Tony George is the smartest man in racing
Fox News reported a failure by Tony George “in his efforts to reach an agreement with supremo Bernie Ecclestone over a new contract” for Formula One at the Indianapolis Motor Speedway.
But, it was Tony George who set the deadline for an agreement to be reached.
When Ecclestone didn’t come to terms by that deadline, George walked.
It’s pretty clear who drew the line.
Over the years, Tony George has been vilified as the man who destroyed open wheel racing in the United States and simultaneously portrayed as not quite bright.
Neither is accurate. Tony George may be the smartest man in racing.
When Tony George became President of the Indianapolis Motor Speedway in 1989, it appeared from the outside that the Indianapolis 500 was at the pinnacle of its glory. Every year the race was a sell-out. Teams spent the entire month of May in Indianapolis preparing for it and the event attracted high rollers from all over the world.
In glamour, the Daytona 500 was small beans. Under George’s grandfather, Anton “Tony” Hulman, the Indianapolis 500 had grown into one of the premier sporting events in the world.
That’s how it looked, not how it was.
In reality, there was a very large problem, one that threatened the Hulman family’s control of the Speedway and consumed their attention.
The problem is that you cannot run a race without race cars.
Over the years, the Hulman family has cultivated an image of being very lucky Midwesterners, people who’d love to rub elbows with Hollywood stars but are, at root, just like you and me.
Smart business, but not true.
The Hulmans are a close family with a lot of brains.
The Hulman family wealth originated with baking powder. Then, as now, the family made Clabber Girl baking powder in Terra Haute, Indiana. Anton “Tony” Hulman, who bought the Speedway at the end of World War II when it was falling apart, got his engineering degree at Yale. Tony George’s father died in a shoot-out with a horse trainer who some claimed was Mary Hulman George’s love. The shoot-out occurred on Race Day, less than a month after Mary Hulman George had filed for divorce and was ruled self-defense by a grand jury.
But it is not the teen trauma that brought about which has defined Tony George.
It is the business acumen which he seems to have inherited from his grandfather that distinguishes him.
From its renewal in 1946, “Tony” Hulman made sure that the purse for the 500 was the largest of any race in the world, by an ample margin. He also made sure that the last place finisher made more money at the 500 than at any other race in the series. That was enough to insure full fields every year.
But in 1955, the AAA, which had been the sanctioning body for racing in the United States, decided to end its role in speed competitions. Hulman immediately grasped the opportunity this presented and formed a new sanctioning body, the United States Auto Club (USAC), to set the rules for the 500 and all other Indy car races. Functional control of USAC gave Hulman effective control of the entire racing series, not just the 500.
By 1979, however, the balance of power was shifting. Indy car owners were wealthy men. Their teams were supported by lucrative sponsorship contracts. In 1979, the team owners decided to exercise their muscle.
That year, Roger Penske and Pat Patrick formed Championship Auto Racing Teams (CART).
Using their influence to get all of the car owners to act together, initially CART was similar to a labor union. It demanded that USAC give the owners a role in negotiating television rights and race purses. It demanded that the owners be given seats on the USAC board of directors. USAC refused those demands.
So, the car owners bolted from USAC and turned CART into a competing organization. As CART had all of the teams as members, CART quickly took over all of the races, with the sole exception of the Indianapolis 500. Track owners weren’t interested in whether the race was CART or USAC. They just wanted to be sure the cars and the stars would be there. If CART had them and USAC didn’t, it was a CART race. In a single year, they all became CART races, except for the Indianapolis 500. The 500 was too rich and too important to their sponsors for CART to boycott and the Hulman family did care, very much, who was in charge.
Still, the threat to the Hulman family was obvious to them, even if no one else noticed.
Though it may only have been a preliminary skirmish, Tony Hulman had lost round one when CART took control of the other Indy car races from USAC. Worse, CART was a means for the teams to act in unison to achieve their goals. Even worse, the Hulman family was somewhat out of its league: certain of the CART team owners were very wealthy and had much better connections in the racing world than the Hulmans. Roger Penske, in particular, had bought Michigan International Speedway out of bankruptcy and turned it into a hugely profitable race track. His cars had dominated the 500 and he also had a large presence in NASCAR. He was the darling of corporate sponsors and had a deserved reputation for making a silk purse out of a sow’s ear.
In contrast, the Hulmans ran one race a year, in a facility which they maintained throughout the year, and which seated 250,000 people.
If that one race didn’t make money, there was a big problem for the family.
After the formation of CART in 1979, it controlled much of the field which the Indianapolis 500 needed to stage a race. Sure, there were non-CART entrants, most visibly the Menard cars that ran only in the 500 and generally broke about two-thirds of the way through. But the best drivers, the best cars, and the best teams were all members of CART.
It was a stand-off. CART couldn’t survive without the 500. The 500 couldn’t survive without CART. Sponsors of the CART cars demanded that the teams participate in the 500, an event which was invaluable in the publicity it generated. But the 500 was very much the captive of CART: without the CART teams, the 500 would not be able to fill its field with credible contenders.
It was into this problem that Tony George was injected when he became President of the Speedway.
When he became president, it was really only a matter of time before CART would do to Hulman what it had done to USAC: demand a piece of the action. That demand could take many forms. It could be a demand that the entrants get a percentage of the profits. It could be a demand for participation in the Speedway’s management. But it was coming. CART had shifted the locus of power.
The 500 and the Hulman family were vulnerable.
But the real nightmare for the family must have been the buy-out offer they would have been powerless to refuse.
Should a prominent and wealthy person with connections in the racing community, control over the CART organization, and the experience of owning his own racetrack, be able to get the CART teams to decline running in the 500 and also be able romance the CART sponsors sufficiently to get them to go along with that, the Hulman family position would be untenable. They’d have a choice between selling out to Roger Penske or having a bankrupt and empty racetrack.
That’s where things stood when Tony George became Speedway president.
Tony George solved the problem.
He did it in a way that protected the Hulman family’s fortune, which is what the family expected of him. Obviously, he made few friends and many enemies in the process.
But he what he did was brilliant.
First, he found a way to entirely replace the revenue from the Indianapolis 500.
Though the 500 may have been the nation’s premier auto race, NASCAR was the nation’s most popular form of racing. NASCAR wanted to become more national in its appeal. Running a NASCAR race at the legendary Brickyard would be a huge boost to NASCAR’s prestige. In return, running a NASCAR race at the Speedway would cost the Hulmans almost nothing: they already owned the track and the cost of maintaining it would be little different if they ran two races a year instead of just one.
The Brickyard 400 gave the Hulman family security. It no longer depended entirely on one race. Indeed, it is likely the case that the Brickyard 400 came very close to producing as much revenue as did the Indy 500.
Even so, the risk to the Hulman family hadn’t been eliminated, only diffused. The France family, after all, owned International Speedway Corporation, which included the racetracks at Daytona and Talladega among its holdings. CART could still elect to sit out a 500 and, if that should happen, the Speedway would be at the mercy of the France family. It would not be unthinkable that someone who had participation in both CART and NASCAR, such as Penske, would take advantage of that situation, alone or in combination with the France family, to force the Hulmans to sell out.
The problem still had not been solved.
Unions use the strike as their weapon of choice, but management has an equivalent: the lockout. Faced with a union-like threat from CART, Tony George elected the racing equivalent of a lockout. He organized the Indy Racing League and reserved the prime spots in the Indianapolis 500 starting line up for IRL members, and only IRL members. CART could scrabble over what was left.
It is entirely possible that Tony George miscalculated to some degree when he did this. Certainly, he could not have expected the CART teams would buckle as soon as he formed the IRL. He may have expected that CART would crumble more rapidly than it actually did. He may also have underestimated the level of personal antipathy which his actions would create. People who are used to losing don’t get upset by it. People who are used to winning take losing personally.
Tony George was right about the central premise: that no open wheel racing series which does not include the Indianapolis 500 can ultimately survive.
While the IRL has been less than a shining success, CART went bankrupt. Penske ultimately sold all of his racetracks to the France family company, International Speedway Corporation. The successor to CART, Champ Car, is only too happy to have its members welcomed at the 500 and that race is beginning to regain some of its past glory. Roger Penske is back, and winning. And then there’s the Danica Patrick factor. As in the glory years, the crowds at the 500 once again have someone whom they want to see win.
The fact is, Tony George won.
He doesn’t need the United States Grand Prix.
Bringing the Grand Prix to Indianapolis was a community relations gesture by the Hulman family. The diminution of the 500 has not sat well with the Indianapolis community. The Hulman family may have replaced the 500’s revenue with that of the 400, but the community did not. In the halcyon days of the 500, hotels tripled their daily rates and insisted on a three day minimum stay. Restaurants were packed. Nobody was on a budget. Most of those attending the 400 don’t even spend the night.
The Grand Prix was a way of returning large dollar visitors to Indianapolis. It was a way of replacing some of the glory which the 500 has lost.
But it’s important to the Indianapolis Motor Speedway.
The MotoGP series, which will hold its first race at Indianapolis in 2008, will probably draw more fans that the Grand Prix.
Tony George has got the better of Bernie Ecclestone.
That alone should establish that he’s the smartest man in racing.