Editorial

CART can still race in Europe, but will they?

 

 by Mark Cipolloni
August 26, 2003

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A lot of our readers have contacted us wanting to know if there is any truth to the rumors that CART may not go back to Europe in 2004 because the races lost so much money.  While that decision has yet to be made we suspect, we can share with you what we know and what we think should happen.  However, in the end it may be The Big Little Man that determines CART's future in Europe.

Regarding 2003

Some wild, and we believe incorrect numbers (losses) regarding the European races were published recently, primarily a quote from Normand Legault that CART lost $9 million in Europe in 2003.  In the recent Q2 Financial statement released by CART, race promotion revenue for the three months ended June 30, 2003 was $5.0 million and race promotion expenses for the three months ended June 30, 2003 were $10.6 million. CART conducted three self-promoted events, Brands Hatch, England, EuroSpeedway Lausitz, Germany and Portland, Oregon during that period.  That is a $5.6 million loss for all three 2003 events.  Of that $5.6 million loss,  $3.1 million was for the two European events in 2003 at Brands Hatch and EuroSpeedway.

At EuroSpeedway, CART agreed to honor the 2002 tickets (cancelled event in 2002) for this year's race.  In June 2003, the company received $1.0 million from proceeds received from a bankruptcy settlement regarding claims filed against EuroSpeedway Lausitz for loss of sanction fees and other damages that occurred when the 2002 event was cancelled as a result of the bankruptcy of the promoter.

This year's EuroSpeedway event realized a loss of about $1 million, mainly because the sales period was very short as they could announce the race in January (race was originally cancelled, but then reinstated in the 11th hour) and started pre-sales in February for a May race date.  Anyone in the race promotion business knows that is nowhere near enough time.

Because they agreed to honor the 2002 tickets (about 13,000 tickets!),  these fans did not have to buy new tickets (one could assume they would have had the 2002 race run and 2003 been a new event) and that directly affected the result of the event.

However, if you add the $1 million for the 2002 ticket lost revenue to the loss of $1 million for the event, CART went out of the event with a balanced result, or at least could have.  This result is - taking into account the difficult circumstances and the very short marketing period - a very good one that demonstrates the potential of this event in Europe.

In the end it also shows that it was the race at Brands that produced a very poor financial result. We don't know the reasons for that.

Regarding 2004 and the future

We do know that EuroSpeedway President Hans-Jörg Fischer met with CART President Chris Pook on July 24th in Germany in order to discuss with him a long-term agreement (5 years).  The agreement says (if signed) that EuroSpeedway Lausitz would be the promoter (means taking the full risk) again.  EuroSpeedway forwarded an offer to CART at the end of July and are waiting a decision by CART.

Last year's German 500 was one of the most exciting oval races in CART`s history at what everyone views as an outstanding facility.

It looks certain that a big German multinational company  will sponsor the 2004 event, in fact it's a done deal, but sorry we can't tell you the name.  Suffice it to say they are already negotiating with several CART teams that will support a German driver (you have read in AutoRacing1.com that Nick Heidfeld will probably be without a F1 ride in 2004, and behind the Schumacher's is the biggest name in Germany right now) in the series (i.e. all races) starting in 2004 and beyond.  We were assured that this will happen.  Wouldn't it be a shame if a German driver would be in the series and EuroSpeedway out!?  That's what EuroSpeedway was desperately waiting for since 2001.

Whatever CART will do in the US (focusing on street courses with a couple of road courses and only one oval race) they should, in our opinion, not turn their backs on Europe so quickly after they invested so much to get it started.  Most new business ventures lose money the first couple of years. In the case of Germany next year, CART has zero risk and they can showcase their product in Europe, which ultimately has a huge potential.

What is needed is a second European race in order to share some of the costs (freight, flights, etc.). There are talks with Estoril but our Portugal moles tell us they are also waiting for a signal from CART. A third European race would divvy up the freight costs even more.  It's up to CART's new ownership to decide what to do about Europe in 2004.......or is it?

The Bernie Factor

One reason the European races may get nixed is simply economics.  Although CART may at least break even on the races themselves, if they are still supporting many of the teams in 2004, every additional race costs the new owners money.  Hence why we have heard of a schedule reduction for 2004.  Less races to support teams and to buy TV time.

Another factor is The Big Little Man (Bernie stands 5'-4" or so, but he's big because of the power he wields).  We were told that when Bernie Ecclestone was going to buy into CART, one of his stipulations was that CART would not race in Europe.  We don't know if that was because of Bernie's non-compete clause he signed with Kirch, or if he simply did not want another open wheel series in Europe competing for the customer's money that could otherwise be spent on F1 races.

However, Bernie has stated to the Toronto Sun, and to the Guardian in the UK, that he has withdrawn his bid for CART.  Does this mean CART is free to stay in Europe, or does CART want to honor Bernie's wishes (of CART staying out of Europe) with the hope of renewing relations with him in the future when he is able to negotiate a new Concorde Agreement which may not include such strong non-compete wording?

We suspect that if CART bows out of Europe for 2004, it won't be because of money as much as it will be The Bernie Factor. 

Time will tell.......

The author can be contacted at markc@autoracing1.com

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