THE MODERATOR: We begin a new season of competition. Mark Miles is CEO of Hulman & Company. Derrick Walker who has seen this sport from so many different vantage points. Always exciting to begin a new year. We thought we'd throw it right open to questions that you have for these two gentlemen.
Q. Talk about the new rules that are going to be in effect. Are there any? Who is going to rule on them?
DERRICK WALKER: That's a good question. Very thoughtful. Big, long answer. Obviously the rules are going to change drastically with the aero kit. We're opening up the formula, so there are going to be a lot of rules associated with that which we've not had to deal with in the past.
When you look at our Competition Committee, we have a series of stewards that judge the on track activity and the technical group that are going to look at the aero kit regulations and everybody staying onboard with the rules as they're written. Quite a number of things new.
MARK MILES: I thought we were going to have a chance to open up, so I'm going to make a few comments if you will indulge me.
As we sit here looking forward to the Verizon IndyCar Series of 2015, I want to just say a word about how we felt about 2014, then a few comments about 2015. Not a speech, but just some highlights.
For '14, we thought it was a fantastic year, nothing short of a fantastic year. I see some of our friends from ABC, ESPN in the back of the room, so they remind me that a couple years ago when we started, people were very concerned about the television audience in this sport- perhaps for good reason.
While we're not where we want to be yet, there's a lot of room for growth, the facts are there was a 25% increase in both the average viewership and average rating for IndyCar over the course of the year.
You can study other sports, other motorsports, and that is not something we take for granted. That is not something that is an Act of God or natural law. A 25% lift is a quality, meaningful increase for us. Took our average audience over a million people for the first time in a while. So that's important.
The metrics on social media were actually a little higher. Again, we started from a pretty low base. But I think we showed we could move the needle, and fan engagement through digital and social media was much, much improved.
We signed a number of sponsors, principal among them obviously was Verizon. That wasn't so long ago. They made a terrific impact for the Verizon IndyCar Series, for all our stakeholders, our fans, and will continue to invest. I think they're a perfect fit. But there were others as well, including TAG Heuer. Angie's List is how the title of the Grand Prix.
In Indy, here, I think I heard Mr. Rahal mention it was a good May, a great May for us. We took a total paid attendance, not including suites, from 285,000 tickets sold up by 75,000. So from 285,000, plus 75,000, to 360,000. That's a really meaningful difference here.
I hope many of you would have seen we care about this place and this great race. From our point of view, what happens here is a great opportunity to present IndyCar racing to fans. The platform for the series, for our drivers, our cars, our teams, our sponsors, for the whole series, is really important. We're doing our best to leverage all the eyeballs that are focused on Indianapolis in May for the benefit of the IndyCar Series.
There's a 55% increase in the total television audience in May. ABC made the decision to cover three consecutive weekends. They could put their best foot forward, promote from week-to-week to the 500, and it paid off. All that accrues to the benefit of IndyCar. I want to say a word to save somebody the trouble of asking our strategy about the schedule.
It is misunderstood. That's on me. It's my opportunity today to talk a little bit about what we are trying to do. We're not trying to shorten the season. We are actually planning to lengthen the season. What we're trying to do is slide the season earlier.
We've shared with the drivers, with the team owners, with the promoters, the vision, the plan, which we'll get closer to in 2016, where we hope we begin the weekend after the Super Bowl, early February, and go through Labor Day for the championship. That gets us into eight months, a little over seven months of racing.
Our objective is about 20 races.
So, yes, we started by ending earlier. You haven't yet seen us start earlier. But I want you to understand that's where we're going. We want to race in a very full schedule, about 20 races, from the weekend after the Super Bowl in early February through Labor Day. That will feel very different than it did last year and this year. You will see the expansion.
Related to that, there's the question of international races. We said we think there's an important market opportunity for us on a limited basis at the very beginning of the championship. The strategy about when we schedule ourselves beginning of February through Labor Day is not dependent upon international races.
We could fill that early part of the series, February, with additional North American races. But, one, there aren't too many places where we can race climate-wise. Two, we're determined to find really vibrant new race opportunities. So we're going to be discerning about that.
We still continue to believe that we're not going to become Formula One. We're not going to be chasing ourselves around the globe week after week after. That is not the strategy. But we can imagine a limited number of international races at the beginning of the calendar in February, then get to the States, North America, stay in North America.
I would emphasis this is not about shortening the season, and we're not shunning North American opportunities for international ones. This is about lengthening the season, racing a full seven-month schedule, and perhaps having international races on a limited basis at the beginning of that schedule.
In that regard, because it will be asked, we continue to believe there's a real opportunity there. There are important international capitals that value IndyCar racing, that provide a great value proposition for IndyCar, not only economically, but also in terms of beginning to expose us to race fans around the world in a way we're not fully exposed to today that I think over time can pay benefits to our series, our teams, our sponsors.
Just a few thoughts about what's happening going forward in terms of this year. More of the same in terms of what you've seen on the schedule. We're excited about getting to New Orleans, a new venue for us, which has hosted a number of our teams with their tests. We're ready to go racing.
So thank you for humoring me with those comments. Now back to the questions.
Q. Derrick, in the Grand Prix race here, are they going to change the starting situation from a standing start to a running start?
DERRICK WALKER: It will be a conventional start for IndyCar. It won't be a standing start.
Q. Mark, on social media you always read fans bringing up the same things. They want to go to this track, that track. Here is your opportunity to explain why Road America isn't on the schedule because we don't want to pay the sanctioning fees, proximity to Milwaukee, et cetera. Detail a lot of the reasons why a lot of these tracks that people advocate are not on the schedule.
MARK MILES: Happy to do that. Maybe generically, generally the scheduling considerations, maybe a little bit of the specifics on Road America.
First of all, we've got 16 races. What are the opportunities for growth if we want to get to 20, if that's the goal over a couple years?
First of all, we are actively engaged in looking for the best place we can be to finish the championship on the Labor Day weekend. For us, the best place we can be ideally would be a major urban market in a time zone that helps us deliver the biggest possible television audience, in a place where we believe we can have a vibrant, successful race.
If you run a count with me. There's 17, when we find that. That's probably not the right fit for Road America.
I believe there are some February opportunities. I've talked about that already. We think our growth is to add two or three races in February, the beginning of March. I came from snowmobiling last weekend in northern Wisconsin. I'm not sure we want to race at Road America in February.
So basically from a calendar perspective, we add those races at the beginning of the championship, you're at 20. So the ability to add additional, to us, currently new tracks, really depends on replacing existing races. We want to be very, very careful about that. That's not to say it won't happen, but we've got a lot of great partners, the promoters of our races, a lot of them have a lot of history with us. We won't be cavalier about changing out existing promoters to chase the next opportunity.
There are other considerations we've talked about in the past. In a perfect world where you were starting from a blank sheet of paper, we'd have better geographic distribution. We've got a lot of midwestern races today. That's not absolute. That doesn't mean we might not add one, but it's a consideration. It's not just the distribution of races by region of the country, but also in smaller regions. We don't want races to cannibalize each other.
We're going to add one to finish the championship Labor Day. We don't have a race and a promoter today for whom Labor Day is ideal, but we know there are cities out there for whom that will be the case. We've got the opportunity to start earlier. You do those things, you're at about 20 races. I think the consensus with Derrick and the paddock is 20 races, a full season for us.
Q. (No microphone.) MARK MILES: Baltimore is not on the schedule. The reason we enjoyed the event, they did a great job. East Coast. Labor Day. Everybody says this. It isn't something you can do overnight. We want to build data equity. We want them to know where we are.
In dealing with Baltimore, again I want to emphasize, they invested, did a great job, as many of you know they were racing around a Major League Baseball park, NFL. They weren't sure they wouldn't have to move their date for IndyCar on those years when Major League Baseball or NFL football had to be played in one of those stadia. We needed a partner for the Labor Day weekend that could give us data equity. We want that continuity from year to year.
Q. (No microphone.) MARK MILES: We don't want to get too far ahead of ourselves. If we're thinking about February or early March, we're thinking about climates, February would certainly be a place you wouldn't rule out like, say, Wisconsin. There's a lot going on in Phoenix in February. The Super Bowl from time to time, important golf tournament every year. They've got other racing. I think for many of us, that's not a thought that's lost on us, that possibility.
Q. You mentioned the TV number increases which were sizable. What goes into reaching your next benchmark? Is there a certain demographic you think you need to go after or another series or sport you have to compete against to increase that share?
MARK MILES: Really good question. As I said, we're delighted with the progress made last year but not satisfied with the television audience. So what's next? Our agreements with our two broadcast partners are in place for a number of additional years. But we're having conversations with them about things that might happen within the existing agreements in the near term, as early as 2016, which I think could make meaningful additional increases in the audience.
So more continuity like I think we achieved with ABC in May would be a good thing. It isn't helpful to a national following of fans to be on one broadcaster one week, two weeks later, another. It's very hard for our television partners to promote the next race if the next race isn't theirs.
So working towards additional continuity would be important. I think we can make some improvements in that regard. Harder, but something that is worth discussing from our perspective is whether or not it's possible to change the current exclusivities, where ABC has broadcast exclusivity, and NBC Sports Network was cable exclusivity. If each could have both, you could imagine ESPN, for example, possibly being a player for us, and you can imagine NBC as opposed to just NBC Sports Network taking some races.
That is harder. That is not consistent with our current agreements. There are ideas like that that at some level are being discussed for a next set of improvements.
Q. Mark, data equity, can you address bouncing Milwaukee around. I think green flag is going to be at 4:35 on a Sunday afternoon in Milwaukee. A lot of our readers are looking at what seems to be a disappearance of ovals, the heritage of IndyCar. Could you address that?
MARK MILES: I'll take the last one first.
There's an oval heritage to IndyCar, we're sitting in this place. I think the distinctiveness of our racing is the mix, what it says about our drivers, the variety of fan experiences when our guys race on ovals and street courses and road courses. I think we have a balance between those three.
We don't have a quota. We've never sat down in a scheduling committee and said there must be X, Y and Z of those. We continue to have a mix, and I think that's what our brand's all about.
The reality is that there are probably more opportunities out there for the other formats than there are on ovals where we can have what we think will be outstanding races.
So we're not going to abandon our heritage with ovals. Kind of hard to do that sitting in this place, nor do we have any ambition to do it. But we're happy. It's almost a third, a third and a third of what I think of of the three formats.
For Milwaukee, I won't recite all the various things that led to their date changing. There's sort of a domino series of event when one event has a real issue, and in order to accommodate that event it requires flexibility on the part of others. Milwaukee, as far as I know, was happy to work with us and accommodate us on this occasion.
What I meant to say and I hope I said is the goal is the greatest degree of date equity. If a place like Toronto has a thing like the PanAm games, and the venue simply isn't available, we don't think it's inappropriate to call on our partners to see if we can collectively address a major issue like that.
Q. Moving forward with the possibility of international races after what happened with China in 2010 and Brazil this year, are you going to make sure the introductory year of that race isn't after an election year where an administration comes in and doesn't have to abide by agreements made by previous administrations?
MARK MILES: We have a longer checklist than just administrations. As disappointed and angry as we were about the cancellation of the event in Brasilia, we learned a lot about the prior institution of IndyCar. We protected ourselves financially. We scheduled the international race that wasn't in the middle of the rest of the calendar, although there is an early hole, it starts later than we wanted.
Just a comment on the Brasilia situation. You're right, it had to do with the changing of elections, politics between a national and regional federal district of Brasilia governments. It wasn't lost on us they were on schedule and invested an enormous amount of money already in the improvement of that track.
To be clear, I don't like it happening. I think we kind of protected ourselves.
One of the big takeaways for me, it's complicated, but it was an endorsement of IndyCar racing in a strange way in Brazil insofar as the sponsorships were at or above where they wanted them to be with a title and a major presenter. All the hospitality was sold. You couldn't buy another box or suite. Ticket sales were very strong.
All I'm trying to say is I think the uptake among fans in Brazil was very meaningful. It was going to be at lease a 30,000 person, in terms of attendance, and it might have been 45,000 or 50,000, and economically it was going to be a success.
So the politics is unfortunate. I wouldn't be surprised if they're not having second thoughts about all that right now.
Q. Two weeks ago there were two words on the minds of every IndyCar fan I talked to. Brian Barnhart. Shall I just leave it at that and open up the conversation?
DERRICK WALKER: Well, yeah, there was a fair amount of fan interest in that decision. In reality it was a very simple decision to make.
Having been in race control for about the last year and a half or so, I've had a chance to stand there as an observer and be part of the process.
When I looked at the team that we have there, I would see there's a strong group there. Brian was part of that whole group that ran since 2013 onwards to this day.
When Beaux Barfield, who decided to go to the Tudor Series, he was part of that process as well. What I think is probably missed sometimes is people don't maybe always understand, maybe we need to explain it more, is the system we've adopted at the end of 2013 where we have a race director who basically is your team manager, crew chief of your team of people in race control, and you have a group of three guys that are stewards. They're looking at the incidents that happen on track. Their job is to know the rules and deliberate on whether they think that's an incident or not.
When people refer to Brian in the past tense of what he did, I think there's a complete misunderstanding of how the system was back then and what it is now. When you look at what Brian does really well, race director is probably one of the best things he does. So it wasn't a decision I had to think twice about. We made that decision way back when Beaux left.We wanted to get the drivers, promoters together and announce it in a proper way, our clients, supporters and our teams. So that's what we did.
I don't think anything that I've read or heard has changed my view on that. I think he's going to do just fine.
Q. I think you said earlier with the new aero kits, you're going to be developing the rules for them. I'm not sure what rules exist right now. I know there's a box, they design a certain part, it's been frozen, put them on the cars, test them soon. Once the teams get them, the engineers start tweaking whatever they can tweak. If the rules aren't in place now, a team can go down a certain path of engineering and spend their resources, then have the rug pulled out from under them because the rules suddenly say, No, you can't do that. Maybe you could elaborate on what kind of rules you think might be coming into play so it's sort of fair. The whole point of being a team is you find that little extra something that no one else has.
DERRICK WALKER: You covered a couple of points there, and good questions.
Let me assure you the rules are in place. The manufacturers, I want to acknowledge their role in all of this. Our two manufacturers in Chevrolet and Honda have really embraced this aero kit concept. They've worked as hard as they can in the aero kit area as they do with their engines. There's a strong competition going on.
Certainly Dallara has been a part of that process as well. Let me get the thanks out of the way. But they really have helped us a lot. When you talk about the rules, what I mean is there's different dimensions. The wings and the body parts are a little bit different dimensions so there's rules that capture what those differences are.
It's not fundamentally a lot of new rules that are different; it's just we have different shapes. I think what you're going to see, and again you're going to see the first probably of anybody the first public release, Chevrolet is going to talk to you, you'll get a chance to see some of the ideas they have. You're going to see the team is going to have a lot more parts to play with, variables, more options to adjust their car.
Of course, the car is going to look a little different than it did last year, quite a lot in some cases. The performance is going to go with it. You can expect to see an increase in performance.
I think it's going to add a lot more interest. It's part of where we're moving with the future of IndyCar, and that is to come out of a very strict standard rule that limits some of the creative sides that the teams want to express and I think the fans want to see, as well.
Q. About the aero kits, there's not a lot of practice time here at the speedway where it gets tested. How do you juggle the safety of the program and the engineering of all of that at the same time still trying to improve the entertainment value of doing this? In the same process, as you get through the rest of the season, is there an adjustment that you can make if Chevrolet has trumped Honda in terms of aero performance?
DERRICK WALKER: Good questions. I mean, when you look at the last part of your question first, we have three areas on the car that have been designated as upgrades. They are predominantly there for 2016. But if a manufacturer finds in 2015 that they come out of the gate and they're obviously behind, then these manufacturers can come, any one of them, to IndyCar and say, Look, here is where we think we are out to lunch, here is what we want to do. We want to exercise one of those areas of the car we can change.
We'll take a look at it. If it's a legitimate claim, they will get the opportunity to bring out a modification, put them back in the game. I think I would caution everybody, we've got a lot of different types of racetracks happening. You'll see a lot of different searching this year for finding out how it's really going to work, what is the best option. I wouldn't jump to an immediate conclusion after the first couple races who is ahead and who is behind.
Remember, there's two kits, a road course and an oval. They are quite different animals. It's going to be interesting to see how they do that.
But we have a mechanism to allow updates.
THE MODERATOR: Gentlemen, thank you very much for coming in