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#51 | ||
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Sounds more like a BoD vote than a stockholders vote.
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#52 | ||
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It is a BoD vote. They are voting on whether or not to file for Chapter 11, which will happen no matter the vote, just the timing changes.
This seemingly has little to do with the OWRS, so I'm a little perplexed as to what has happened. |
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#53 | ||
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If they file for chapter 11 and administrators take it on before any sale to OWRS then it becomes a buyers market on the assets. TG could pick and chose some contract and outbid OWRS for them.
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#54 | ||
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Do you think so? The contracts are with CART, and OWRS plans to retain that name, therefore keeping the contracts valid. Even if I had the cash, I doubt if I could outbid OWRS on the LBeach contract and stage a lawnmower race there next year. Surely the promoters would have something to say.
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#55 | |
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The BoD vote will also incorporate whether ot not to accept OWRS' latest offer, which bypasses the previously scheduled shareholder vote.
I'd imagine promoters are having their lawyers look for loopholes with a magnifying glass. Dover, on the St. Pete race, already did. They cut a deal that said, in effect, "Okay, here's the fencing, here's the barriers, here's the office keys and we're outta here." I can't imagine the BoD voting for the OWRS' current proposal because it, in effect, makes the race teams "whole" by paying them 100 percent of whatever purses are owed AHEAD of all other creditors. IMO, that won't fly. How is ISC (on the Fontana issue) or any other promoter or creditor, going to view this action with respect to doing business with OWRS in the future after it has pitched this deal to squeeze, for itself and the teams, every last quarter they can gobble up out of the piggybank? |
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#56 | |
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#57 | ||
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An interesting point was made elsewhere - the vote is only on "bankruptcy." We've all assumed it's Ch.11 (reorganization), but what if it's Ch.7 (liquidation)?
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#58 | ||
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Thanks for the post indycool. Looks like investor Dave Thomas has the business accumen of his silver screen alter-ego Doug McKenzie(Strange Brew). It was public knowledge at the beginning of the season that Pook was going to spend the cash reserves to keep CART rolling. If Dave was worried about that fact, he should have sold his stock then.
That said, this is not the kind of press CART/OWRS needs right now. |
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#59 | |
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Good question, paul, and there's only conjecture and speculation for answers right now. It seems like they'd need to go Chapter 11 to accept OWRS' offer. If CART goes Chapter 7, then OWRS is standing in the creditor line for its $350,000 termination fee.
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#60 | ||
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While you make an interesting point Ac., who here thought that the company would be drained, only to be sold to a private company at the start of last year?
The role of Management, CEO and BoD is to serve the role of investors, was that done? These people have done what is necessary to keep racing alive, which is nice for us fans, but runs counter to what they should have been doing as a public company. I think we all believed that about half the money in the bank was to be spent this year, in attempt to turn CART the company around, and then make CART, the company, profitable for shareholders. I was talking numbers this time last year, and thought it wasn't a great plan to continue to spend to the point where your cash would be gone in two years. Instead, they drained it to the point of bankruptcy in one year. Think about it, a plan that drains the company accounts to zero in one year, without a known plan for whom is going to buy it in a year to save racing. How proposterous is that? Can anyone say that with a straight face? Seriously, can you believe that they didn't know who was going to buy the series, can you believe they took that much of a gamble? Can you believe they didn't purposefully do over the investors to get this thing private? Interesting point, the guys buying the company took $7 million in payouts last year, and now stand to take the assets of what is left for $2 million. These guys better have some good lawyers, because their Pookched if they don't. |
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#61 | |||
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A bit of a hijack:
Quote:
(Not to take anything away from PT, as his driving was exemplary this year - but I'm sure it didn't hurt. I had heard that N-H ran about $6M per car...) How much would be a reasonable season budget for a team? |
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#62 | |
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Fogelhund:
"The role of Management, CEO and BoD is to serve the role of investors, was that done? "These people have done what is necessary to keep racing alive, which is nice for us fans, but runs counter to what they should have been doing as a public company." I agree with that one hundred percent. Instead of looking out for the shareholder, the owners and members of CART's board were enriching themselves. Look at where some of CART cash has gone, a quote from the Indianapolis star. "Team owners Gerald Forsythe, Paul Gentilozzi and Kevin Kalkhoven are the core of the group known as Open Wheel Racing Series, which wants to buy CART's assets and revive the series as a private entity. The trio combined to receive more than $7 million from CART through the first three quarters of 2003, according to filings with the Securities and Exchange Commission. Derrick Walker and Carl Haas, team owners who recently resigned their positions as CART board members, have received a combined total of $10.5 million." Are you kidding me! I know Haas and Forsythe's operations had paying sponsors this year. No matter, they got the same incentives as well. I was somewhat naive to think Forsythe would not get his money back from those CART stock purchases at $14. I don't know if its illegal but it smells pretty bad nontheless. |
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#63 | ||
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I have come up with three basic scenarios, as to what has happened, why, and what the ramifications are for existing Mgmt, shareholders and us Fans.
1./ CART Management operated in a fair manner during the course of the year, in trying to save CART the company. CART management believed that they could turn the ship around, or perhaps have some white knight gift them money. Through a lack of foresight, or perhaps some incompetence they were wrong, and unfortunately, CART the company could not be saved. What this means for Management - not much really, beyond the conclusion they are an incompetent lot. You can't sue them for being incompetent. What this means for Shareholders - squat really, they invested in a company that was affected by bad economics times, and a number of competitors who were better then them. For Fans - well, this is the $90 million dollar reality. It cost $90 million dollars more to put this show on, then it brought in revenue. OWRS openly stated they could put $10mil in previously, plus say $4mil they saved from not buying the company outrigh. So that leaves a shortage of $76mil that must be made up in a combo of cost cutting, and increased revenue mostly made up be the teams through sponsorship revenue. I hate to be a bear, but if you believe in this scenario, expect it to fold at latest some time next year. 2./ CART Management knew at the start of 03' that the only way to save Open Wheel racing was to take it private, by all means necessary. They purposefully spent the wad to get there. What this means for Management - Job well done boys, you are fully competent, and are about to get your butts sued off. You have purposefully defrauded investors of $90mil. If this is true, then the lawyers will argue that they should have sold the assets at the beginning of the year, for a sum, and then filed for Chapter 7, and sent everyone a nice cheque. CART type racing would exist, and they would not have taken shareholders for a ride. What this means for Shareholders - call your Lawyer, NOW. What this means for Fans - Well good news, Bad news. Perhaps CART type racing IS financially feasible, but the crooks might have ruined it for us. Perhaps CART is only losing 20-30 mil. With at least half of that money coming from OWRS, the balance should easily be made through some costs cuts, and aggressive sponsorship deals. The litigation could block transfer of assets. Future unknown, but hopeful. 3./ CART Management thought a white knight would save the day, perhaps Bernie, but that fell through. At some point in time in the season, it was decided that they must take the company private, and run it down to zero. What should have happened, is they should have prematurely ended the season, sold the assets, filed for Chapter 7, sent the shareholders a cheque for the amount still in the bank, say $40-50mil. What this means for Management - well, your incompetent on two levels. First, you misunderstood your company and underestimated how poorly it would do. Second, you made the wrong call on how to take this private, and as a result should be liable for a portion of the drawdown. They purposefully defrauded shareholders of at least half of the money in the bank. What this means for Shareholders - Call your lawyer. What this means for Fans - well, same as scenario 1, but this time, it is a 40-50mil reality. Combined cost cutting increased revenues for $26-36 mil. I suppose this is possible, but it is going to take a completely different product then the one we are used to, fewer races, and reduced travel. Anyway, enough of the armchair prognosticating, lets see how this plays out. In the meantime, the lawyers are getting paid big time. |
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#64 | ||
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Don't know if this will answer your question, paul-collins, but it might help:
I know for sure of an IRL team that ran two cars for the full season in 2003 for about $4 million...it was a rather spartan budget, but they weren't exactly making repairs with chewing gum and chicken wire, either...and that is with having to buy at least four brand new chassis last year and signing a new engine lease per the rules and specs changes that took effect in 2003....the cars alone cost them a total between 1.5 and 1.6 million for primaries and backups for each driver.... I imagine that Derrick Walker did run a two-car operation with Reynards for their chassis for about that cost....but again, that's a low-budget effort...no frills and not a great deal of room for error.... If I had to give you a ballpark, my guess would be that a middle-ground budget for two cars would range in the $6 million-$7 million bracket....not the "top of the line -- spare no expense to win" spending like a Ganassi or a Penske type would do, but certainly enough money to be competitive and have some capital to test and to do some R&D on what you are racing with to learn new ways to go faster.... |
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#65 | ||
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Excellent post Fogelhund, but your second and third scenarios both presume that CART management should have chosen to liquidate the company in order to give the shareholders their best value.
I don't know any business owners or managers who would be willing to take such a step unless they thought their business wasn't worth trying to save. Typically in the business world the BOD of a company that wants to liquidate and shutdown fires the existing CEO and staff, and then brings in a hatchetman to close the doors. In the case of CART, Pook, an avid CART supporter, was brought in to run the business. The obvious intent of the BOD was to try to resurrect the series to its former greatness. Assessment of whether or not the funds were spent wisely is up for debate, but I for one think that the 2003 season was one of the most exciting in a long time. I don't think that lawsuits will have much ground to stand on here. |
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#66 | ||
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I agree that it was a good season, Ac.
But to spend the way CART spent over the past calendar year, and to blow through many, many many, millions beyond what the Series could reasonably afford to spend when, as a public company, owes accountability to its shareholders, is outrageous... They should have found the best and most cost-effective ways to operate this year as opposed to shipping their teams to Europe in the spring, and spending the kinds of $$$ in subsidies for teams (sponsored or not) when they didn't ahe that kind of capital to pread around is unbelievable.... Spending like that with the hope that a white knight would arrive to save the day is absurd....they would have been better off saving capital for future years to ensure their operation... |
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#67 | |||||
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Quote:
Quote:
Quote:
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#68 | ||
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Join Date: Jun 2002
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Think about what they did this year. First we went over seas and even raced at an old F1 venue to try and get European investors involved, which almost worked. We almost tricked F1 into partnering with us. We went to Mexico more often to try and get more Mexican investors involved while also strengthening a relatively newer, already strong market for us, which worked. We went racing in a few new street races this year hoping to spur new interest in different American markets. If the marketing team didn't suck so bad, it might have worked out a little better. I really believe they fully expected to pull off a great recovery and either sell the company or partner with F1. Unfortunately they tried to do it all in one year without any help. This should have been a multi-year plan.
The argument from Dave Thomas that it costs so much more this year can be attributed in many ways to all the cars we had to pay for, that's obvious. It's was much easier to run when Ganassi had Target running around and sponsors such as Shell, Miller Lite and others hadn't left and/or jumped ship. That's half the money spent this year. With Players now out of the picture it only makes it more difficult to field the cars needed. I say 8 races, 16 cars, use the existing engines and chassis and only run the most important events to the series: The Mexico races, the more legendary American circuits and Surfers if you can afford the flight. In the meantime hire an outside marketing group to turn the rediculously poor marketing of CART into something that makes some kind of sense. It's horrible the way our product is marketed. We have no merchandise worth buying, we have no marketing machine pushing our drivers into mainstream media and we have no one building an identity in the public's eyes. Maybe MotoRock or whatever can help but I don't care if Elton John sings his bells off as long as people are coming because they know who these guys are and want to see Junky, Tags, Jourdain, PT, etc. Marketing, marketing, marketing, if they'd have hired a marketing company three years ago we wouldn't have the problems we have now. Is anybody in agreement with me? The soapbox derby gets better coverage than Champ Cars in the US for goodness sake. No lie. |
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#69 | |
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gaines, I don't think the European vacation "almost worked." It was doomed from the beginning because of cost. Pook had made his trips over there to talk to manufacturers. They weren't buying in. Maybe they weren't buying in because of what happened to Judd.
If a business is in trouble, you don't expand it, as this one did to Denver and St. Pete for low-buck sanctioning fees and the races were losers for the promoter (Dover). Dover has washed its hands of St. Pete and is about to do the same in Denver. And you don't buy Miami lock, stock and barrel. And who in their right mind is going to think these guys were going to "trick" Bernie? I agree. The marketing program sucked. But your solution of hiring a firm was what they did years ago with Andrew Craig's ISL firm, which went bankrupt, and CART won a multimillion dollar judgment from it that it'll never se a dollar of. So that'd been done before. |
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#70 | ||
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#71 | ||
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Same old story....
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#72 | ||
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Hasn't Wednesday passed, what happened with the Vote? Is this going to reach the news at some point?
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#73 | |
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For what it might be worth (??), Mark C.'s reporting the meetings went well Wednesday, OWRS is using today to draw up the papers and the final meeting is Friday.
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