Money

[Casper]

I am sitting here trying to salvage some money out of the train wreck that has occured in financial circles in the last week or so and was wondering just what effect it will have on Australian Motor Sport. Me thinks there are going to be a whole lot less money floating around for a little while and things are going to be just a bit tougher than they already were. Who suffers first, the little guys or the big guys?

[mountainstar]

I suspect the real estate and hedge fund dollars have been sucked out of the system which will certainly have an impact on motor racing worldwide. Everyone suffers when the dollars stop flowing.

[Malfunction Junction]

I realise this sounds like a smart alec response, but at least you didn't sell anything to TKR.....

The difference between the good times and the bad times is that somebody always prospers, it just doesn't go as far in the bad times.

Probably those already in difficulty first, followed by the little guys, then the big ones.

If it's a big enough crunch though (which I doubt domestically), anyone could fall.

[Peter Nightingale]

Originally Posted by mountainstar

I suspect the real estate and hedge fund dollars have been sucked out of the system which will certainly have an impact on motor racing worldwide. Everyone suffers when the dollars stop flowing.

How correct you are, even Formula 1 is going to hurt in some way !!!

[mountainstar]

Originally Posted by Peter Nightingale

How correct you are, even Formula 1 is going to hurt in some way !!!

Well I think in certain commercial sponsorships the desire to advertise and promote a product or service will still be there, and maybe more so in a recession. We saw in previous recessions much of professional motorsport did okay in some areas. I think the car manufacturers and many commercial sponsorships are still going to be around.

However the current crisis reminds me so, so much of the Japan real estate bust in the early 1990's. As I recall companies like Leyton House and Footwork were involved in F1 and when that whole real estate business went bust they dried up and blew away like a fart in the wind with the associated effects on the teams they owned/sponsored. From what I've seen much of sportscar racing and junior formula series have been beneficiaries of real estate development money and frankly I don't think much of anything is going to be built for 5-10 years.

Here in the USA, I travel all over the country every month and in certain parts there are huge residential and commercial developments that are nearly empty. It's very odd to see a residential development built in the middle of absolute bare desert, brand new but almost vacant. I know a lot of those guys were spending their spoils on motor sport and as I said before that business is not a good one to be in for now.

From my travels in OZ and NZ recently I've also seen a lot of evidence in over building(especially vacation homes) and it has seemed many of the real estate developers were spending in motorsport much like the USA and Europe. We've already seen Westpoint go bust hurting DJR and WPS pull out and there might be others.

I think the biggest problem Australia will be facing is the coming commodities bust. With production of homes, cars and other consumer and business goods being cut world wide, plus everyone and their brother sticking holes in the ground in WA and in other places worldwide, someone is going to wake up one morning and see the world flooded with iron ore and other minerals and starting selling futures and the price will tank. Companies like Ausdrill will take a major pounding.

[bestfit]

Originally Posted by Peter Nightingale

How correct you are, even Formula 1 is going to hurt in some way !!!

Isn't (wasn't?) 20% of Formula 1 owned by Lehman Brothers?

[mountainstar]

Originally Posted by bestfit

Isn't (wasn't?) 20% of Formula 1 owned by Lehman Brothers?

Not anymore. Sold out several years ago.

http://www.grandprix.com/ns/ns16591.html

[peckstar]

so mountainstar, i wonder wheer cvc borrowed the money to buy of lehman brothers.?

We will give you a good price if you borrow off us

[cavvy]

Interesting view from stateside mountainstar - I dont share your take on Ausdrill, indeed quite the contrary. With a full book, it will take 3 years for any downturn to effect them. The CEO 'put his money where his mouth is' & bought more shares.
The rise & fall in the share price current is due to an aborted takeover play, nothing else.

Be a big weekend when the V8s go to Perth for all associated with Ausdrill, subject to how the Ford line up shakes out.

[mountainstar]

Originally Posted by cavvy

Interesting view from stateside mountainstar - I dont share your take on Ausdrill, indeed quite the contrary. With a full book, it will take 3 years for any downturn to effect them. The CEO 'put his money where his mouth is' & bought more shares.
The rise & fall in the share price current is due to an aborted takeover play, nothing else.

Be a big weekend when the V8s go to Perth for all associated with Ausdrill, subject to how the Ford line up shakes out.

Perhaps and I'd actually hope business continues to do well. I just recommend caution having seen in my short life time many mining, oil or gas companies looking good and then it all disappears almost overnight.