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February 22, 2011

Randy Bernard

Mike Kelley

PAUL KELLY: Good afternoon. Our guests today are Randy Bernard, CEO of IndyCar, and Mike Kelly, the executive vice president of marketing for Phillips-Van Heusen. An exciting day today in Las Vegas as IndyCar announced that the 2011 season will culminate with the crowning of its champions from both the IZOD IndyCar Series and Firestone Indy Lights on October 16 at Las Vegas Motor Speedway.
A lot of exciting components to this weekend, which will be known as the IZOD IndyCar World Championships, taking place on a 19.5 mile high-banked oval at Vegas. Some of those elements include any fan purchasing a ticket to any IZOD IndyCar Series race during the 2011 season is eligible to receive a complimentary ticket to the championship race.
In another exciting aspect of this season finale is that there will be a $5 million challenge to any professional race car driver not competing in the IZOD IndyCar Series for the season finale race, reinforcing the series positioning of its drivers as the best of the best.
It's a return of IndyCar to Las Vegas; the series last competed at the Las Vegas Motor Speedway oval from 1996 to 2000, so everyone is very excited about that. Randy and Mike thank you very much for joining us today.
Randy, there are so many fun, unique, interesting elements about the IZOD IndyCar World Championships, from the standpoint of both the sanctioning body looking at the excitement of the fans; is there one piece of this season finale that stands out for you, or is it just a comprehensive package?
RANDY BERNARD: Well, first and foremost, I have a 15-year history with the City of Las Vegas and the LVCVA, and I know the marketing machine that they are. It's very exciting when I saw that they were not going to be here in -- we didn't have a race here in Vegas, it was a fantastic opportunity to bring one of your premiere races, and that's your IZOD IndyCar World Championship. So we are very excited about that.
PAUL KELLY: Mike, talk about the importance for a series sponsor, especially from an IZOD and the Phillips-Van Heusen perspective of having the big finale and World Championship in such a dynamic location as Las Vegas.
MIKE KELLY: You just said it. It's such a dynamic location. It's evidence, again that, we hitched our wagon to the right horse. This is just more evidence of growth. We are heading to -- I don't want to name a city and make anybody angry, but if we were heading out there and nobody knew what it was, it would be a whole other thing.
When you see the schedule, I'm certain over the years to come, we are going to see more of this which is moving into dynamic markets. Think of the presence for us; how can you not like it? We have got all of these fans that are captive in this city looking for fun and entertainment, and then they get delivered fun and entertainment on a big scale. We get to have our name associated with it. It's a real honor and we could not be more excited. It's a great move.

Q. Wanted to check with the $5 million challenge, who would you like to see take this challenge up, what about someone else from motorsports?
RANDY BERNARD: We want to see anyone that thinks that they are good enough to compete with our drivers. I think that we threw it out there with the belief saying that, first and foremost, we believe our drivers are the best drivers in the world. They are the fastest, most versatile race car drivers in the world. We have to gain credibility for these drivers, and there's not a better way than to throw a challenge out like this.

Q. Just the first part of my question is to Randy, a couple of years ago, nobody could have imagined this coming out of IndyCar, such an ambitious challenge like this being thrown out to all of the other drivers outside the series. Could you just talk about that? You touched on it just now, but can you talk about the ambition that comes with putting out something like this to everybody in the country, every driver in the country?
RANDY BERNARD: Let me tell you something, Mike Kelly and I feed off one another, I'm going to tell that you right now (laughing). It's our job to grow this. When we were lucky enough to get IZOD as our title sponsor, hey, we have to think outside the box. We sat down and created our plan and our objective.
First of all, we defined our sport. We said that we are going to be known as the fastest, most versatile race car drivers in the world, and I think that's very important. And the second thing; we are not going to run from danger. Our cars are fast, Super Speedways, short tracks, road and street which shows the versatility, but let's not forget, these are some of the fastest cars in the world and we need to showcase that and what a better way than to create a World Championship where we are really putting the money out there where our mouth is.

Q. It's been over a decade since IndyCar has come to Vegas and the last time, there were attendance problems. With the track and SMI, what do you feel they have learned in the past decade since IndyCar has been in Vegas, and what do they have to do in order to make it succeed this time around?
RANDY BERNARD: Let me tell you, the last time they were here is was during the split; and I promise you, if the NBA split tomorrow, they would have the same problems; or if the NFL split they would have problems. I think it's very important that it's reunified.
This isn't Champ Car. It's not CART. It's not IRL. It's IndyCar, and this is the IZOD IndyCar Series and it's about the world's best. That's what we have to deliver.
And we want to -- in our State of the Union, we talked about, with our fans, entertainment, giving our fans a great experience; entertainment, competition and value, and we hit on every one of those. I mean, entertainment, you can't get any better than Vegas. Competition, it's going to be some fantastic racing as you heard today from all of the drivers out here, as well as value. We want to make sure that we thank our fans. The economy is great right now and by offering a free ticket to anyone that goes to another event we think gives our fans great value.
MIKE KELLY: You didn't ask me the question but you I've got to tell you, what I saw today, I don't know what happened years back, and how the leadership interacts with the city and with the powers that are out here, because if you come to Vegas for an event, this is what they do for a living day-in and day-out. There are people here that are just incredibly professional.
Randy has had the experience of watching firsthand this weekend with meetings and conversations from the top down, it gives us a lot of encouragement as a sponsor. You need that leadership and connection and you need that in any market you want to, but in this market, you have to think big or go home, I'm not sure what's happened in the past but I think the announcements today it will resonate.

Q. I noticed that Vegas race will be the day after the NASCAR race in Charlotte. Do you have any sense yet or feeling, has there been any reaction from the NASCAR community that a driver or two on the Cup side might come?
RANDY BERNARD: We are not going to speculate on who is going to come over, as much as we would love to. I think definitely it was planned to have it on October 16 because Charlotte is on that night live on ABC, we are on live on ABC on Sunday; so there should be great cross-promotional opportunities there. We think it's going to give a great opportunity to increase our viewership coming out from last year from Homestead on versus. So this was thought out on why we picked October 16.

Q. The fact that this thing is happening during their championship playoff chase, was that considered at all? Do you think that might impact if guys come over or not?
RANDY BERNARD: The challenge was made, and we don't want to separate out NASCAR, F1 or any other series in the world. I mean, it could be someone from RallyCar that comes in and wants an opportunity.
We want to see the best drivers in the world that think that they can drive an IndyCar that wanted to give it a shot. First they are going to have to test and then they are going to have qualify and then they are going have to win. Basically it's those type of steps in order to win the money. It's not going to be no easy task, that's for sure.

Q. You just hit on it, first of all, how are you going to pick -- already heard from three guys that have a ride for the Indy 500 only and are saying, will he be eligible because we don't have a full-time ride. Let's say you get 15 different people from Rally and all-over-the-world sports cars, how will you select? And will you help them with a special test session?
RANDY BERNARD: Yes, first of all, we will have to provide some testing out here in Vegas.
Secondly, we will create a selection committee and I mean, don't forget, we are also dealing with the integrity of our drivers, and we want to make sure that we select the selection committee that selects racers that are great and have an opportunity to win. It won't be for a one-off type of Indy drivers.
This is a challenge to showcase the sport of Indy car to other motorsports around the world, and try to attract a new audience and some new drivers and showcase how important, how tough it is to be an IndyCar driver.

Q. Whenever anybody went to Vegas, it was so hard to draw people and this ticket promotion idea, I've already got a lot of e-mails from people saying that's great; how does SMI handle this? Does IZOD help pick up the bill for all the tickets or how does that work?
RANDY BERNARD: -- I don't want to put Mike under pressure, I'm sitting here holding a gun to his head right now actually.
No, this is a sponsorship model, our business plan on this event was designed off of sponsorship models, not ticket revenue. We have about 44,000 tickets we plan on selling but the remaining tickets we plan on giving to our loyal fans, and I think that it's going to be a complement of one, IZOD signed up to be our sponsor, as the title; and it's our job to deliver them great value to the sport and I hope at the end of this year, that when Mike meets with his shareholders and PBR Management, that he can look them in the eyes and say the IZOD IndyCar series gave great return on their product.
MIKE KELLY: It's hard to add anything to that. We saw last year, you've heard me talk about the return, and you know, these are ideas that come from Randy, the ideas that change the sport, and indeed all sports, it's an innovative idea, there's no question, to drive awareness.
I think our right place continues to be, how can we energize the cities around the race weekends and the three weeks leading up to the race or the five weeks leading up to the race. And we are looking at Vegas and we are going to keep working, and I'm going to find money and ways to come in here and really tear it up; and that's what we do in markets when we go in and I think it's a perfect one to do it.
I can't imagine what it could be like in five years when you consider kind of a Super Bowl city if you will, what Las Vegas could be like for a championship.

Q. What kind of commitment have you made with Vegas for future years?
RANDY BERNARD: This is a one-off deal with Vegas. I've had a 15-year relationship with LVCVA, and I'm a firm believer, you start with a date and it becomes a marriage, and we want to grow this just like we did the PBR. By doing a long-term deal, I think we're leaving money on the table. I want to prove to them first that we can deliver.

Q. Did you put out any feelers to potential or hopeful candidates for the 5 million challenge before you put yourself out there and if so, please feel free to list off some names.
RANDY BERNARD: That's a great question and no, I didn't. I wanted to keep this so confidential.
We have thrown a lot of ideas out there. I wanted to do some other big promotions, and this one, I wanted to keep it between IZOD and executive management of IndyCar until today so that it could be a surprise. And I think we did a really good job of maintaining the confidentiality and now it's up any driver out there that thinks that they have a chance.

Q. Anybody who takes you up on a challenge is going to need cars and equipment and engines and a lot of other expensive things. Could you give us a ballpark on what it could cost to race one race, and is there any thought to giving potential participants turnkey operations?
RANDY BERNARD: Well, I can't talk about the costs per for car this race, because I think that would be better to a Roger Penske or a Chip Ganassi.
But what I can talk about, it will be the very last car of this chassis, so I think there's going to be some opportunities where those cars will be -- it's the last race. So I think we can find quite a few chassis out there for drivers.
Let me rephrase that it; cars, completed cars.

Q. And cruising -- inaudible -- where do you suppose those would come from?
RANDY BERNARD: Those top drivers are going to expect to have a great team, so they are going to have to talk to the Roger Penskes and the Chip Ganassis and the Michael Andrettis and on down and make sure that they feel that they have a shot of winning this race.

Q. Who actually is the promoter of this event? Is this it a track deal and IndyCar is the promotor, or is this an SMI/Las Vegas Speedway promotion?
RANDY BERNARD: IndyCar owns this event. We were able to work a deal out with Chris Powell on a straight rental and we wanted to do it.

Q. To follow-up to the $5 million bonus, it would seem in that way not only would you need to get drivers interested in that sort of thing but you would need the cooperation of fellow sanctioning bodies and series there was a NASCAR executive who Tweeted there is no double but the 600 can stand on it; how do you feel about that? Does there need to be more cooperation in motorsports to have events like this and have that sort of crossover, and are you discouraged that you ever not gotten a warmer reception from other series on that front?
RANDY BERNARD: I'm a firm believer -- I thought it was great that it was called a Cinderella story in weekend at the Daytona 500. I thought it was great you saw your viewership up by 17 percent.
We have already defined our sport as the fastest, most versatile race cars and drivers in the world, that differentiates us from NASCAR and F1 and everyone else and we have our own genre. We think we reach a different demographics with our ovals than road and street courses. We are going to provide our sponsors great demographics and certain genres that we think are very powerful and from a fan base, we all have to have the same mission, whatever series you're involved, whether it's NHRA or Rally, you have to entertain, you have to give them great competition and you have to give them great value; if they deliver on all three of those things, I'm a big deliver that you'll grow.

Q. How would you characterize the relationship of IndyCar to NASCAR since you've taken over during your tenure and the relationship of IndyCar with other series, is there a sense ever cooperation that is growing there that you're trying to faster?
RANDY BERNARD: That's a great question and I like to be transparent; I've had several conversations with Mike Helton. I was with Brian France down in Texas when they did our twin race announcement. I always wish there was more communication. I want to work with them. We have an active board meeting tomorrow where I hope -- I love sitting around there, whether it's SEC a or NHRA or USAC. I think it's important that we all try to work together and grow motorsports. That's first and foremost and I think that one of the things that we have all failed on for the past ten years is to grow our audience age; it's continued to increase over the past ten years and it should be all of our responsibilities to figure out ways on how we deliver more youth and bring our age back.

Q. Distance on the race, has Brian decided that? Have you and Brian decided it?
RANDY BERNARD: 200 laps, 300 miles.

Q. Kind of just getting in a little bit more detail, let's say we have got a couple of teams that are battling for the championship, they are going to want to focus all of their energies on having their driver win the title, so how difficult will it be for them to maybe make a car available for somebody to do this challenge?
RANDY BERNARD: Well, great question, I know Mike wants a shot at this, too; but what I'm going to say is that last year we saw a rating at Homestead of .3, .4. There wasn't one team owner that was happy with that. It's the best-kept secret in motorsports in my opinion. It's our job, we have to get our ratings up.
This year being on ABC, we need to focus on that and say what are ways -- if you heard our State of the Union, the one thing we said, we were going to have a dual marketing platform, we were going to spend 50 percent of our focus on the endemics, on the motorsports world. We know in the mid 90s, we lost 15 to 30 million fans during the divorce, and in my opinion, that's low-lying fruit. We must get them back.
I think by offering things like this, it's really showcasing our sport and saying, hey, we're back. And then on the other side of that is our done-endemics. What Mike and IZOD have been able to do, their lifestyle of pop culture how they have been able to focus on the 18- to 34-year-old, it was very impressive to see VERSUS up 40 percent on that demographic and we were the only sport on their network with double digits growth. We have been able to see what the power of a great title sponsor can deliver to the series, as well.
So I think that it's very important that we keep our overall mission intact and we have to be very articulate on our strategy and I think this is right in line with what we need to do in order to grow our audience.
MIKE KELLY: You know, I have heard this in the conversation; it's the end of the season, the teams will know where they stand in equipment, $5 million does cover a lot of problems, and it's tempting for those to know that they can win.
And I think more importantly, though, Randy was just hitting on it, we do understand the business of marketing. This is a business mold, what's good for the series is good for the teams is good for the sponsor is good for the teams is good for the drivers is good for the series; they are all connected.
And Randy has taken a step out here, you are not going to have all the answers when you are innovating and doing things new for the first time. But he's taken a step out there and saying, listen, this will draw traffic and fans and improve ratings and that will improve your chances of building sponsorship which all teams badly need. It's teams that are clearly below Roger and Chip that need the sponsors to drive even greater competition, bring new blood into the sport. It's good for everybody.
So I think they understand their responsibility in that whole mix and I think they take it very serious.

Q. And also, I know that last year IZOD wanted to help make this look like the trendy, you know, image-type of sport and kind of expose it to the fans out there that may have gone away from it. Now, to bring it in with a backdrop like Las Vegas, talk about how that fits into your plan with that.
MIKE KELLY: Well, like Dan Lungren said, bringing sexy back; it's not too hard to do it in Vegas. It's made for that. But also, it's more than just sexy and more than just parties. There's incredible talent. Imagine what happens if you take illusionists and mix it with this kind of speed or design of the car along with the design of the architecture and showmanship of a city like this, so you have great painter's pal late of kind of paint to work with.
And it takes money, there's no question but it also takes partnership. This is a city that also understands that. What Randy is doing by throwing out an offer to 80,000 fans to drive traffic into the city is good for the hotels; so you can get your partners there, because you know it's something that's driving business. There are some pretty good ideas that are floating here that we are going to do our dangedest to amplify.
PAUL KELLY: With that, I would like to thank Randy Bernard and Mike Kelly for joining us today on the teleconference and an exciting day for everyone in IndyCar.
RANDY BERNARD: Thank you for joining us, really appreciate it.
PAUL KELLY: Quick reminder, there's 33 days left until the 2011 IZOD IndyCar Series opens in St. Petersburg, and we thank everyone for joining us today on the teleconference and have a great day.

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