As the racing season winds down, there was another major announcement in motorsports finance. This was not expected by almost everyone and caught the industry by surprise that early Monday morning.
Penske Motorsports will acquire the principal operating assets of Hulman & Company. This includes Indianapolis Motor Speedway, NTT Indy Car Series, and IMS Production.
The history of the legendary Speedway is well documented – built in 1909, purchased by Eddie Rickenbacher in 1927, and sold the Tony Hulman in 1975. For almost seventy five years, the facility has been under the ownership and guidance of the Hulman-George family.
Was this transaction expected, not really? The longevity of the Hulman-George family is a remarkable achievement. The operated in the public domain – under the gaze of racing fans – while maintaining a generous philanthropic role in the Indianapolis community. Generating economic returns to balancing these interests is challenging.
The May 2019 sale of Clabber Girl Corporation to B & G Foods for $80 million may have been an indication. Hulman & Company divested this well known brand to an industry leader with depth in this category.
It is not uncommon for a family business to evaluate options when a unique opportunity arises. Wealth creation is a key goal in capitalism. This may allow current and future generations the ability to explore entrepreneurism and the flexibility to continue stewardship in different areas.
Roger Penske is no stranger to the Indianapolis Motor Speedway. He first visited in 1951 with his father and has been there ever since. Team Penske has 18 Indy 500 wins and 1 Brickyard 400 victory.
His off-track business acumen is unrivaled. Roger is listed on the Forbes 400 with an estimated net worth of $1.6 billion.
Penske Corporation is a closely-held diversified transportation services company located in Bloomfield Hills, Michigan. They operate in many sectors including retail automotive, truck leasing, transportation logistics and professional motorsports. These businesses have consolidated revenues of $32 billion, operating in 3,660 locations and employ more than 64,000 people worldwide.
Their racing related entities include Illmor Engineering and Team Penske. Teams compete in various open wheel, stock car, sports car and touring car racing. This includes IndyCar, Nascar, IMSA, and SuperCars. Team Penske is headquartered in Mooresville, NC occupying a 425,000 sq. ft. former electronics manufacturing factory with over 400 employees.
It should be noted that Penske has a long history with motorsports facilities. He first purchased Michigan International Speedway out of bankruptcy in 1973. Over the years, he expanded his ownership interests to include Nazareth Speedway, North Carolina Speedway, California Speedway, Miami Homestead Speedway and the Detroit Grand Prix.
Penske Motorsports (SPWY) went public on NASDAQ in February 1996 at $17 per share raising $60 million. These proceed were used towards to the construction of California Speedway.
Three years later, in July 1999, Penske Motorsports merged with International Speedway Corporation (ISCA), This doubled the size of ISC in revenue and number of tracks operated. The offer price a combo of stock and cash, valued at $50 per share, resulting in a $691 million transaction. Roger Penske sold a portion of his holdings three years later for $100 million. Greg Penske was CEO of Penske Motorsports at the time of the ISC merger and took a seat of the Board of Directors until 2007.
Keeping anything in racing confidential in racing is difficult. This was an exception. The number of people involved on both sides was limited – 4 each. Mark Miles – CEO Hulman & Company meet with Penske in Detroit early and late on weekends.
The press conference provided details that Tony George approached Roger Penske after the IndyCar Series banquet in September. After an initial discussion, it moved to the fast lane – taking seven weeks till the announcement. The deal is expected to close before the end of the year. Hulman & Company’s financial advisor was Allen & Company and legal counsel Ice Miller LLP.
Debate over conflicts of interest was raised amongst a few. The combination of track, series, and team ownership – may lead to decisions favoring a few. Centralized ownership is not uncommon in motorsports – the France Family and Nascar and International Speedway Corporation – is the most recent example. This illustrates a strong commitment to motorsports from an operational and financial perspective.,
There has been favorable reception of the Penske / Indianapolis Motor Speedway transaction. The stewardship of a storied institution has been passed from one legacy to another. The next century for the Brickyard is bright.