Long Beach – Kalkhoven gets it

UPDATE #13 This rumor is upgraded to 'fact.' See the AutoRacing1.com exclusive on our home page. 05/23/05 As for Long Beach, Kalkhoven was guardedly optimistic about the Champ Car World Series returning to the streets of the Southern California city in ’06. The Indy Racing League has made no secret of the fact it would like to sanction the race next year and published reports have Champ Car in negotiations with the Grand Prix Association of Long Beach’s parent company — Dover Downs Entertainment, Inc. — to purchase the event. So, what is the status of Long Beach from Kalkhoven’s standpoint?

“I think it is moving along in a very positive manner," he said. “There’s a process we’re going through . . . (Dover Downs) is a public company, and there are rules and regulations thy have to follow. I think you’ll see in the next month that things should become relatively clear."

As far as reports of Champ Car’s interest in buying the event outright, Kalkhoven said “We’ve made no secret about (being interested in buying it. If it were to (be sold), we would certainly like to purchase it."

Although Indy Racing League officials have stated they are only interested in sanctioning the event, it is believed that a group headed by former Champ Car team owner Barry Green — who promoted the recent IRL St. Petersburg race — is also taking a look at Long Beach on the IRL’s behalf. Kalkhoven says, however, that Champ Car has a price it is willing to pay for Long Beach and will not engage in a bidding war.

“There is a value that we’ve assigned to it," he says. “That’s the value we’ve told them and we will not engage in a bidding war."

Not unlike a few years ago when he, Gerald Forsythe and Paul Gentilozzi were negotiating to buy Championship Auto Racing Teams, Kalkhoven politely declined to offer much in the way of specifics regarding the Long Beach situation in deference to federal law pertaining to the sale of assets of a publicly held company such as Dover Downs Entertainment.

“I can’t say anything more, because it’s still under a confidentiality agreement," he said. “We can’t say anything. You have to remember it’s a public company and under rule 404 of Sarbanes/Oxley people like Martha Stewart end up going to jail! So . . . the rules and regulations when you’re dealing with a public company are substantially tighter than with a private company." SPEEDTV.com

05/14/05 A decision on the future of the Long Beach (Calif.) Grand Prix doesn't appear imminent. Les Unger, national motor sports manager for race sponsor Toyota, said Friday he spoke with Long Beach officials this week and was told it could be a month before a choice is made between Champ Car, which has the race, and the Indy Racing League. Indy Star 05/12/05 [Editor's Note: As first reported on AutoRacing1.com and now confirmed in the Press-Telegram] Kevin Kalkhoven, the Australian businessman and major Champ Car owner who made a fortune acquiring telecommunications companies, appears primed for another takeover. His target: The Grand Prix Association of Long Beach. "All I know is that Dover (Motorsports) is going to sell Long Beach," Kalkhoven told the Press-Telegram in a phone interview Wednesday. "(Dover) has hired bankers and we're in discussions."

Up to this point, Delaware-based Dover Motorsports, the parent company of the GPALB, was only believed to be determining which series will race the streets of Long Beach next year. The 31st running of the Toyota Grand Prix of Long Beach on April 10 was the last of a five-year deal with the Champ Car World Series, the sanctioning body owned in large part by Kalkhoven.

The Indy Racing League the decade-old rival of Champ Car was the only other series considered to be in the running for the new contract. But Kalkhoven's bid to purchase the GPALB certainly changes things.

"Quite frankly, this is one of the possibilities," said Jim Michaelian, the head of the Grand Prix Association. "We are going to do whatever is best for the future of the race. Dover is a public company and it has to review all the alternatives it has in front of it and make the right decision."

Michaelian said if the GPALB is indeed sold, he hopes the new owners would leave the organization intact like Dover did seven years ago. "We have one hell of a team here," he said. "They are a great team that has shown it can run this event effectively over the years. If (a sale) were to transpire, I think anybody would want to retain that capability."

Kalkhoven said he was bound by a confidentiality agreement with Dover, a move that is common when companies start looking at each other's books. Due to the agreement, Kalkhoven said he couldn't go into too much detail on his bid.

He refused to say how much he thinks the GPALB is worth. The Grand Prix Association has been estimated to be worth between $20 million to $25 million. Kalkhoven appears to be the only bidder at this point.

"The IRL is not a bidder," said Ken Ungar, the vice president of business affairs for the IRL. "The IRL is waiting for a response from our offer to sanction the race, but we won't make a bid to buy (the GPALB)."

That marks a change of strategy for the IRL. Tony George, the founder of the IRL and its CEO, told the Press-Telegram in recent months that he'd be willing to purchase the GPALB if given the opportunity.

"This is not unprecedented," Ungar said. "Champ Car is in a position where it needs to promote many of its own events. We don't promote our own events. That's not something we would contemplate doing."

Michaelian didn't say whether Dover officials were leaning toward Kalkhoven's bid to purchase the GPALB or the IRL's bid to purely sanction the race. He said he expects a timely conclusion to the process. More at Press-Telegram

05/11/05 In addition to our rumor update that appeared yesterday, this Long Beach Press-Telegram article talks about the status of the Long Beach race. The author, AJ Perez, was the one who went to the St. Petersburg IRL race anticipating, perhaps tipped off, that the IRL would get Long Beach. That was possible early on by Mr. Perez wasn't aware that Kevin Kalkhoven would put a stop to it, which he did. Despite all the uncertainty that swirled around this year's race, it was the biggest in recent years. His anti-Champ Car rhetoric has been toned down in recent articles. Ditto for the Orange County Register. 05/10/05 AutoRacing1.com has learned that Dover Motorsports is definitely looking to sell the Long Beach GP race. We hear the transaction probably will take until July to complete. Assuming our sources are correct, they tell us they are in negotiations with Champ Car (and we assume the IRL) to buy it, this of course puts Champ Car very much in the drivers seat. Recall our previous report on the City Council meeting that took place right after this year's race, whereby the city attorney stated that if Dover sells the asset (the race) the contract is null and void and the city can then negotiate a new contract with any entity they please. However, the City Council clearly favors Champ Car and will vote to either 1) continue the contract if Dover sells the race to Champ Car, or 2) Void the contract and do a deal with Champ Car if Dover sells the asset to the IRL.

This of course is analogous to "heads I win, tails you lose" in a coin toss. Champ Car appears to be in the catbird seat to get the Long Beach contract assuming they come to an agreement over the price of the asset. Based on his history is anyone better at buying assets that Kevin Kalkhoven and his crack team of attorneys and financial analysts? Having done the deal with a large corporation like Ford to acquire Cosworth, we suspect they will work out an amicable deal with Dover Motorsports for the Long Beach race. Mark C.

04/06/05 Our latest article on this rumor can be found on our Home page. 04/06/05 Kevin Kalkhoven has not bought the rights to Long Beach nor has the IRL. We will have a more complete story on what is really going on later tonight. 04/06/05 We are bumping this rumor up to 'strong.' Word going around Indy is that Kevin Kalkhoven has trumped Tony George again. An IRL official said at the Flag Room last night in Indy that Kalkhoven had bought the rights to the Long Beach GP from Dover and that it was a done deal. This item remains a rumor because an IRL official saying it at the Flag Room doesn't make it official. It does, however, substantiate the original rumor, that Champ Car appears to have the inside track on Long Beach. We will try to get more info this weekend in Long Beach. Mark C. 04/05/05 A reader writes, Dear AutoRacing1, The Press Telegram does nothing in this town without
1) City ok
2) LBGP ok
The Managing editor just does not take on the downtown establishment. Same thing with the university; no matter how bad the coaches are they "support the home team." Often to his staff's chagrin. I can't believe they sent someone to St. Pete. UNBELIEVEABLE. They are so short of sports reporters that they don't send writers to cover local college or pro stuff but wire service or group service things nowadays. In fact, they even have a columnist doing double duty covering local sports for the first time in over 15 years. Name Withheld, Long Beach Dear No Name, What you are insinuating is that the Press Telegram AND the LBGP (Dover) are in cahoots with the IRL to undermine the event and bring the IRL in? On the surface it may appear that way, but it's all speculation at this point. The LBGP appears to be trying hard to promote this year's race (and honor the current contract) but that doesn't mean they have other motives after the race is over. Mark C. 04/05/05 Champ Car could be prepared to enter an unprecedented bid to keep the Toyota Grand Prix of Long Beach on its schedule. A source with knowledge of the negotiations told the Press-Telegram that Champ Car — the series that will headline the LBGP this weekend — might give away the first year of what is expected to be a three-year contract for free to keep Long Beach in its fold. The bid appears to be a pre-emptive strike against the Indy Racing League, which ran its first street race here Sunday.

The Grand Prix Association has chosen not to comment on negotiations until after the conclusion of this Sunday's race, which marks the end of the Champ Car's contract. Dover Motorsports, the parent company of the Grand Prix Association, pays about $2.4 million per race to run Champ Car on the streets of Long Beach. "It could all come down to how munch money Champ Car is willing to forgo not to lose Long Beach, which would be a significant loss," said Dennis McAlpine, an analyst with McAlpine Associates in New York. Champ Car spokesman Eric Mauk said in a phone interview Sunday he didn't have knowledge of any current discussions on the new contract, although he said Long Beach was "a very important race and we will do what it can to maintain our presence there."

Champ Car — formerly known as CART — first ran in Long Beach in 1984 after replacing Formula One. Jim Michaelian, the head of the Grand Prix Association of Long Beach, said recently that he expects to make a decision along with officials at Dover within 30 days of the conclusion of the LBGP. "I don't like bidding wars, but I think what Dover and Long Beach have to look at is what's best for the event long-term," said Tony George, the president of the IRL. "If I was asked to respond to (a bid), it would certainly have to make sense."

George put the chances of inking a deal with the LBGP at "no better than 50-50." If the IRL does win out in Long Beach, the reverberations could be felt all the way to the Inland Empire. "A lot will depend on promoters interest in us staying," George said when asked if he'd have two races in Southern California. "I can't sit here today and say, 'Yes we will," or 'No we won't' be in Fontana for the foreseeable future."

The IRL has raced at the California Speedway — a track owned by the International Speedway Corporation — since 2002. The race will conclude the IRL's 2005 season on Oct. 16. The Grand-Am Series, which raced over the weekend in Fontana, has also expressed interest in coming to the LBGP as a support race if the IRL wins its bid. Long Beach Press Telegram [Editor's Note: It's plain to see that the Long Beach Press Telegram wants the IRL to take over the race in Long Beach. Why else would they send a reporter to an IRL race in St. Petersburg when in fact there currently is no IRL race in Long Beach? Just as they took sides with the IRL during the CART bankruptcy hearings, this appears to be an underhanded ploy by the local newspaper in Long Beach to create negative press surrounding this year's event in an effort to torpedo it.]

04/04/05 It looks like the IRL is still trying to wrestle Long Beach from Champ Car. The IRL is in "serious discussions" with officials from the Long Beach (Calif.) Grand Prix for a race in 2006, according to Ken Ungar, a league vice president and its lead schedule-maker. Long Beach's contract with the Champ Car World Series expires after next week's race. Indy Star 04/03/05 A reader writes, Dear AutoRacing1.com, I sure hope this rumor pans out. My many Champ Car fans and I love Long Beach and would miss going if the IRL stole the race. We won't go if it is an IRL race. Jenny Moore, San Diego, CA 04/02/05 We are hearing rumors that Champ Car will remain in Long Beach after 2005, the last year of the current contract. We hear that they took a page out of the Tony George/IRL book of "free" sanctioning fees and will forego the current $2 million fee for the first year of a new multi-year agreement, something we assume that the IRL was willing to offer as well. IRL insiders told us that Tony George paid all the sanction fees for all the IRL races up until recently.

It would have been very risky for Toyota and for Dover Motorsports to switch horses and change the race over to an IRL event and risk ruining a great event for all involved. Champ Car fans are adamant about not supporting the IRL and we hear they flooded the Long Beach offices with mail supporting Champ Car and stating clearly they would not support an IRL race, but in the end what matters most to Dover is to turn a profit for their shareholders and until Champ Car gets back to the strength they enjoyed back in the 90's, they are willing to work with Dover to ensure the continuation of their marquee event.

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