Roger Penske Purchases the Indianapolis Motor Speedway

On November 4, 2019, the auto racing world was rocked by the announcement that Roger Penske had purchased the Indianapolis Motor Speedway, IndyCar, and IMS Productions. The process began nearly two years earlier when Hulman & Company’s board did a strategic review of their various holdings, ranging from IMS to Clabber Girl and real estate. What would be in the best interest of the entities and stockholders? They hired Allen & Company, a boutique investment bank known for being very discreet, for advice. Allen & Company has no website and does not issue press releases about the deals in which it has been involved.

After making the preliminary decision to sell IMS and related entities, Allen & Company reached out to some of its clients. Discussions happened, but the process stalled when the board couldn't get comfortable with the terms, conditions, or price. Still, a couple of companies kept coming back, expressing an interest. The board identified a couple of companies they thought they could get comfortable with but wanted to reach out to Penske before pulling the trigger on the transaction.

Tony George approached Penske in California on September 22, 2019, hours before Josef Newgarden won the 2019 IndyCar championship, to talk about the “stewardship” of the track. George reported that Penske got “a very serious look on his face.” Penske reported that when he learned of the opportunity, “my stomach was going 100 mph.”

George followed up with an email to Penske after the race and another the next day. On Thursday, September 26th, George, Mark Miles, and Penske met at the Columbia Club in Indianapolis. Miles recalled, “He didn't push and ask. He absorbed first what Tony was saying about what the Hulman-George family thought and where they were coming from. All of that matters, he knew instinctively, and he wanted to understand it. And from there, it was precious little time before he said, “I'm very interested.” Not, “I might be interested.”

After signing a nondisclosure agreement, Penske was given access to Hulman & Company's data room, which included financials, projections, contracts, and historical information. Miles emphasized the urgency of an answer, as they couldn't hold off the two prospective purchasers much longer. For the next two days, Penske and his trusted lieutenants poured over the information in the data room. On Saturday, Miles and Cindy Luchese, Hulman & Company’s CFO and chief administrative officer, flew to Detroit and spent half a day with Penske. Miles was impressed by how much Penske knew. On Sunday, Miles was back in Indianapolis and spent the day answering more questions from Penske. After Penske signaled he wanted to do the transaction, they negotiated the price and terms. It was now in Penske's hands. Would he pull the trigger?

Penske called Miles on Monday evening as he waited for a flight to Tokyo. Penske reaffirmed that he would close the transaction at the negotiated price. It still took an intense six weeks to conclude the transaction. Penske didn't want the rumor mill to create havoc, so, under the veil of secrecy, teams from the Penske organization and IMS worked on weekends in Indianapolis hotels far from the track. George commented about the due diligence process. “It was not easy, but this isn't their first rodeo, so they were able to execute it very quickly.”

There had been other suitors in the past, including after Tony Hulman's death in 1977 and another in the spring of 2019. But the Hulman-George family was committed to maintaining the track’s legacy, which had been in the family since Hulman’s 1945 purchase. George believed they had taken IMS as far as they could and wanted to do what was best for the track. He knew Penske had the financial resources and the desire to take the track to the next level. He was comfortable with his family's legacy becoming a part of Penske Corporation. George said of the sale, “It’s bittersweet, but we know we’re passing the torch to an individual who is ideally suited to take over the stewardship. (It’s) a corporation that is family-owned, much like ours, but with a track record that is really without compare.”

For Penske, ownership of this track, which had been an essential building block in expanding Penske Corporation, was a dream come true. His vision is for IMS not only to be the racing capital of the world but possibly the entertainment capital of the world. To achieve that, they need to take care of the fans who support the Speedway and IndyCar by investing in the infrastructure. Penske said, “I’ve got a big commitment to take over as the steward of this great organization and what’s been done here in the past for so many decades.”

At the press conference announcing the purchase, Penske talked about the status of IndyCar. “I think the teams, when you look at them top to bottom, it's competitive. I think the rules are in great shape, and it's affordable to go racing in IndyCar now, which I think is key. If we keep the rules the way they are, then we can get date equity. We need to come back to these tracks at the same time every year, and that's going to grow this fan base. I think the races are the right length, and we have a really key TV partner with NBC.”

Penske planned to keep the management team: Mark Miles as president of Penske Entertainment Corporation, the umbrella for IMS, IndyCar, and IMS Productions; Jim Frey as IndyCar president; and Doug Boles as IMS president.

Miles was looking forward to the future. “These assets, the property, they've been in good shape and they're headed in the right direction and we want to go further faster, and Roger is a great leader. To have his enormous perspective and look at everything now with fresh eyes and have access to the resources to make everything happen at a whole new level, I really believe and am convinced that this will be great.

“Roger's relationship and reach globally is remarkable. Some of us have a hard time getting the right person to pick up the phone. Roger might short-circuit that a little bit. Roger will answer our call and have his own thoughts about how to grow this. We've had ideas for a long time in the Speedway where we'd love to see some of the investment and where we think it'd add value, but we didn't have the access to capital.”

A potential source of conflict was Penske’s role as a team owner. He had been in this situation before with the purchase and turnaround of the Michigan International Speedway, Nazareth Raceway, and the California Speedway (now Auto Club), and George had owned both the Speedway and a racing team. Penske committed to stepping down from his role as strategist on race day. While those outside the racing fraternity raised conflict-of-interest concerns, his competitors, by and large, trust Penske to protect their interests. George Steinbrenner IV, owner of Colton Herta's team, said, "My ease speaks to Roger's character more than anything.” He continued, “You think about it for a short time, and then you realize, no, it's Roger, no we're fine.”

On Monday of the announcement, IMS notified the IndyCar teams about the purchase with a basic outline of the details. “We have found the ideal steward of the company and its iconic assets. Penske Corporation – with its 64,000-plus employees and more than $32 billion in consolidated revenue – will bring tremendous energy, leadership and resources to IMS, IndyCar and IMSP.”

Bobby Rahal said of the purchase, “Roger Penske’s commitment to the sport we love is over six decades long, and I am confident that his stewardship of the Indianapolis Motor Speedway and the IndyCar Series will ensure a great future for the sport. His many successful business ventures underline the fact that he is the perfect custodian of one of the most historic venues in the world and is the perfect architect to build the foundation for the next 100-plus years of the sport.”

Al Unser, Jr. said of the purchase, “Roger Penske is the only man in this world that would have the same love, same vision, same everything that Mr. Hulman had.” Unser Jr. was excited about the Speedway's future. “Knowing Roger, whatever it is, it's going to be better. Roger is such a detailed person. He thinks about details I don't think about. It is truly in the best hands that it could possibly be in. There is not a gentleman or a family in this world better to have the Speedway than to go to than Roger.”

On January 6, 2020, ownership of IMS, IMS Productions, and IndyCar was transferred to Penske. Since the day he agreed to purchase the Speedway, Penske had been actively envisioning changes for the venerable track. “Our goal here and my personal commitment isn't to what generates more revenue for our company in 2020 or 2021,” he said. “It's about what we can do as a team to make the guest experience better. That's where I'm committed.”