Editorial

ďChamp Car South of the Border: An interview with Joe HeitzlerĒ

 by Mark Cipolloni
July 20, 2004

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Joe Heitzler

Former CART President Joseph Heitzler has been very busy making Champ Car's two Mexican races South of the Border a huge success.  Mr. Heitzler presided as President of CART through some turbulent times and we were able to break him away from his hectic schedule to conduct the provocative interview. As they say, hindsight is 20/20 and Mr. Heitzler is now able to reflect back on  what was CART as well as provide his insight into its future as Champ Car.

AutoRacing1: Joe, thanks for taking the time to be with us today.

Heitzler: Itís my pleasure Mark, thanks for inviting me.

AutoRacing1: It should be noted for the reader that we were concluding this interview when the Champ Car/IRL unification story broke and Mr. Heitzler asked we postpone concluding the interview until that story settled down. Now that is has, with no hope of a unified open wheel series in sight, what is your take on the topic of unification? Can the two series come back together?

Heitzler: It seems as if the parties are in a look-see pattern. The participants are all positioning their respective viewpoints and feeling their way. What else can they do given the atmosphere of mistrust, miscommunications and all the other elements that have transpired over the last 10 years.

AutoRacing1: We understand you have been wrapping up your work in Mexico and that you will be devoting time to other projects in the US. Can you bring us up to date on this - in particular what is your next project and what does it entail?

Heitzler: While I will be focusing more attention on the U.S. I will still spend a significant amount of time in Mexico. The Mexican corporations are the most tenured sponsors in the series. That fact, coupled with the desire of the Mexican corporations to expand both their operations and their marketing programs to the U.S. warrants having a direct relationship with the key decision makers and the management of those corporations. Unless you have worked as closely with these corporations as I have you probably would not know that the second largest economic factor in the Mexican economy is the over $14 billion dollars Hispanic consumers in the U.S. send back to Mexico each year. That is significant! Cross border development is an essential element in our long term business plan so I will maintain an office with a staff full time in Mexico City.

In the U.S. there is a great deal going on that I would love to share with you and your readers but, for all the obvious reasons, I simply cannot. What I can share is I am in the final stages of forming a new U.S. company that will be focused on providing corporate communications services with an emphasis on special events, such as motor sports. Iím very excited about this new venture and look forward to sharing more information about it with you and your readers just as soon as everything is finalized.

AutoRacing1: We recently reported, as a rumor I might add pending our receiving more definitive information, the Herdez press bulletin that was released in Mexico indicating they would not sponsor racing teams in 2005. They may want to sponsor golf instead. Herdez owns a big chunk of HERDEZ Competition. What are Herdez, Corona and Gigante planning for 2005?

Heitzler: Our company, EMG, is in negotiations will several of these firms and it would be premature to announce several positive developments in this area. But they are positive.

AutoRacing1: Obviously both Mexican races were huge successes last year and Monterrey drew well this year. What did your team do to make it all happen?

Heitzler: One essential aspect of the success of these events is the incredible love and passion the Mexican fans demonstrate on a daily basis for Champ Car. The 2003 season was absolutely rewarding with 17 podiums for Mexican pilots (drivers) which helped to heighten fan interest in our events. My people in Mexico, my core team, are some of the most talented people Iíve ever worked with. There are none better. They dedicated themselves 24/7 to ensuring these were going to be successful events. Their passion for what they were doing was contagious and the fans, the sponsors and even the media all fed on their energy. You know, Mark, passion is a critical element in most every aspect of management in Mexico. I never have had a member of my team say they could not do something. They naturally assume they can do whatever it is they set their minds to, and you know what, they do! It was amazing. My biggest transition was to learn the language and, more importantly, learn and understand the issues that truly motivate the management of the corporations making these sizable sponsorship investments.

AutoRacing1: Is there one lesson you learned down in Mexico that you think could help some of the promoters in the States?

Heitzler: I would without a doubt have to say the media coverage and our relationship with the media in Mexico is totally refreshing, especially the level of trust and interest by the media and a willingness to help make the events successful. They have pride in the event and have taken ownership of the Champ Car World Series and the Mexican races. The Mexican media prefer to report the news not the rumors and they are not interested in spinning news to suit the political agenda of a competing series. You must remember that the fans in Mexico are overwhelmingly road racing fans. F1 and Champ Car is what they follow. More than one of my Mexican colleagues has asked me to explain what U.S. fans see in oval racing, particularly NASCAR. All I can do is shrug my shoulders and shake my head because I havenít been able to figure it out myself. Road racing demands so much more talent from the pilots, the crews and the teams as a whole. There simply is no comparison in my book. Another lesson learned here in Mexico that could be exported back to the U.S. is the way in which the Mexican sponsors integrate their participation in Champ Car into their core advertising. They are much more effective at this. Champ Car becomes a common thread woven into all of their advertising and promotion. They are very aware of the value in tying it all together.

AutoRacing1: Are you happy to see Champ Car now in private hands? Do you wish it was when you were President?

Heitzler: YES, very happy. As to it having been private during my time as President of CART, honestly, Iíve never really considered it.

AutoRacing1: You were somewhat instrumental in helping OWRS win the bankruptcy trial over Tony George? Do you get a lot of satisfaction out of that?

Heitzler: Yes, but my satisfaction with that victory is derived more from the confidence demonstrated by Mr. Forsythe in asking me to provide my contribution. There was a lot at stake there and I would be lying if I didnít admit it was one of the most nerve-wracking moments of my career. I would like to share this though, Judge Otte was overwhelmed by the support shown by CART fans. He allowed the court room to burst into applause on more than one occasion when procedural rulings went in favor of the OWRS bid but on those occasions when a ruling may have favored the IRL there was only silence. No response at all from those in attendance. I must give CART fans a lot of credit. They were sending e-mail to Judge Otte urging him, not so much to save CART, but begging him not to let Tony George get his hands on it just so he could kill it. I sat near Tony George for a majority of the day, inside the docket area, and that was really an interesting vantage point to watch from. The last time I had seen Tony was when I attended the 2001 Indy 500 as the CEO of CART and as a guest of then CART supporter Roger Penske. As Iím sure you may remember, CART drivers swept the top five positions that year. Tony, in a very private moment backstage at the awards banquet, said it was the worst day of his life! I obviously was in a bit of a different mood.

AutoRacing1: What do you view as the major hurdles Champ Car still has to clear? What about Open Wheel Racing in general in the USA?

Heitzler: Sponsors and TV. Both are absolutely critical to Champ Carís future. Champ Car needs a business plan that addresses sponsor equity and sponsor development. They also need a single Producer/Director to do the Champ Car broadcasts. You take the signal Champ Car produces or you donít get a signal. Pure and simple. The same Producer/Director for every event - a consistent look and feel for each broadcast. It becomes a signature element of the series much like PGA golf was on CBS when Frank Chirkinian and Chuck Will did every CBS golf telecast and set the broadcast standard everyone else has chased ever since.

As far as a business plan is concerned they must look to the future. Each race weekend the ownerís (OWRS) jets should be full of corporate CEOs and senior marketing executives from the worldís most visible consumer products companies all of whom need to reach the kind of consumer that is the Champ Car fan! Champ Car fans fall, not surprisingly, into the most highly sought after consumer demographic on the planet. We have to begin educating key corporate decision makers in our product and we must demonstrate to them that the Champ Car World Series is one of the most cost efficient means for them to reach their target customer in mass. There is nothing that gets that point across like getting these executives to a race so they can experience it firsthand.

One last thing relative to the business plan, I would organize a national contest to pick the best 20 or so Champ Car fans and then form a fan advisory panel. Have them meet three to four times per year with the owners to voice their concerns or criticisms and provide us with the input we need to ensure Champ Car stays focused on the fans who are our customers. Customer service is everything in any business, including ours. It is the fans of Champ Car, together with the owners and the sponsors, that have gotten us to this point. Without the fans where would we be now?

AutoRacing1: Are you bullish on Champ Car, or is the jury still out?

Heitzler: Let me put it to you this way. If you were given the chance, knowing their track records as businessmen as you do, would you invest with Gerry, Kevin and Paul? Has Gerry Forsythe deviated one step from the desires and objectives he had for the sport when he was the single largest stakeholder in CART? There is a significant rationale attached to these guys when they dedicate themselves and, more importantly, when they allocate financial resources, to this investment. Add to that their charisma and the promotional talents they all share and you have some real Disney, Apple, Microsoft style aura going. I would bet the ranch on these guys.

AutoRacing1: Should Champ Car focus on North America or make a major effort to become a true global sports property? What changes would they need to make to be successful at either?

Heitzler: As a global sports entertainment product they will be enormously successful. North America is too small for this product and the North American market is already crowded with the oval racing entities. As tobacco bans force F1 out of their traditional venues new opportunities for Champ Car to step in, fill the void, and introduce new customers to our product are created.

AutoRacing1: Rumors say that NASCAR will be racing in Mexico soon. Can you comment on that?

Heitzler: Having spent the time I have as a resident of Mexico I have learned a lot about the culture and the business mentality of the major companies and their consumers. Oval racing is not of any interest at this time. Oval style racing has none of the deep seeded traditions road racing enjoys in this country. Again, oval racing is a uniquely American product and it does not export well. Combine the lack of interest in oval racing with a relatively low level of disposable income at a national level and you have some major obstacles for NASCAR to overcome. However, on balance, there is an emerging Middle Class developing in Mexico and as this consumer class develops they may seek out new sports entertainment options, create a paradigm shift if you will, and develop a taste for oval style racing with trucks and stock cars.

They could also, just as suddenly, become big fans of ice hockey too! Who knows what COULD happen. But given how entrenched road racing is in this country, partially due to F1 and Champ Car, but also due to karting and the other forms of open wheel, sports car and motorcycle racing, I think NASCAR will have a long uphill battle to win the Mexican motorsports fan over to their form of the sport. An example of Mexican interest in stock car racing was seen a few weekends ago. The new stock car series was having its first event and only drew between 800 to a 1000 spectators. This was not a good way to start a new series and supports what Iíve been saying for some time: there is no interest in oval racing in Mexico. Recently Mexico has beaten Argentina in a major soccer competition and that combined with the upcoming Olympics has caused the Mexican media to focus on those events. Also the Mexican pilots are having a tough year in the Champ Car World Series.

AutoRacing1: Obviously your Presidency at CART didn't end up the way you had hoped. Was the situation there unworkable regardless of who was President?

Heitzler: I have heard some say that I was the right guy at the wrong time. One of the individuals that I brought to the board said he had NEVER seen as many intellectually dishonest people in his life in one place! It is beyond my comprehension that the SEC (the Securities and Exchange Commission) did not conduct some kind of investigation into the activities of the CART board. These guys were asleep at the wheel and would not support anything that represented an improvement. Now theyíre all over in the IRL and look whatís happened over there since they arrived! There were only a few CART board members who wanted change but they were always in the minority. It is my opinion that no matter who was at the helm of CART at that time they would have been doomed from the start just as I was. My successor went through over $100 million dollars in cash and wiped out over $250 million of market capitalization and this board never received one visit from an angry stockholder. It truly puzzles me.

AutoRacing1: What do you feel was your greatest achievement as CARTís President?

Heitzler: That I did not have a heart attack or find myself divorced! Seriously, though I feel that I was able to demonstrate that the fans and the drivers were what was important. Iím also very proud of my decision not to allow the Engine Committee to adopt the IRL engine and chassis specs. The fact that I kept the turbo engines was a source of great satisfaction to me. Also, I felt that we had to leave the ovals to the oval track cartel. I cancelled the Nazareth race and recommended we remove all the ovals from the schedule. The Texas race cancellation was a good decision made in the interest of both driver and spectator safety. I stand by it to this very day. I received several messages from drivers, some who have been hurt at that track admitting that, in hindsight, it was the right call. That catch fence was there for Kenny Brack last year because CART REQUIRED it to be there as a condition of racing there in 2001! But in the end there were other issues (G loading) that could not be corrected so we did not race. I also think adding the second Mexican race, renewing the Vancouver race and adding a third Canadian race were strong management decisions made by my administration.

To sum it up, Mark, I think the ultimate scorecard for my time heading CART is the financial condition of the corporation when I left. CARTís stock was trading in the mid fourteen dollar range I think and there was $122 MILLION in the bank. I believe we were being responsive to the fans while working hard to increase stakeholder value in their company, increase CARTís value as a spots entertainment product, and run the company as Wall Street expects any publicly traded company to be run. In all of those pursuits, we succeeded.

AutoRacing1: What do you feel was your biggest disappointment while CART President?

Heitzler: If I could do it all over again (pauses a moment to consider) . . . on day one I would have asked for the resignation of the entire board of directors. This would have cleared the deck for massive and immediate change for the better. A complete housecleaning might also have made more untenable the actions taken by some team owners that ultimately contributed to CARTís demise. In hindsight a MAJOR mistake on my part, Mark.

AutoRacing1: While President what was your relationship with Tony George?

Heitzler: We had a cordial relationship. When our drivers finished in the top five spots in the 2001 Indy 500 I could have really hit him hard but I decided not to rub it in. No good could have come from it. We treated it very softly. Our guys took all his cash back to CART with them. That was good enough I thought. I did find Tony to be dedicated and passionate about his mission. I have no respect for his mission but can at least respect his passion.

AutoRacing1: Was there ever any dialogue about a possible merger or truce, or did you feel the IRL was out to put CART out of business?

Heitzler: Never any dialogue at all about a merger or truce and Tonyís intentions toward CART and now Champ Car have been painfully transparent for some time now.

AutoRacing1: What really happened with Toyota and Honda that made them leave CART? Is there a story that has not been told?

Heitzler: Yes, there is a compelling story and someday it needs to be told. The fans deserve to know the truth about Toyota and Hondaís departure from CART and the truth about the pop-off valve incident. But I regret we must save that for another time.

AutoRacing1: How do you feel about the Champ Car TV situation? Was Spike TV the way to go?

Heitzler: The TV situation is of great concern to me. When I did the deal with FOX it was because there were no other deals available. There were no other suitors. This Spike deal was more than likely the only deal available, so it needs to be made to work. Everybody needs to get behind this deal and make it a great business decision. A win-win proposition for everyone. Letís all stop being so critical and get behind it. Tune in and watch! Look at it from CBSís perspective. Why would they want Champ Car on their air given our ratings? Donít forget Spike is part of Viacom so CBS is like our next door neighbor. Spike is available in virtually every basic cable and basic satellite television package. The problem isnít being on Spike. Champ Carís ratings are not what weíd like them to be but the IRLís ratings arenít any better and they're on ABC!   Promotion and advertising of the Champ Car World Series is key. We must tell our customers where and when they can see us and when they tune in we MUST give them the most exciting and entertaining program we possibly can. If we do that, all the other issues, including corporate support, will take care or themselves. If we execute on Spike itís only a matter of time before CBS takes a second look at Champ Car and likes what they see.

AutoRacing1: What about network TV, should OWRS buy time on CBS for the majority of races?

Heitzler: No. Continuing to buy time is a VERY expensive proposition. Those kinds of deals will always be there but we need to perfect our broadcast and build our ratings back up. Then we need to find the correct mix of sponsors and, as Iíve said, the rest will take care of itself, including CBS or, by then, maybe ABC will be looking for something people are willing to watch!

AutoRacing1: Would it make sense to tape delay the races to prime time on Sunday evenings?

Heitzler: No! By Sunday night everyone is sports viewed out! The Sopranos, Deadwood, dozens of movies, free over the air programming, itís extremely competitive in prime time so Sunday night is a real tough slot. A live broadcast supported by the simply incredible HDTV feed is the way to go. If we canít get that then a same day tape delay airing before prime time would be next best.

AutoRacing1: Joe, Thanks for your time. Is there anything else you would like to add in closing?

Heitzler: Yes, there is. I never really had the chance to thank all of the fans who voiced their support for me while I was at CART and, most importantly, continued to support me after I left. The fan support means a great deal to me. A very special thanks must also go to Gerry Forsythe and Alejandro Soberon, the Chairman CIE, for their unwavering confidence in me and for the support they provided to me as CEO of the Mexican events we created. Mark, I think itís worth pointing out that in less than two years we created a management team and a product from scratch that has to date attracted over 1.2 million people to just three races! On average thatís some 400,000 people per event which, last time I checked, is MUCH better attendance than the Indy 500 has enjoyed the last couple of years. I am most proud of this accomplishment and of the talented team that made it all happen.

The author can be contacted at markc@autoracing1.com

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