INSIGHT: Someone's always buying IndyCar, Pt 1

Spend enough time around America's most enduring open-wheel racing series, and you just might lose track of all the surefire sales, supposed takeover attempts, and other versions of the same old story.

The latest rumor about a purchase involving IndyCar was just that – a rumor. But the people behind the new and rather shadowy X1 Group did apparently inquire whether the Verizon IndyCar Series could be bought.

The answer to their question was familiar, according Mark Miles, the CEO of Hulman & Company, which owns the Indianapolis Motor Speedway, IndyCar and other properties, and the series remains in the firm hands of the Hulman George family. Purchasing IndyCar was not an option, which led to a shift in strategies for Michael Earle, the man at the forefront of the X1 Group.

In addition to his role atop X1, Earle is also the CEO of aiotv, a "cloud-based toolset that provides service providers the ability to quickly aggregate traditional linear, Internet video and VOD content into a scalable video service across connected devices," according to its website. Although Earle's day job is interesting, it isn't a factor in this discussion.

The X1 Group is now motivated to join forces with IndyCar to revolutionize the series' business model through an online gaming platform. X1 claims to have massive financial resources at its disposal. It also has a vivid, multi-tier marketing plan that centers on creating a new, futuristic chassis that would serve as the real-world connection to its proposed online racing/gaming business. More on that later.

The gaming platform, whether by subscription, sales, or the purchase of in-game add-ons, would mirror some of the wildly successful online games that have generated staggering income for some companies. There's no guarantee it would work for IndyCar, but at least the concept has been proven in other gaming genres where younger audiences are engaged.

If the money is real, and if a deal is struck, and if cars are designed and built, and if the revenue-generating online component comes to fruition, IndyCar – and the X1 Group – could prosper. And if you're wary of anything involving IndyCar and a big plan with so many "ifs" attached, you aren't alone.

A cursory look through X1's online presence does little to reassure those who doubt their intentions or abilities. Through the group's single-page website, X1Series.com, visitors are greeted by an image of the Red Bull X1 concept car (LEFT), a note below the photo that states: "The future of formula car racing is coming in 2017!" and a link to the group's Twitter account where one can "

see the latest series news and details.

"

Following the link reveals more than 20 tweets from the group and a budding list of over 130 followers. A brief scan through almost two dozen tweets also reveals that the group's promise of news and details is a work in progress.

Based on X1's sparse web page and loose social media campaign, it would be easy to dismiss Earle and his unidentified constituents as nothing more than charlatans. Using X1Series.com and their Twitter page to gauge the abilities of the group, however, could be short-sighted.

Links between X1 and IndyCar were instigated earlier this summer when IndyCar's former president of competition, Derrick Walker, fielded Earle's initial outreach. Walker than passed the group onto IndyCar chief revenue officer Jay Frye. A meeting was held with X1 Group at Sonoma Raceway over the Aug. 29-30 weekend, where the company was received by Miles, Frye, Indy Racing League founder (and Hulman George board member) Tony George, sponsorship guru Zak Brown, and KVSH Racing IndyCar team co-owner Kevin Kalkhoven, among others. Following the meeting, Miles says he was encouraged by the interaction.

"We asked them to get more specific about what next steps could be followed to really test the idea," Miles told RACER. "These are all big leaps to make, especially as you can imagine when they involve the car. Just the thought or the hope that it could create a new generation of fan is one thing; testing the idea, which could be done, especially if it is gaming-based, would also be required. So they are going to think about what that might look like and we'll have another meeting soon."

ABOVE: IndyCar on iRacing

Speaking with Earle – whose enthusiasm for a partnership with IndyCar was readily apparent – provided more insight into what the X1 Group hopes to achieve.

"We started the research project about two years ago as former racers and now businessmen involved in technology, TV and a whole lot of areas that touch the current state of the sport," he said. "The research project was done to see if there's a way to turn the tide of open-wheel racing into something that is a more sustainable and growing sport, as opposed to what we see today with the skyrocketing costs.

"In short, we looked to see if there's a new way to fund open-wheel in general, as opposed to the typical sponsorship model for the teams, and on the series side, the typical use of sanctioning fees that has been there for decades. It's not sustainable the way it is. The IndyCar Series looked like a perfect candidate for what we were trying to do."

Turning to a gaming business model made the most sense to X1.

"The more we looked at it, studied how to grow an audience and how to change the funding scenarios for the sport in general, and how to grow new subscribers, fix all the ills, if you will, a number of things emerged in that project that ultimately became the business plan that we now call the X1 project," Earle said.

X1's interest in exploring new methods of creating income for IndyCar teams and the series itself was met with obvious interest. Most teams struggled to properly fund their programs this year, and while the series has been a steady financial supporter of its teams through an annual million-dollar Leader Circle stipend for its full-time entries, a new influx of cash would help in every imaginable area.

Earle's proposed reboot of IndyCar's income streams would involve the establishment of the aforementioned online gaming platform where virtual racers could compete in real-time against IndyCar drivers as IndyCar races take place. This concept of marrying virtual and reality in a gaming environment has been floated more than once over the past 20 years, and while X1's detailed plans for turning the idea into an actual product has yet to be presented, the most compelling part – the cash-generating opportunities – is where the most potential is found.

Gamers have had the ability to race futuristic cars like the Red Bull X1 for a few years with other gaming platforms, but Earle and X1 are banking on the "race-with-the-actual-IndyCar-drivers-in-real-time" angle as the hook to sell their theoretical product.

"We have the scenarios built around a brand-new car," Earle said. "A new way to fund the sport, basically tying virtual racing, the gaming environment – which is a huge base of subscribers worldwide – tying that to the actual real sport and the real events, where a virtual racer can compete against his or her heroes in real time during the actual event."

Earle envisions another online IndyCar championship that would run in parallel to the real-world tie-in, and sees that model as the one with the greatest earning potential.

"There will be a second virtual championship based on this model that would effectively allow us to shed the sanctioning fees and team sponsorship model for the whole sport going forward so we can have healthy promoters, healthy team owners, healthy drivers as far as their economics go," he added. "And be able to get the ticket prices to the point where more fans can enjoy the sport real time."

To entice younger fans, and the core gaming audience, Miles, Kalkhoven, and Earle pointed to the same area of interest by replacing the current Dallara DW12 Indy car chassis with something closer to the Red Bull X1 concept.

IndyCar's primary demographic is an aging white male – closer to grandparents than recent college graduates – and through X1's proposed gaming platform, IndyCar sees a rich opportunity to connect with a group that has been elusive in recent years.

"The concept is that they would create a race gaming platform that is so compelling that it is a powerful tool for attracting the interest of millennials," Miles said. "And potentially as part of that, make it more powerful by considering a different car design, which would be aimed at, among other things, obviously being more radical for millennials."

Tomorrow: X1's plans for a new Indy car, and the TV package it hopes to see support it. Plus, does it really have the financial firepower that it claims?