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The Lowdown on Qingdao

by Mark J. Cipolloni
Sunday, June 17, 2012

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The facilities around the Qingdao circuit were spectacular
It's common knowledge now that IndyCar was forced to cancel its upcoming Qingdao, China race.  What's not known is why it was really cancelled and how very important it is for IndyCar to not give up on China.

In this article we give you the 'Paul Harvey Now that's the rest of the story' inside facts into what went into cancelling what was to be IndyCar's most important new race since its inception.

Everyone thinks that this was just like the previous failed attempts by Champ Car and CART to race in China, but it wasn't.

Based on our intelligence investigation of what really went on in Qingdao, we can tell you that this event had all the makings of being huge, and a real shot in the arm for IndyCar, which is need for any feel-good success they can get right now.

Three and a half years of hard work went into making the Qingdao (pronounced Ching-Dow) race happen only to see the event cancelled in the 11th hour by a mayor who was afraid to fail on such a large undertaking.

Outside of the Indy 500, the Qingdao race was supposedly going to pay the largest sanctioning fee to the IndyCar Series and was expected to attract attendance second only to the 500.

As we had reported in earlier writings, everything was in place for a successful event.  The venue was perfect and IndyCar had a great promoter in Yinxin Investment.  It was very clear from our earlier intelligence that Yinxin is the right race promoter to get the job done. They are a sizable real estate development and construction company in China, but more importantly, they have connections at the highest levels of the China Central government, hence they are a very powerful player in China, and IndyCar to their credit did well to select them.

All the race sponsors were lined up, including the title sponsor, and the budget for the entire event (between $20 and $30 million) was appropriated to the City Development entity budget in Qingdao.  A future Chinese IndyCar team was planned to promote Chinese drivers (to be done in conjunction with an existing IndyCar team) and a whole slew of racing related endeavors were planned in China to grow the IndyCar brand. 

In other words the money was in the bank and the deal only required the new mayor's signature on the event plan to proceed, and specifically for release of the funding. 

But after several promises privately to proceed once in office, he didn't.

The culture in China is that a previous mayor won't kick off a new project and dump it in the lap of an incoming mayor.  So everything was on hold for the new Mayor to take office. Everything. Planning and preparation continued nonetheless.

Once officially appointed, the Mayor began to understand the size and magnitude of the event, began expressing doubts and finally turned and bailed.

The race promoter was shocked.  They never had anything like this happen to them in China as it is totally outside their cultural ways.  They now refuse to do business with a politician who blindsided them and cost them millions which unfortunately will prove to be a huge loss for the beautiful City of Qingdao.

And while some may speculate that Bernie Ecclestone somehow got to him and lined his pockets with cash to have the event cancelled (Bernie has been very outspoken about IndyCar racing outside the USA), the facts are that the mayor took office in late March and was without  his own executive cabinet, which he would appoint later this year.  With over 1 million people coming in for the Qingdao Beer festival the same time the race was to be held, and with no cabinet in place that he could trust to support him, the enormity of the two events made him step back for fear of the unknown about IndyCar and racing in general.

Of course the Shandong province government, as well as the race promoter, IndyCar, the sponsors and everyone else involved simply cannot believe what happened.  It is a bitter pill for all to swallow and no one is happy, especially Randy Bernard who was already under pressure to be removed as CEO of IndyCar.  The last thing he needed was for the China event to be cancelled.

So what's next for IndyCar and China?

The fact remains that China is a true global economy (#2 behind the U.S)  that is not going to go away, but instead continues to grow at a robust pace.  The experts predict that China will surpass the USA and become the largest economy in the world by 2020, possibly sooner.

More important to the racing world is the growth of the auto industry in China, but what you probably did not know is its connection with the State of Indiana.

Word has it that there are now more automotive related entities in the State of Indiana than in Michigan, the home of the USA automotive industry.  Independent of the race, the State of Indiana has established strong automotive business ties with the Chinese government and Chinese automotive companies.

The State of Indiana is way ahead of IndyCar in China, but more important is the natural tie to the Indianapolis Motor Speedway and racing.

Chinese car manufacturers are growing quickly and ready to start selling cars globally, so it won't be long before Chinese companies want to compete in racing on a world stage.  Bringing them into IndyCar Racing is a next logical step.

The good news we learned after a number of calls to China, was that there are now three or more other cities (Beijing rumored to be in the mix) competing to get the IndyCar race.  The group also includes a city that is now run by the former Vice Mayor of Qingdao who was the one who started the IndyCar project from the beginning.

And so while what you see on the surface is that yet another race was cancelled in China, the fact remains there is a very good possibility IndyCar will still someday race in China.

Having been burnt by China, Randy Bernard's taste for going there must be soured at this point.  But he would be wise to put the recent hurt aside, do his best to recover what he can for the cancellation and refocus on the potential China could someday bring to IndyCar if he has the determination to gut it out.  It's not easy doing business in China for anyone, but the potential rewards are enormous.

If I was Randy I would demand next time that IndyCar has the full payment before putting a China race on the schedule, and with the 2013 schedule planned for a September release, the clock is ticking to get it done by 2013.

And contrary to Roger Penske's comments that IndyCar should not be going to China and race domestically, he is dead wrong.  It's clear that Roger has not done his homework on China, which surprises me. Readers should note that Roger initially opposed going to Brazil as well, but now does some healthy business for his companies with Brazil created through the new Brazil event platform.  He should consider China in the same context.

Now is not the time to throw the baby out with the bath water.  And while Randy is probably thinking, "Fool me once shame on you, fool me twice, shame on me," if IndyCar is every going to stop being a bottom feeder to F1 and NASCAR, they are going to have to make some bold moves, moves that carry risk, but ones where the potential rewards outweigh those risks and will provide IndyCar some badly needed "quantum leap" growth effects.

Now is not the time to take the easy way out.  Now is the time to dig your heels in and fight for what you want and need.

When in doubt, just do what's right.

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