO would be to improve fan engagement—including better marketing of drivers. Miles also wants the CEO to better organize the staff and overall series, and to align the economic interests of the teams, tracks and the league.
To that end, the CEO will be charged with developing the series’ first ever revenue-sharing plan. The series now has what is called the Winner’s Circle program, but “that’s not revenue sharing,” Miles said. “It’s the league’s investment in teams.”
Miles wants to create revenue pools that can be shared by the series and tracks, lifting all boats—including teams and drivers. Miles also is considering selling sponsorships and signage across all the series’ races and sharing that money among the tracks.
The idea, Miles said, is “to get people to pull from the same oar.”
Overall, track operators seem pleased with the idea. But some have concerns that the combined staff will focus on the series’ money-making ventures, namely the Indianapolis Motor Speedway, while giving money-losers such as the IndyCar Series a low priority.
And track operators want assurances that Miles’ revenue-sharing plan isn’t IndyCar’s way of sucking more money out of them.
“They’re probably overdue to take a look at something like [revenue sharing],” said Tim Frost, a Chicago-based motorsports business consultant who has worked with various tracks. “They just have to be careful about the way they structure and present it.”
Miles said he’s not trying to take money from tracks, but rather to create common goals that help grow the bottom line for everyone in the series.
Jim Michaelian, president of the Long Beach Grand Prix Association, said he would be interested in a revenue-sharing formula for ticket sales, hospitality and program advertising, but cautioned it might be difficult to develop a formula using only revenue for tracks that hold IndyCar Series and other events the same weekend.
Miles also wants a marketing campaign that better promotes the series and its drivers. That could include broadcast ads and track signage that give the series’ marketing a uniform feel. It isn’t clear who would pay for broadcast advertising.
Before this year, track operators paid the series a sanctioning fee, usually $1 million to $2 million, then were responsible for their own promotions. IndyCar officials often complained that track operators were lax on promotions. Generally, the series has kept all or most of the broadcast revenue, leaving the tracks to recoup their costs through ticket sales and other revenue, including concessions and parking. Both sides have complained that IndyCar marketing has been disjointed.
Miles is confident his plan will address many of those concerns.
But there’s one overriding danger in the series’ becoming more involved in track operations, Frost said.
“IndyCar Series officials have to ask themselves, are they in the sanctioning business or the event-promotion business?” Frost said. “Those are two distinctly different models. And trying to do both is a big part of the reason CART got itself in trouble.
“Getting in the event business is high-risk and high-reward,” he added. “If they enter into a revenue-sharing plan and the event goes wrong, the series can really take it on the chin financially.”
While Miles is still working out staff-restructuring details, it is clear that Jeff Belskus will be less involved in the company’s on-track racing product.
Belskus, the current Speedway CEO and interim IndyCar Series CEO, will remain part of the management team, including maintaining his position on the Hulman & Co. board, Miles said.
But his on-track involvement will be diminished. As president of Hulman & Co., Belskus will oversee Clabber Girl and the company’s real estate interests, Miles said, as well as technology, human resources and financial services for IndyCar and the IMS.
Before being elevated to CEO of IMS in 2009, Belskus was the track’s chief financial officer.
As part of the restructuring, Miles plans to combine the IndyCar Series and IMS staffs, including sales and marketing, information technology and human resources.
Currently, Miles said, the IndyCar Series and IMS “operate in a more siloed way than is optimal.” Eliminating duplicated services will grow, not downsize, the racing operation, he said.
“This is not motivated by a desire to reduce costs,” Miles said. “Any cost savings realized by this would be plowed right back in the company. This is about creating a more efficient and high-performing organization.”•