Mark Miles sat down with RACER’s Marshall Pruett ahead of this weekend’s season-opening race at St. Petersburg to discuss calendars, TV deals, keeping the OEMs happy and many other topics…
Marshall Pruett: Looking at 2015, what would you say is the number one topic you have your team focused on to improve IndyCar?
Mark Miles: I think it’s probably a successful first year experience with the aero kits. There are other more clearly commercial things that we are focused on and there are things scheduled for the future but the aero kits [BELOW RIGHT, LAT photo] have such a rich narrative, with some risks. There’s a lot at stake and it’s really important to us that we fully develop the story. Attracting fans is all about telling stories, and I think there’s so much going on from the obvious aesthetic, to the story of performance and speed to whether there really is a relevance for the OEMs as they face future CAFE standards. They have drag and aerodynamics as one of the tools in their belt that they can use to reach those standards, so it’s interesting to see where we are against other series in that regard with the introduction of aero kits, and also to see whether the racing stays close. There’s a lot going on there and people are watching closely and we love that.
MP: What are some of your longer term items to improve for the series? I assume that awareness throughout the country – from coast to coast – would be top of the list?
MM: Yeah, we think the label for us is fan engagement. Get it in front of more fans and get it in front of fans more often. A richer relationship with fans. There’s nothing more important than that broader focus. And it entails lots of things – a good schedule, being in the right cities, the right races, having each of the races more attractive to fans, and new markets. Then we must continue to improve the television coverage, and continuing to improve our fan engagement in terms of social media and other digital outlets.
An important element of that is bringing technology to bear as we approach fans. We have said this before but I’m more convinced than ever it’s going to have real legs. The Verizon relationship – and prospectively working with a company like Arrow Electronics that is now invested in IndyCar racing – will allow us to make sure that a fan at the track, in particular, can take in the whole rich experience, which is hard to do. If you’re not sitting in front of a fixed screen and listening to commentators and looking at the graphics, the Verizon INDYCAR 15 app is a great mechanism and it is very rich in content [BELOW, Verizon image], whether that is live content or video on demand content. It’s going to continue to get better. We think there are other things out there that over time with partners we can develop to make it an even more exciting experience, and particularly for younger people at the track.
MP: IndyCar was one of very few North American racing properties last year that saw net increases in its television audience. Granted, we’re talking hundreds of thousands of viewers for most races compared to the millions that the series would want. Is there a way to get that closer to seven-digit viewers everywhere? Is that necessitated on transitioning some NBCSN races to NBC, or ABC doing more?
MM: Yes, it is and it’s another part of the focus of greater fan engagement. We actually did get last year to an average greater than 1 million: 1,035,000 was the average television audience. That is a blend of all of our broadcasts, race broadcasts, both ABC and NBC Sports Network. But that is a significant – over 25 percent – increase. We’d like for that to be a bigger number, but I think that’s indicative of momentum and doing a lot of things better.
Going forward, yes, you outlined some of the near-term strategy for 2016 with the same broadcast partners. We think there can be more continuity week to week between the two partners. It probably won’t end up looking like this, but in an ideal world, ABC or ESPN would take the first half of the season and NBC or NBC Sports Network would take the second half of the season. And they could do a much more strenuous job of tune-in advertising week to week and race to race.
Along with that, if NBC Sports Network could imagine giving up its cable exclusivity so that ESPN with ABC could play in that first half of the season and if ABC could see giving up its network or broadcast exclusivity so that NBC could get involved, between the continuity idea and coming off a platform-exclusivity notion, we think there could be another 25, 30, 40 percent increase in audience in the year we get that done. It’s important and something that doesn’t have to wait until our television agreements expire, if our partners are willing. That’s something that we are working really hard on.
MP: Has there been any positive input or traction?
MM: Yes. Well, again, there is the model, the perfect form of it, and then there’s progress. I think both of our partners are engaged in dialogue and have expressed willingness to work with us to see what can be done. This would all be for the beginning of 2016.
MP: Beginning with some of the key partners in the paddock – Chevrolet and obviously Honda – some of them have contracts coming up, and you’re looking to hopefully re-engage, but what does IndyCar need to do? Are there any changes that you believe need to happen with the series or the car to improve those odds?
MM: I think the players you’re talking about now have at least a couple of years on agreements and we’re quite optimistic that they’ll want to be with us for that period of time and they’ll want to be part of our long-term view. Derrick is leading the effort to work on what he calls the car of the future. The OEMs and the prospective additional OEMs would be a big part of developing that vision.
MP: On the topic of engines, Chevy and Honda have certainly turned this into a heck of an ongoing Ali-Frazier, but is there a realistic proposition to make that three or four manufacturers in the near future?
MM: There are long lead times in bringing in a third, so if we had an agreement to do so soon, it would probably be 2017 before you saw them on the track. It isn’t imminent. I think there are a couple of conversations that are hopeful, but way too soon to know whether they will bear fruit.
MP: I would love to hear of more businessmen and businesswomen say, hey, I want to buy a Dallara, have a conversation with engine manufacturer X, get an aero kit, lease a shop, put together a team [BELOW, Buddy Lazier’s entry at last year’s Indy 500. LAT photo], and have that be something that makes sense as a pure business decision. I don’t know if the budget levels required to do all those things make that as feasible as anyone would like right now. How do you view the current costs to compete, with the average annual budget in the $5-$6 million range to be competitive? Is there way to bring that number down to entice people to come in on the strength of a business decision? Or is this still a passion play?
MM: Well, I’m not sure that there’s a motorsport series that is a small business opportunity that people can use for return on investment. I suspect it will always have passion involved. And I think that’s true whether it’s an NFL team or NBA or Formula 1. So, no, I don’t think there is any likelihood of reducing the costs. What we’re trying to do is manage the cost increases effectively, and create a series ecosystem where it is easier to generate more revenue. Revenue has to be the lion’s share of the improvement in the economics for teams.
They tend to spend whatever they’ve got, so whether increased revenue ever lowers the bottom line is another question. But we’d like them to feel emboldened by their prospects to bring in more sponsors. So that is about TV audience, that’s about the vitality of the series overall and our races in particular. Internally, if we can grow our sanction fees, we intend to pass along a lot of it. We’ve got an internal objective of trying to get the Leader’s Circle compensation annually to $2 million per car by 2018. We went up 25 percent this year so that’s not an inconsequential step, nor would reaching $2m per car. I suspect the budgets are higher than $5-$6m to be competitive…
MM: Yeah but that might even be the low-end. You know that better than I. Anyway, if we can get to contributing $2m of $7m instead of $1m of $7m, I think that’s a kind of gap filler that’s meaningful. At least it ought to help the teams keep up with cost increases.
MP: That segues perfectly to the next question. I read your interview with Mark Glendenning where you said you’re hoping IndyCar could be a solution to those international circuits where Formula 1’s sanction fees are crazy. Does that desire differ than the one you’ve had, which is to feature IndyCar on an international stage, on a limited basis, and use those sanction fees to enrich the paddock?
MM: That is the strategy that we’re trying to develop. And it’s difficult. It’s harder than I thought it was. But I still believe it’s a matter of time. So we don’t have any ambition to compete with Formula 1 and fly the cars around the globe from week to week. We see ourselves always being a fundamentally North American circuit. But if we could establish, say, three international events in the February period where there aren’t a lot of choices in the States, where there are good television window opportunities and where we think the market is, that’s a very great value proposition for IndyCar racing.
We think it’s a matter of time until we can harvest that and we continue to work on it. I don’t know what to predict yet for February of 2016, but we spent a lot of time on it and there are lots of people who want to talk to us. It’s different because it requires a segue. We have not focused so much on international television. We have had a license… we’ve gone through a licensing partner, ESPN International, and they’ve achieved very broad coverage for us, but we think there are other opportunities to get deeper coverage in markets and be in front of more fans more often. This year the French broadcaster is Canal Plus, which is a very strong brand of broadcast in France and we have a couple of strong French drivers, so that’s important. There are other countries where we think there’s ongoing opportunity to increase the television exposure. And that is part of the equation to harvest this opportunity for a few races in February.
MP: Looking at this weekend where we have the debut of the brand-new Indy Lights car and the rest of the Mazda Road To Indy ladder, IndyCar’s farm system appears to be strong. What are your thoughts on the ladder’s health, and just as those series look to groom the next IndyCar stars, can you see grooming some of the Lights team owners to make the jump with them?
MM: First of all, I think compared to even a couple of years ago the health of the ladder series is clearly stronger. In the end, I think it was a good move for us to partner with the management of that and, as you say, that investment is proof positive that they are on the right track. It’s a cool car [BELOW, Chris Jones/IMS photo], and it’s neat that the last couple of champions are now in IndyCar. For those who wanted to be convinced that there really is a feeder system for drivers, I think there’s a lot of current evidence to that effect.
It’s a big step, financially, for a team to go from Indy Lights to IndyCar although those owners that are prospects probably think about it often. I don’t think we’re in a position to materially subsidize the transition, but we also hope eventually to get to 24 Leader Circle teams so that will be helpful as Indy Lights owners or others consider joining IndyCar.
MP: IndyCar has one phenomenal asset I think that separates it from almost every series in North America, and that’s its drivers. Is there a plan or intention to leverage IndyCar’s drivers from a promotion standpoint?
MM: We’re trying to work closely with the teams and the drivers. We’re trying to develop more major media partnerships along the lines of what you’ve seen introduced this year. There’s a very focused effort to increase our activities in social media. By that, when I say our, I mean our in the broadest sense, both IndyCar, Inc. and the drivers. So if we can coordinate the messaging a bit and create more content for them that will help. So we’ve added a position which is a really about content creation for social and digital media, and we’re giving the drivers the tools that I think will make them more successful in reaching out to fans.
I don’t think a series has ever been able to turn their athletes into stars on their own nickel. It’s largely dependent on the investments that business partners make, whether that is Chevy or Honda, in our case, Firestone, sponsors of the teams. You certainly saw that with the meteoric rise of NASCAR. That’s another element of it – bringing more advertisers into the mix and having them focus more on driver personalities.
MP: If you had a number to suggest, how many races will IndyCar have next year?
MM: We set our eventual goal as maybe seven months containing 20 races. We will be above 16 next year, I think, and although I doubt we would be all the way to 20, somewhere between 16 and 20 is a strong possibility. We could probably do that today if we had more doubleheaders again, but that’s not the objective: we want to be in more markets and I think we’ll make progress.