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INDY RACING LEAGUE MEDIA CONFERENCE


November 5, 2009


Terry Angstadt

Mike Kelley


THE MODERATOR: Welcome, everyone, to this Indy Racing League teleconference. It's a truly momentous day for the Indy Racing League and the IndyCar Series and open-wheel racing in North America as Phillips-Van Heusen Corporation announced today a multi-year agreement in principle with the Indy Racing League, the sanctioning body for the IndyCar Series, for its IZOD brand to become the title sponsor of the newly renamed IZOD IndyCar Series.
Our guests today on the call are Terry Angstadt, president of the commercial division for the Indy Racing League, and Michael Kelly, executive vice president of marketing for Phillips-Van Heusen.
Terry and Mike, thanks for joining us.
TERRY ANGSTADT: Thank you.
MIKE KELLY: Thank you.
THE MODERATOR: This is a big day for the IndyCar Series. Can you talk about IZOD and what it can do for the sport of open-wheel racing and Indy-style racing.
TERRY ANGSTADT: Thanks very much. It's a fantastic day for the IZOD IndyCar Series. When people ask about the priorities of the business side of our business, this was No. 1 through 10, trust me, that is to secure a title. To secure a title with the quality of an entity like Phillip-Van Heusen and the IZOD brand is really just kind of beyond perfect. It's a young-focused, sports-inspired brand. The brand fit, the vision of the two management teams, the ability to go outside of motorsports to attract new fans and consumers, it's just phenomenal.
You're exactly right, it's certainly our biggest day I think in the history of the company. We just could not be more proud of the association with Phillips-Van Heusen and IZOD.
THE MODERATOR: Thanks, Terry.
Mike, talk about this decision for Phillips-Van Heusen and IZOD. What was attractive about the IndyCar Series, now the IZOD IndyCar Series, from a corporate standpoint for the company?
MIKE KELLY: Well, we had a hard time finding things that weren't attractive. Forget the fact if you've been to a race and you see what the show is itself, I think to sum it up, we look for underdeveloped properties, underdeveloped assets. The Indy Racing League just has a number of great stories that weren't being fully told and fully expressed and needed a partner that could come up behind and provide some marketing and I'll say merchandising because the opportunity to take things as rich as the archives, the Indianapolis Motor Speedway archives, and manifest that in product, it's just very rare that you get all the dots to align like that.
There's an amazing sport, rich heritage, these assets that are available in the museum, in its history, drivers that are doing things that people just don't realize. Most people just don't realize today how fast the sport is, how amazing these athletes are. It's not water polo. These guys are young, sexy guys. You have third- and fourth-generation drivers, some really great stories.
As a marketer, as a merchant, it's hard to find things that weren't working. Then the ability to have a partner like we do in Macy's, our chosen partner for this program, that has a national platform that can put all that on display. If we had a product that was sold through vending machines, there's not necessarily a lot we can do with it. We have a partner in Macy's who has this real estate in all these fantastic locations across the country, all the markets that are raced in, and they've got these huge display windows and all this real estate to be able to take these unique assets generously provided by the league. It's a win, win, win for everybody. We like it a lot.
THE MODERATOR: Terry, the announcement at 2:00, some details were offered. Can you offer any more details or give a recap of the details offered at the 2 p.m. event for those who maybe didn't see it.
TERRY ANGSTADT: Well, I just arrived from New York, I wasn't there, that might be a bit of a challenge. Are you talking about the details of the deal?
THE MODERATOR: Yes, the specifics, exactly.
TERRY ANGSTADT: I'll certainly say what we can say out of respect of our new partner and their position as a public company. I know Mike has spoken to the term. We're so proud of a six-year term with an option. So I think everyone would recognize in today's landscape, that's just an unbelievable commitment of confidence and the willingness to build for the future. So the term is fantastic.
It is multi-million dollars. It is really across a number of platforms. We are going to downstream funds to each and every car participating in the series. There's a significant activation budget that will go towards targeted markets and certainly at venues so we can activate in and around each race market. There is a very big commitment to each broadcast partner so they showcase the new relationship in an appropriate way.
So it really is, it really hits across every important area you would want a very well I think put together and integrated deal as it came together. So it really is something that will raise the entire economy of the IZOD IndyCar Series and our key partners, team owners, drivers, venues, broadcast partners. It's just outstanding on every measure.
THE MODERATOR: We'll open it for questions from the media.

Q. I was wondering how long has this deal been in the works, if you can provide a time frame when these negotiations began and how they progressed to today.
MIKE KELLY: I recall, it's been about three months that we've been in conversation, about 12 weeks or so. We knew for ourselves we were nearing the end of the season and we liked how 2008/2009 had gone for us. We knew we wanted to increase our position. We just weren't quite sure where yet. The opportunities for us were either with the team, with more drivers or with the league. While initially we would have thought it too outlandish, the more we thought about it the more we liked the opportunity because it allowed us then to have maybe a greater role and greater opportunity with fewer partners, really ourselves and the league, and the primary sponsors within the league to really rally together and move the sport outside the endemic space with that effort through marketing efforts and appeal to larger audiences.
So we liked the opportunity to have that control and that position which only comes with the title.

Q. This was a series that open-wheel racing for over a decade had its share of problems with the split. Looking back a year and a half ago, two years ago, if we didn't see this merger that we finally had, do you think we'd be sitting here talking today? How important was that announcement to be here today?
TERRY ANGSTADT: I really think, as we said upon unification, we knew it would be very, very important to our sport. Kind of living in the trenches daily with the business development side, it was far more impactful than I thought it would be. We knew it would be big and important. It was much bigger and more important than we thought it would be.
And I really will, I'm not trying to get too far ahead of ourselves here, but a new position like this with IZOD in titling our series, I think this can be even more important. I mean, the new activity we have been seeing and cultivating now with the title, someone that can help us move the business forward in such great strides like this we think is just a huge next step in our development.

Q. Terry, beyond the obvious, the infusion of money which comes with this, what are some of the other advantages of having a title sponsor such as these folks?
TERRY ANGSTADT: Well, I'll certainly say that there is no sanctioning body, and you can go down the list of any Tier I professional sport, does the majority of their marketing. You can't afford to. You need strong, stable partners to help you do that. And so that was the void. That's why I've kind of said that this was priority 1 through 10.
This just gives credibility. It gives the additional marketing literally down to the human and financial resources. I think, as importantly, it also gives our other key sponsors, Honda, Firestone, Peak, National Guard, folks like that, it gives them the confidence and the willingness to step forward.
We've had those conversations. We will be in a room. As I said in an earlier interview, it was Allen Sirkin going over, the COO of PVH, saying, We're going to step up, we're going to title this business, we need your help to help grow it. It is the classic one plus one equalling five or ten, not two or three. It's collaborating, bringing marketing budgets together from those big, important partners all together to really move forward in a more cohesive way.

Q. Mr. Kelly, I understand that PVH is really moving into the sports arena for most of its marketing these days. Why did you go this direction? Why did you choose sports marketing in total? I know this isn't the only place you're putting your eggs at this point.
MIKE KELLY: A few years ago we did some fresh research. One of the largest, if not the largest men's apparel companies in the country, it was more important than ever to reach consumers across the country, you have to have a place in sports. For men, it just comes back to, What are their interests? Sports, sports, sports, news, kind of in that order.
For IZOD, that was an immediate play. Sports-spirited, outdoor, active brand. We immediately took some actions where there was opportunity, like taking the naming rights for the IZOD Center, where the Nets play, creating a platform and opportunity for sponsorship there.
In motorsports, we wanted a place in motorsports. We were looking at it but couldn't find a way in. That's when we met the folks at Indy and saw that there was, again, underdeveloped assets, an opportunity for us to be not just a place in through a pure purchase play but an opportunity to partner and really build something together and build each other's brands.
That's our thing. We like that a lot. So this satisfied on a number of levels. It's just a very sexy sport, as motorsports go. It's very sexy. The design, design capabilities, what the drivers go through, what they're all about, the fact that they're from many nations, kind of multi-cultural, the fact that there's both men and women, they're young, there's next-generation drivers. There's a lot of sexy pieces to this.
I have a picture I put on my desk yesterday of Paul Newman in a car. I'm going to leave it on my desk because that to me just signifies something about American racing heritage. It's very sexy.
THE MODERATOR: Mike, Terry, we thank you very much for joining us today. All the best. That will conclude our teleconference for today.
MIKE KELLY: Thank you.
TERRY ANGSTADT: Thank you.

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