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September 1, 2007

Terry Angstadt

Brian Barnhart

THE MODERATOR: We thought today would be a good opportunity to update people on what's going on in the Indy Racing League. To do that, I'd like to introduce Brian Barnhart, the league president for racing and operations, and Terry Angstadt, the IRL president for its commercial operations.
Start off with you, Brian.
BRIAN BARNHART: Thanks, John. Good afternoon, everyone. We certainly appreciate your attendance here this afternoon. We'd also like to express some special thanks and appreciation to Mayor Kwame Kilpatrick and the entire City Council for their support of the Detroit Belle Isle Grand Prix, and we wouldn't be here without the hard work and passion of Roger Penske and Bud Denker. It's greatly appreciated. We certainly thank everyone associated with the Belle Isle Grand Prix Association for their efforts for the weekend.
I'd also like to take a moment and thank our drivers and teams for the consistently strong product that we put on the track week in and week out. 2007 has been the type of season that has become the standard in our series: intense and unpredictable competition, outstanding individual and team performances. We've had seven race wins with a margin of victory of less than one second, six different race winners and six different pole winners. It really looks likes it's going to shape up to be an outstanding battle for the championship the last two races of the season.
The close side-by-side racing witnessed by our fans has become a hallmark for the IndyCar Series, and our drivers and teams certainly deserve much of that credit.
We debuted on road and street courses in April of 2005 at St. Petersburg, and it was a tremendously successful event. In 2007, we enhanced our schedule with two more road and street events, as well as a short oval, giving the IndyCar Series the most diverse schedule in all of motorsports.
All of the technical challenges of our schedule have been met without a hitch. The new Honda engine has been flawless all season long. The first racing series in the world to run an alternative fuel. We're extremely proud to be the only racing series to run on a hundred percent fuel-grade ethanol. Our transition to a hundred percent fuel-grade ethanol has been nothing short of a resounding success. The message we're sending to the consumers is a powerful one: performance and environmental responsibility can coexist. We're extremely proud of our position with regards to alternative fuels.
I also would like to take a moment to commend the championship contenders as we move into this weekend. There's no doubt in my mind that I think we have some of the finest driving talent in the world, and they offer spectacular entertainment to the fans, be it on superspeedways, short ovals, road courses or street events. With two events remaining in our schedule, we're once again in a fierce battle for the championship.
Three drivers remain in contention for the championship hunt. And it seems like we go down to the wire on an annual basis in the IndyCar Series. With these two races remaining, we have Scott Dixon of Target Chip Ganassi Racing with a four-point lead over this year's Indianapolis 500 champion Dario Franchitti, and Tony Kanaan is still alive in the championship as well.
A couple of tidbits to remember as we approach these last two races, Scott Dixon has won three races this year on road and street courses, and five career wins on road and street courses, while Dario has yet to win on a road or a street course in the IndyCar Series, but he has three wins on ovals this year. So we have a Belle Isle street race this weekend and the mile-and-a-half oval at Chicagoland next weekend shapes up for an exciting event.
In 2006, the eventual champion Sam Hornish took the points lead following the 12th event in a 14-race schedule. The margin of points right now at four is the closest we've had since 2002 when Helio Castroneves led Gil de Ferran by only one point with one event remaining. As I mentioned, should make for some great drama here this weekend at Detroit and next weekend in Chicago.
As we did last season, we're looking for a post-season test probably in the middle of October, we'll probably take the IndyCar Series, take the teams down and do a compatibility test or facility test or equipment test at a venue sometime in mid October, which is consistent with what we did last year. We'll probably start the 2008 season with two pre-season tests, most likely in late February and the beginning of March.
Looking ahead to 2008, those test sessions would be used to test some new updates on the cars. One of the items we're looking to do for 2008 is the introduction of a paddle shift system on the cars. We're looking to put the shift mechanism on the backside of the steering wheel, which has a multitude of benefits, the first and foremost is safety. Gets the gear lever out of the cockpit. In terms of an impact, you always like the least amount of obstacles in the car as possible from a driver safety standpoint. I think it gives the driver better control. It's always a better option when a driver has both hands on the steering wheel instead of taking one off to shift. It also reduces the incidence of overrevs, which helps protect the motors and is better for everyone involved from that standpoint as well. It increases the transmission component life. So we'll be looking to test a paddle shift system as we move into 2008.
We're also looking to improve the side intrusion of our cars, in keeping with the FIA standards. We're looking at the addition of a seven millimeter thick anti-intrusion barrier to reduce the penetration resistance -- actually improves the penetration resistance of the chassis. The panel is made up of 21 layers of Zylon, which is bonded to the existing tub that we have. It's the same modification that the FIA is requiring the current F1 chassis to use in 2008. So that will be another change as we move into 2008.
And as the diversity of the series has grown, the IndyCar Series is continuing to investigate the application of some new steering technology to enhance the steering effort on the road courses for introduction, as well, next year. So those are some of the items we'll be looking at.
We also have an ongoing research and development program that's currently underway to identify the most effective seat design, the most effective seat structure and seat belt configuration as well, so that we can provide the drivers with the highest level of protection possible.
We're obviously very proud of our Delphi Safety Team. They're working in conjunction can Les Mactaggart, Dr. Mike Olinger, our senior medical director, and our safety directory Terry Trammell.
Via Delphi's testing facilities the use of (indiscernible) we continue to test the new seat configuration in our cars, including different materials, angles and seat belt configurations.
Also new for 2008, we anticipate the announcement in the very near future of a program that will greatly increase the value of racing in the IndyCar Series for all of our team entrants. We look for that announcement at Chicagoland or shortly in the week after. I think it's going to be an exciting plan that's going to really stabilize the teams and attract new ones to the IndyCar Series in the future.
While we're always entertaining our options in regard to the future, and we're anticipating the introduction of plans for a new chassis in the near future as well, we'll run the current chassis fundamentally as is for at least the 2008, perhaps the 2009 season. As some of the additional updates that I mentioned with the paddle shift, side intrusion, that type of deal, we're also looking to integrate a more efficient sound reduction system, some sort of a form of muffler or silencer to help reduce the noise output of the cars. We're looking to introduce a new tub perhaps as early as 2009 or 2010 that will feature a wider cockpit with improved head protection as well.
We will go from our current 19-inch cockpit to a 20-inch cockpit, which is the FIA specification, again similar to what an F1 car runs. That will make the extraction of a driver in case of an injury much easier.
The new tub, when introduced, would be the nucleus of the new chassis that could debut as early as 2010 or 2011. In developing the new car, we'll not deviate far from where we are today in terms of the already high safety standards of our sport.
As a sanctioning body, we're never satisfied with the status quo when it comes to safety. We're continually striving to enhance and improve safety in every way possible, and we're very proud of our position as leaders in motorsport safety.
Looking back at the current season, 2007, from a tech standpoint, we couldn't be happier with the transition to Honda's new three-and-a-half liter engine as it did everything we could ask for and then some. The reliability has remained one of Honda's strongest points. We actually improved torque more so than we anticipated. The Honda engine is so versatile that it's allowing us to be very flexible in where we can take the IndyCar Series in the future.
In talking about league suppliers, we can't say enough about Firestone. The Firestone Firehawks have run approximately 170,000 miles this year, including qualifying today, including nearly 48,000 miles at Indianapolis under the highest loads and the highest speeds, giving our drivers and teams the best performance and the most incredible reliability of any racing tire in the world. They're just an outstanding partner.
The same can be said of our move to ethanol. We touched on that a little bit earlier. The reliability has been outstanding, and the fuel consumption has actually been what we anticipated and thought it would be. The fuel efficiency, the move and switch to ethanol, has been so good that we have consumed nearly 20,000 gallons less than we did in 2006. A huge improvement, about a 30% improvement there.
We certainly appreciate the hard work of EPIC, the Ethanol Promotional and Information Council, and Honda to make the league's first season of racing in alternative fuel a tremendous success. Ethanol has worked so well for us in the IndyCar Series, we see where automotive companies are going with research and development of alternative fuels, that we're also looking seriously at an alternative fuel in the near future for the Pro Series.
It wasn't on the racetrack only that the transition to a hundred percent fuel-grade ethanol worked for us. I think Terry has more on that.
TERRY ANGSTADT: Thanks, Brian. To continue on ethanol, the story off the track has been just as successful. The (indiscernible) has been absolutely phenomenal in terms of major network coverage, cable networks, major newspapers, magazine and local television. The ethanol/IndyCar Series partnership has made tremendous progress with performance enthusiasts. EPIC's partnership with the IndyCar Series has not only put a spotlight on the performance attributes of ethanol, but it also has given the industry opportunities to address a wide variety of issues surrounding the energy policy in the U.S.
While the relationship has been beneficial to both sides, the key message is consumer relevance. There is a link from the racetrack to the family sedan. Ethanol has passed the test with flying colors in the most demanding racing environments. The IndyCar Series has once again aggressively grabbed the mantel of pioneer in the racing industry.
We are the first in motorsports to embrace a renewable fuel and environmental responsible fuel source. The series is now at the forefront of (indiscernible) of racing. Alternative fuels are key to our nation (indiscernible) long-term racing platform and motor racing now has the rightful place to build momentum behind this. The message we are sending to consumers is a powerful one: performance and environment can responsibly coexist. This partnership exemplifies the spirit of energy independence, American ingenuity and innovation.
As we look at the season and ahead to 2008, there is more interest and opportunity today than any point in the last 10 years, and we are prepared to embrace it. We have a 100-year history, and are looking forward to the next hundred years as an organization we are focused on the future. The series was formed to be an extension of the Indianapolis 500, and we share the same core beliefs and values across the enterprise. We are leaders and we are innovators and we always strive to exude those qualities.
We continue to work with others to deliver world class motorsport entertainment and grow the series' constituencies and foster an atmosphere of working together for the good of all involved. We will develop new races, both domestic and international, as opportunities permit, and we will keep a healthy balance of oval, road and street circuits as part of our schedule.
We will be relevant and we will embrace the opportunity to lead the industry and our approach to balancing business with social responsibility. We are progressive and we represent the next great value for many of the reasons I previously stated. We have a (indiscernible) of attributes that include speed, close competition, technology and innovation, ethanol, and of course a focus on safety. We are proud of our vision, mission, value statement, and I would like to read the mission of our company.
The IndyCar Series, based on the history, heritage, passion and intense competition of the Indianapolis 500, will entertain race fans and challenge drivers, teams and equipment manufacturers to diverse racing venues, culminating in the crowning of a world class driver, team and manufacturer champion. We will steward equipment specifications and its equal availability to competitors. This maintains the spirit of sport and rewards driver and team skill and athleticism. The IndyCar Series promotes multiple suppliers competing on specifications that balance safety, innovation and technology, close competition, economic viability, and social responsibility.
The IndyCar Series will seek to develop and optimize the competitive and business opportunities for suppliers, sponsors, teams, drivers and venues.
I don't know if you all realize the complexity of that business model. But if you think about those five different groups, to really optimize and develop opportunities, it's a wonderfully challenging model, and we think we're well on our way to doing that.
We're rapidly closing in on finalizing our 2008 schedule. 16 of the 17 races on the '07 schedule return basically the same weekend as this season. As sanction agreements are returned and executed, we will be working with the tracks individually to announce their respective dates.
At this point we continue to work on a 17th date for 2008, and we have notified all of our teams that they should budget for 17. The 17th will be big news.
Looking to the near future, we see our schedule growing to 20 events, with the West Coast a priority, and potential events in Canada and Mexico. We have shared with some of you the concept of a separate international schedule, and we continue to look at the merits of it. We have received numerous inquiries about taking the series overseas, and while it remains a work in development, we do see an opportunity to expand our business with a limited international schedule shortly after our domestic championship concludes.
To what extent in terms of numbers and locations is still being discussed.
BRIAN BARNHART: I'd also like to add and talk a little bit about our Indy Pro Series. In the sixth season, the Pro Series is stronger than it ever has been. The series has averaged more than 23 cars on the grid this season, and for all 15 races that represents a 48% increase from last year and an 86% increase from just over two years ago, a combination of increased prize money, continued controlling of cost and expenses from a team standpoint, a very diverse schedule, and the bonus testing rules for teams that run both IndyCar Series teams and Indy Pro Series teams have led to this growth.
The series is one of the richest among all development series in racing, returning almost $4 million in prize money. The costs have been contained by utilizing doubleheader race weekends and by putting together one of the most affordable engine programs in any developmental series. In fact, the Indy Pro Series engine program is the cheapest per mile of any major racing development series in the world.
Like the IndyCar Series, the Indy Pro Series schedule is also one of the most diverse in motorsports. The Indy Pro Series is also establishing itself as a breeding ground for new talent in the IndyCar Series. Developments to the car continue to make it more and more like an IndyCar, and the chassis, engine and tires are highly reliable.
The bonus testing rules have created an incentive for IndyCar Series teams to participate in both the IndyCar Series as well as the Indy Pro Series. This participation has led to five drivers in this year's field having an opportunity to test an IndyCar Series car, and one of these drivers, Hideki Mutoh, will drive in the IndyCar Series season finale next weekend at Chicagoland Speedway for Panther Racing.
The future for next season looks even brighter. Interest from potential drivers, teams and sponsors is at a level even higher than last year. In fact, last weekend at Infineon, Roger Bailey, the executive director of the Indy Pro Series, met with two more potential drivers and two new potential team owners, including two additional sponsors as well. So the future looks brighter and continues to grow for the Indy Pro Series.
TERRY ANGSTADT: In line with the 2011 Indianapolis Motor Speedway Centennial celebration, we completed a 12-week project with the Art Center College of Design with a funded educational program called IndyCar 2011. The 26 students participating in the funded educational project were challenged to imagine the future of the IndyCar Series. The four teams did not disappoint their faculty or members of the IRL teams that participated. Each team, comprised of students in the school's transportation design, environmental design, product design, illustration and entertainment design, graphic design and photography, with guidance from their teachers and administrators, were consistent in presenting designs of cars of the future and advanced looks at race venues.
Some of the teams went further in offering fan experiences, marketing and branding ideas. We truly were overwhelmed that at what we saw. We have some of the examples of the work in the room today.
We will take some of these ideas and determine if they may get implemented in the future. To immerse themselves in IndyCar culture and technology, the students, faculty and administrators attended the 91st running of the Indianapolis 500 in May. I want to thank Robert Clark, president of Honda performance development, who introduced us to the arts center.
It was Honda's experience at the arts center that convinced us that sponsoring a project could provide tremendous benefit to the IndyCar Series. This is a great way to demonstrate forward thinking. We will continue to invest in innovation and technology and we truly feel the arts center IndyCar 2011 project set the stage for new ideas.
We will kickoff at the Indy 500 this year the Centennial celebration, which is 2009, 10 and 11, so the timing of this was ideal. There could be a revolution. And I think some of these designs represent that. We know we have a great racing product right now, but we also know the that great organizations constantly challenge themselves to think differently.
On the television front, we anticipate the full 2008 schedule being presented in high-definition. While we search out more promotion and media coverage for our drivers and teams, we feel like we have made progress this past year.
I don't think we all know quite yet the tremendous level of exposure Helio is about to deliver as he takes the stage on ABC's Dancing with the Stars. 30 million people watch. We have a new sales team and an association with (indiscernible) Marketing, the top motorsports marketing agency in the world, we have a relentless attack on every category of sponsorship with a focus on new and healthier teams first.
Our marketing efforts will be focused on attributes that are uniquely ours: the most talented and diverse driver lineup in motorsports, speed, technology and innovation and ethanol.
In closing, I sincerely feel that you can't fake passion, enthusiasm and optimism. Our future is very bright.
We want to thank everyone involved: suppliers, sponsors, drivers, teams and tracks, and we look forward to increasing our value together.
THE MODERATOR: Questions for either Terry or Brian.

Q. Brian, you're in Motor City. What are the chances of Chevrolet, perhaps Ford, coming to the series as an engine supplier? You have one at the moment? Are you open to more people coming to the series and are there any initiatives going on right now?
BRIAN BARNHART: We certainly are open to multiple manufacturers, and I think eventually that would be in the best interest of the IndyCar Series, to have a multiple engine manufacturer platform.
Hopefully racing here at Belle Isle in the Motor City, it helps attract the attention of those auto manufacturers that are located here. It exposes them to the value of what the series has, as we take the 16 events outside of Indianapolis, and of course what the Indianapolis 500 brings. We'd be very open to that, open to any discussions that could lead to that scenario.

Q. Brian, might we ever get to the point where we have more than one or two chassis manufacturers so that some of these concepts can be utilized?
BRIAN BARNHART: That probably is the ultimate goal, as well. I think from a sanctioning body standpoint, the one thing that has always got to be kept in everybody's mind from where we're positioned, it's all about any time you do have competing anything, competition does increase cost. It's important for us to maintain one of Tony's founding principles, which the IndyCar Series, Indy Racing League was formed, equal accessibility of equipment is important, whether that's on the chassis side origin side. I think that's a little bit of what's led to where we are right now. Everybody has got access to the same chassis, the same engine. We do a random distribution of the engines from Honda now, the performance is so equal. I think you're seeing that out on the racetrack. The increase in competition comes from the level playing field that's been created by the situation where we're at.
As you move forward, you always got to balance. You want to give teams an area, you want to give manufacturers area of development to keep their interest and excitement involved in the series. At the same time, you have to have checks and balances in place that the spending, accessibility of the equipment and the level playing field doesn't get out of balance.

Q. Terry, how much work has been done to try to get a series sponsor and also maybe to increase the prize at the end of the season? It's been at a million dollars since the IRL began in '96.
TERRY ANGSTADT: There are a lot of efforts behind a series title sponsor, inclusive of some this week, as well. What we like about that is if you look at our brand attributes, this is direct feedback with some of the people we're talking to, there are a lot of companies that like speed, technology, innovation, diversification. I mean, we really match up well. You can kind of fill in some of the industries that are the likely candidates to do that.
We're encouraged. Those are big negotiations and tend to be a long sales cycle, but we're very optimistic on making that happen.

Q. The prize money.
TERRY ANGSTADT: What Brian alluded to, and we'll talk in much more detail literally next week, we'll probably not touch the year-end prize fund, but really provide some tremendous stability and predictability behind increasing and, again, making our current teams healthier and attracting more teams, and we think with a tremendous payout for being competitive and winning races. We think it will be a great balance.

Q. Terry, Helio Castroneves notwithstanding, he's going to do a lot for the IndyCar Series by tripping all over himself on the dance floor, but what are we doing to promote our drivers? Everybody knows NASCAR drivers. We have just as good if not better and a lot more Americans than most people think in this series. What are we doing to promote these guys and girls?
TERRY ANGSTADT: Well, really there are a couple of things you can do. A lot of that really comes from strong, healthy sponsors that, frankly, have greater budgets than sanctioning bodies to do that. When you look at our collateral, our brand imaging, our print, our limited TV campaign, we feature or stars. That's why people show up. That's who they cheer for.
You're shaking your head no. Please, please.

Q. Not everybody knows them.
TERRY ANGSTADT: No, no, no, you're exactly right. And it takes a lot to do that financially. Believe me, it's the focus of what we spend, on our drivers. And the more people we get involved in our business from a sponsorship standpoint, you see the Motorola spots, those are the kinds of things that really explode the awareness and the recognition of our drivers. Those are the kind of people that can really, you know, help us carry that message. So that's where a lot of the focus is.

Q. Brian, you mentioned the paddle shifters. Once you give the okay for that, is that something that's optional for the team? Are you anxious to open up some of the rules so the teams can do more work on the cars, more technological changes?
BRIAN BARNHART: When we get the paddle shift system up and going, it will probably be a mandatory system for the full-season participants. We'll probably make it optional for the one-off teams at Indianapolis. That way we can keep cars in the loop, help control the expenses of the teams that try and do Indy only. It will probably become a mandatory system for the full-season participants.
It's not a hugely expensive system. It's about $25,000 per car/driver combination, per chassis. That can save itself pretty quickly just in the reduction of the incidences of overrevs. I think it's a good situation, one that can be amortized over a long period of time, be a good situation for the teams to be able to actually reduce their expenses over the cost of the season.
Again, I kind of touch on the balancing. You know, you open something up, people are going to spend money. Open up to the teams, they're going to do something in a wind tunnel that can offset your competitive balance and level playing field. We just try and make some good common sense practical decisions because you do have to have some things that enable a team to separate themselves from someone else. You want to keep them interested. You want them to be able to utilize their resources and their people as well as they can. We'll do our best to make good decisions and common sense ones in that regard.

Q. Brian, you talked a lot about the Pro Series. You're down to 18 cars on a regular basis in the IndyCar Series. You're going the other way. How concerned are you when your boss, one of the team owners, is talking about reducing the number of cars maybe on his own team? How do you feel about that part of it?
BRIAN BARNHART: Well, as Terry and I have said, I think it's priority one for us. We've got to have more and healthier teams. So it is the focus of what we're doing. That's the crux of what we're hoping to roll out next weekend at Chicago, is a system that we think is going to greatly increase the value of participation in the series. We think it will stabilize existing teams and certainly get the attention of new ones and attract them.
Similar to what we've seen in the Pro Series growth in the last couple years, we hope we see similar growth in the IndyCar Series for 2008 and beyond 'cause it is something we need to have. Our ultimate goal, we'd love to see 22 to 24 cars on a full-time basis on the racetrack. I think that's our No. 1 priority on the competition side.

Q. How concerned are you about the team tactics that we have up front particularly the last week? Have you had a chance to address that?
BRIAN BARNHART: We've talked with the drivers involved and the teams involved with it. We'll touch more on it in the drivers meeting tomorrow. It's a very slippery slope, in my opinion. I think you got -- they got to be careful. I've kind of talked and polled the people involved with it, not involved with it. It's about a 50/50 deal.
I think you got to be really careful because I think they start to encroach a little bit perhaps on the integrity of our sport and the moral character of the competition, if you will. I think from my standpoint as the chief steward, I'm here to protect the integrity of the event, and at the same time I understand the obligations to sponsors, the advantage of running multi-car teams. It's a very touchy situation that will be addressed in the drivers meeting tomorrow and hopefully everybody will continue to make good decisions as we move forward over the last two races.

Q. Brian, with regard to the Pro Series, is there any thought about capping the number of teams and drivers in that competition in the interest of safety or competition management?
BRIAN BARNHART: There isn't talk about capping the participation level in the Pro Series. To be honest with you, the biggest reason for it is simply logistics. As we bring in events to run at certain racetracks, if there's the IndyCar Series and the Pro Series and one or two other series that run with us in some cases or just one other, you run out of paddock space. The biggest reason is the available pit lane space for the number of cars that you can run, the available paddock space for transporters. That's the biggest reason for doing so, as well.
I think we're still in an area averaging 23 cars. I can see the thing expanding to 26 or 28, and still being able to accomplish what we need to do.

Q. Brian, with some of these designs that have been turned in, at what point do engineers and everybody kind of start looking them over? Whenever you do go to something radically different, the law of unintended consequences, if these are feasible in terms of performance and safety.
BRIAN BARNHART: Well, we're at that point now. These are some of the designs that have been submitted. They're exciting designs. The concepts are outstanding. One of the challenges with the project or any time you have concepts of that nature is the practical implementation of those concepts into the real world of racing that we have as much knowledge as we can possibly gather over the course of the years.
The fact of the matter is the car that we're running right now is the car that it is because of evolution. It has evolved for a reason and for a purpose ever since rear-engine cars came on board in the mid '60s. Everything that you learn from one season applies to the next. That's going to continue.
When you look at these concepts, they're great concepts. The challenge is going to be the practical implementation into the known real world of racing for our type of racing, with our diverse schedule, to be able to run road and street courses, to be able to run high banks at Texas, to be able to run 225 miles an hour at Indianapolis. It will be a real challenge, but it's one we're excited about.

Q. Are you considering any tweaks to the layout of the weekends, qualifying format?
BRIAN BARNHART: We do that on an annual basis. When we get done, we look at all the events, whether they're two-day or three-day events, road or street events. We debuted the road racing package in 2005. In the winter of 2004, we created the weekend format we currently use on the road courses. We feel pretty good about it.
I think it's served us very well for the three years we have road raced to this point. But as Terry mentioned, you're always excited and challenged to try and improve it. While we've been very successful in the Firestone (indiscernible) has been a great format for us. Sure, we'll go back and take a look at it. I feel it's a bit of a compliment. I think the F1 format that they use now is a little bit of a derivative of what we've done. Imitation is the sincerest form of flattery. They've improved on what we've been doing. We can go back and take a look at ours on the road.
It's hard to do much with the ovals, but we are looking at it. If we can do something that we think balances costs, entertainment and the right presentation, we'll make a change if we think it's necessary.
THE MODERATOR: Guys, thank you very much.

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