Bringing 'entertainment' to Penske Entertainment: How Fox's new minority stake pushes IndyCar forward

Indianapolis Star

4 days ago

Chip Ganassi may have said it best: 'This deal brings 'entertainment' to Penske Entertainment.'
And therein lies what may be the simplest aspect of Thursday's mega story in the IndyCar world. Fox Corp. – the parent company of Fox Sports – has purchased a 33% stake in Penske Entertainment, the conglomerate that includes IndyCar, the Indianapolis Motor Speedway and IMS Productions that Roger Penske and Penske Corp. took stewardship over from the Hulman George family nearly six years ago.
It's a deal that, according to a report in the Wall Street Journal, delivers $125 million to $135 million – that ironically mirrors and even surpasses the figures McLaren Racing CEO Zak Brown and former Andretti Global majority owner and found Michael Andretti have clamored that Penske himself inject into the sport's promotion, marketing and activation with an eye towards trajectory-altering growth.
Andretti was all but ostracized by Penske Entertainment leadership after saying as much 17 months ago, when he first lamented to reporters that Penske Entertainment was asking team owners to purchase their charters before launching the program. He then suggested that if Penske wasn't willing to inject $100 million or more his own funding into IndyCar in pursuit of the sport's long-term health, at a time when Formula 1 and NASCAR's Xfinity series were nipping at its heels in some metrics, then he should 'sell the series.'
'There's people out there willing to do it. I think there's a lot of people on the sidelines thinking, 'This is a diamond in the rough if you do it right,'' Andretti said. 'But what you need is big money behind it to get it to that level, and if he's not willing to do it, I think he should step aside and let someone else buy it.
'I told him, 'Why don't you sell part of the series to somebody to use that money as an equity stake. You still keep that control, but take that money and invest it.' But he doesn't want any partners.'
That last idea is precisely what has taken place today.
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Penske has spent more than $60 million on investments and upgrades to the Indianapolis Motor Speedway – not to mention millions more to keep the series afloat during the pandemic; to purchase (and therefore save on the calendar) the Long Beach Grand Prix; to help fund the final development stages of IndyCar's hybrid technology alongside Chevy and Honda; and to promote or co-promote new or altered races at venues that have (or will) also include Iowa Speedway, the Milwaukee Mile, Nashville Superspeedway, the Detroit Grand Prix and the Grand Prix of Arlington. Thursday's deal with Fox Sports CEO Eric Shanks, Fox Corp., Lachlan Murdoch and the Murdoch family gives IndyCar a platform. It comes at a time when the motorsports and greater sports and media landscape has never been more crowded and competitive and where it's as difficult as ever to reach, attract and win-over the young fans and potential casual ones whom IndyCar needs to add in order to reach its potential.
To be frank, this deal puts those responsibilities on the shoulders of Fox Sports that many in the paddock trust to be more capable of handling. For years as Penske Entertainment Corp. president and CEO Mark Miles has been asked about new events on the calendar, he's emphasized again and again a desire to seek out strategic partners that could share the financial risk, lend their unique expertise and share in the hopeful spoils.
Though Penske had long shot down any idea he'd consider selling a stake in a sport and a track he now views as Penske family assets, it appears the prospects of an even greater strategic alliance – and perhaps a realization Penske Corp. and its subsidiary could only do so much – may have triggered a change of heart while still allowing Penske to maintain his spot as the sport's ultimate decisionmaker.
As IndyCar has taken off in so many other ways – from social media impressions, to the sport's overall digital footprint, to more mainstream merchandise deals and sales, attendance at some key events, more consumer-facing sponsors trickling in and the Indy 500's overall rapid success – it's been a popular gripe among fans and legitimate question among so many in the paddock in recent years: Why can't Penske Entertainment market the sport better?
There's rarely any single specific thing one can point toward, and it's clearly not a wholesale failure on helping the sport blossom, because IndyCar is undoubtedly in a better place than it was six years ago.
More on today's news: Fox buying significant stake in IndyCar series owner Penske Entertainment
But for a sport that has some of its veteran legends still active, a savant of a driver approaching records; not to mention a Mexican racing superstar whose throngs of fans at races often appear to be those of the day's latest boy band trend; a slew of young successful American racing talent; a host of other engaging, fiery, all-around unique personalities; the biggest race in the world; a field as deep and competitive as anywhere in racing; and names connected to the sport like Andretti, Penske, McLaren, Rahal and Foyt, it's been perplexing at the ways in which some drivers continue to not have almost any buzz and that some events still only can attract a few thousand fans on race day.
And there you have IndyCar's issue of the time: How to make the sport popular enough, interesting enough, relatable enough and attractive enough to capture a more mainstream audience so that diehards don't have to continue propping up so many races' attendance figures and TV audiences alike.
There was a widespread hope in November 2019 that Roger Penske would bring the answer to that longtime question – just like how he'd deliver a third engine manufacturer and oval races would magically become viable business propositions and that IndyCar would return to the east coast and have a larger presence in more major American cities. Though Penske and his charges have delivered a much-need firmer foundation and higher floor for the sport, the Penske era has not injected jet fuel into the sport's engines in the way many expected. The pandemic no doubt slowed those well-laid plans from taking off, but in Year 4 of full-fan events, that excuse has long expired, and up until Thursday's news, we seemed to be on a trajectory of getting to February 2026 amid whispers that this year – yes this one! – would be the season where IndyCar would finally realize that long-awaited exponential growth – a tune eerily similar to the one sung each of the last couple years.
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The working theory of many in the paddock is that for everything Penske has achieved, its greatest marketing tool has been his dominant race team that has gained mainstream name recognition.
Though far and away from the only reason Penske has amassed such a fortune and how he's come to partner with so many major brands, sell so many cars and land so many truck deals, having the winningest team in American open-wheel racing team evokes an air of success, professionalism, dependability and some automotive know-how that no doubt has paid Penske dividends.
But Penske Corp. never has been and never will be an entertainment-focused business in the ways in which the France family at NASCAR and Liberty Media at Formula 1 seem to view their places in the motorsports world. Over there, it's all about new venues, expansion, experimentation with in-season challenges and sprint races and well-polished, engaging shoulder programming. In those series, change, evolution and an unwillingness to become complacent rule the day, and they're sports that clearly feel as if they're looking five or even 10 years down the road and setting trends, not reacting to the ways in which the winds of the industry blow. Yes, there are millons upon millions more dollars that change hands in those sports, and at times it's unfair to say IndyCar and its shallower pockets are realistic competition, but it's the landscape nonetheless.
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Like it or not, NASCAR's playoffs elicit drama, tension and surpises, and even if there's not a championship battle to follow in F1, Liberty has found ways to connect never-before fans with its unique set of personalities.
Whereas those two IndyCar competitors, with all their admitted flaws, function with a clear identity and as entertainment-first entities, and where IMSA attracts the gearheads with devotion to one of the series' plethora of manufacturer brands, it's long been hard to pinpoint IndyCar's niche. Is it for fans who love high-competition racing? Or those who want drivers to feel more down-to-earth and accessible? Is it for the speed, or the oval racing, or the danger?
And so a sport without an identity and an owner without a marketing-first mindset has fallen to (outside the Sunday of Memorial Day weekend) the third (and strictly on non-500 TV ratings, fourth)-most popular racing series in the U.S.
Enter Fox Sports, the broadcaster with an affinity for big games, bigger moments and some of the biggest personalities.
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'This opens doors that were previously closed and makes aspects that weren't there before possible,' Ganassi told IndyStar on Thursday morning. 'I think it's an on-ramp toward momentum, and then you've got (Fox) extending their commitment.
'And here's what I'll say; you've got all these words and phrases, but you know what it does? It brings 'entertainment' to 'Penske Entertainment.' And it answers a lot of questions a lot of us had that were up in the air before. To have the Murdoch family behind you is a big thing worldwide.'
Count Brown, Mike Shank, Larry Foyt, Andretti Global president Jill Gregory and others among those thrilled, energized and motivated by Thursday's news – likely to represent nearly a paddock full of folks who've paid witness to Fox's impact, energy, dedication and willingness to experiment in its early days with the sport.
Lingering production issues and commercial-heavy broadcasts aside, it's hard to fault a partner that had already so thoroughly put all its cards on the table in pursuit of a sport's growth. And unlike the percolating NFL-ESPN deal or Fox's partnership with the Big Ten – particularly on college football – this is a sport sorely in need of the funding influx and declaration of support that this deal represents.
'There's putting money into this sport to keep it going, and then there's playing offense, and I think we as a sport talk too much about cost containment and not growth,' Brown, the McLaren Racing CEO, told IndyStar less than two weeks ago at Toronto. 'You're never going to cut your way to success.
'I'd rather get big TV numbers and more events, better events that bring in a lot more commercial revenue.'
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So what could this deal deliver, and what questions remain unanswered – representatives at Fox Sports and Penske Entertainment declined to make decisionmakers available for comment Thursday? Here are my closing thoughts:
>>The reported valuation of the Fox's deal with Penske Entertainment tells a potentially exceedingly interesting – and perhaps telling – story. Though never confirmed, several sources in the paddock have long believed Penske purchased the assets now known as Penske Entertainment for roughly $300 million more than five years ago. A 33% stake at the price of $125 million to $135 million would deem the whole package to be worth between $375 million and $405 million.
Though that appears, at first glance, to demonstrate a pretty hefty profit margin for Penske, when you take into account the $60 million-plus spent on IMS alone, not to mention buying Long Beach and the other races Penske Entertainment now runs, you start to wonder if Fox was given a sweetheart deal at those figures, or if the value of IndyCar and IMS have truly risen very little in the five-plus years since the acquisition.
>>When Fox was simply IndyCar's rightsholder, there was reason to wonder whether for all the 'no expenses spared' attitude paid towards the series' Super Bowl ads and the all-out-blitz production that was the Indy 500, there had to be a ceiling Fox was fast-approaching to promote a sport that for nine out of 14 races had delivered it an average audience of less than 800,000. Because you can only do so much without what would appear to be satisfactory results. And if that's the case, how long can the allure of the 500 outweigh otherwise largely lackluster viewership numbers and keep Fox interested in staying?
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Thursday's news has completely transformed that mindset. No longer is Fox Sports a partner seeking enough eyeballs through which it can reap the amount in ad sales money it has put into the ownership of IndyCar's rights and production and promotion of the sport. It's now also an entity that can firsthand feel the effects of IndyCar growing as a brand and as a sport, through commercially-successful events, new partners, spikes in ticket sales and merchandise sales and Indy 500 sellout crowds. And with the structure of this deal, Fox can ensure it won't lose IndyCar to another prospective rightsholder five years down the road and lose out on reaping the benefits of what at that moment could be a far more popular, lucrative sport – the way in which Fox watched the UFC walk to ESPN years ago.
So does Fox now lean-in even harder? Will we now see a weekly IndyCar talk show? A dedicated, standalone pre-race show or post-race show support on cable or streaming? Longer race broadcast windows? Funded in-car cameras for the entire field? Those are the types of things that a broadcast partner that now has a vested interest in the sport's growth beyond a short-term TV contract window could look to pursue. It's how you start to widen the scope of the sport on TV beyond Fridays, Saturdays, Sundays and mid-week re-runs, how you begin to make it feel exceedingly important and how you generate the types of conversations that propel stars, fan the flames of drama and create connections with casual sports fans.
>>Might we see some sort of outside-the-box shift in the start of the season, as Brown has proposed in recent months, where IndyCar could run its season-opener the weekend between the NFL's conference championship games and the Super Bowl, the same weekend NASCAR has recently held its season-opening 'Clash' that Fox broadcasts?
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Could you run the Saturday of Daytona 500 weekend – or both – and therefore begin to shrink IndyCar's current six-month-long offseason? And could Fox use its influence to negotiate a shared NASCAR-IndyCar weekend at some track on the former's spring slate that Fox broadcasts? And might Fox be willing to shift the traditional thinking around IndyCar weekends as mostly Sunday afternoon races and experiment with weeknight made-for-TV races at a time on the calendar where running on Sundays against other sporting competition puts the sport at-risk of low TV numbers and week days allow it to be the event of the night?
>>The biggest concern or question I have in seeing an entity that comes to the table not with the traditional sporting-first mindset, but one of entertainment and drama, is this: If entertainment, the racing product and revenue-driving are the pillars to which a successful sporting product is built upon, which becomes priority No. 1 in this new conglomerate? Not that a rethink in that area is necessarily a bad thing, but a shift toward a more entertainment-focused sport is bound to cause a rift between IndyCar's older diehards – a demographic that IndyCar's fanbase is presently overwhelmingly made up of.
It will be a theme to watch closely.