PHOENIX, Thursday, Feb. 8, 2001 HOST: Mike King GUESTS: Brian Barnhart, vice president of operations Bob Reif, senior vice president of sales marketing and chief marketing officer Mike King: Good afternoon and welcome to Phoenix ...
PHOENIX, Thursday, Feb. 8, 2001
HOST: Mike King
Brian Barnhart, vice president of operations
Bob Reif, senior vice president of sales marketing and chief marketing officer
Mike King: Good afternoon and welcome to Phoenix International Raceway on behalf of the Indy Racing League and the Indy Racing Northern Light Series, Two gentlemen here today are set to deliver our State of the Series address, if you will, today. This is Brian Barnhart. Brian recently promoted to vice president of operations of the Indy Racing League. Brian is perhaps as well respected as any individual in motor sports today, and that's pretty much across the board, ladies and gentlemen. I tell you that from listening to an awful lot of people in other series comment on Brian Barnhart's ability to weigh the pros and cons of a racing series, the magnitude of the Indy Racing Northern Light Series and help produce the product that you see on the track. Brian has been an incredible part of the growth of this series and the competition on track, and he's going to be addressing on track situations with both our teams, the formula, and how it has worked in these past five years and what we are anticipating in the future. Next to him is Bob Reif. Bob is Vice President of Marketing for the Indianapolis Motor Speedway and the Indy Racing League. He's our chief marketing officer. Bob's one-year anniversary, I think, was, what, about six weeks ago.
We are going to get open comments from both and then we'll open the floor up to questions, but we will start first with Brian Barnhart. Brian?
Brian Barnhart: Thank you, Mike, and thank you for those kind and gracious comments. I really appreciate that. I don't know if I agree with them, but I appreciate them. I'd like to welcome everybody to our kickoff luncheon for the 2001 season. We are extremely excited about the opportunities that will be presented to us for the upcoming year. We'll talk a little bit about those today between Bob and myself. We've got a lot of positive things and a lot of great momentum going in the Indy Racing Northern Light Series. We are excited about kicking off our season when we return here to Phoenix, the Pennzoil Copper World 200 on March 18th. It's the first time we've ever kicked our season off at Phoenix and we're excited about that. We always have had a successful "Test in the West" out here. We are looking forward to that again tomorrow and Saturday. Robin Braig and his staff are wonderful to work with out here. They've got a first class facility and continue to make the Phoenix International Raceway a place that we are excited to participate at each year, so we are excited about starting our season next month. It's going to be a good race out here in about six weeks. The 2000 season was in many ways a defining year for the Indy Racing Northern Light Series. It was a season where we came of age in many ways. We are going to use that and build on that success in the future. It legitimized the existence of the IRL and our formula in many ways. We had just an outstanding on track product. Our racing is second to none. The entertainment value and the close competitive nature of our racing is just -- it's something to behold, whether it's from a sponsor standpoint, a team standpoint or a fan standpoint. We are extremely proud of our competitive formula that we have created in not compromising the principles of Tony George in creating the IRL. We have incredibly close competition with cost controls in place. We race at speeds that we're comfortable with and we're very happy in going to the racetracks that we go with what our safety record has been. So we're extremely pleased and proud of our formula, and it shows with our great on track product, and as I said, the break-through year that 2000 was, we are looking to build on that success for 2001. So we're real excited and I'll turn it over to Bob for some comments.
<Bob Reif</b>: Thank you, Brian. Thank you, Mike. Thank you everybody for being here. Robin, you guys do a great job. We are ecstatic to be here to open the season in Phoenix, even though it's the start of the NCAA weekend. I know a lot of people gave us some criticism about that. But I think that we're ecstatic being with Copper World this year and we are looking forward to a great kickoff performance here. When you think about the state of the series, you have to think about where we were last year. Last year this time, the series had some challenges. Let's be straight. I mean 2000 was our breakthrough year, but we had some definite challenges. Our schedule was only nine races. In 2001, we have 13 races. Last year this time was about the second week of February that we actually started to promote the --at the time the WorldCom 200, which was taking place here at PIR. We started in November this year to promote the race, at the Winston Cup event, and we started advance ticket sales shortly thereafter. So we're really ahead of the curve when it comes to -- especially in terms of ticket sales, but when it comes to the overall marketing effort -- we're very much ahead of the curve. I think when you talk about TV from the television standpoint, last year was our first year with ABC coming back on board to air all the Indy Racing League events and it was a little bit of a learning curve. In year two, we are ready to do some neat things. In 2000 we only had 50 hours of programming. That's not enough. Actually it was 88 hours of programming. Let me be exact here. Winston Cup had 50 hours of programming a week. We had 88 for the year. This year, we're proud to say we are going to have a minimum of 500 hours of programming, if you include our infomercial, which will be airing locally in the market here, which is a half hour television show. I know Robin is shaking his head. I hope many of you have seen it. So in terms of growth, that's what 2001 is going to mean for the Indy Racing League. This is our growth year. 2000 was our break out year, a watershed year. 2001 is about growth, and the way we measure growth is in terms of customer service. And so we have to think about who our key customers are. First and foremost, our promoters. We are helping our promoters do their job. Their job is to sell tickets and fill the stands. I think we've all been spoiled by Winston Cup a little bit because they have been so successful. So what we're doing is, as I mentioned earlier, we are starting the promotional package, the promotional offering, months in advance. We are coming to market television, radio, print. Hard media also have strong promotional partners this year for the first time. You can look at companies like Kroger, Papa Johns and Purex, that are helping us at the retail level. These are things that didn't exist before in the Indy Racing League. For the first time in the history, we will have pack promotions. When you walk in stores, you are actually going to see the Indy Racing League in stores. That hasn't happened in the past. So one is our promoters. They are our number one customer when we talk in terms of our number one goal, which is to put fans in the stands. So the promoters are helping us achieve our objective of putting fans in the stands. Second, another great customer of ours, our drivers. We want our drivers to be successful. The Indy Racing League exists so that all of our stakeholders do well, and so a week ago, we had a media coaching session for our drivers. Not to turn our drivers into vanilla, but so that they know our message. They know the Indy Racing League is about a good value. It's about access. It's about a great entertaining product with close competitive side by side racing. So we're proud of that. We want our drivers to tell that story. Our team owners, they are another important customer to us. That's why I introduced Bob Beasley earlier. Bob and his staff -- team sponsorship services. They are committed to accessing companies that have budgets to spend money in open wheel racing and turn those into deals for our teams. It's an early start. We have got some great success stories. You are going to hear about some of them as the days go. I think you will hear about one of them today. We also, I think, in terms of our television partner, ABC/ESPN, they are a key customer. You can go to see at Indy -- at the Indy 500, we are going to introduce some new technology. I already mentioned about the increase in programming. But the new technology is going to be very important for us when we get people to stop when they are going through their stations and they are clicking through, we are going to get them to stop and watch our races. It's not just because of the on track product. We know that's great. New fans don't know about that. We need to get new people coming in. There is only about 10 million open wheel racing fans out there. We need to extend to the 283 million people in this country and get them - get their eyeballs on the TV set. We think we have got some ways to do that. We are ecstatic. There is no doubt about it. This is Tony George's vision. He's committed to the future of open wheel racing and growing the future of open wheel oval racing through the Indy Racing League. That is crystal clear. We hired 30 new people in marketing roles to make that vision come through, people with experience from major league baseball, the NFL, major legal soccer, people from the NBA, people that understand how to run leagues, people from the NHRA, people that have experience working with teams. You may know many of these folks and we are just so happy that they are on board. So when you come by our offices, you see there's people running around seven to seven running through walls making stuff happen. This is going to be a building growth year for us. We think the on track product is fantastic. Everybody else needs to know that. Not enough people understand. It's time for us to control our message, tell our stories and bring the new fans out. So we're committed. We are in it for the long haul. There are no discussions with CART. That is not on our table. It will not be on our table. We are going straightforward.
Mike King: Okay. Questions for Brian Barnhart or Bob Reif? Yes, sir.
Robin Braig: Let me just add to Bob, being a promoter, what he was talking about. Again, I'm Robin Braig, general manager. We are the recipient of what he's -- everything he's talked about. Nascar, Busch Series, Craftsman Truck Series. We could take a real lesson from IRL. As I sat here, I just wrote down some of the things. He mentioned the infomercial. He sends Billy Boat -- we run him ragged -- and Casey Mears out here, they have been at the Phoenix Open. I'm trying to give you some local feel for what he does. Phoenix Open, Birds Nest, autograph sessions. They got buses coming from Tucson bringing people up here to our race. They give us group sales leads. They have radio, TV, outdoor advertising in this market going right now. They brought Pennzoil to us. Rarely does a sanctioning body bring a sponsor to you. Usually you are out chasing your own down, and they have staff in the marketplace early. So just to really bring it to the grass roots level. That's what the IRL is doing for the promoter.
Mike King: Brian, if you could comment quickly on any changes we will see this year, including the qualifying situation with points.
Brian Barnhart: Well, we have had minor changes only from the 2000 season going into the 2001. Just a little fine tune here or there. One of the things that we have eliminated for the 2001 season is there will not be any points awarded for qualifying. We used to give three for the pole, two for the second place starter and one for the third place starter. We have eliminated all points for qualifying. The rest of the point system stays in place. We will still award two points for leading the most laps of the races. Our thought behind a lot of that was in keeping with the principles of the Indy Racing League and cost control. We had a situation and we had created an environment where there was a large amount of money being spent on qualifying engines and it became a bit of an issue the last couple years with what we were doing, and there's a bit of perception of teams and/or drivers buying championship points by spending exorbitant amounts of money on engines that have a very short life span to them and making just a qualifying special. So there's a lot of ways to approach that situation, but from the best product on Sunday, and maintaining and ensuring that we have as many cars running at the finish and giving the fans the best product on race day, we still want to allow the team to change that engine or not restrict or make you qualify in a race with a same engine. There will always be circumstances about that. The best way we felt handling that was just to eliminate the championship reward for sitting on the pole. We are more concerned with race day and that's what we're here for is to entertain the fans on race day, and from that aspect, we did away with the points. A team may still, you know, obviously build something that has a shorter life span to it to try and guarantee themselves an up front starting position, but I think especially last year in the Indy Racing Northern Light Series, we demonstrated as competitive as our fields are and as good as our racing is, it's really not where you start, it's race day that counts. Buddy won from last place here last year at the Phoenix race. Robbie Buhl, I think, started 22nd in Orlando and I think Little Al started 22nd or 23rd at Las Vegas when he won. So it's not about where you qualify. We put our emphasis on race day. We didn't feel that spending an exorbitant amount of money on a qualifying engine is what we consider value added spending in our series and that's one of our fundamental principles, so we have done away with the qualifying points for the 2001 season.
Mike King: Questions? Brian, where do you see car counts for both the season and the league and Indy?
Brian Barnhart: Well, I think addressing Indy first, I think if I remember right, last year I thought we had about 46 or 47 car drivers attempt to qualify or practice. I would anticipate that number probably reaching right at 50 this year for Indianapolis, which obviously will make for very high drama at the Indianapolis Motor Speedway. We've re-instituted the three-week format, a bit of a modified three-week format. We've got a third qualifying day on a second weekend now. And I think with 50 guys, in that neighborhood, trying to qualify for 33 spots, it obviously will make for some very high drama at Indianapolis. For the rest of the year, I would anticipate our car counts to be very similar to what we had last year and probably in the 25 to 27 range, which is a good number for us and we're pleased to have that as a starting field at our other events.
Mike King: Questions? Bob, if you could maybe comment one year ago where you stood looking at the marketing aspect of the league, where now a year later you stand as far as you and your staff looking down the road for the series?
<Bob Reif</b>: Well, I think I touched on that a little bit in my opening comments, but, you know, I failed to mention our key customer, the most important customer is the fan. And we are even making it easier for the fan to come to the track. When you think about the fan, why will they come to the track? They need a reason to care. Robin mentioned bus tours that we have coming up from Tucson, and every market, you will see we have bus tours going on where there's pre-race parties and post-race parties. We are providing transportation for fans. We're just doing things that the other leagues have done, other companies have done. We're not re-inventing the wheel. We're just doing things that are grass roots, roll up your sleeves and let's start working. We know our product better than anybody else knows our product. We can't expect anybody else to market or sell our product. That's why we've taken on the responsibility to do that. And we're very proud of that -- that fact and we believe we're going to be successful because we're committed to it. From a marketing standpoint, there's no doubt about it. We are light years ahead of where we were last year. And frankly, there was not a marketing plan for the Indy Racing League that could stand on its own and now we have it.
It's no secret here in Phoenix that a lot of your fans are built on the season ticket package, the coattails of NASCAR. Is there any thought -- when they buy their NASCAR ticket, they are buying the season ticket package, which includes the Northern Light race, is there any thought to sweetening that pot at all, to enhance that so that these NASCAR fans would open their eyes, and it's no secret that a lot of them have not come to the race, maybe to get them out here so that they may become fans?
<Bob Reif</b>: If you know about the Indy Racing League and what our whole fan position is about, it's two things. It's good, good value and access. We purport to be the most accessible professional sport. In 2001, we'll prove that. I mean in 2000, we had a pre-race brunch in Kentucky where 10,000 people showed up before the race and had Krispy Kreme doughnuts with all of our drivers and signed autographs and it was a neat thing.
I will be here for that.
<Bob Reif</b>: That's why I brought it up. Frankly, I mean there is very few sports where you can be 5 to 10 feet away from the athlete an hour to two hours before they perform the feat that makes them so unique and so special, and we want the fans to get that. What did it for me coming from the stick and ball side of the sports business was to get up close, understand that what our drivers do is heroic. I mean there's only a handful of people in the world that do what our drivers do. There's fighter pilots, there's astronauts and there's Indy car drivers. And we are so proud of what our guys do. And our women. Can't forget Sarah. And all the up-and-comers. So we are about good value. Fans can come out to the track, they can come out to the track, four tickets, four Cokes, four hot dogs for a reasonable family price. It's not sampling the product at $400 for four people. It's sampling the product for a reasonable price. Different markets, different promotions. So the value is real important for us and the access is important, when fans come out into the garage area, come to Victory Circle. So we are going to see different programs in each market, but each promoter has embraced our marketing efforts and I tell you what. We failed in markets in the past because you can't get a family of four to sample your product for $400. That's not what the Indy Racing League is about. So we do think we have a pointed difference versus other products and, sure, we are going to sweeten it with a fan pack, which is a pretty neat deal. We want fans coming to the race knowing who they are going to root for. Not show up saying, who am I going to root for today? We have education pieces. The infomercial is a half hour show because it teaches. It's not just a spot. This communicates something, tells you who our drivers are. It tells you what's going on at the track. It makes you look at the people that you see coming to the race and say, hey, they are like me. I want to go out there because I'm like them. So we're about education. There is also a radio infomercial, which is going on, which is a half hour show -- it's expensive to buy half hour shows than to say buy 30-second spots sometimes. So we are using that format to educate people.
Mike King: Brian, could you talk a little bit about the growth. We are going to be visiting five new venues this year.
Brian Barnhart: I think that's one of the most exciting aspects that we have for the upcoming season. The venues that have been added to the schedules for this year at Kansas City, Chicago, St. Louis, Richmond, Homestead and Nashville are all going to be fantastic markets for us. The schedule expansion from 9 to 13 events is a big increase in many ways for us, but the best aspect of it is not going just from 9 to 13, is that the Bob and his people have done a great job in condensing the schedule in terms of calendar. I mean we used to run 10 months of the year to run nine events. Now we are in a six-month time frame. We will be running 13 events and expanding Indianapolis back to a three-week format. We're going to be on a lot of people's calendars and radar screens from start to finish. It will be much easier from a fan standpoint to follow the series championship as it progresses from event to event. We had a great championship battle last year, and the downside was our last two or three races had anywhere from four to six weeks between them and people just forgot what was going until you got back to the next event. It will be much easier to follow from that aspect. It is a great TV package we have with ABC and ESPN. We are excited and proud of that. But those venues, the thing the 13 race schedule brings to us this year is we have a very heavy emphasis on Midwestern races. The Indy Racing League is formatted and based off grass roots racing and we have a very large fan base in the Midwest portion of the United States, and we are going to bring more events to our the larger part of our fan base. You know, NASCAR was regionally based for a long time out of the Southeast and that's where their strength was before they grew nationally. And we are going to take little bit of that as well, and we had a great turnout in a great event at the Kentucky Speedway last year, and I anticipate the same thing out of Nashville, St. Louis, Kansas City, and Chicago. I think those will also be tremendous venues. Bob can probably address a little bit, but the size of the crowds that are going to be at those events, I think we're going to look for a heavy turnout at a number of our events this year. That's one of our goals this year obviously is to put more fans in the grandstands. But those racetracks are going to be wonderful racetracks for us to participate on. The mile-and-a-half tracks at Kansas City and Chicago with the higher banks, you know, we are very well known for our shows at Texas and Atlanta and Kentucky. You are going to see the same thing in Kansas City and Chicago. The Nashville track is a mile-and-a-third, very similar configuration, so you're going to look for high speed, side by side, extremely competitive competition. So all told, the schedule expansion, the shortening of the time, and the markets that we are going to with the Midwestern emphasis make for an exciting prospect for the 2001 season.
Any plans in the future about trying to get back into the Northeast?
Brian Barnhart: I think we'll always look to cover the whole nation. I think Bob touched on it a little bit. I would see us continue with what I would like to see or term as moderate growth. Nine to 13 events this year is a pretty big hit from a financial responsibility to the teams. And instead of, you know, making big changes and jumps in the future, I'd like to to see, you know, one, two, maybe three events added each of the next couple years and just kind of stay where we're at with very slow, moderate, incremental growth and, yeah, I think we definitely would be interested in returning to the Northeast.
Brian, then in your -- what's the cap on number of races a year? Do you have that figure in your head?
Brian Barnhart: I don't know if I have a figure in my head as much as what I think is a comfortable number that our teams can support financially. I think we're asking quite a bit out of them to go to 13 events this year. I think the economy will drive a lot of that. And I think the series also is not going to put themselves in a position that we had maybe been in in the past where if it's not a good deal for us, we're not going to go there. I think we're going to be a lot more selective about events that we go to in the future, and I think you'll see us be very controlled in where our growth goes. But I'm comfortable running, you know, anywhere from 15 to 18 events a year. I think a lot of factors go into that and Bob can address them a little bit. You don't like to fight a whole lot on television with football in the fall, so we like to finish the season, which is what we are doing this year, by the middle of September. And, you know, weather drives a lot where you can go. But just due to the nature of our cars, you run about every other week is about what you can do. So if you pick the amount of time that you have available to do that, I think 15 to 18 events is a good number for us to be.
<Bob Reif</b>: But not for 2002.
Brian Barnhart: That would be too soon. If we can get there over the next two or three years, I think we will to be doing it just about at the right speed.
Do you see Phoenix as always being a season opener or do you like opening at Phoenix?
Brian Barnhart: Personally, I like opening at Phoenix, but I think of where you maybe want to go in the future and warm weather markets drive that a lot. It's been a very good thing for the series this year to not open our season in late January. It has afforded the teams a true off season. We never really had one from the standpoint we used to finish up in the middle of October, late October, in Texas, and our first official event for the following season always took place the first week of December as an open test at Orlando. You usually only had about five, six weeks off, and that really wasn't a true off season for our series, and kind of drug things out too long. So from the aspect of starting mid-March, I mean I could see us probably starting somewhere late February whether that's at Phoenix or somewhere else, I don't know if that's the case or not. But I can see us running from February to September, and, of course, we'd love coming here in the spring. It's usually really warm.
Mike King: Have time for one more question. Anyone?
Bob, can you talk about marketing in these new venues or new cities that you've got. Nashville has not had Indy car racing, Kansas City. Can you talk about those, easier or more difficult?
<Bob Reif</b>: Well, the question was is it easier or more difficult to go to markets that haven't had racing before. Well, depends what market it is. Each market is different. In Kansas City, boy, they did a great job in picking it. There is no doubt about it. I was there yesterday, as a matter of fact, from the cab driver to the people in the lobby of our offices that we were meeting at, everybody's talking about the fact that the racers are coming to town. And that's a great market. I haven't spent much time personally in Nashville. Matt McCartin has. Matt is our Director of Marketing. He's had a great reception from all the local folks that want to see the Indy Racing League come down. Each market is different. I just couldn't comment specifically in general about the markets, but I will tell you this. We are going to have our best attendance at these new venues. I mean we are going have sellouts for the first time in the history of the Indy Racing League. We are going to be able to have sellouts. I'm happy to say that.
Mike King: I want to let you know that bhoth Bob and Brian will be available for a few minutes for one-on-ones. So, gentlemen, thanks very much. Thank you all. We will see in just a few minutes.