Indy 500: Revving Up for War

Jumping from the cockpit of his sleek Indy race car, Al Unser Jr. could be mistaken for a walking billboard. Seemingly every inch of his red jumpsuit is covered with corporate logos.

Unser’s garb is a fitting symbol for Indy car racing. Its high-decibel, high-tech machines--capable of 240 mph on the straightaways--have fostered a $1-billion-a-year enterprise that has become one of America’s fastest-growing sports industries.

But as the 80th installment of the Indianapolis 500--the sport’s premier event--draws near, the boom has been engulfed by gloom.

Like baseball, hockey and football before it, Indy car racing is being ripped apart by an internecine dispute. Its very future is the focus of a bitter battle for control among its strong-willed owners and promoters.

For the first time in modern history, the biggest names will not be among the gentlemen starting their engines on Memorial Day weekend at the Indianapolis Motor Speedway, the famed 2 1/2-mile oval known as the Brickyard.

Instead, heavyweight drivers such as Unser, Michael Andretti, Bobby Rahal and Emerson Fittipaldi and the sport’s wealthiest owners are heading to rural south-central Michigan, where they are staging an inaugural, upstart event they call the U.S. 500.

The competing races are noisy manifestations of a dispute that dates back nearly two decades but recently erupted into a civil war. And this Sunday promises to be the racing equivalent of Gettysburg.

“To put it simply, this is a battle for control of Indy car racing,” said Cal Wells III, an Indy car team owner from Rancho Santa Margarita who will shun the Indy 500 to race in Michigan.

The nasty feud pits two philosophically opposed camps against each other.

One--embodied by Brickyard owner Tony George and his new Indy Racing League--wants to regain the control it lost in the 1970s and to democratize the sport that it argues has strayed from its oval-track roots and now is too expensive, elitist and removed from U.S. fans and drivers.

The other--represented by Championship Auto Racing Teams, the rich and famous of Indy racing who seized control of the sport in the 1970s--says its formula for success has worked. CART plans to keep raising the technology ante, offer a variety of racing venues and expand abroad to attract ever-bigger crowds and purses.

The dispute’s outcome is likely to decide whether the Indy 500--an unparalleled American pageant and party that attracts 400,000 fans and last year drew a live TV audience of 12.8 million--will continue to be what its promoters call “the greatest spectacle in racing.”

Already the spectacle of competing races has left many fans angry and dispirited. And the dispute threatens to undermine corporate support and stunt the sport’s growth. It has driven away such familiar sponsors as Valvoline, Texaco and Honda from this year’s Indy 500 and appears to have begun eroding the sport’s all-important TV audience.

“This could end up killing the goose that laid the golden egg,” said Jim Andrews, vice president of IEG, a Chicago-based firm that monitors corporate sponsorship of sports and entertainment events.

The split is certain to diminish this year’s Indy 500, already clouded by the death Friday of driver Scott Brayton during a practice run. Winning will be no less lucrative--the champion gets more than $1 million--but the weak field studded largely with little-known rookies inevitably will cheapen the achievement.

Undergoing Rebirth

The rift in Gasoline Alley, as the Speedway’s garage area is called, comes as motor sports undergo a key renaissance. Much of the growth is attributed to NASCAR, which has used clever family-oriented marketing to expand beyond its good-ol’-boy Southern roots and ride its modified Chevys, Fords and Pontiacs to financial glory.

The faster, more exotic Indy-style cars--rear-engine, open-wheel machines whose only purpose is speed--may not have reached NASCAR’s commercial speed. But in attendance Indy racing is the third fastest-growing sport, lagging only stock cars and ice hockey. For the 16-race PPG Indy Car World Series, it is at an all-time high, up 50% since 1989 to an average of 141,000 per race.

The demographics are an advertiser’s dream: The typical fan is a young, college-educated, professional man who has an average household income of $51,000, 42% higher than the national average.

Every race is shown on network or cable television, and viewership has grown impressively. The average race is broadcast in 180 countries and, with delayed reruns, draws 65 million viewers worldwide, CART says.

Sponsors are expected to dole out $357 million this year to support Indy teams in 21 races, up 24% in two years, according to IEG.

The sport’s growing appeal has helped spark a racetrack development boom. At least a half dozen are being built, including the $80-million California Speedway in Fontana.

Wall Street is helping to build the new tracks. When Penske Motorsports Inc., the track subsidiary of racing mogul Roger Penske, went public in March with an initial stock offering, demand was so great that the price rose 33% to $32 a share on the first day of trading.

Overall finances are difficult to ascertain, but insiders estimate Indy car racing generates well over $1 billion in annual revenues from sponsors, sanction fees, event receipts, TV rights and licensing fees for accessories.

“It’s unfortunate that when things are going so well that we have to be distracted by this,” said Rahal, a former Indy 500 winner and CART director.

Storied History

Disputes are nothing new to the sport. Its storied history, which dates to 1911, is replete with power struggles and fist-fights. But this is the first conflict that pits the epic event itself against the biggest stars and cars.

Anton “Tony” Hulman George, a third-generation owner of the speedway, talks of returning Indy car racing to its oval-track roots. He wants to make the sport less expensive, adopt rules that ensure close competition and bring more young American drivers into the top echelon of the sport.

CART, whose franchise owners include Penske, E.U. “Pat” Patrick, Dan Gurney and entertainers David Letterman and Paul Newman, favors a variety of venues--ovals, permanent road courses and temporary street courses, such as the one used for the Long Beach Grand Prix, which is part of the CART Indy series. They are strongly opposed to restraining advances in engine and other technology. And they see Indy racing as an American sport that should be exported.

The struggle is a very personal one. George aims to return his family to the throne as Indy cars’ rightful rulers. His supporters blast CART as a virtual cartel awash in conflicts of interest.

The team owners in turn call George crude and backward-looking, and insist they will not relinquish the driver’s seat.

“The feelings run deep,” said Cary Agajanian, a Los Angeles attorney aligned with George and whose family has long been involved in Indy car racing. “This is all about 80 years of history.”

Always a grueling endurance test of man and machine, the Indy 500 was brought into the modern era by Indiana baking-powder magnate Anton Hulman, who acquired the rundown track in 1945 from a group headed by World War I flying ace Eddie Rickenbacker. Hulman refurbished the brick-laden speedway and created a monthlong extravaganza that annually pumps more than $100 million into Indianapolis’ economy.

He also helped to establish the United States Auto Club as the sanctioning body for Indy car racing. Hulman died in 1977. The following year, seven of USAC’s top officials were killed in a plane crash. Their loss left a power vacuum that quickly was filled by team owners who were upset with USAC’s arbitrary rules decisions and lack of promotion of the sport.

Led by Patrick and Penske, these owner-drivers formed CART and began an Indy car racing series independent of USAC and the Brickyard. The two sides coexisted uneasily: CART ran its series sponsored by PPG Industries, but its teams continued to run in the Indy 500 under USAC rules.

Change came when Hulman’s grandson, Tony George, became speedway president in 1989. George--a former race car driver of little distinction--moved to modernize Indy, brought in stock-car racing and upgraded the golf course on the Brickyard’s vast infield to championship caliber.

Most important, he began planning to reclaim what CART had wrested away. But, in an interview after being honored this month by the Indianapolis Athletic Club, the 36-year-old George denied he is trying to even the score.

“This is not about revenge,” he said, choosing his words carefully. “Anybody who says that is misinformed. I’m more concerned with the future than the past. This is about having a chance to create a new vision.”

CART, however, likens George to a corporate raider mounting a hostile takeover. They characterize his tactics as heavy-handed and his vision as rooted in the past. “He is trying to turn the clock back 20 years,” said Patrick.

From the start, George pushed CART’s 24 franchise owners for changes, without much success. After several failed political maneuvers, in 1994--while the IndyCar teams were en route to Australia for a race--he announced the formation of the rival Indy Racing League. It was to be a five-race series anchored by the Indy 500.

After lawsuits and counter-suits, George declared in mid-1995 that 25 of the 33 starting positions at the Indy 500 would be reserved for the leading IRL point leaders. The move was intended to force CART teams to compete in George’s new IRL races if they wanted a decent chance at making the Indy field.

CART said its teams had been effectively locked out of the Indy 500; the speedway said the teams were boycotting its race.

Thus was born the U.S. 500.

To be run on Penske’s Michigan International Speedway 90 miles west of Detroit, the race is expected to draw 100,000 fans and pay the winner $1 million. And CART hopes its race--held on a track that has yielded the fastest laps in any Indy car competition--eventually will surpass the Indy 500 in prestige.

Though CART has maintained a remarkably united front, there is one prominent dissenter, the legendary driver A.J. Foyt, George’s godfather and close friend.

“They say, ‘The U.S. 500 will be as big as Indy 500 in two years,’ ” said Foyt, one of only two CART franchise holders who have broken ranks with the other owners. “I don’t think that will ever happen.”

Instead Foyt, a four-time Indy 500 winner, believes the moves taken by the Indy speedway will revitalize oval racing, reduce engine and chassis costs and again give young unknowns a chance to win at Indianapolis.

If there is a model for George’s vision, it’s NASCAR.

Wide Audience Appeal

The new league’s officials enviously eye the stock-car empire’s marketing prowess, its appeal to a broader audience including women and families, and its ability to attract new sponsors who aren’t hawking tires, beer or cigarettes.

George wants to limit the skyrocketing costs of Indy racing, ensure the competition is tight and open the field to more American drivers, who perform best on ovals.

It now costs roughly $10 million to field a competitive Indy car team for a year. Much of the cost is driven by racing suppliers’ practice of using racing as a test bed for new engine technology and development processes.

“We don’t think the results should be based on who has the biggest wallet,” said Agajanian, now a USAC official presiding over IRL races. “Fans come to see who’s the best driver, not who has the best widget.”

Indeed, IRL officials complain that CART is a closed club run by wealthy owners who often have clear conflicts of interest. They especially criticize the influential Penske--whose teams have won 10 Indy titles--noting that he helps set engine and chassis specifications even though he supplies such equipment to many Indy car teams.

Refusing to be drawn into the fray publicly, Penske has denied all interview requests about the dispute. But his spokesman and fellow team owners dismiss the suggestion that Penske or any single owner controls CART.

Andrew Craig, CART’s British-born chief executive who previously ran marketing for the Olympic Games, acknowledges more can be done to broaden the appeal of Indy car racing.

But he says it would be a mistake to turn it into a high-tech version of NASCAR. In fact, Indy car racing is more akin to Formula One racing, the costly, sophisticated road racing popular in Europe.

Craig says Indy car growth can best be achieved by appealing to fans beyond North America and to multinational corporations with big marketing budgets. CART, which holds races in Australia, Canada and Brazil, plans to expand to Japan and Europe.

While oval racing--a uniquely American form--may be easier for fans to watch, CART says hard-core Indy car fans want a series that offers a variety of driving tests. Fans also are enamored of the sport’s high-tech nature, CART says, and any efforts to impose cost controls or restrictive rules would be counterproductive.

As the warring Indy sides trade barbs, sponsors and fans find themselves caught in the middle.

Spawns Disruption

For sponsors, the Indy skirmish has produced uncertainty and disruption. It has forced many to decide which race to support. Some, including Philip Morris, Texaco, Honda, Toyota and Mercedes-Benz, have abandoned the Indy 500. Others, like PPG Industries, are supporting both.

Another no-show is Valvoline, the official fuel and oil supplier for the Indy 500 for 29 years. The company bowed out when it was unable to get lower rates that it believed reflected the diminished drawing power of this year’s race.

But Indy quickly found willing replacements. Three days after Valvoline bowed out, Pennzoil stepped forward. When Miller Brewing Co. canceled its sponsorship, Coors jumped in.

Fallout from the dispute also is hitting home--in Indianapolis, where Memorial Day weekend is routinely a bonanza for local businesses. This year, corporate players such as Ford Motor Co.--its new racing engine ineligible for next year’s Indy 500 under the latest IRL specifications--have drastically cut back their normal monthlong presence on the Indy cocktail circuit.

Such cutbacks reportedly have cost local hotels and restaurants hundreds of thousands of dollars in lost business this year.

Ominously, the dispute also appears to have hurt TV ratings. Viewership of Indy racing this year lags last year, perhaps an indication of confusion among fans. ABC will televise the Indy 500 and its subsidiary ESPN will air the U.S. 500, which starts two hours later.

“It would be better if we didn’t have competing races,” said ABC spokesman Mark Mandel. “But we are confident the Indy 500 will do well. It’s a blue-chip event that many fans plan their calendar around.”

That remains to be seen.

Brian Ames of Sterling, Ill., attended the last seven Indy 500s. But this year he is headed for Brooklyn, Mich.

“I would much rather watch the real professionals race than go for the tradition of the race,” he said.

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