Penske purchases Indianapolis Motor Speedway and racing series

pinchvalve said:

Indy is important to Roger Penske and no one else. He's already made it so no one cares what's going on there anymore, pretty soon it will be one big private box for him to sit and watch his own cars go around. A billionaires' version of a slot-car track in the basement. Its a shame because I used to love Memorial Day weekend, my Birthday and watching the Indy Car Race. I haven't seen it in years, and with cars this ugly, I don't have much interest in tuning back in.

 

You seem out of touch.  The Indy 500 and Indy car in general is on an upswing gaining views, clicks and interest.  While NASCAR is loosing viewers, Indy car seems to be slowly gaining them on TV.  Also not only has Fred Alonso become a huge international storyline for Indy, but there has been renewed interest from overseas drivers as well.  Indy seems to becoming more attractive for talented open wheel racers who can't break into F1, and as you know not getting into F1 is often more about money than talent.  Also, the cars look different these days.  I never had a problem with the bumperettes on the rear of the DW12 I accept many didn't like them.  The cars look pretty cool these days.  That appears to be Helio back in 2015.  here he is in the #3 from this year.  Tell me that doesn't look like a cool race car.  

Finally the racing.  I still love F1, watching the cat and mouse game of strategy play out even if people are on completely different strategies during the race, but Indy car produces far far better racing with excellent variety from a combination of temporary street course, natural terrain road courses, short ovals and super speedways.  Such a variety of different disciplines need to be mastered.  If you think Indy racing is boring and out of touch I urge you to watch some of the races.  They are really good these days.  The other great thing about Indy racing is they put up both the full races and 30 min  highlights (not the crap 5 min F1 highlights) on YouTube within a day or two of each race.  

"Everyone is guessing at the price tag ($2 billion was the popular number Monday) but nobody has a clue except Penske, Miles, Mitch Daniels and the board of directors, and they ain’t talkin’. "

Wowsers.

Streetwiseguy said:

"Everyone is guessing at the price tag ($2 billion was the popular number Monday) 

The other question is how much debt was the family sitting on?  I'm sure using the track as collateral makes for an easy loan at the bank. 

I lost interest back during the USAC-CART feud.  

Streetwiseguy said:

"Everyone is guessing at the price tag ($2 billion was the popular number Monday) but nobody has a clue except Penske, Miles, Mitch Daniels and the board of directors, and they ain’t talkin’. "

Wowsers.

Maybe not...

In reply to stroker :

My guess is 75% leverage on $400mm of equity, so $1.6bln asset value.

I'm not seeing why the Speedway would be worth $2 billion or even $1 billion in 2019. I could be dead wrong, but...

It's been easily 20 years since the 500 was the premier event in motorsports in the USA. So you don't want to factor a whole lot of "goodwill" into the price beyond what you'd attach to any old superspeedway.

400,000 seats per year for the big race at $100 each is $40,000,000. Assume IMS gets a similar TV cut and a similar revenue from "everything else" and you arrive at $120,000,000 / year in revenue.

I think this is more than fair. It's somewhere between one-half and one-third of the revenue of a small-market NFL team, coming from a facility that's really only in the spotlight once per year.

A $1 billion valuation would be 12x annual revenue. That's a pretty generous multiplier.

Google lists Tony George's net worth at $200,000,000. Don't you think they at least tried to factor his interest in IMS into that when they calculated that? If so, that's not really compatible with a billion-dollar IMS.

If IMS really was valued at $400 million, all told, that's a bit mind-boggling for anyone who watched CART in its heyday, but I think that's quite possibly just the reality of it now.

There's also Nascar races, sponsorship, etc. Normally for a startup or speculative venture, you'd have 5x price earnings (not revenue), 10-15x for something more established, so yeah $2B based on that might be difficult to justify. (long term stock market is 16x, we're ~22x right now) There is the real-estate value of the 560 acres, although at farm land prices of say $20k/acre that's only $11M. 

Apparently back in May ISC sold Daytona, Fontana, Taladaga, Homestead, Phoenix, Watkins, Richmond and 5 others for $2B. I have trouble seeing Indy as being similar value to all of those combined...

That said, I don't see Penske over paying, so perhaps $2B is simply incorrect, or maybe it's worth more than we think?

Snrub said: That said, I don't see Penske over paying

That was another thing I thought about. $2 billion would be his entire net worth... leveraged, certainly, but still it is an eye-popping number.