[Note: The opinions stated here are those of
the author and do not necessarily reflect those of AutoRacing1.com]
IRL, NASCAR, CART, Formula One. When "The
Captain" talks motorsports, people listen. That was the case when
motorsports mogul Roger Penske, 65, sat down last Saturday (Sept. 14) with a
group of sports journalists for a free-wheeling interview. Penske is
tight-lipped but read between the lines and he'll tell you everything:
Question: "You recently predicted that there would be one domestic
open-wheel series within 18 months. You want to revise that?"
Penske: "From my perspective, I think we need one open-wheel series. I said
18 to 24 months ... and I would still say this. Obviously, CART has got
capital in the bank. Chris Pook [CART president/CEO] is a very savvy guy.
They've got a real strong CEO. The issue is, is the market bigger than what
he can control? It's the fans. It's the emotion. At the end of the day,
you've got to build a series that will have identity. And we've got to build
the stars. That's what NASCAR's done."
Penske is unconsciously projecting his own concerns when he states that "the
issue is, is the market bigger than what he can control?" This most
certainly doesn't apply to Pook, a man who is barely hanging on by his
fingernails to his shrinking race schedule and his embattled series.
BATTLE STATIONS
Christopher Robin Pook is engaged in a classic guerrilla war (Spanish for
"little war"). Ever since taking the helm of Championship Auto Racing Teams
late last year, he has been battling the combined might of the nation's
oval-track conglomerates who appear hell bent on the destruction of his
beleaguered racing series and its replacement with an open-wheel racing
league of their own. One by one, the oval-track venues his Champ Car series
used to race on have been denied him, forcing him to literally take his
brand of exotic, high-powered formula car racing to the streets.
The forces arrayed against Pook's increasingly irregular force of gypsy
road-racers are beyond formidable (note - there's competition for market
share in any business and auto racing is no different).
International Speedway Corporation, headquartered in Daytona Beach, Florida,
is the largest promoter of motorsports activities in the United States,
currently promoting more than 100 events nationwide. The conglomerate, which
annually brings in $525 million, currently owns or operates 12 major U.S.
tracks with an ownership interest in at least two others. In addition to
motorsports facilities, ISC also owns and operates MRN, the nation's largest
independent sports radio network (with 650 affiliated stations in 48
states); Daytona USA, the "Ultimate Motorsports Attraction" in Daytona
Beach, Florida and the official attraction of NASCAR; Americrown Service
Corporation, a provider of catering services, food and beverage concessions,
and merchandise sales; and Motorsports International, a producer and
marketer of motorsports-related merchandise. Majority owned and controlled
by the family dynasty of William France, Sr., sons William, Jr. and James,
ISC controls NASCAR, the most popular form of motorsport in the America.
Founded and managed by O. Bruton Smith, Speedway Motorsports, Inc. is the
second leading marketer and promoter of motorsports entertainment in
America. The company owns and operates six premiere track facilities. The
company provides souvenir merchandising services through its SMI Properties
subsidiary, and manufactures and distributes smaller-scale, modified racing
cars through its 600 Racing subsidiary. The company also owns Performance
Racing Network which broadcasts syndicated motorsports programming to over
750 stations nationwide. SMI's annual revenues are approximately $376
million. Debuting on Wall Street in February 1995, Speedway Motorsports,
Inc., became the first motorsports company to be publicly traded on the New
York Stock Exchange.
Anton H. "Tony" George, is president and chief executive officer of the
Indianapolis Motor Speedway, home since 1911 to the largest single-day
sporting event in the world, the Indianapolis 500. George represents the
third generation of IMS ownership by the Hulman family of Terre Haute,
Indiana. In 1994, George created the Indy Racing League "to preserve the
traditions and excitement of America's open-wheel oval racing." Centered
around the Indianapolis 500, the IRL campaigns in 15 oval races across the
country and is the series that the American oval track owners would like to
see replace Pook's CART. An aggressive program of expansion and investment
has marked George's tenure as IMS president and CEO including extensive
reconstruction and redesign of various track components. Each year, the
track plays host to the Indianapolis 500, once the world's best-attended
race. In 1994, George brought the NASCAR Winston Cup Series to the
Indianapolis Motor Speedway for the annual Brickyard 400 event, the world's
second biggest race.
There are other oval track owning companies in the country, including Dover
Downs Motorsports, Inc., where Chris Pook worked before he took the helm of
CART, but they are minute in comparison to just ISC. Name a major speedway
in the U.S. and it's a sure bet that either ISC and/or SMI owns, controls,
manages or influences the facility. In large measure, this is because the
France family, Penske, and ISC control NASCAR and determine where and when
any one of its immensely profitable series will run. Five years ago, before
NASCAR's popularity soared to the stratospheric heights it enjoys today, a
Wall Street analyst stated that a Winston Cup race date was worth an
instantaneous $10 million to any venue lucky enough to get one. That figure
has undoubtedly grown much larger today.
ISC is a public company with a difference. Its annual report notes that the
company's financial structure is such that the France family holdings,
approximately 60%, are weighted in favor of their control of the
corporation--even if the percentage of their ownership should be
significantly reduced. The annual report also states that it can be expected
that "conflicts of interest" might arise with regard to the Frances and
their granting of NASCAR rights. Thus, while several suitable speedways
owned by small independents clamor for their first NASCAR race, tracks owned
or operated by ISC and SMI are host to multiple events.
As much as anything, this is a reason for the conglomerates' attempt to
destroy CART and elevate the status of the IRL. ISC et al are skating on
thin ice with regard to anti-trust violations. NASCAR's calendar is full and
there is no longer room for expansion. A prima facie case can be made that
ISC and SMI are engaging in monopolistic practices in the meting out of
NASCAR race dates and should share one of two "double header" NASCAR races
with the independents. ISC and SMI, needless to say, are more than reluctant
to do so. Thus, if they could arrange for a NASCAR surrogate, no matter how
profitable, to be offered to the small operators, they could retain all
their NASCAR races while maintaining that a competitive market situation
exists. Listen to the ISC-influenced motorsports media extol the praises of
Tony George's IRL and it is always with reference to the benefits it might
provide to tracks OTHER than those owned by the conglomerate(s).
For this stratagem to work, the IRL must be at least marginally profitable.
George himself recently estimated that it has cost him at least $250 million
out of pocket to establish and sustain his series over the past seven years.
The figure is likely to have been understated. Furthermore, while things are
definitely looking up for the IRL as of late, there is still no convincing
evidence that the IRL has yet to turn a profit. George is in much the same
situation with regard to his IRL as ISC is with NASCAR. The only
indisputably profitable race in the series is the Indy 500 and George is not
likely to share its proceeds with the other track owners holding
sparsely-attended IRL races. So, the IRL must grow in order to meet the many
needs of its backers and, until recently, it has found that nearly
impossible to do with competition from Pook's CART series.
Ergo, Pook's series must cease to exist. There is ample circumstantial
evidence to indicate that an organized and funded effort was undertaken to
kill CART before the start of its 2002 season. As a public corporation, CART
was exquisitely vulnerable to the destructive insider manipulations which
crippled the once-thriving race sanctioning body. Forces to which the
essentially private Penske and France corporations were immune. As we speak,
CART is reeling dangerously close to the brink of extinction brought about
by corporate sabotage, the carefully orchestrated defections of several of
its top teams, drivers, manufacturers and sponsors, and an unremitting media
assault unprecedented in the annals of American motorsports.
The fact that CART is still standing is a miracle. One that is owed to two
factors, both mentioned by Roger Penske in his opening interview: Chris Pook
and CART's money in the bank.
DEATH OF A 1000 CUTS
In December 2001, the future of the series could probably have been numbered
in days. That's when Chris Pook, creator of the Long Beach Grand Prix and a
pioneer in the promotion of street race events, took charge of CART and the
defensive guerrilla war that it is fighting for its very existence. Like its
military counterparts, CART's campaign is being waged against a vastly
larger and better-equipped entrenched force. In keeping with the nature of
its struggle, CART has taken the issue to the streets of the Americas,
avoiding open battle as much as possible, and exploiting the mobility gained
from its lack of fixed infrastructure. To be successful, i.e. to survive,
the embattled series must have a wide degree of popular support. In this one
regard, CART is winning. While its adversaries have contrived to limit
CART's access to traditional electronic and print media outlets, its street
"events" have been met with the enthusiastic support of hundreds of
thousands of spectators and fans.
It has become abundantly clear that if the oval track allies are to defeat
CART, barring sudden collapse, they will have to bleed the series to death
financially. In this, they have all the traditional advantages of a
ruthless, centralized power accustomed to wielding absolute political and
financial authority. In predicting a time limit for CART's demise, 18 to 24
months, Roger Penske has set the clock in motion toward the final conflict.
One's guess is that CART's opponents have their eye on some critical figure
below CART's $140 million capital reserves at which losses will trigger a
call (issued no doubt by the conglomerate's institutional operatives) for
the dissolution of the company.
In their end game, the key is to continue to drain CART of capital while
preventing it from replenishing its reserves. If they can do that, then as
the old adage goes, "if your outgo exceeds your income, your upkeep will be
your downfall." In this deadly game, all the players on the other side hold
an advantage because they all possess cash cows which constantly renew their
war chest while CART is required to bring in income primarily from its
events, which the conglomerates can interfere with.
Several weeks ago, the media controlled or influenced by the conglomerates
signaled a tentative peace proposal. Essentially, the message sent to Pook
and his lieutenants was that if CART would abandon the oval tracks to the
IRL (almost a fait accompli already) and concentrate its efforts on its
highly successful street and road course events, that there was "room enough
for two open-wheel series to co-exist." In other words, retreat and cease
hostilities and we'll call off the dogs. For the beleaguered series,
especially battered by the events of the past few weeks, the offer seems
tempting. But, is it for real?
In a word, no. The "Daytona Cartel" and its partners have already all but
driven CART from its territory. Why, then, in return for something they
already possess--an oval track hegemony--would the conglomerates cease their
attack? The answer is to get CART to cease its resistance long enough for
ISC's assassins to strike a final death blow.
Pook has already had experience with the conglomerates' peace proposals.
Soon after his arrival at CART's Michigan headquarters he was approached by
factions within CART who represented that an accommodation with the IRL was
close at hand which would allow the two warring series to co-exist, if not
come together as a unified series for the first time since they bifurcated
in 1995. All that was required was for CART to remake itself in the image of
its rival and, then, its opposite number would graciously consent to bury
the hatchet. Over the strong opposition of the majority of the series'
manufacturers and goaded by a ultimatum from another manufacturer, who later
became a mainstay of the IRL, CART complied. And promptly lost all its
sponsoring manufacturers, whose support was the life's blood of the series
and its teams. Critically wounded, CART was left with reunification with the
IRL, in whole or part, as its only viable option. Not to worry, the insiders
whispered, come to an open wheel "summit" to be heard.
In Pook's words, what happened next is that: "We
put it [commonality] out as an olive branch to try to form some type of
compatibility with the other side to bring us closer together to see if we
could merge the two. But the olive branch was broken off in two pieces, and
we were slapped around the face with it and told to get out of town."
Problem was, CART was now resident in the town and under siege from all
quarters. The "peace proposal" had been a trap. Tony George and his allies
in Daytona Beach had even had the unmitigated gall to have Pook & Co. pay to
transport their belongings to their own cannibal's soup, where their remains
could be picked apart by their enemies without them having to go to the
trouble of paying freight!
So, it is unlikely that Pook, the guerrilla leader, will fall for any more
peace proposals from the benevolent folks in Florida or Indiana. But they
know this; they've been outwitted by the masterful Brit enough times to get
the measure of the man. So, if the ostensible peace proposal was not the
intent of the media notes sent to Pook, what was?
ISC and its partners have the classic problem that any entrenched force has
in dealing with a small, highly-mobile guerrilla unit--it's illusive. In
military terms, CART's permanent road course events might as well be held in
a fort. Pook and his band are not vulnerable to attack or disruption there.
But, street course events, held in public places are relatively unprotected.
The conglomerates want CART to commit to a schedule of street races (in
addition to its road course venues), so they can catch he and his forces out
in the open and annihilate them.
The Grand Prix of the Americas, to be held October 4-6 in Miami, Florida, is
the quintessential model for the final battleground as envisioned by the
"Daytona Cartel". Of all the streets in all the Americas (save perhaps
Long Beach, CA), Miami has the ones where Pook the street fighter and his
turbocharged, high-tech open-wheel guerrilla racers stand their best chance
of victory. If they fail there, their cause is in doubt because the
conglomerates will have found a way to drive a stake into CART's heart.
Since the conglomerates hold sway over most of the nation's motorsports
press, as befits the group controlling its most popular form of motorsport,
they can portray an engagement in pretty much any light they desire. Where
the battle in Miami is concerned, they choose to depict it as a fairy tale
involving the Big Bad Frances in a turf war over one of their brick houses,
Homestead-Miami Speedway. This is a tale told so often in childhood that it
goes right past the critical thinking function of most observer's brain and
registers somewhere in the memory near the story of Jack and the Beanstalk.
We have the erstwhile Jack (Pook) trying to sneak one past the giants with
the colossal egos (the Frances), who are jealously guarding the golden goose
(Homestead-Miami). This is something the average Joe gets before he gets it
and the fiction is designed to hide a larger, more sinister purpose.
APPOINTMENT IN MIAMI
Originally proposed in the fall of 2001 by local race promoter, Raceworks,
the Grand Prix was to be an American Le Mans Series race that would bring
its international style of racing and 180-mph speeds to a picturesque
waterfront course in Miami this past April. Raceworks, owned by architect
and developer Willy Bermello, motorsports industry attorney Peter Yanowitch
and racing legend Emerson Fittipaldi, had plans to return the Grand Prix to
the streets of Miami.
Though the city was the host to some of the world's most successful street
races in the 1980s and into the 1990s, the music of a race engine at full
song has not echoed against Miami's downtown skyscrapers since 1995.
Miami became part of the racing game when a local entrepreneur, Ralph
Sanchez dreamed up a race through the downtown streets. Sanchez, a Cuban
immigrant and self-made multi-millionaire, loved auto racing and thought it
was a perfect way to showcase the cosmopolitan beauty of his adopted city.
He promoted the Miami Grand Prix for sports cars which was sanctioned by the
original IMSA. He also talked his good friend, Emerson Fittipaldi, who had
retired from racing after his foray into Formula 1 with his own team nearly
caused him to go bankrupt, to come out of retirement as well as lend his
fame to the endeavor.
A hugely successful series of Grand Prix races followed its debut in 1983
and continued well into the 1990s. The sports cars ran on the Grand Prix's
1.784-mile temporary street circuit until 1985 when the PPG CART Indy Car
series became the premier event. Each year from 1985 until 1988, the CART
series raced through the streets of Tamiami Park, Miami bringing its unique
blend of high-octane excitement and thrills and filling the city's coffers
each November. In 1995, the year of the Indy Car "split", the CART PPG
series was back on the streets in March for the Marlboro GP of Miami.
The success of the Grands Prix began to threaten their existence. They
helped bring prosperity to the area and the resultant development began
encroaching on the downtown race. Ralph Sanchez began to cast around for a
place to locate a permanent facility.
In 1992, Hurricane Andrew devastated South Dade and the City of Homestead.
Sensing an opportunity, Sanchez met with Homestead's then-city manager Alex
Muxo to negotiate a deal that would bring a racing facility to town with
hopes of aiding in the revitalization of the city. With a loan from H. Wayne
Huizenga, the "King Midas of South Florida", and $11 million in seed money
from hotel taxes, groundbreaking for the new complex took place less than a
year after Andrew came to town in August, 1993.
One gets the impression that Ralph Sanchez knows most of the right people in
his neck of the Sunbelt.
Grand Opening ceremonies for the ultra-modern 1.5-mile Homestead Motorsports
Complex were held on Nov. 3-5, 1995, as NASCAR made its South Florida debut
in front of a sellout crowd of 60,000 with its Craftsman Truck and NASCAR
Busch Grand National events. Executives and dignitaries did the ribbon
cutting and Dale Jarrett provides the fireworks. Although not a points race,
former Daytona 500 champion Geoffrey Bodine was the Speedway's first
"winner" of a race, taking top honors in a NASCAR Craftsman Truck Series
exhibition race on Nov. 4, 1995 - the day before Jarrett won the inaugural
Jiffy Lube Miami 300.
In July, 1997, Penske Motorsports, Inc., and International Speedway
Corporation became partners with Sanchez and Huizenga. ISC purchased a 40
percent interest in the Homestead Motorsports Complex. Prior to the PMI/ISC
takeover, the complex's 1.5-mile oval had undergone an $8.2 million
reconstruction which transformed the former quad-oval and its "short-chutes"
between the turns into a continuous-turn oval. The Speedway also has an
infield road circuit which is used by the France-backed Grand Am sports car
series and others. In 1998, ISC purchased an additional 5 percent and owned
45 percent of the facility, with Penske Motorsports, Inc., owning 45
percent. On March 15, 1998, PMI and ISC acquired Sanchez's remaining
interest in Homestead Motorsports Complex, and longtime Penske Corporation
employee Brian Skuza was named president. Sometime during the acquisition
the Motorsports Complex was re-christened the Homestead Miami Speedway,
staking out a unilateral claim to the Miami motorsports market.
In 1999, the ISC merged with PMI. With the merger, ISC held a 90% interest
in the Homestead-Miami Speedway (it acquired the remaining 10% in 2001).
Coincidentally, I'm sure, in 1999 the Speedway hosted NASCAR's premier
Winston Cup division when Tony Stewart won the inaugural Pennzoil 400. Prior
to the event, the Speedway nearly doubled its seating capacity, raising the
existing grandstands from 32 to 48 rows while adding a massive expansion in
Turn 1.
FAST CARS, BIG MONEY
As an aside, the Ft. Lauderdale Sun-Sentinel in February 1997, published the
results of a study of the financial impact of the partially public funded
($60 million in tourist taxes) Homestead Motorsports Complex and the CART
Marlboro Grand Prix of Miami on the economy of South Dade county. The
headline read: "Auto Racing, Fast Cars, Big Spenders -- Grand Prix of Miami
worth $23 million to local economy." The study had several interesting
findings, especially as they relate to CART and the current owner of
Homestead Miami Speedway, ISC.
* Really fast cars generate really big money. * CART, running its second
straight season at the South Dade superspeedway, would attract 155,787
spectators over the three-day race weekend, including an expected sellout of
72,000 for Sunday's headline event. * The author, Washington-based economist
William Lilley, said the $23 million in actual spending represents a
10-percent increase over a similar study he conducted the year before.
Lilley's canvassers discovered that hotels, restaurants and shops as far
north as downtown Miami were generating heavy race weekend business for the
PPG CART Indy Car series event. * More importantly, Lilley said, about 80
percent of that spending would be generated by people outside Dade County.
This was music to the ears of Metro-Dade politicians and Homestead boosters
who had committed $60 million in tourist taxes to build the track shortly
after Hurricane Andrew devastated the area in 1992.
"If Hurricane Andrew took Homestead off the map, then (the motorsports
complex) put it right back on the map," said Metro-Dade Commissioner Katy
Sorensen. "The psychological impact on the community is just as great as the
economic one."
* Auto racing events such as the Grand Prix were generating new dollars -
and tourists - into the community rather than pro baseball, football,
basketball and hockey, which largely take entertainment dollars that would
have been spent on other local events.
"What's significant is that this is new money that wouldn't normally come
into this community," Lilley said.
* In relatively small, poor and undiversified economies such as South Dade,
the near-absolute certainty of sharply increased revenues at a predictable
point in time is an important factor in determining the ability of a
relatively small service business to profitably exist. * Indy Car events
typically draw a slightly wealthier audience than the NASCAR Busch Grand
National or Craftsman Truck events that also run at Homestead. * The average
race fan will spend $150 a day for tickets, food, beverages, parking and
souvenirs. * The Grand Prix is also more of a recognized event because of
its history; Sanchez has been promoting the race since the early 1980s, when
it ran through the streets of downtown Miami. * Hoteliers, especially those
close to Homestead, were cashing in on the 100 percent capacity rates. Room
prices during Grand Prix weekend are, on average, 35 percent above normal
rates this year; the figure was up from 28 percent in 1996.
The economics of the situation clearly indicate what a Grand Prix of the
Americas type of event can mean to the city fathers of Miami. Speedways of
the sort owned by ISC/SMI are self-contained merchandizing loops. It's not a
coincidence that the oval track conglomerates inevitable include subsidiary
divisions providing catering services, food and beverage concessions,
merchandise sales and production and marketing of motorsports-related
merchandise. At this moment, there is a nationwide fan boycott of certain
ISC tracks because it is charged that they used 9/11 "security concerns" as
an excuse to ban coolers from the tracks, forcing the fans to buy their food
and beverages from ISC concessionaires, who reportedly raised their prices
to celebrate the occasion.
Speedway conglomerates like ISC use their political clout to try to get the
taxpayers of an area to pay as much of the cost of their tracks as possible.
If they can't get direct building grants or loans at low interest, they
lobby for tax-free status and/or reduced fees of all types. All of these
requests are predicated on the supposed infusions of money and jobs into the
local economy generated by the speedways in attracting tourists (i.e. fans
from outside the area).
If one thinks about that proposition for a moment, though, one will see the
weakness of the argument. Take the speedway's much vaunted addition to the
job market. If a speedway holds ten race weekends a year, that's twenty days
of seasonal employment for workers in the local economy.
When politicos were attempting to get the taxpayers to pay for the
acquisition of a new professional football team in Los Angeles, CA a few
years back, a University of Chicago study was produced which showed that the
seasonal economic impact of an NFL stadium on the local job market was less
than that of a average-sized Motel 6! One after another the copious economic
studies presented to the city by the NFL citing supposed benefits to the
local economy from the presence of a major-league football team were proved
to be specious. Finally, after months of examination and debate, the NFL
essentially said that the primary reason for a city to have a professional
football team was for the status it conferred on the city. "A major-league
franchise puts a city on the map," said a spokesman for the team owners
association. The taxpayers of Los Angeles basically answered, "Thanks, but
no thanks. We're ALREADY on the map."
The speedways are designed to keep every penny they can within the confines
of the complexes. Their only valid argument for the role they play in
augmenting the local economy boils down to being an attractive nuisance. In
other words, the tourist industries (food, lodging, and gasoline) benefit
from the race fans passing through. The same could be said for the fall
display of the leaves changing colors on the East Coast and the trees aren't
asking for taxpayer subsidies. Moreover, if the speedways could sell you a
room for the night, meals and gasoline, they'd do so in a minute. Don't
bother trotting out all the gazillion "studies" to the contrary, they're
bogus. In fact one of the only parasites savvy enough to prey on speedway
management are the highly paid "economists" churning out economic studies
used to justify the conglomerates' stance with regard to taxpayer subsidies
and government hand-outs.
Now, look at a street race anywhere--in this case, Miami. The oval track
conglomerates make about 45% of their revenues from the sale of tickets.
Given the same number of fans at a street race, the amount of tickets sold
is the same but the revenues account for a much larger percentage of the
promoter's gross because the rest of the revenues (by and large) that
ordinarily go to the speedway, go instead directly into the local economy.
Instead of the customers being held within the confines of the speedway, at
a street race they're within the confines of the city where all the
taxpayers and residents can benefit from any additional revenues which are
generated.
Street races aren't just a threat to the speedway's monopoly with regard to
the fan's dollar, they're a threat to the speedway itself. NASCAR is
arranged such that most of the time the series participants need to race on
expensive tracks with their smooth, banked turns and other features unique
to the speedways. If one comes up with a popular motor racing form using
readily available public infrastructure, like Champ Cars on a slightly
modified city street, one has no need of speedways. Races can be held at
potentially thousands of venues and the infrastructure put in place by the
taxpayer pays dividends back to the taxpayer. This is not the forum for a
long-winded discourse on economics; feel free to completely disagree (but
you'd be wrong).
However, if even a modicum of the arguments made hold true, one has only to
put oneself in the place of a Miami public official and in the place of a
speedway executive to see why the former may welcome a street race and the
latter may view it as a threat to his existence. Certainly, beyond dispute,
is the fact that the speedway conglomerates want Chris Pook and his CART
series to go away -- forever.
SHOWDOWN IN MIAMI
What should come as no surprise given the foregoing is that earlier this
year the target of ISC's minions in Miami was not Pook but Don Panoz and his
partner in the Panoz-Sanchez group, Ralph Sanchez (remember him?). Why?
Well, they wanted to hold a street race featuring Panoz's American Le Mans
Series and Sanchez's Trans Am.
Don Panoz is in love with sports cars. After amassing considerable wealth,
primarily in pharmaceuticals and land development, Panoz and his son, Danny,
formed Panoz Auto Development at the end of the 80's, almost as a hobby.
Besides auto manufacturing, the company became involved with racing. The bug
bit hard and in 1997 Don founded Panoz Motor Sports to race his own cars
internationally and acquired the Road Atlanta Motorsports Center and Sebring
International Raceway. In 1998, he added Mosport Park Raceway in Canada.
Panoz had found a mission: to revive major-league sports car racing,
particularly in North America. In 1999, he founded the American Le Mans
Series for sports prototypes with an eight-race schedule. The same year he
expanded his motorsports holdings with the formation of the Elan Motorsport
Technologies Group and the purchase of Van Diemen International and G Force.
Panoz went into partnership with Ralph Sanchez and they acquired the rights
to the Trans-Am series.
The turn of the millennium found Panoz expanding the ALMS into Europe, Asia
and Australia. The series schedule was expanded to 12 races -- eight in the
United States, one in Canada, 2 in Europe and the season finale in Adelaide,
Australia -- including the historic 12 Hours of Sebring and the Petit Le
Mans at Panoz's Road Atlanta. . In a sense, Panoz found his fledgling series
expanding in a vacuum and with domestic and international televised coverage
unprecedented in American sports car racing history, he found himself with a
hit show on his hands.
It's not hard to see why. ALMS is sportscar racing at its finest and
features both individual sprint races as well as endurance races with
multiple drivers and pit stops. The formula is very exciting for the fans
and viewing audiences alike.
With his series visiting race tracks across the U.S. and Canada, Panoz
became focused on reviving some of the most historic and popular sports car
races from the sport s illustrious past. It was perhaps inevitable, then,
with Ralph Sanchez as a partner, that the idea came to revive the Grand Prix
of Miami in the city's streets.
The prospects for the race couldn't have seemed brighter. The ALMS's
popularity was soaring and former Miami Grands Prix had been unqualified
successes. With Sanchez on board to shepherd the race, Miami's elected
officials were looking forward to a healthy boost to the local economy and
the opportunity to showcase the city's downtown and waterfront around the
world.
What they had in mind was a 1.54-mile temporary racing circuit that would
include part of Miami's famous Biscayne Boulevard and the city's Bayfront
Park. Cars would travel south on Biscayne, make a brief loop to the north,
and then turn into Bayfront Park. The circuit would wind through the park
and then rejoin Biscayne. Pit road and the paddock area were to be placed on
Biscayne Boulevard.
While racing through the park, the cars and the television cameras following
them would have scenic Biscayne Bay in the background, with dozens of yachts
and other boats moored in the water. Large cruise ships would be visible in
the distance at the Port of Miami. It was remarked that the world-famous
Grand Prix of Monaco has similar nautical scenery.
Thus, Raceworks, LLC, a group of Miami businessmen working with the full
cooperation of the city, secured a city lease to stage the Grand Prix of the
Americas over a three-day weekend set for April 5-7 of this year. The event
was expected to attract a projected 50,000 to 75,000 local and international
spectators to downtown Miami.
Way up the Florida coast to the north, the France family took notice of the
plans of the group in Miami and was not pleased. In their view, the only one
that counts in their estimation, the Homestead-Miami Speedway more than
adequately serves the Miami market and they did not want any other races
taking place in South Florida, particularly ones put on by the ALMS.
That is because they are also at war with Don Panoz and his ALMS.
The Frances have never consented to an interview on the subject so one will
have to intuit the reasons for their dislike. Like CART the ALMS stages road
races on permanent road courses and city streets. So does its allied Trans
Am series. Arriving out of the blue, the ALMS was an unexpected hit with
television audiences and a competitor for the domestic motorsports dollar.
Most important, though, was the fact that the series showed no sign of ever
needing to rent ISC's facilities and the Frances didn't own a piece of the
action.
Many of the speedways owned by the conglomerates contain infield road
courses. They get plenty of use for everything from driving schools to
motorcycle racing. Generally speaking, what they don't get used for,
however, is big-league road racing. For whatever reasons, most fans of road
racing do not consider the speedway road courses to be proper venues for
their favorite sport. It is perhaps understandable that the Frances and the
other speedway owners have never understood this.
Faced with an emerging road racing series which makes exclusive use of
permanent road circuits and city streets, ISC's response was automatic and
well-rehearsed: destroy the series and replace it with a pale imitation
owned by the Frances and which makes use of the infield road courses at
speedways and/or conglomerate tracks. Thus, the Grand American Road Racing
Series was born in 2000.
As is the norm, the Frances' description of the mission of their Grand Am is
a study in hypocrisy: "Most importantly, Grand American has brought
stability to sports car racing and automobile road racing in general. This
country has seen a variety of organizations and private entrepreneurs come
and go at the helm of automobile road racing. The result has been that the
sport has lagged behind other motorsport series in developing a sustained
fan base and sponsorship support. It is our mission to provide the stable
platform this sport so dearly needs and we will do that by controlling our
spending and growth at levels that can be built on each new year."
In that brief statement, ISC basically outlined the key elements of their
campaign(s), only in reverse: destabilize the target series by creating a
competing series and attack the viability of the fan base and sponsor
support to end up "at the helm of automobile [fill in the type] racing."
As was mentioned at the outset, what makes the situation in Miami so
noteworthy is the fact that the ALMS, the Trans-Am, and CART all have
powerful friends among the movers and shakers of the city. It's remarkable
that ISC chose to attack them there. For one thing it is an open declaration
of "total war", meaning that ISC is signaling that it will settle for
nothing less than complete victory -- no "peaceful co-existence" being
possible. Secondly, it is a test of ISC's might. To paraphrase the song: "If
they can do it there, they can do it anywhere."
THE OPENING ROUND
In mid-December of 2001 the principals of Raceworks, LLC secured the
go-ahead from the city and hosted a "kick-off" luncheon to mark the official
143-day count down to the Grand Prix of the Americas, "a high voltage street
race slated for the streets of downtown Miami."
The luncheon was held in a tent in Bayfront Park, the site of the event, and
featured prominent auto racing personalities including Derek Bell, winner of
the 1985 Grand Prix of Miami, Raul Boesel, winner of the 1991 Grand Prix of
Miami, and Andy Pilgrim, GTS class winner for the past two years in Petit Le
Mans at Road Atlanta.
The official Grand Prix of the Americas logo, designed by Coconut Grove
architectural and engineering firm Bermello Ajamil & Partners, was unveiled
at the event.
The entrance to the luncheon tent was lined with racing cars including a
Champion Racing Audi R8, a Porsche 911 GT3 RS and a Porsche 962 Prototype.
Peter J. Yanowitch, President & Founder of Raceworks LLC, stated, "This
event will attract thousands of tourists, race participants, sports
enthusiasts, and the international press who will patronize the local hotels
and restaurants generating an economic impact in excess of $25 million for
the City of Miami."
Mr. Yanowitch also happens to be Ralph Sanchez's attorney and friend.
"We will celebrate the 20-year anniversary of the original Downtown race by
adding more entertainment activities that will appeal to a wider audience",
said Willy A. Bermello, Principal of Raceworks LLC.
Famed championship driver and race promoter Emerson Fittipaldi, who recently
joined the Raceworks team, said: "I have had a long-standing love affair
with Miami. It is the perfect location for auto racing and I am very excited
to be part of the return of racing to Downtown Miami."
The main attraction was to be an American Le Mans Series race, a series of
sports car endurance races that features many of the same world-class
drivers and cars that compete in the famous 24 Hours of Le Mans.
"They will join the international and cosmopolitan atmosphere of Miami.
Sports cars are extremely popular in Miami, and most of the old street races
in the city were sports car events."
"I'm really excited about racing in Miami," said Tom Kristensen of Denmark,
a three-time winner of the 24 Hours of Le Mans and a driver for the powerful
Audi factory team. "We presented our new Audi in Miami two years ago and the
people were very excited to see it. It's a lively city with lively people,
and the event will be very exciting."
"I raced in the last street race in Miami in 1995 and it was great," said
California's Bryan Herta, who has joined the Panoz factory team for 2002
after a stellar career in CART racing. "It's an exciting city to be in and a
great place to hold a street race."
The Grand Prix of the Americas weekend in Miami was also to include a race
for the popular Trans-Am Series for the BFGoodrich Tires Cup, along with a
race for historic sports cars, including many that actually competed in
previous Miami races. Also part of the weekend was to be a celebrity race,
with participants to be announced.
Around the time of the "kick-off" luncheon, the Miami City Commission
members started receiving phone calls from officials representing the
Daytona Beach motorsports conglomerate seeing if there was anything that
could be done to stop the event. They are said to have coaxed and cajoled,
calling city commissioners at home trying to bring pressure to bear, warning
of a possible scarcity of comp tickets to the popular NASCAR events as well
as greater care exercised with respect to future campaign contributions.
After failing to exert enough pressure on the Miami City Commissioners, the
Speedway and ISC finally hired a large law firm to continue the battle and
to ferret out any possible loophole and stop the event, and they did.
A lawsuit was brought to block the event, citing irregularities in the lease
arrangements between the city and the race organizers. A county judge threw
out the agreement between Raceworks LLC and the city of Miami. For technical
reasons the county judge felt that a revocable permit to hold the event was
more appropriate than a lease.
The problem for the Raceworks group lay in the word "revocable". By having a
county judge vacate the lease in favor of a permit, ISC had accomplished at
least two goals: they had opened up the process of granting permission to
hold a race to a virtually unlimited number of challenges up to the actual
moment of the race and they had managed to pit county officials (with whom
one assumes ISC has more influence) against city officials.
With nothing but delays and legal wrangling in sight, Raceworks started to
cast about for an alternative. The added expense of the legal proceedings
and road-blocks caused the promoters to determine that they needed more
co-investors and a loan from the city for marketing and staff and to help
start construction of the course. Application was made to the Miami Sports &
Exhibition Authority for a loan and Raceworks openly searched for investors
willing to buy a controlling interest in the event.
CART had been looking at several sites in and around the Miami area and a
Miami race some time ago and let the ball drop when the folks at ALMS beat
them to the punch. CART was being forced out of venues controlled by the
conglomerates. CART had had great success with its street races in Miami in
1985-1988 and 1995 and hoped to return. Panoz, though, seemed to have the
race locked up. Until ISC launched its attack on him.
"The enemy of my enemy is my friend." Pook and Panoz have mutual friends.
For all I know, Pook and Panoz are friends. Raceworks and CART going into
partnership in Miami had many advantages. They were both battling a common
enemy, ISC. The conglomerate showed no signs of letting up and the
ALMS/Trans-Am race date was near--too near. Moving the race date to October
with a joint event gave everyone breathing room. Raceworks would provide the
friends in Miami that CART needed. plus add a vital race to its schedule,
while Panoz & Co. got the financing they needed along with an ally in
battling ISC. Once the Grand Prix of the Americas is in the history books it
can also be assumed that it will be more difficult to disrupt next time.
So, Raceworks LLC and Panoz's IMSA/ALMS decided to partner with CART for a
joint mega race weekend in October featuring FedEx Championship, American Le
Mans Series, and Trans-Am series races.
The organizers approached the city with a proposal to sell up to 60% of
Racework's controlling interest to Championship Auto Racing Teams and
applied for a $1.5 million five-year loan from the City of Miami.
"Raceworks is looking for investors to buy controlling interests in the
event," said Lucia Dougherty with the law firm of Greenberg Traurig
representing the promoter.
Event organizers asked Miami commissioners to amend the city-issued
revocable license to reflect CART and a Delaware-base limited partnership as
new partners. But the city administration said the change was unnecessary
until an ownership transfer took place. Raceworks had the same owners it did
when the license was granted, said Assistant City Manager Frank Rollason.
Mr. Bermello owns 33.33%, Mr. Yanowitch 63.67% and Mr. Fittipaldi 3%.
While still not a partner, CART officially committed to participating in the
three-day event. The American Le Mans Series race was moved to Saturday.
The race falls under the purview of the city's Sports & Exhibition
Authority, which reports to the Miami City Commission. The group, with some
city commissioners sitting on its board, is in charge of marketing, funding
or underwriting sports and community events.
Ferey Kian, the Authority's director of finance, said the group's proposed
loan to Raceworks consists of lending Miami Arena-generated funds to pay for
road improvements. The five-year loan would have an interest of 150 points
above Wall Street's prime rate. The $1.5 million would not be disbursed at
once but in chunks, as reimbursements to incurred expenses, he said.
If Raceworks sells part of its ownership, the authority would get 7.5% from
sales proceeds, Mr. Kian said. The borrower would also be subject to
relocation fees.
If the event is moved out of Miami in its second year, Raceworks would pay
$1 million. If it leaves the following year, it would pay $750,000. Fees
will keep on decreasing until year five, he said.
While this provision is probably standard Authority practice (to see that
public funds get spent where they're supposed to), it has interesting
ramifications for any group who might wish to relocate to, say, Homestead.
The law firm of Steel, Hector & Davis, representing ISC/Homestead-Miami
Speedway immediately notified the Miami Sports & Exhibition Authority that
Speedway executives were also inquiring about applying for a similar loan
for another street race they contemplated in downtown Miami.
The lawyers also questioned whether the city's revocable Street Race Permit
granted to Raceworks LLC shouldn't be reopened to competitive bid to assure
Miami taxpayers of the best return on its sale.
Jorge Luis Lopez, of Steel, Hector & Davis, said he was watching closely how
the city and authority proceeded. His firm represents the speedway, which
sued the city over its agreement with Raceworks, forcing the city to sign a
revocable license with the promoters rather than a lease.
"To say that nothing has changed, when CART is about to get on board, is
misleading" he said.
According to Lopez, another speedway complaint about the city's negotiations
for the race was pending.
Miami Mayor Manny Diaz was highly upset with the turn of events and vowed
"This race started in downtown Miami [as the Grand Prix of Miami]; this race
belongs in downtown Miami, and this race will run in downtown Miami."
Finally, after more than a month of wrangling, the commission acted.
City officials made changes to the contract -- including making it a
revocable license agreement -- which they said brought it into compliance
with the county judge's order. The city also formally invited any other
racing company to apply for an unsolicited license to race in Miami.
But Jorge Lopez, the lawyer for Homestead-Miami Speedway, questioned whether
the city's actions were enough to address Judge Genden's ruling. "They
thumbed their nose at the judge's order," Lopez said after the commission
meeting.
Commissioners Joe Sanchez and Johnny Winton expressed their frustration with
the Speedway, which they said was only interested in stopping the race.
Winton instructed City Attorney Alejandro Vilarello to ask the U.S. Justice
Department to investigate whether the Speedway and its parent company, the
International Speedway Corporation, are violating antitrust laws.
"Their entire intent has been to block this race for their own monopolistic
purposes," Winton said. "They are trying to corner the market for
themselves."
"The idea that ISC/Homestead Miami Speedway wants to offer a bid for another
event in the area is sheer nonsense," said one local news source.
"ISC/Homestead-Miami has no interest in seeing another racing event anywhere
near Miami."
"It is hoped this is the end of ISC-Homestead Miami Speedway's intervention
and that Raceworks and the City of Miami can move forward with the business
of putting on a world-class racing event. However, we believe that neither
threat of another court battle, nor threat of involvement of the U.S.
Justice Department will deter the minions of the Family France, NASCAR, ISC
and the Speedway, such is their arrogance and belief in their own power,"
wrote a local sports writer.
So, in July 2002, at a press event in Miami's Bayfront Park, "a ceremonial
signing was held of the final permit allowing the Miami street race to go
forward. The race, originally scheduled for April, encountered substantial
delays due to legal actions brought by Homestead-Miami Speedway seeking to
kill the event, as well as a change of ownership of race promoter Raceworks,
LLC."
Miami City Manager Carlos Gimenez, before signing a giant facsimile Street
Race Permit document, joked, "The real one was signed yesterday, so it's too
late for another injunction. This race WILL happen."
"It's been a long and winding road, but this is going to be a great event
for us," City Commissioner Joe Sanchez said.
Delays and legal challenges led to the race being moved to October but also
transformed it into a full weekend of racing that includes the ALMS race, a
Trans Am Series race and a CART FedEx Championship Series race.
But attorneys representing Homestead-Miami Speedway, which has been fighting
the street race, say legal issues remain. At the next Miami City Commission
meeting, they are scheduled to appeal the race's zoning permit.
"The fundamental issue is can you race in the park?" said Jorge Luis Lopez,
an attorney representing the speedway. "We think the answer is 'No.'"
Lopez said his clients also questions whether safety issues have been
addressed.
A Miami judge's ruling that the original contract establishing the race was
invalid also is still on appeal, Lopez said.
Grand Prix of the Americas President Chuck M. Martinez said plans are on
track and organizers expect crowds of at least 100,000 for the three-day
event.
"We are fully confident everyone is on board on this," Martinez said.
Drivers, too, are excited about street racing in Miami -- the Miami Grand
Prix was held on Miami streets, at Bicentennial Park and at Tamiami Park
from 1983 to 1995 until it moved to the Homestead-Miami Speedway.
American Le Mans Series drivers Johnny Herbert and Milka Duno were on hand
for a ceremonial placing of the first concrete barrier. They were joined by
local CART drivers Christian Fittipaldi, Tony Kanaan and Oriol Servia who
are expected to compete in Miami at the 18th of 20 CART races this season.
Fittipaldi, who lives on Key Biscayne, made his CART debut at the 1995 race
in Miami, finishing fifth. Fittipaldi is currently in seventh place in the
CART standings.
"What Miami will produce will be outstanding," said Fittipaldi. "The drivers
will entertain people during the day and they can party in the evening."
Servia is looking forward to racing on the streets of his hometown.
"It's the road where people go to buy their bread and can see 800 horsepower
cars fighting for position," said Servia, who has a season best sixth-place
finish in Japan. "It's more real racing in the streets."
Wednesday's event was not a press conference, per se, as there were no
questions taken by the organizers. The event was primarily intended to
introduce the new people in charge of the event, and to announce that legal
hurdles to the race had finally been cleared. Local media, including several
Miami-area television stations, were on hand for the event and did
interviews with organizers and drivers.
On display at the event were an Audi R8 show car in Le Mans 2000-winning
livery (ordinarily on display in Champion Audi's showroom in Pompano Beach)
and (in a bold stroke of irony) a blue Motorola Michael Andretti Champ Car.
In the interim since the first launch of the Miami street race, the
controlling interest in race promoter Raceworks was sold to CART, which is
now the primary promoter for the event, scheduled to take place October 4-6.
The ALMS race will run on Saturday, with CART and Trans Am races on Sunday.
"Downtown Miami and its Bayfront Park locale are very picturesque and
tourist-friendly, and the cultural makeup of the south Florida area is
incredibly diverse, making for what would seem to be an ideal climate for
ALMS success. But in a most curious move, the preliminary CART schedule for
2003 places the Miami date in direct conflict with the Le Mans Preliminary
Tests. So whether this marriage will be a long one remains to be seen."
[As an aside, note the recent events involving ISC and its allies with
regard to the CART contingent that were on hand that day: Andretti and
Kanaan gone to the IRL, Fittipaldi gone to NASCAR, and if memory serves the
Japanese supposedly took a run at Servia for F1.]
Last week, a local (perhaps pro-ISC) news outlet brought events at Miami up
to date:
____________________
Miami's street race is on ... apparently
by Richard Biebrich
Staff Writer
Posted Septemer 18, 2002
MIAMI 7 Giving new meaning to the phrase dog-and-pony show, Miami Mayor
Manny Diaz stepped out of the yellow Corvette pace car on the grounds of
Flagler Dog Track to the high-pitched whining engines of two Toyota pace
cars and the smoke of a CO2 fire extinguisher.
Far removed from the lawyers arguing Tuesday whether a race can or should be
held in the streets of Miami, Diaz proudly proclaimed the Grand Prix
Americas race week the start of a renaissance for the city.
Miami's grand prix is going to happen, where it belongs ... in downtown
Miami," Diaz said at a news conference featuring drivers from the CART/FedEx
Series, American Le Mans Series and the Trans Am Series, which will compete
Oct. 4-6, bringing racing back to downtown for the first time since the CART
left for the 1.5-mile oval in Homestead in 1996.
"This race has been an obstacle race," Miami Commissioner Tomas P. Regalado
said. "But we won."
The ongoing soap opera started when the grand prix was first announced in
July 2001 as an ALMS event by the city and race promoter Raceworks.
The race drew legal challenges by the Homestead-Miami Speedway and was
pushed back from April 2002 to its present Oct. 4-6 date, which allowed
organizers to add the CART series. Judges continue to hear appeals even as
the weekend has grown to become a week celebrating speed with Tuesday's
announcement of the inclusion of Sept. 29's Miami Cycling Classic at Coconut
Grove. The final stop on the U.S. Pro Cycling Tour, the four-year-old
Classic will feature some racers from the U.S. Postal Service Team.
"In the past we've had big-name riders, but they've never been supported by
full teams," said Lee Marks, president of Velo Racing, the promoter of the
race.
With 17 days remaining until cars start to take practice laps on the street
course laid out downtown, Diaz is hopeful the event's legal issues will
fade.
"[The speedway's lawyers] come up with stuff all the time," Diaz said. "But
I think we are now in a position where this is right around the corner, and
I think we should just enjoy the races."
* * *
Footnote: CART's 2003 Board, as elected by CART's shareholders, includes one
new appointee and eight returning directors. The new appointee is veteran
motorsports promoter Rafael A. "Ralph" Sanchez who joins returning directors
James Grosfeld (who recently resigned for personal reasons), Carl A. Haas,
James F. Hardymon, James A. Henderson, U.E. "Pat" Patrick, Fredrick T.
Tucker, Derrick Walker and CART President and CEO Christopher R. Pook.
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