OWRS: ChampCar will go ahead in 2004

[carsten66]

FRIDAY 5TH DECEMBER 2003 | from crash.net

"Despite the current uncertainty over the future of CART, potential buyer Open Wheel Racing Series (OWRS) insiste that there will be a roadracing series to rival the IRL next season." ...

more on:

http://www.crash.net/uk/en/news_view...id=3&nid=82254

... some positive news on a number on fronts

[rustyfan]

I read that earlier, but figured it was basically what has been said elsewhere already..?

[climb]

never stop hope, but rustyfan could be right..

[paul-collins]

You have to admire their dedication.

They must overcome the legal hurdles.

They must help teams solidify their financial position to meet field size requirements.

In the long term they must revamp the cost structure for the teams.

At least they aren't being equivocal about their intentions. Go KK!

[Fogelhund]

This is certainly, the only posture that OWRS could take.

Having said that, the writer is lacking some understanding, of the key fundamentals, of the issues involved.

Hopefully though, the theme proves to be correct.

The next step will be known Monday morning. By mid week, we shall likely know, if there are any lawsuits to stop the new proposed deal.

[Brian W Keske]

**CART spokesman Eric Mauk said company attorneys have advised the board that a bankruptcy court is unlikely to approve any plan that ignores the stockholders.**

From this article:

http://www.indystar.com/articles/2/099231-4242-037.html

There should be some interesting meetings this weekend. Seems like this is not a done deal at all yet.

[Dov]

If it's from indystar.com, I don't read it!

[Brian W Keske]

It was a quote by Eric Mauk. I believe he would be a reliable sopkesman, as that is his job.

Other than that, I don't read it either....But come one...

[Flatspot]

I've been pretty silent about this stuff because how it will all shake out is anybody's guess but suddenly I feel compelled to speak up and speculate a little.

Erik Mauk's comment is about as obvious as saying something like "you are likely to pass out if you don't continue to breathe". Duh! The bankruptcy courts job is to protect the creditors and stockholders of a company. It has no choice in the matter.

The current position of OWRS doesn't surprise me at all, that is why they included all of the language they did in their offer...so they could take this position...semi-anticipated...keeping options open. Fairly normal stuff in what for lack of a better term you can call corporate raiding. The biggest problem OWRS has is that they are working against time. My guess is they need to posture this way to now save money that they have lost due to delays. In the alternative it is a great comment to make to scare fence sitters into casting yes votes.

Can OWRS pull off the 2004 season. Sure. They don't necessarily need to own C^RT's assets to move forward. I beleive they may enter into some sort of a lease arrangement for their use until such time as the vote is cast or the bankruptcy court accepts or rejects their offer to purchase.

It's down to crunch time and the hardcore businessmen are getting down to hardball and brass tacks, squeezing the deal for all its worth.

[dirtfan]

3 blocks of 200,000 shares just went for about 70k, does the person/persons who bought know something we don't, or are they just playing with daddy's money?
And what about the ENGINES? Are they owned outright by CART, or, considering the sweet deal they got on them (about the price of a top-of-the-line NASCAR engine), are there strings attached by Cosworth?
Can't run cars without engines!

[Brian W Keske]

Originally posted by Flatspot
Erik Mauk's comment is about as obvious as saying something like "you are likely to pass out if you don't continue to breathe". Duh! The bankruptcy courts job is to protect the creditors and stockholders of a company. It has no choice in the matter.

It was Eric telling somebody what CART's own attorny's were warning. In other words, I read this to say 'you guy's might be walking an aweful fine line with the courts on this one'.

We can all take the comment for what is worth, that is my take. And I also believe it is fairly obvious, yet some seem to be saying OWRS has nothing to do with the stockholders, the heck with them, but in a roundabout way, this transaction does effect them, and CART's attorny's are warning them of that.

[Flatspot]

Fair enough. Given the business accumen that C^RT's leaders seem to possess they probably need the attorneys to state the obvious for them. That and they are just covering their own butts for when this thing turns messy.

[Tim Northcutt]

Quick Notes:

1. The Indy Star is NOT a mouthpiece for Tony and the IRL, so I don't know why you would object to that publication as a source for CART or open-wheel racing news...thier commitment to auto racing coverage in unparalleled when you compare the Star to its peers...other daily newspapers that serve a full spectrum or readers within a community...

*** If it is because they fired Robin Miller, they had no choice...his acceptance of money from CART while covering that series as part of his beat is a conflict of interest and unethical...period...

NOTE: I feel that Robin is probably one of the most knowledgeable journalists covering auto racing....and I don't have any bad feelings or anything against him as a person or as a writer....but I see the Star's position on why he was let go...I'll leave it at that....

2. I also am very familiar with both Curt Cavin and Steve Ballard, the two reporters who cover auto racing for the Star....they are hard-working, dedicated, "ethical," thorough and "Objective" journalists...they report the facts the way they are presented...and they make a particular effort to report "all" sides of a particular issue or story with no editorializing...unless the column is clearly labeled as a "Commentary" or an "Analysis"

I've been in media relations for 20 years...and I know from my peers here in Indy who have had to deal with them who tell me that both are "straight shooters" who have earned their respect...

3. In such columns mentioned in the last part of point #2, they have been just as critical of the IRL and they have of CART....I know...I live here and read their coverage whenever either writer publishes any auto racing news...they merely call 'em as they see 'em...That's all you can ask of a "true journalist"...they're not paid to be cheerleaders, or supporters or whatever of the subjects they cover...they're paid to report the news...good or bad...period...

You're entitled to read whatever you want....but if I want "objective" coverage of open-wheeled racing in a daily newspaper here in North America, I'll read the Indy Star over any other publication...bar none....

[dirtfan]

Seriously, does anybody know anything about the engine deal?
Who REALLY owns them?
Seems like it might be a rather big roadblock to running in '04.

[Fogelhund]

I can't comment as to why anyone is buying shares at the moment, it certainly seems strange. In the past few days OWRS have been buying shares.

CART owns the engines.

[Tim Northcutt]

That is a good question, dirtfan...

I can't remember if the $4 million or so was to buy them outright or not...

The way I understood it, however, was that this was an "at cost" deal where CART got a great price for a Series Lease Agreement of some sort that would in turn tie Cosworth to servicing the engines and providing parts as part of the "Powered By Ford" moniker as part of the Name of the Series exposure that Ford got...

But that deal was cut long ago...I'm very vague on the specifics...if someone can correct what I have posted or confirm it, we'd all appreciate it...

Because my explanation of it may be in left field...

[Flatspot]

A look backward C^RT's Engine Deal Announcement

[dirtfan]

It was a two year deal, and considering CART was sort of on life support at the time, I would have to believe there was a "belly-up" clause in the contract. Maybe OWRS or whomever will have to re-negotiate the engine deal. Since Cosworth has all the spare parts, they would have the upper hand in any deal.

[Tim Northcutt]

Thanks, Flatspot...I appreciate it....

[sgw2]

reading the Quarterly reports it looks like the engine service lease with Cosworth is one of the required payments in 2004 under the liabilities sheet. The lease support is roughly $5M paid to Cosworth directly, but counted as team ESP. This plus $2M in TAP remain -the rest of the $30M TAP is gone. I don't know who, but one team owner did a heck of a job negotiating (Haas? Patrick?). There are no other carry over (to 2004) obligations of any significance.

I think it is highly unlikely that anyone will purchase the engines separate from the venue contracts - they would likely get those $5M payments to Cosworth to go with it. This "sabotage" scenario is not going to happen.

[Tim Northcutt]

I don't think there is any sort of sabotage effort going on...

The key is:

Will a bankruptcy court allow CART to sell off $5 million in engines when thee have to be other obligations and liabilities out there...

Someone noted costs that CART owed to the government in the Mexican state where they raced this past year...at least that is the way I understood it....

Plus there is a legal action filed by Calif. Speedway, not to mention any actions that will be taken by any shareholders....

I guess we'll know next week....

[GTRMagic]

That would be nice, C^RT rolls over and dies, OWRS picks up the sexy bits like a vulture, and gets the same groups to run its show, despite them not being paid/settled with the C^RT group because its in purgatory.

Gotta love that phoenix....

[Zinger]

The ISC lawyers may way in and place some sort of injunction on the fire sale until there is a settement between CART and Fontana. The buying of stock would certainly see a lot of people who are thinking the may be able to under cut OWRS and gains some control (who knows how many of these people are out there). Certainly the courts would look at the fire sale to see that the stockholders are looked after especialy if there is a clause as suggested that CART must file for Bankruptcy. There will be a hell of a lot more playing to be done in this game. I wouldn't mind better that there are a lot of races in 2004 that will disapear simply because of they uncertainty (either ALMS or IRL).

[carsten66]

Indeed the CART/Cosworth engine deal is essential and the question is, who actual owns the engines-rights...? Ok, Cosworth sold the engines to CART, which had in turn be leased to the participating teams... but the whole thing also was a special CART/Cosworth engine deal sponsored by Ford... a partnership deal... so I believe it's not an exclusive contract and surely Cosworth or Ford have the rights (and are willing) to sell the turbocharged V8 engines to OWRS too... they can do this deal twice...

[Flatspot]

GTRMagic, I beleive the Phoenix will rise.

I can see the bankruptcy court allowing the sale of the engines particularly in light of the fact that there is an ongoing obligation on them as sgw2 suggests. I suspect that Ford/Cosworth holds a lien on them of some nature until the obligation is discharged. Given when that deal was signed they will be forward in the chain of claim priority as it is usually discharged on the basis of when the obligations were incurred. C^RT was still liquid when that deal was struck. ISC may have a tougher go because their claim probably lies closer to the end of the debt timeline.

Let's also not forget that the vote is still scheduled and that OWRS has not officially pulled its offer. They've just made noise about it. Its some time before the dust is going to settle on this one.