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It doesn’t make any sense.
That’s the thought that went through my head yesterday when Indianapolis Motor Speedway CEO Jeff Belskus told me business operations at the famed Brickyard “aren’t as bad as they look.”
Well, they look pretty bad.
There have been two rounds of layoffs within the last year, sending at least 70 people packing at the IMS—and its sister operations. That doesn’t include the people who vacated voluntarily.
There are a couple company jets for sale, the month of May is being sliced by one-third and the golf course and catering businesses are being privatized.
“The sky is not falling,” Belskus said yesterday from what looks like an unmistakable hard hat zone.
Belskus insists the Indianapolis 500 is financially strong and the MotoGP and Brickyard 400 races are “making positive impacts on the business.”
Belskus admits the motorcycle and NASCAR events aren’t making nearly as positive an impact as they once did. Still, something doesn’t jibe.
With all your properties presumably turning a profit, why all the cost cutting. And consider, this is a property—with its famed oval, 2.5-mile road course, broadcast facilities, pagoda, garages and other infrastructure—that was once estimated to have hard assets near $1 billion.
There’s another thing I don’t understand. The notion that shrinking the month of May won’t have much of an economic impact on Indianapolis.
What about all those thousands of motorsports related businesses in the region that the governor and Indiana Motorsports Association have been touting recently. Aren’t they hurt by this—at least a little?
My how things have changed. Steve Goldsmith thought the month of May was so important to the city, he threw all his support behind Tony George in the mid-1990s as open-wheel racing began to fracture.
A former top Goldsmith aid recently told me that the then mayor threw his support behind George after CART boss Andrew Craig told Goldsmith his plan was to cut back the month of May and emphasize the entire series.
In 2000, a study demonstrated the Indianapolis 500 had a $336.6 million economic impact on the city. It takes $6 million to $10 million annually on the conservative side to run an IRL team.
And we’re talking about reducing hotel and dry cleaning costs for teams and a week’s worth of yellow shirt staffing for the IMS. Oh, and a week’s worth of expenses for IMS Productions.
Belskus said the most recent move will create a six-figure savings for the Speedway. Team operators say they’ll save five-figures. By my calculations, this is a low single-figure percentage savings for the Speedway and IRL teams.
Now this startling revelation: Belskus said the IRL teams asked him to cut the month of May. I thought the Indianapolis 500 was the one thing that has kept the IRL afloat during the worst of times. I thought that’s what kept the teams, sponsors and TV partners hanging in there.
And in the same breath, Belskus told a small group of us reporters gathered yesterday at IMS’ headquarters that another IRL race could slide into the calendar space abdicated by the Indy 500—as soon as 2011. Wouldn’t that take a bit more luster off the Greatest Spectacle in Racing? This is the exact sort of idea that caused caused Goldsmith to turn his back on Craig.
This part of the puzzle does make sense: The Indy Racing League is not profitable, and its losses might now be outstripping the shrinking financial gains of the 500, 400 and MotoGP race.
Officials for the Performance Racing Industry Show, the nation’s largest motorsports industry trade show held last week in Orlando, told IBJ yesterday that business for all motorsports companies was down 30 percent in 2009—40 percent or more for open-wheel businesses.
And there’s this: The board that controls the Speedway and Indy Racing League didn’t care for Tony George’s proclamation that the IRL needs to be profitable by 2013 or else. They liked the idea of profitability, but another three plus years of sucking money from the family fortune didn’t sit well. That six-member board includes George’s three sisters and mother.
Belskus, the IMS’ former chief financial officer who replaced George as captain July 1, got the message. He sharpened his pencil—and his scalpel—to a very fine point.
And the transformational surgery is under way.