Officials at the Indianapolis Motor Speedway have been talking about diversifying the facility for years.
For at least a decade, I’ve heard rumblings about the possibility of massive concerts and a variety of other events to be held at the Speedway. In 2007, then Speedway executive Joie Chitwood first raised the idea of racing airplanes at the track.
The idea has been to use the massive fixed asset that Hulman & Co. has in the track to bring in new and bigger revenue streams, all the while increasing exposure for the venue.
It’s a worthy goal. And it all sounds so simple. And maybe it is. But many experienced business operators would tell you it isn’t.
Hulman & Co. CEO Mark Miles, who took his post overseeing the Speedway and IndyCar Series in late 2012, has punched the accelerator on the diversification initiative.
Last summer the track hosted a Rolling Stones concert. Next October, the Speedway will host an airplane race. There’s no reason to think there won’t be more diversification under Miles and Speedway President Doug Boles. Most people familiar with the Speedway would be surprised if there wasn’t.
No doubt, lots of time and energy have been spent by Speedway officials discussing and planning for ways to bring new events to the track. Negotiating the types of deals that brought the Rolling Stones or the Red Bull air race to the track aren’t done in a few days.
The trick with any business diversification is to not let it negatively impact your core enterprise.
The core business at the IMS for more than a hundred years has been auto racing. And for most of those years, it’s been a hugely profitable core business.
Now it’s not making as much money. So the temptation to diversify—to change with the world—has intensified.
But it’s also a time where the Speedway’s core business needs more attention than ever. The Indianapolis 500 and especially the IndyCar Series desperately need to increase television viewership, live attendance and sponsorship sales. And to Miles’ and Boles’ credit, they’ve made some progress in recent years. But more is needed.
While it may be tempting for Miles to focus his energies in the place he calls home by bringing in more events to the Speedway, he has to remember a healthy IndyCar Series is critical to the long-term health of the series’ and this city’s crown jewel—the Indianapolis 500.
And make no mistake, no matter how much this facility is diversified, an ill Indy 500 would crumble the foundation of the fabled Brickyard.
Perhaps the Speedway can take the money generated from the myriad other events they hope to host and invest it in racing. And I’m not just talking about cushy spectator seating, spiffy concession stands and big-screen monitors. They need to improve marketing, community outreach and sales tactics among other things.
One thing Miles must remember is you can’t buy time. And if the diversification plan is nothing more than a distraction for Boles and his key staffers and a drain on their finite resources (ie: time), it could turn out to be a net loss in the long haul.
Everyone in IndyCar—and in Indy—is hoping that’s not the case.