Editorial

Kevin Kalkhoven talks Champ Car with AutoRacing1
 
with Mark Cipolloni

 December 15, 2004

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Kevin Kalkhoven
Champ Car

With the holidays fast approaching and the off-season deal making at a fever pitch, we caught up with Champ Car co-owner Kevin Kalkhoven between buying holiday gifts, and working on his next deal, to talk about some of the key issues facing the sport today.

Now that the 2004 season is over are you satisfied with what you achieved given where Champ Car was back in January, i.e. bankruptcy?

"We are on or ahead of target, but am I completely satisfied?  No, not completely," said Kalkhoven.  "Television and officiating are areas I was not happy with and we are fixing them in 2005, and it will be even better in 2006.  But considering where the series was on January 28th,  I'd say we are doing remarkably well."

"Our top priorities for 2005 were having a better TV and production package, adding at least two more races to get the '05 schedule to 16, and building a more solid foundation for '06 and '07.  That means a continuing development of the events we race at, and more evolution of our teams and our organization. You will also see us strengthen our ladder series. Look for a completely new format for the Atlantic series in 2006. 

"We hope to have the cable portion of our 2005 TV package finalized in about two weeks. In addition to the USA we will have a comprehensive international TV coverage.  Besides the Eurosport deal in Europe, which is huge, we will have TV deals in Canada, Mexico, Latin America and of course Asia," smiled Kalkhoven.

On the subject of new race venues, there have been rumors about possible races in Argentina, Brazil, China, the Czech Republic and even LeMans.  How real are any of these?

"Literally as we speak a bill is on the floor of Argentina's assembly," said Kalkhoven.  "That deal is the closest to happening.   We are also looking at Brazil and another venue in Asia, but I prefer not to be more specific at this time."

All indications were that Ford was going to re-up with Champ Car, and possibly take a more active role, but things have gone rather silent in recent weeks. 

"I am very confident that Ford will continue the relationship and possibly increase their role with Champ Car.  Ford has been great and the deal will be announced when it is ready," said Kalkhoven.

What about sponsorship for the series, is a title sponsor coming on board? 

"We expect to make a number of new sponsor announcements in the coming months.  Whether we have a title sponsor I can't say right now," said Kalkhoven.

The topic of Formula One came up.  At one time Kalkhoven was going to start a F1 team and instead he became a Champ Car team owner, which led to the purchase of Champ Car.  Kalkhoven was quick to point out that it's nearly impossible to be a privateer in F1 with the current structure.  "The FIA is trying to change that because the costs are outrageous," said Kalkhoven.  Manufacturers are spending hundreds of millions of dollars a year.  You can run a two-car Champ Car team for $10 to $12 million per year and that makes a lot more sense."

So what's Bernie really like we asked?  "Bernie is the smartest manager in motor racing, period," said Kalkhoven.  "We have been in touch and there are no barriers between Bernie and Champ Car.  He has not hindered our efforts to expand globally at all."

With the Concorde Agreement stating a maximum of 16-races per year, does a 19-race (soon to be 20) F1 schedule surprise Kalkhoven? If they can do 19-races, how many can Champ Car eventually do?

"As you know, Champ Car did 19 in 2003, but that is very difficult, especially when you are globe hopping," said Kalkhoven.  "There are a lot of people complaining in F1 about the schedule and I think eventually you will see the number of races reduced.  I think that for now Bernie is simply trying to lock up as many venues as possible for long-term contracts to thwart the efforts of the GPWC."

"I am completely confident we will have at least 18 cars on the grid in '05 and possibly more"

Kevin Kalkhoven

Speaking of numbers, a number of existing teams have yet to announce sponsorship deals for 2005. Things are awfully quiet and people are starting to wonder.  "I am completely confident we will have at least 18 cars on the grid in '05 and possibly more.  We have been approached by a number of new team owners and we hope to have some announcements early in the new year."

Part of the hesitation has been whether Champ Car will have all new equipment in 2006 and whether it pays to buy the old stuff now.  "There are plenty of Lolas and Reynards around, which are perfect for new team owners who want to gain experience in our series in year one and year two.  We have decided to keep the existing package through the 2006 season.  Look for an all-new car/engine combo in 2007," said Kalkhoven.

Kevin Kalkhoven and his partners are venture capitalists, as such they are always looking for a return on their investment. Did he buy Champ Car because he's a sportsman and wanted to preserve the series or is this strictly a business opportunity?

"I would not have bought Champ Car had it not had significant business opportunities. We are about to start year two of our five year plan.  Would we sell out after that?  No, the most successful business ventures are the ones you can ride for the longest time," stated Kalkhoven.

"I have turned around a number of companies in my career. There were only two times that I had any doubt whether we could be successful with Champ Car.  Of course there was some doubt during the bankruptcy proceedings in January and then when Fernandez and Rahal announced their 11th hour departures we had to scramble.   Yes, we still have some issues to work through, but once we got past those two major hurdles we became pretty confident."

Take out your crystal ball and tell us what you see for Champ Car in five years time.

"I believe Champ Car will be America's interpretation of Grand Prix racing showcasing American racing, i.e. more of a muscle car approach vs. the European finesse approach. That means no driver aids, a good combination of tracks, and maintaining a close level of racing with no one team completely dominating"

Kevin Kalkhoven

"I believe Champ Car will be America's interpretation of Grand Prix racing showcasing American racing, i.e. more of a muscle car approach vs. the European finesse approach.  That means no driver aids, a good combination of tracks, and maintaining a close level of racing with no one team completely dominating.

"The key to our success is not engine manufacturer money but sponsor money. We have to have the product and geography that sponsors want.   It has to be economically feasible for them. Manufacturers spending engine money is not the way to success.  San Jose and Silicon Valley are very important to our sponsors as are markets in the Pacific Rim and North and South America that are not currently dominated by F1 and NASCAR."

NASCAR is sometimes described as a religion. With NASCAR getting stronger by the day, is the USA indeed a NASCAR-only nation?

"The USA market is a very important market for Champ Car and we will maintain a significant presence there," said Kalkhoven.  "We will never gain the TV ratings NASCAR does, at least not short-term, but we can provide significant business opportunities for our sponsors in key markets and grow our TV ratings to respectable numbers.  At the end of the day, for our sponsors who increasingly sell product worldwide, the cumulative TV ratings globally are more important than just the USA ratings, and far higher I might add."

In many respects a sport's popularity is directly proportional to the popularity of its athletes. NASCAR is a prime example. We hear the excuse that Champ Car simply does not have enough American drivers, that the young Americans are all going to NASCAR, hence Champ Car's popularity in the USA has waned. How do you respond to that?  

"We must have a continuity of drivers.  To do that we need to strengthen our series to the point where drivers want to be in Champ Car and our teams can pay them the salary they deserve," said Kalkhoven.  "Right now drivers can earn the most money in F1 and NASCAR so naturally that is the first choice for many."

The question on many peoples minds is whether any new engine manufacturers have expressed a 'real' interest in joining Champ Car.  "Yes," said Kalkhoven, "but I can't comment further at this time.  I can tell you that we will have a maximum of two chassis suppliers when we roll out the new car, and possibly even one.  And on the tire front, we have no plans to open the series up to a tire war.  It creates excess speeds, requires more test days, results in tires that create marbles (single line racing) and increases costs.  We will stay a single tire series for the foreseeable future."

NASCAR has 43-car grids, more than double Champ Car. From our perspective an 18-car grid is far short of what the series needs to develop a sizable following because each driver brings in new fans. "As far as what's the right number for Champ Car, I would like to see about 24 to 26," said Kalkhoven.  "It's impractical to have 43 open wheel cars on a grid, the 26 number existed for many years."

Short-term Cosworth is the sole supplier of engines for Champ Car. What is Cosworth's role long-term with Champ Car, particularly if car manufacturers choose to enter the series?

"Cosworth has to stand on its own two feet.  Champ Car must turn a profit and provide entertainment. We would not exclude any manufacturer for the benefit of Cosworth, so yes, in the right situation we will allow multiple manufacturers to compete, but whatever we do we will not allow engine costs to dictate our series," said Kalkhoven 

Some people are highly critical that Champ Car is becoming an urban street circuit series and lament over the fact that Champ Car is throwing its heritage right out the door with the dropping of each natural terrain road course. What will it take to get the Road Americas of the world back on the schedule?

"Promotion," snaps Kalkhoven.  "It's very simple. Promoters who are active with their promotion will be successful.  Motor racing exists because of sponsors and fans.  In markets where our promoters really promote we have sponsors and fans."

Speaking of natural terrain road courses, Mexico has one of the best. Champ Car's popularity in Mexico is a direct result of their biggest name drivers being in the series. With Fernandez gone, Dominguez talking about F1 and Jourdain talking to NASCAR, Champ Car must protect their interests in Mexico. 

"A lot of people are talking.  We will wait and see who will be on the grid come Long Beach.  We are confident.  I am paranoid about events in every single country we are in - Canada, the USA, Mexico, Australia, etc.  It's important that we safeguard our best venues."

The Long Beach Champ Car contract expires after the 2005 event. Many in the IRL have told AutoRacing1.com that they will be in Long Beach in 2006. That appears to be the next big battle with Tony George. Could Champ Car indeed lose its signature event to its arch-rival and if so, can it survive the negative media that will result?

"We have already been approached to hold another street race in the LA area or Las Vegas on the same day if that were to happen (become an IRL race), and we will"

Kevin Kalkhoven

"There is a possibility that we could," said Kalkhoven, "but we have already been approached to hold another street race in the LA area or Las Vegas on the same day if that were to happen, and we will.  I also believe that the Long Beach City Council is 100% behind us, and if there is a change they will not be behind the event and support will wane."

Besides San Jose, which was recently announced, are there other new USA markets that are on the horizon for Champ Car?  "Absolutely, just wait and see," winked Kalkhoven.

What do you say to the many Champ Car fans out there who still worry about the future of the sport they love?

"I can understand their concern, I really do," stated Kalkhoven.  A lot of people don't know me and my partners and the passion that we have for this.  We are backing this 24 hours a day. With that said, I get a bunch of emails from around the world that indicates to me more and more people are believing in what we are doing.   Just give us time my friend.  Give us time."

The author can be contacted at markc@autoracing1.com

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