Sunday saw the 90th running of the somewhat faded crown jewel of American motor sport, the Indianapolis 500 (New Zealander Scott Dixon came second). While fan interest has rebounded over the last couple of years, thanks largely to the participation of the eminently marketable Danica Patrick, Indy car racing is still a pale shadow of its former glory.
It all went horribly wrong in 1994 when Tony George, owner of the Indianapolis Motor Speedway, founded the breakaway Indy Racing League. Since then the US has had two supposedly premier open wheel racing leagues, IRL and CART (now the Champ Car World Series), neither of which have enjoyed anything like the popularity of CART before the split.
The rump CART organization even declared bankruptcy in 2003 and had to be rescued by a consortium of team owners. Meanwhile rival NASCAR has grown to become one of the most popular sports in the US, with TV viewership second only to the NFL.
Ironically, the reasons for the split are now largely irrelevant. The IRL has come to be dominated by a few of the same elite teams whose hegemony over the old CART series helped motivate the split. Meanwhile, in order to control costs and promote competitive racing, the Champ Car World Series has abandoned its Formula 1 style technological arms race in favor of nearly standardized cars, similar to the system used by the IRL.
All of which suggests that there is a significant investment opportunity. Open wheel racing was once very popular in the US. There is no reason that it couldn’t be again if only the warring sides could be persuaded to bury the hatchet.
Is there a private equity group out there with the cash and, perhaps more importantly, the diplomatic skill required to put humpty-dumpty back together again? If this isn’t a merger and rationalization opportunity, I don’t know what is.