Penske Buys Michigan International

By Sigur Whitaker
 
As early as 1972, Penske toyed with the idea of buying a racetrack. The Ontario Motor Speedway, patterned after the Indianapolis Motor Speedway, opened in August 1970 at a cost of over $25 million. With a significant debt load, the track was unsustainable. By the end of 1972, the bondholders were looking for someone to turn it around. Penske was on the shortlist to head an ownership group, but he turned it down.
 
Michigan International Speedway was also in financial distress. Built by Larry LoPatin in 1968 as part of his dream to have a chain of tracks around the country, the track had a couple of advantages over Ontario. The first was that the cost to build was about $6 million, resulting in a significantly smaller debt load. The second advantage was that Ford Motor Company used the track for testing. The track was put into foreclosure and sold for about $1.5 million to Manufacturers National Bank of Detroit, the holder of the first mortgage. The bank wished to either sell or lease the track to some other operators.
 
Penske had opened a Chevrolet dealership in Detroit and relocated to the area. He followed the happenings of the speedway bankruptcy. After American Motors agreed to lease the track when the races weren't run, Penske decided to pursue ownership. He outbid Pat Patrick for the track paying $150,000 plus the assumption of the $1,833,000 mortgage, $433,002.00 to Ford Motor Credit, and $150,000 to the bankruptcy trustee, in late May 1973. He set up a corporate entity, Penske Speedway, Inc, to own the track.
 
His vision for the track was simple. He explained, “What I would like to do is end up by filling the stands with spectators and putting on a good race.” He planned to improve the grandstand, garage, reduce the pit area from 50 to 35 spaces, and resurface the oval where it was needed. For the 1974 season, a full schedule of racing, including two NASCAR races, a USAC championship race in September, and the USAC/NASCAR doubleheader in July, was planned.
 
In 1985, Bobby Rahal took the pole for the Michigan 500. Afterwards, he crashed his car during practice after the front right tire blew. Concerned about the tires, drivers met with Goodyear as this was the second crash attributable to tire failure during practice. Many believed the underlying problem was the track surface which caused multiple tire failures and broken suspensions. Because of concerns with the tire issues, the race was postponed a week, giving Goodyear time to produce tires with an older compound. Penske promised to repave the surface at a cost estimated to be between $600,000 and $1 million, including new drainage.
 
Tony George, president of the Indianapolis Motor Speedway, founded the Indy Racing League (IRL) in direct competition with Championship Auto Racing Teams (CART) in 1994. The centerpiece of the IRL racing would be the Indianapolis 500. In June 1995, tensions between CART and the IRL escalated when CART announced that it would run some races in direct competition with the fledgling IRL. In reaction, George threatened, “CART’s action could diminish the opportunities for some drivers and teams to compete in the greatest motorsport event in the world, the Indianapolis 500." A month later, George announced that 25 of the 33 slots in the Indianapolis 500 would be reserved for participants in the IRL. This action would shut out most CART members from the Indianapolis 500. In response, CART announced in December that they would run a race at MIS in direct competition with the Indianapolis 500, and qualifying would be on the same day as that for the Indianapolis 500. CART would rent Michigan International Speedway from Penske and would assume the financial risk of running the race. The running of the Michigan 500 in direct competition did not benefit either CART or the IRL. The next year, CART ran the U. S. 500 at Michigan International Speedway on July 27.
 
The 1998 the U.S. 500 at Michigan International Speedway was marred when Adrian Fernandez’s car hit a wall and lost a tire, which flew over the 15-feet tall catch fence. The tire assembly first landed in the lower rows of the grandstand before bouncing near the top of the grandstand where it struck more spectators, killing three and injuring six. In response, the catch fence was increased an additional four feet.
 
Over time, Penske added three additional racetracks (California Speedway, Nazareth, and  Rockingham), to form Penske Motorsports, Inc.
 
In April 1999, Penske purchased controlling interest of the United Auto Group which had 66 dealerships in 16 states. He financed the purchase by selling his shares of CART stock. CART had gone public the year before and Penske intended to sell the bulk of his holdings because of the conflict of interest with publicly traded Penske Motorsports. At the time, four CART races were on Penske Motorsport tracks. Penske sold all four of his racetracks including Michigan International Speedway to International Speedway Corporation, which was founded by NASCAR founder Bill France, Sr. The deal was valued at $700 million.
 
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