Does it Really Matter?

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Among all the speculation that has occurred over the last couple of weeks regarding Roger Penske’s purchase of IndyCar, IMS and IMS Production there is one that doesn’t interest me in the least. I’m very curious to learn of the big-picture plans that Penske has for both. I’m also anxious to learn about the little details; like who will give the command to start engines next May or will double-points still be a thing.

But one thing that a lot of people seem to be anguishing over, holds no interest for me whatsoever – the purchase price.

I’ve never been one to fret over how much a co-worker makes or how much a friend paid for their home. About thirty years ago, my first wife and I bought a new home. One of her friends came over to see it and blatantly asked us how much we paid for it. Since I thought it was a rude question, I quickly came up with a rude answer before my then-wife could even answer. I flat-out told her it was none of her business.

When the rude friend left, my wife told me how I had embarrassed her. I told her it was the friend who embarrassed her because it showed what rude friends she has. Exchanges like this were frequent in that marriage, and that probably explains why it ended in divorce. Fortunately, I have a much better relationship with my second wife, but I digress…

Unfortunately, that story didn’t end there. The rude friend went to the court house to look up the purchase price, then went so far as to let us know she had done it. Did it really matter that much?

I grew up in a time when it was considered rude to brag on how much you paid for something. Likewise, it was just as rude to ask someone that same question. Based on Roger Penske’s reaction when he was asked the purchase price in last week’s press conference – he feels the same way. After he explained that the information was between two private companies; whoever the person was that asked the purchase price, was on the receiving end of a glare from Penske that would send shivers up my spine. I felt embarrassed for him, because even as another question was being asked – Penske kept staring down the offender as if to get the point across to him and anyone else watching to never ask that question again.

I’ve seen estimates as low as $250 Million and as high as $2 Billion. But no one really has any idea, except for those directly involved in the negotiations – and they’re not talking.

Does it really matter?

Most of us cannot even fathom the kind of money we’re talking about here – even on the low-end of the estimates. So it’s not as if any of us could’ve matched or beaten Penske’s offer.

I know that some are just curious about such things, but I think others may have other motives. They want to be able to prove that one side got fleeced. My question is, who among us are privy to the books for Hulman and Company? Unless you know every line-item on their balance sheet, there is no way any of us can make any type of estimate as to the worth of the company.

We have no idea how much revenue IMS takes in. Until Curt Cavin counted the seats in 2004, we had no idea how many seats the facility held. For the record, at that time there were 257,325 seats. That was before thousands of seats were torn down outside of Turn Three, as well as the First Turn Terrace – which were bleachers that sat inside ot Turn One. Now, it’s closer to 235,000. Prior to Cavin’s espionage work to count the seats – it was a closely guarded secret. Attendance is also kept under wraps each year. Each year you hear estimates of 300,000 to 400,000 all the way up to a half-million people on Race Day – counting officials, team personnel, media, track workers, etc.

You might be able to get a gauge on ticket sales, but do we know how much Gainbridge paid for presenting rights last year? What about concessions? What kind of cut does IMS get from NBC for the TV package? How much do they lease each suite for? How much does Arrow pay to erect their mobile suite? These are just a few of the many revenue streams that the Indianapolis 500 generates. What about NASCAR? The Brickyard 400 sells just a fraction of what it used to in ticket sales, but my understanding is that the track makes so much money from NASCAR’s TV deal that it doesn’t really matter.

Even events like Lights at the Brickyard in November and December probably brings in a healthy amount each night. I have no way of even guessing, but the two times I’ve been there for that Christmas event – cars have been lined up on 16th Street waiting to get in. At $35 and $50 a pop – that can make for a healthy bottom-line for a race track in December.

My point is, we have no idea how much IMS is worth. Consequently, we have no clue if one side took advantage of the other. I would not be surprised if Roger Penske ended up paying less than some other offers. That would make sense.

If you were selling the home that you grew up in, and had over fifty years of wonderful childhood and adult memories there – wouldn’t you take less if you had an offer from a family friend that you knew would respect and take care of the place, as opposed to a real-estate developer who had the potential to tear down your childhood home and build a duplex where your homestead once stood? I know I would.

With so many pressing questions and major concerns facing Roger Penske over the coming months and years, why are so many people wasting time and energy pursuing the elusive purchase price. I would think there are far more important things to focus our energy on. After all… Does it really matter?

George Phillips

8 Responses to “Does it Really Matter?”

  1. I also grew up at a time when it was considered rude to ask a person how much they paid for something. Maybe it’s a generational thing. I truly think some young people don’t know any better. I didn’t catch the name of the questioner, but Roger’s icy stare was a pretty uncomfortable moment.

  2. Since IMS is holds a place in so many people’s hearts maybe they think they deserve to know the number or are just immensely curious. These are the same type of people who watch Dancing with the Stars.

  3. billytheskink Says:

    I think curiosity about the sale price is understandable and I won’t deny experiencing it myself. Trying to uncover it for purposes of validating one’s opinion (or invalidating another’s) on value (and, therefore, success) of IMS and the series is pretty unbecoming, and there are certainly folks doing that.

    I’m happy to leave the price at “something only a small few people or groups could afford” and be happy that the person in that club who did buy it all is someone with a known passion for Indycar racing and the 500.

  4. When confronted with an impertinent question such as how much I paid for something, my standard answer is, “No more than I had to.” I’m sure the purchase price for IMS and the series was “plenty” to put it succinctly. I’m also confident a business person like Roger Penske didn’t pay any more than he had to to buy it.

  5. Chris Lukens Says:

    I voted for “It’s normal to be curious about such things,” because it is normal to be curious. But you know what curiosity did to the cat. Besides, I am sure that this deal has so many stock swaps, deferred payments, structured third party protections, tax advantaged clauses, etc., that any dollar number anyone can come up with ( other than Roger P ) would be meaningless.

  6. Reminds me of something my dad once said…..”I lived next to the same neighbors for 25 years. Never asked them how much money they made, where they go to church, or who they vote for, and we got along just fine!” Good wisdom in my humble opinion!

  7. Half of you have no interest in what the mecca of auto racing is worth? They place we all would have wanted to buy if we won a record powerball. I don’t believe it. My guess is IMS in total is probably worth $1 billion and Penski is buying it at about $850M. In a year or so if we can find out what Marion county appraises the property for, we will probably have a number close to the sale price.

  8. I think there is a significant difference between which questions are appropriate to pose to a visitor to your house and which questions are appropriate to pose to a public figure at a press conference. If Adam Vinatieri happens to drop by the house, I’m not going to ask him why he doesn’t seem to be able to kick any better than my mom. But reporters absolutely must ask that question. Their job isn’t to ensure that he’s comfortable. It’s to ensure that the public is informed. Similarly, it’s completely reasonable for reporters to ask RP how much he paid at a press conference. Their job is not to make him feel comfortable. Of course, it was completely within RP’s rights to decline to answer, but he should expect to be asked.

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