Making sense of CART's situation


 by Mark Cipolloni
July 30, 2003

Go to our forums to discuss this article

Many readers have written expressing concerns about CART's future, and asked for advice or insight as to what is happening.  While we don't have access to the inner sanctum at CART headquarters on a daily basis, we do hear things, and here are some things for you to ponder.  

1. If CART were fast approaching its demise, you would expect the likes of David Clare and many of the other people hired over the past year to jump ship ahead of time. That such big-name defections haven't occurred as yet seems to be a positive sign.

2. Mr. Ecclestone would have a much more difficult time picking up the Long Beach GP if he were to double cross Mr. Pook, given the latter's influence and reputation with the event. Nor would Long Beach automatically want to pay a fee multiples of what they are currently paying for CART's race given the current state of municipal finance in the U.S. today and, in particular, in the State of California.

3. If CART's management were really trying to tank the stock to make it cheaper for someone else to buy, it also would ruin the value of the holdings of some key people in a resurrected organization:

  • Gerry Forsythe, the company's biggest shareholder (23% as of 23 May) and part of a rumored buyout group

  • Carl Haas, a 2% owner and a director

  • Pat Patrick, a 1% owner and a director

While these individuals may be willing to eat their losses for the good of the sport, there are other investors who simply can't be expected to.  

4. Shareholders may have a difficult time claiming they were duped by CART management. More than a year ago Chris Pook laid his cards out on the table, proposing to buy television time, to support new teams, to promote a number of its own races and to buy engines from Cosworth. Everyone knew and discussed how that strategy would use the company's cash reserves at an unprecedented rate. That it has now come to pass should not surprise anyone.

Moreover, the fortunes, strategies, tactics, problems and risks of this company have been openly discussed in more venues than just about any public company in the world. You don't see this kind of coverage relating to IBM or Wal-Mart. AR1 is not the only forum that has reported on the rumors and suggestions of the company getting taken private, bought out or failing.

That a shareholder - particularly a significant one with resources to do firsthand research - could claim that they did not see this - whether it is a rescue or failure - coming unless they have other evidence that the rest of the public does not.  With that said, I expect a major shareholder lawsuit to be filed by Friday unless CART steps in at the 11th hour and negotiates a settlement of some sort.

5. Given the financial trend at CART, it is hard to imagine that the IRL and its chief supporters - the descendents of Tony Hulman - haven't endured an even worse financial drain. They have admitted in the past week that they still are not profitable after eight years in business and that the addition of the Brickyard 400 is what helped finance the series. Also consider that they started their operation from scratch and had a couple of formula changes thrown in for good measure, all suggesting that their losses might make CART's look meager. Talk about grounds for a lawsuit.

6. If I were a shareholder,  the people I would look to sue would be the former team owners, shareholders and directors who took advantage of their positions as insiders to disparage, belittle and defame the organization they were entrusted to oversee.

7. If a buyout does occur, will the media in Indianapolis focus any attention on the "sexed up" comments from CART's competitors about the company's fortunes in the same way the national media has regarding Weapons of Mass Destruction in Iraq?  Will the SEC look into the origins of negative rumors relating to the shares of a publicly listed company?

The author can be contacted at markc@autoracing1.com

Go to our forums to discuss this article


Other Editorials

Champ Car's Minardi 2-seater is the ultimate ride

For Alex Figge and PCM it's baptism by fire

A tribute to Alfred J. Cipolloni

Champ Car owners move to silence critics

Establishing a firm foundation for Champ Car

One-on-one with Champ Car President Steve Johnson

J.R. Hildebrand is one American going places in a hurry

What's new for Champ Car for 2007 - Part 1

Champ Car positions itself for international expansion

Paul Stoddart confirms interest in Champ Car

An inside look at Champ Car TV production

Ho-Pin Tung wants to be Champ Car's first Chinese driver

Stephen King explains Justin Wilson's novel Investor's Club

One-on-one with American sensation AJ Allmendinger

Champ Car moving forward without the IRL

One-on-one with Paul Tracy

Bruce Delahorne explains CDW's sponsorship in Champ Car

One-on-one with Justin Wilson

Champ Car bosses won't be bullied

Part 2: NASCAR/ISC get dirty in Phoenix, out to destroy Open Wheel

Part 1: NASCAR/ISC get dirty in Phoenix, out to destroy Open Wheel

The Rahals: Like father, like son

Why and IRL/Champ Car merger will be a big boost for the sport

Headless Open Wheel Racing appears doomed

Richard Lyons looking at Champ Car for his next challenge

We salute the champions of 2005

Is Jay Howard the next Ayrton Senna?

Interview with Grand-Am President Roger Edmondson

Otaru, Japan Champ Car race moving closer to reality

Champ Car's global appeal may ride on mimicking the Team Australia concept

Champ Car's Surfers Paradise race promoter "gets it"

Champ Car cements another brick in its foundation

Custom built Champ Cars and Indy Cars

Interview with RuSPORT Team President Jeremy Dale

Conspiracy Theory: What Indy was really all about

Why the Champ Car/IRL war must end

How a Champ Car and IRL merger might work

Will the battle for Long Beach destroy its Grand Prix?

Katherine Legge has her eyes set on Champ Car

Traveling Light Media - Just what the doctor ordered

Champ Car lays out bold 3-year plan

Champ Car's 2005 driver lineup vastly improved

Hunter-Reay anxious to get racing again with new team

That sucking sound you hear is NASCAR

Feud - The story of the murder of Mickey Thompson

Yes, Blame Tony and the CART defectors too

Interview with ALMS President Scott Atherton

2005 a foundation laying year for Champ Car

Kalkhoven talks Champ Car with AutoRacing1

Kalkhoven and Forsythe buy Cosworth from Ford

Carl Russo is bullish on Champ Car

Can this be Champ Car's next-generation car

Champ Car poised for major comeback

Champ Car Race Control - the 'Hot Seat Zone'

Open Wheel Racing is in serious need of consolidation

Champ Car South of the Border, An interview with Joe Heitzler

There is an easy way for Champ Car and the IRL to unify

From airport to race track, a race within a race

The 2-seater Car is one of Champ Car's biggest assets

Why Bernie Ecclestone could, and should, buy Champ Car now

Champ Car rocks the streets of Times Square in Manhattan

Why did Fernández leave Champ Car?  Follow the money....

Next Generation Champ Car: A call for F1 tires

Coming to America?  Interview with Ralph Firman Jr.

Open Wheel Racing defeats IRL - Champ Car Series to continue

Open Wheel Racing needs a win by OWRS - Part 2

The next generation Champ Cars - Part 2

Is CART next for Villeneuve?

New deal for CART may be better than first thought

The genius of one Bernard Ecclestone

CART Champ Cars, the next generation - Part 1

Details emerging on CART race in Seoul, South Korea

CART hits a Grand Slam in Mexico City.  Now What?

Top-10 Challenges facing new CART owners

CART can still race in Europe, but will they?

For CART, time is of the essence

Making sense of CART's situation

Push-to-Pass means no more parades for CART

An interview with CART's David Clare

What did Roger Penske really mean?

CART must differentiate itself - clearly

Why turbos make for superior street and race engines

For CART, it's now or never

Chicken or the Egg?

War of the worlds

What Bernie brings to CART

CART, Driven to where?

Is it really about CART vs. IRL?

If I were Bernie

The Champ Cars and St. Pete

An informal survey of the St. Pete race attendees

Artificial Dissemination

CART, F1 coming to grips with doing business in China

Cancel the Funeral

Why CART and F1 must, and will, share a common V-10 engine

Book Review: Autocourse 2002-2003 F1 yearbook

Does CART need Michael Andretti?

2002 CART TV ratings by the numbers

Now is the time for CART to redefine its ladder system

CART gets a taste of tifosi passion in Mexico

Love affair in Mexico

Making sense out of Bernie/CART rumors

Changing of the guard?

Mom, apple pie, CART and....Formula1?

Why CART and Bernie make perfect dance partners

Miami should be a CART and ALMS kickoff party

David slays Goliath in Miami

What to make of Gurney's F1 team

Taking it to the streets, why Miami is a war zone

CART, like the Phoenix, about to rise up from the ashes

There's more than handwriting on the wall.....and here's the concrete facts

Labor Day weekend 1952...A weekend I'll never forget

Team owners show support for CART

CART still may be in cards for Villeneuve

Bryan Herta, USA's next best chance for F1

Is Paul Ricard in CART's future?

CART's real attendance numbers

Is Brands Hatch suitable for Champ Cars?

An Unappealing Appeal, George reigns in GEORGE-town

A candid conversation with Chris Pook

More than meets the eye with CART's turbo move

It's time for CART to define its own future

Key upgrades at Road America

Back-Breaking work

The rebirth of CART

The hidden costs of Indy Car racing

CART's road and street circuits are clicking with the fans

Is it sport, or a P.T. Barnum show?

IRL at Fontana - a victim of friendly fire

CART's 2003 race venues #1 in the world

Meet the Gonzalez brothers

ISC is making enemies in Miami

e-mail us:

Back to the top

AutoRacing1 is an independent internet online publication and is not affiliated with, sponsored by, or endorsed by CART Inc., NASCAR, FIA,  FedEx, Winston, or any other series sponsor. This material may not be published, broadcast, or redistributed without permission.
User agreement & disclaimer

Copyright 1999 - 2003, AutoRacing1, Inc., Hamilton, NJ