Issues with Beijing UPDATE #4 Kevin Kalkhoven, Joe Chrnelich and others are currently over in Beijing to try to make the China race a reality. The race is not a dead issue by any means, as negotiations are ongoing, but the two sides are quite far apart on several issues, most notably the sanctioning fee.
BSAM, Beijing Asset State Management, that is a quasi-government entity, feels that the fee is too high, and to complicate things, BSAM has been trying to pass any potential money loss onto the back of Jim Ye, the Goldenport facility owner. Needless to say, Jim isn't about to enter into a risk that could result in him losing control over the place he built. Further meetings are scheduled for tomorrow morning.
As we noted below, there's always Zhuhai, but Champ Car really prefers to be in Beijing. Mark C.09/30/05 Q. I know that there was talk that there was some announcements or press releases made about the Beijing race and that was also not put on next year's schedule as many of us had anticipated. Is there any update on that?
JOE CHRNELICH: Actually it will be back on over there in early October to continue discussions with BSAM, more accurately their new company, which is IS. And back to the prior question on the difficulty of dealing in Asia, what we're also finding out not only on a logistical basis but on a business basis, people in Asia, the cultures of Asia, look at things a lot differently than we do back home here. And part of the challenge is reaching an agreement on key points but also how they're packaged together, and images and pictures are much more important in the Orient than they are in the U.S., which we're just the opposite, we're more focused on words.
That's been a challenge for us, but we're continuing to talk with them. We think they're a good partner. We're a ways away on some money issues. We do have some track options there, as you know, but at the end of the day, we need to continue to be patient with our decision. We're not going to just race into an arrangement to say we've gotten that off our list. We just need to make good business decisions, and that requires patience.
Q. You mentioned TRK there's been a change in promoters in China, that BASM -- was that a government agency before, and who is this new IS that you mentioned? Is that a private promoter in China?
JOE CHRNELICH: Actually BASM, Beijing Asset State Management, that is a quasi-government entity, they actually acquire and hold assets on behalf of the state, but -- they're a quasi-government company. That's the best way to define them. Very early in our discussions with them, they had informed us they were going to form a subsidiary company to help attract sports events to the capital of China, Beijing, and that's the company IS which was ultimately formed. That company is involved with the Olympic effort, but it's also very keen on bringing racing to China. That's how they intertwined.08/21/05 It seems our information about what is going on in Beijing with the Goldenport track is pretty much spot on. Jim Ye is not going to spend the money to upgrade the track for Champ Car nor A1 GP knowing that the Beijing government wants the Champ Car race at the 2008 Olympic site starting in 2009. So it looks like Goldenport is probably history. However, Champ Car has at least one definite alternate, Zhuhai (pictured right), just across the bay from Hong Kong and near Macau. There is another alternative, but based on what we know, it would seem that Zhuhai, a 2.6-mile permanent natural terrain road course built to FIA F1 standards can work if they want it to. Although it is not an "urban" downtown event it's not far from major population centers.
On a related note, the Chinese government is planning on building a bridge(pictured left) between Hong Kong and Zhuhai but that will take 20 years to design and build so it will be no benefit in getting people from Hong Kong to Zhuhai before 2009. The Zhuhai area is a major economic development zone in China.08/09/05 We did some more research on the situation at Goldenport. Apparently the track owner Jim Ye is very upset with the Beijing Auto and Motor Association over some demands that they are making regarding the funding of the upgrades. Details are a little sketchy at this point, but as we understand it BAMA wants guarantees that the upgrades will be finished on time, and if the deadline isn't met, they want to confiscate Goldenport and Jim Ye's personal property as well. They also want free use of the facilities in return for funding. There are a couple of other issues as well. Obviously, Jim is not going for this, but has entertained counteroffers regarding funding.
There is also the problem with the Champ Car MOU's. If completion is not on time, or not in time to stage the race as scheduled, there are some kind of penalties involved. These would be on the promoter, which is BSAM, or BAMA or whatever they call themselves. In turn, they have mentioned passing on penalties to Jim Ye and Goldenport. Since Goldenport is entirely privately funded and run, and all out of Jim's pocket, this is currently a stumbling block as well. We only got the bare bones info and explanation on this, but you likely get the idea.
Apparently, Jim is in discussions with A1 GP regarding their proposed race at Goldenport, wondering if they would race on the current length of the track if other facilities were upgraded. We believe that they are planning on racing at the Brands Hatch Mickey Mouse Indy Course, which is slightly shorter than Goldenport is now.
In any case, on August 12th, we believe, there will be the official groundbreaking for the new facilities and expansion of the track. That much is still going ahead right now, and if both sides can get their s**t together, the expansion could still go ahead as planned and Champ Car may still be able to have their Beijing race. Mark C.08/09/05 When we heard that the contract between Beijing and Champ Car regarding a race there next autumn had not yet been signed we contacted our sources in Beijing. They told us that they heard Jim Ye, the owner of the track, might go ahead with the updates to the existing facilities, but not the extension of the track that we previously reported. Unfortunately the track is too Mickey Mouse for Champ Car in its current state (but then when has a Mickey Mouse track ever stopped Champ Car before?). As we previously reported, the track extension was submitted to the FIA for approval, but who pays for it is another story.
We previously reported that the race would likely move to the Olympic Stadium area after the 2008 Olympics so it is quite possible Jim Ye doesn't want to invest too much money in his facility knowing that the race will only be there a few years and then move on. If this information is true, then it will be up to the government of Beijing as to whether they really want to do this race. They are up to their eyeballs in preparing for the Olympics so we have to wonder just how focused they are on a Champ Car race at this time. We saw a similar situation in Vancouver when they were awarded the Winter Olympics - the Champ Car race was sacrificed.
It is quite possible that we are reading too much into this. Champ Car President Dick Eidswick and Joe Chrnelich will fly to Beijing in a couple of weeks to try and resolve the issues. For the time being, therefore, we don't expect to see this race listed on Champ Car's '06 calendar to be released in Denver this weekend.