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With a record 18 wins in the Indianapolis 500 as a team owner, it’s been said that Roger Penske owned the Indianapolis Motor Speedway.
On November 4, 2019, he took the next step and purchased the Indianapolis Motor Speedway, the Indianapolis 500, and the IndyCar Series from the Hulman-George Family.
Penske went from being the owner on the track to the owner of the track.
IndyCar and its fans celebrated the future. With Penske, one of the world’s most successful businessmen and competitors at the helm, the future of the world’s greatest race and the world’s largest sports stadium appeared brighter than ever.
And then came COVID.
When a National Emergency was issued on March 13, 2020, the world began to shut down. Major sporting events were either cancelled, such as the NCAA March Madness, or postponed and moved to another date.
Prior to that, Penske had already invested a reported $300 million to purchase the fabled Speedway along with IndyCar and IMS Productions. He also invested an additional $20 million into facility improvements and announced another $2 million would be added to the purse for the 104th Indianapolis 500 in 2020.
As COVID lockdowns tightened its grip on the United States, Penske and IMS officials decided to move the race from its traditional Memorial Day Weekend date to August 23, hoping the COVID 19 virus would have died out from the summer heat.
Instead, the pandemic roared on and despite various health and safety protocols, and had an ongoing dialogue with the Marion County, Indiana Department of Health to allow spectators back to the sporting event, even in limited capacity.
When IU Health, a major partner of the Indianapolis 500 and the Indianapolis Motor Speedway, went public and said it was not in the public’s best interest to allow spectators to attend, Penske took everything under consideration and made one of the hardest decisions of his business career.
He decided to move forward with the August 23 Indianapolis 500 without spectators.
In order to make that work, costs had to be cut. The purse, which was $15 million in 2019, was cut in half. He met with the team owners to explain why the Indy 500 Purse and the “Leaders Circle” program that gives payments to 22 full-time IndyCar participants, was also reduced.
By holding the race in an empty Speedway, it would ensure the NBC television contract was met and the much-needed television money would be issued.
Fans that had already purchased tickets to the 2020 Indy 500 were issued credits for 2021 or 2022.
Penske was able to successfully guide IndyCar and IMS through its darkest year and looked forward to a full house in 2021.
But the Marion County Board of Health saw a resurgence of COVID and despite a massive vaccination drive, the 105th Indianapolis 500 would have to be held with “limited capacity.”
Instead of 300,000 spectators, 137,000 were allowed to attend last year’s Indy 500 and witness history as Helio Castroneves became the fourth, four-time winner of the Indianapolis 500.
Through weakening strains of COVID and more vaccinations, many health protocols have been lifted or eased. Sporting events were allowed to return to full capacity last summer and that meant the staff of the Indianapolis Motor Speedway could finally prepare for a full house for the 106th Indianapolis 500 on May 29, 2022.
After three long years, Roger Penske will finally get to host the Indianapolis 500 in all of its red-white-and-blue, star-spangled banner, celebrity-watching, Military-honoring Memorial Day Weekend, Back Home Again in Indiana, full-capacity glory.
There’s a term that describes Roger Penske’s penchant for detail – “Penske Perfect.”
He learned that as a cadet at the prestigious Culver Military Academy in Marshall County, Indiana when he was a youth from Shaker Heights, Ohio.
“The one thing I learned was to shine my shoes,” Penske said. “Overall, that experience at Culver was terrific. I learned how to be a leader. You worked with people from different parts of the world at Culver. I would say it was a great foundation for me to have discipline, to understand you had to work to get to the front and that important to me in life.”
After the last three years, there is another term that best exemplifies the 85-year-old businessman:
I had an exclusive interview with Penske inside his mobile office motorhome known as “RP-1.” He gives great deal about the efforts that it took to keep IndyCar, the Indianapolis Motor Speedway, and the Indianapolis 500 on track.
“Obviously, when we signed the paper and gave them our check back in January of 2020, we had a business plan that had well in excess of 250,000 people and that didn’t happen,” Penske explained. “It meant we were going to have to provide credits to certain customers that weren’t going to be able to make it and then hunker down and look at expenses from the standpoint of where they were and where we could optimize the people, we had in our overall holding company to run the track.
“We never stopped. We invested another $20 million in guest experience in the track and that showed our personal and company commitment moving forward. It was a matter of continuing to invest. I think it has paid off.
“With COVID moving on, we are really anxiously awaiting to see what the outcome is in 2022.”
Penske used the delay of the Indianapolis 500 in 2020 from May to August as a chance to actually get more work completed at the Indianapolis Motor Speedway. He continued the capital improvement project, which would have been paused in May of that year if the Indy 500 had been run on schedule.
“We knew there were things we had to do,” Penske said. “We really took advantage of the shutdown in order to complete things we might not have had on our list. The primary reason we moved on – without the series, we don’t have the Speedway, without the Speedway, we don’t have a series. The investment we made to the Speedway was obviously critical for the series.
“To me, to have the race even without fans and be able to support the other promoters for two years was important. We had to give some money back from the standpoint of sanction fees, some of the payout for the teams was less, but everybody worked as a team for the outcome.”
Throughout the early days of the pandemic, Penske went to work. He depended on Penske Entertainment CEO Mark Miles, Indianapolis Motor Speedway President Doug Boles, and IndyCar President Jay Frye to help create opportunity and implement key decisions.
That’s a key component of Penske’s business career. The Penske Corporation has been able to take over foundering businesses and turn them around. He purchased the truck leasing arm of Hertz and rebranded it as Hertz-Penske before it became the highly successful Penske Truck Rental.
He created the United Auto Group and Penske Automotive, which are among the largest automotive dealerships in the world.
He was successful in taking Detroit Diesel from a company that was struggling back to prominence as one of the largest Diesel manufacturers on Earth.
Auto racing, however, has always been Penske’s “golf game” as he describes it. He was a superb race driver himself in the 1950 and 1960s and was offered a ride from the famed Dean Van Lines team for the 1965 Indianapolis 500. Penske, who had just recently been awarded a Chevrolet dealership in Philadelphia, turned it down because General Motors said he could not be an active race driver and a Chevrolet dealer at the same time.
That ride went to a young Italian immigrant from Nazareth, Pennsylvania named Mario Andretti.
Instead of driving race cars, Penske owned a race team. With Mark Donohue as an engineer/driver, the team achieved incredible success. They arrived at the Indianapolis 500 for the first time in 1969 and Donohue gave Penske his first Indy 500 win as a team owner 50 years ago in 1972.
Fifty years and 18 Indianapolis 500 wins later, Penske is ready to welcome the world back to the “World’s Greatest Race Course.”
Through his guidance and business acumen, Penske has led the Indianapolis 500 through some dark times and into a brighter future.
“We always look for under-valued and under-performing,” Penske said. “I don’t think the purchase price was undervalued. It was where it needed to be. Certainly, the performance at the Speedway the last many decades has been amazing, or we wouldn’t have the iconic Speedway, the biggest sporting event in the world. The reason we continued to lead in was the history. We needed to complete our commitment, and that was through good or bad.
“We’ve had tougher situations. Detroit Diesel was one. We like that. It’s like scratching as a team in racing. If you are a second or two behind in racing, what do you do? You work hard and have to change things.
“That’s what we did. We had a course correction in some cases and continued to invest, continued to invest in human capital with people. We have a lot more sponsorships now. We’ve been using it for the OEMs for many different functions in the industry.
“I would say it’s a home run right now.”
From a business standpoint, Penske and IMS had a large inventory of credits issued from fans who had already bought tickets. Last year, 137,000 of those credits were used by fans to attend the race.
That means part of this year’s crowds will be using credits that were paid for three years ago.
“Absolutely, but we are down to about $1.2 million credits available,” Penske said. “I would say that inning has closed. Divide $1.2 million by $125 and you do the math.
“But there is a lot of fresh revenue coming because we have the suites, we have the infield, and obviously we will have at least 100,000 more people than we had in 2021. We feel good about it. Ticket sales are really strong at this point going into the race. I feel good.
“We have tried to deal with credits, which is what we have to do for our fans. We own the business. We have a customer base which is traditionally the fans that come to the Indianapolis 500. There was no question about it and hopefully, it has created a lot of good will.”
The NTT IndyCar Series appears to be on an upswing in 2021. Crowds have been larger at every event except the March 20 XPEL 376 at Texas Motor Speedway.
Attendance appeared to be up for last week’s qualifications on Saturday and Sunday. IMS officials believe the first wide-open Indy 500 since 2019 has created a hunger for the event.
They expect the largest crowd since the 100th Indianapolis 500 in 2016 was announced as a sellout.
“We do expect the largest crowd since 2016 and if you look at our ticket sales, we are about 10 percent ahead of 2019, which is amazing,” Penske said. “I think people want to get out. We have a lot of race fans that had to watch it on television and didn’t have the chance to come where they wanted to go.
“I think there is momentum out there for a lot of sports, not just the Indianapolis Motor Speedway. There is no question that our fan base and this legacy fan that we have are all coming, they are bringing their family and their kids, and the sponsorship support is better than it has ever been.”
Expenditures have been adjusted and after cutting the purse in half in 2020 and 2021, it will return to the 2019 level, but the additional $2 million that Penske was going to add in 2020 will have to wait another year.
“We’re not going to announce the purse right now, but it will be substantially larger than it was last year,” Penske said. “It’s too new to make that comment. We want to see a level playing field here. Look at the revenue, look at the seats, what are the costs? One of our most important assets are the teams and we want to make sure we provide them with all the funding that we can.”
After purchasing the Speedway in November 2019, and taking official control on January 6, 2020, Penske stepped up to the plate and expected a fastball.
Instead, COVID through him a curveball.
Like a great hitter, Penske was able to adapt.
“That’s my day every day,” Penske said. “I get curveballs in my business. It wasn’t anything new; it’s just managing. With the team that Mark Miles and Doug Boles and the team we have in place, they have done a terrific job. We have made some changes. We have a different qualifying for the race weekend, which will be real exciting. When you think of six drivers to go for the pole just before 6 p.m. on national network television will really be something.
“One of the things we’ve done, we stretch our people, but we take the people who have the expertise and add them into the nucleus of our company. I don’t think there is anybody that is involved in our race team or involved in Indianapolis doesn’t love this sport. It’s not just a job for them, it’s special when they can say they work at Indianapolis or are on a race team that is winning and providing nationwide, worldwide coverage.
“That is what we want. It helps build our brand and it helps build the individual’s brand. A lot of people have worked for us, moved on and done quite well in the world of business.”
According to his wife, Kathy, Penske puts as much time in each business as he does his other businesses. The problem is the more businesses Penske owns, the less time there is in a day.
He is notorious for sleeping just three or four hours a day. Much of his sleep happens once his private plane takes off on another business trip.
Somehow, he finds the time and devotes his full attention.
“I’m the chairman of the company and I have presidents that have the operating responsibility across all of our businesses,” Penske explained. “We have Doug Boles and Mark Miles at Penske Entertainment. We have Tim Cindric at Team Penske. Brian Hard at Penske Truck Leasing. We have these capable people within the organization.
“What I do is have weekly reviews and monthly reviews with all of our key businesses. I like to travel to a location, so I spend a lot of my time on the road visiting our facilities and getting a chance to talk directly to all of my employees.”
Penske is “old school” when it comes to business. He expects his employees to dress professionally. He prefers shaking hands and looking people in the eye. He hates clutter on employee’s desks, and he wants people to be in the office, instead of on ZOOM.
“I think you have to look at the circumstances we had over the last 24 months with COVID,” Penske said. “People were not allowed to go out from a legal perspective. We like to work with our people. Eighty to ninety percent of our people worked during COVID because we are an essential business. We had people working on trucks and working on cars and people working at the Speedway. It’s part of our MO.
“We have flexibility for certain things meaningful to an employee, but I think you are seeing people wanting to get back to going to work now rather than stay home. Some people got into the groove of wanting to work at home, but if you hire people that only want to work on a screen and don’t have a chance to have that high-tech, high touch with them is probably a mistake.
“That will be a balance we will look at over the next five to 10 years. Where will we end up? Will we have four, 10-hour days? We will have a rotation as far as days you work. We have women that have kids. We need to take care of single mothers. Overall, it’s too new to rate on what is the best formula for it. We want our people, especially the key people, to be able to see them.
“During COVID, we had ZOOM meetings every single day. I went into the official every day and connected by ZOOM. As soon as it was safe to travel, we traveled and met with people in a safe environment based on what were the laws in that particular state or environment.”
One other thing about Penske and his business philosophy:
Don’t ever tell him “No.”
“I think the word ‘no’ should not be in our vocabulary,” Penske said. “We should always say, ‘Let’s take a look at it. Is there a work around here? Is there another way to address it? Is there another way to do this?’
“From a work ethic, we have great people. From my perspective, they work hard. I think they are proud to work here. We have very little turnover of our senior management team. If you look the metrics of other companies, we are way ahead of the average.”
There is another key component to Penske’s ability as a business man.
It’s the ability to pivot. That is what he had to do at the Indianapolis Motor Speedway and at his other businesses at the Penske Corporation.
“As I look at our business over the last 24 months, we had to pivot in many ways, people working from home, dealing with family and friends in dire need health wise,” Penske explained. “Our supply chain has been interrupted here over the last several months. We have the war in the Ukraine that has compounded that.
“But overall, we are an essential business. We are providing trucks and vehicles across four continents and nine countries. We have 63,000 people and our revenues in 2021 were over $35 billion. Fortunately, we had the best return we had for our shareholders in history. The first quarter numbers are available for everybody to look at.
“We saw that same result going forward. We have to be careful. Interest rates are going up. Online, from what I understand, has slowed down. We are seeing some of that in our online auto business, it’s softening, but from the business we are getting in store is increasing. From a retail auto side, there is no question that people are driving miles because our parts and service business has gone up. A byproduct of people getting out is now more parts and service. That’s the fixed coverage we get from that margin in our business.”
With so much responsibility and so many different businesses in the transportation, automotive and motorsports industries, Penske continues to look for new ventures and opportunities.
At 85, the word “retirement” is not in his vocabulary.
“We are always looking at ways to add additional maintenance locations for our truck leasing,” he said. “We have made four or five acquisitions this year on our automotive side, both domestically and internationally, and we will continue that journey over the next year for sure.
“There is a pipeline of opportunities we are always dealing with. I wouldn’t say that it is any greater today than it was in the past. There are some people that after COVID because multiples are high on businesses and interest rates were low, it was a good time to sell and a good time to buy.
“We have a very measured approach as we go forward. Our biggest focus is on the quality of our balance sheet and our leverage is .7 debt to cap and our automotive is 26 percent. These are world class numbers in our business. We actually have less debt at the end of the quarter in our truck leasing business where we have $16 billion of assets than we did a year ago, yet we grew the business 20 percent.
“I think we are on the right track.
On Sunday, when Penske steps up to the microphone to give the command, “Gentlemen, Start Your Engines” to start the 106th Indianapolis 500, he will certainly be at “the right track” as he welcomes 300,000 fans “Back Home Again in Indiana.”