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T.E. McHale: Welcome to our second 2000 teleconference of the 2000 season. We are very pleased to have at this time as our guest, president and chief executive officer of championship auto racing teams, Mr. Andrew Craig.
But let me just start very briefly by saying that I do think if I was to describe the 2000 season in a few words -- actually, in three words, I'd describe it as "the big change." On the track, we have new teams, of course Mo Nunn Racing and very recently formed the Arciero Project Racing Groups, two new teams. Obviously new chassis options, with a very much revived Lola, very much a factor in the series. I think most interesting of all, we have new team and engine combinations and new team and engineer combinations. So I think a lot of things have changed. Add to that, the fact that we have no less than six rookies taking part in the 2000 season. And you can see why I think we're in for an exciting season that's based on a lot of change. At the sanctioning body level, a lot of changes as well. We have a new focus on racing with Hal Whiteford who we announced, last and I'd be happy to answer any questions that you have about that position and what it means for the future. Joining us a couple of months back but still relatively new on our team Pat Leahy, senior vice-president of marketing, and along with Pat, of course, we have a very large number of in marketing initiatives or promotional initiatives in the year 2000. CART Radio Network will be on the air for the first time this coming weekend, broadcasting from the track on Friday, Saturday and Sunday, and throughout the year, but principally in these early days into our major race markets. Inside CART, not a new program, but coming back to the airways will be ESPN2 this year for the first time. We have, as many of you know, we have no less than nine local PR agencies servicing all of our 20 race markets to make sure that we provide in-depth support to our race supporters, not just for our own race, but every race, to make these races more relevant in every market in the country. On the PR side, we have added or are adding no less than four new staff; that's doubling the team that works with Ron Richard. We have in the new media seats, this is of interest to everybody on the phone who is working for a dot-com Nate Siebens is our new media manager. I know that Nate knows many of you and he fully intends to know all of you to make sure that we do a more thorough job of servicing the Internet and electronic media. On the TV side we will be making an announcement next week to bring in somebody to handle non-race markets from a TV point of view, to make sure we get greater coverage away from the race markets in network affiliates and local stations by simply going around, knocking on their doors and selling the CART story. What we're doing is actually the same -- we have press in the non-race markets and still have to make one appointment in that position. Steve Shunck of course came on board to us as director of broadcast PR to reallocate Merrill Cain to work more closely on radio where he has been highly successful throughout this year. So a lot of changes going on in the series and I won't really say any more than that. With that, I'll throw it open to you for any questions that you may have. Question: With Hal Whiteford's appointment, I was just curious how early on did you focus in on Hal as the primary candidate for that job? And part two, how important is it having this kind of new blood, outside perspective that Hal brings and Pat Leahy brings?
Hal's name did not come to mind immediately, I must admit. We looked more inside the industry than outside, but as we got into the whole thing, and his name did surface pretty early on as a strong candidate, because A, we all knew him very well; B, we respected the work he'd done at Mercedes Benz; C, he has a terrific background in operations and large-scale corporations where process is critical to the whole activity. So he very early on emerged as a strong candidate for the position. I hope that answers the first part of your question. As far as the second part is concerned, I like the fact that Hal is both an insider and outsider. I think it's a perfect combination, a little bit like Pat Leahy is -- or was, in that he's from outside of our sport. So he brings new disciplines, new skills and new perspectives, but at the same time, he's sufficiently knowledgeable and has been involved in the sport so that he won't be a total outsider. It's not all going to be new to him, and it's the same with Pat. I mean, Pat came on board and he knew straightaway what was what and straightaway exactly what the series was all about. So I think with both those individuals we got the best of both worlds. Question: Can you first talk about the dwindling numbers of American drivers in the series, and does that concern you, and also, can you talk about Steve Horne and if he possibly will join CART in some capacity?
There is, I think, some positive hope for the future. We have 10 Americans this year in Indy Lights. We have 17 Americans this year in tow for Atlantic. And those, I believe particularly in the case of Indy Lights, that's a record, and certainly high levels of numbers in these series for the past. Now bear in mind that of the current Champ Car or FedEx Championship field, 15 -- 15 drivers have graduated from either Indy Lights or Atlantic. The vast majority having come through Indy Lights, and, in fact, you can see is that there's no reason at all why, providing these individuals have the talent necessary, and I'm sure that some of them do, providing they can showcase their talents on CART, as indeed they will in these two series, there's no reason at all why we can't start to graduate some of these drivers up into the Champ Car ranks. So yeah, we're not happy with it at all. We don't like the fact that we have so few American drivers. We want to correct it. And let me say that -- this is the bigger challenge, it's not just an issue of Indy Lights and Atlantic. It's how we as an industry in open-wheel racing reach down further into the ranks of kasting, with a K, and the lesser formula and encourage and nurture that talent to move up through the sport. Now we took some pretty important initiatives last year and this year with the African American community and with women as well, but that's not enough. Clearly, we've got to start working hard to rebuild American presence in the sport. As far as Steve is concerned, Steve, actually I believe was under contract with Forsythe Championship Racing through -- until the middle of March. He's now gone on holiday for a couple of months, and certainly is not going to make any decisions for a couple of months. Obviously, it takes two- to tango, but certainly, I do see some important consulting roles for Steve in the future, if that's what he want to do. And Steve, obviously, he's going to decide what he wants to do, and we respect that, and once he's made that decision, there's an opportunity there to talk to him about some things I'd like to talk to him about. Question: Why has there been such a decline? Is it just the sponsorship role? I know you guys have been pushing people through Indy Lights, Atlantic, Toyota, why is it now such a hard thing to find?
Looking a bit now below Atlantic and below Indy Lights one second, it's an awful lot easier if you're a Brazilian or an Italian or a Frenchman or a Brit or a German to get sponsorship at the Formula III level and below. And it's really in those early runs, that's where careers are built and established. Motor racing is just -- it's a very big sport here, but it's just plain bigger in other parts of the world; and therefore, industry is more predisposed to listen to presentation and support young athletes. It really is a grass roots problem we have here. I don't think we alone can solve that, but obviously it's a major responsibility for us to do what we can. Question: Are you discussing or talking with ISC or PIR people about possibly returning to Phoenix as early as next year?
I really wouldn't want to comment on specifically on what we may or may not do, but I will say this: Phoenix is a very interesting market for CART and something we keep uppermost in our minds. That's really all I can say at this stage. Question: There are reports about CART coming to Montreal, can you tell me anything will about that4?
And I said, "Look, this is really very premature." I believe he did take steps to correct this impression that had been created in the press, and I said at this stage I don't really want to pursue those discussions any further. It doesn't mean that Montreal is not a great racing market, but I closed that conversation down. Question: Is there any news you can give us regarding any other international venues? We've heard about Monterrey, we've heard about Germany, we've heard about Britain, can you shed some light on that?
Again, at a strategic level, we think it's really important to add a race in Europe. I would say the level of sponsor interest is perhaps not quite as high as Mexico, but it's certainly up there. A lot of sponsors would like us to be there and as you obviously know, we have two very good opportunities, one in Germany at the Lausitzring, the other in England at Rockingham, both of those venues have significant merit. Some differences, obviously. Both have significant merit. However, I have to say it would be highly unlikely that CART could contemplate doing both of those events. So if and when one of -- a European event were to appear on the schedule regrettably, I think it's going to be one, rather than two, and it is regrettable because they are both first-class opportunities. Question: You wouldn't want to go and make it a doubleheader? Would it make sense to go to two venues while you are over in Europe?
Economically for CART and for the two promoters involved, two races would make great sense, but whether from a marketing perspective and presence perspective it does, it's questionable. Question: If I might, two questions, if I might he revisit the American driver issue. Your points about developing the talent pool are well taken, but the fact remains that there are at least a handful of qualified candidates who have gone elsewhere to race or can't get money to race. What can or specifically does CART need to do to try and help address that situation? Question: Brazilian drivers get Brazilian money. Do we need to encourage American companies to give their money to American drivers, more conditional, anything at all in terms of what influence you might have in being able to address that situation?
And certainly one of the roles I want Pat to undertake here is to increase the visibility of the series amongst corporate community, effectually open doors, make the community more predisposed to CART racing. As a consequence, if at a later stage an athlete knocks on the door, or a team, for that matter, knocks on the door, that particular company, they are going to get a hearing. Whereas, today it's a struggle, quite frankly, or can be a struggle if you've got to first of all sell the product before you sell yourself. So I think it is our job to help sell the product. Question: If you could sort of outline, I don't know, the division of labor between you and Mr. Whiteford. I mean, what will his responsibilities be? And as you guys mentioned in your release, part of the thinking in creating this position is to free you up to handle some of the commercial aspects, I don't know not more exclusively, but maybe more focused. Talk about that split?
But having said that, I do feel that we've reached a point in time where, whether I like it or not, I can't spend as much time as I could -- or perhaps more important, should spend on the product, with our team owners, with our officials, with our staff on racing-related issues. The series has become much more complex and much more sophisticated recent years. Just to put that in some context, in the five years prior to -- let me think -- 1994. Prior to 1994, the average number of full-season entrants was about 16 cars per year. The average number in the last five years or so has been in the region of 26 cars. So you can see that there's been a real change here. There are many more full-time race teams out there. It's become far more demanding in terms of managing the relationship with the racing teams at the racing level. And the schedule expanded, so you have more teams more full-time teams, to races, a far more complex series, a far higher level of competition from our four engine manufacturers in the series as ever witnessed before, and it's just plain, well, a bigger job. Couple that with the fact that obviously the role of CART has moved from being a private sanctioning body which is essentially an organization that was sort of -- an organizer of events and conduit of a very small amount of money for race teams and a public company, and you can see these things need to be split. And Hal is coming in to run racing. He's an operations guy. I'm looking to him to streamline our operations, to improve our officiating system, which has been great for the last 20 years but I'm not convinced is the perfect system for the next 20 years. He's coming in to really get our ship in order for, as I say, the next 20 years. He's part of our future, and I anticipate quite a lot of change and quite a lot of reorganization. Meanwhile, that will free me up to focus on building the business further. Question: When we say "racing operations," though, that would not, for example, include scheduling, ordering, determining which of those opportunities you guys might take in terms of expanding the schedule, that kind of thing that would remain yours?
Question: First of all, in terms of expanding the schedule, if and when it happens, are you looking more towards the European or Mexican, South American market and the U.S. and second of all, how are your talks about Las Vegas Motor Speedway going?
We've expanded our schedule substantially over the last couple of years. We now run well into -- well, actually, to the end of October. We're into football season which we don't particularly like. And we really need to address the idea of when we start racing, and if so, where do we -- if we start earlier, where would we race. So there are a lost things that are up in the air right now. We're having a lot of discussions with many of our promoters to see if we could reorder the schedule, perhaps go to some of the same places, but at different times of the year, and maybe there are opportunities for other venues. And all I would say with regard to Las Vegas it is obviously a very important market which our sponsors like a lot, and also a market where we can run early in the year; so that you can see on any list of potential new venues, you couldn't have such a list and not have Las Vegas on it. Question: And what are -- what is the status of any talks you have had with either Las Vegas officials or Speedway Motor Sports?
Question: Are there now or have there ever been talks with ISC about racing at the new Kansas City track?
I certainly couldn't get into any detail, but certainly in those discussions, the question of Kansas City has come up. Obviously, it's an interesting market. I couldn't really comment further than that, but sure, from time to time, we have talked about that. Question: You are stating that you have never had any talks with Mr. Pappillion? He says to the contrary?
And I sent him a letter, and I must say he came back to me very, very promptly with an e-mail saying, well, he was sorry, he didn't mean to imply he had had conversations with us. But the only conversations I have had with him have been after the fact, after he'd announced that he was coming to Homestead for meetings with us and so forth. I'm here tell you we never met face-to-face. The only communication we have had is me asking him what he's doing representing the idea that he has talked to us. And furthermore, I did decline a meeting at Homestead. Question: This person stated he would be in Homestead for the opener and later on they would have talks with you guys. Is that confirmed or is that true or not?
And I can only say it again. The only communication we've had with Mr. Pappillion was simply to find out what it was we thought he was doing, because we've never talked to him about a race, ever. Question: Can we expect an official statement from CART on this matter?
Question: Nascar recently went out and did a bid for their TV package. Now, my understanding CART's contract is due to expire a year or two with, I guess, ESPN. Is there any thoughts at all about maybe doing a similar thing for the CART TV package at that time?
And quite definitely, we do want to look very carefully at our U.S. broadcast partners, and also at the same time, look very carefully at how we handle our international distribution going forward, which we do intend to change. So we are moving into the negotiation phase right now. I don't really want to comment in too much detail on that, except to say that, obviously, we have some contractual obligations and we have to negotiate and we wanted to negotiate with ESPN and by exchange ABC by the middle of this year. Question: We've gotten a lot of e-mails from folks in Europe who are kind of upset that CART is not going to be broadcast live as much as it has in the past. And I had some conversations with some of your staff and they said they were working on developing some other outlets there to broadcast. Could you tell us -- give us an update as to what kind of progress CART is making in getting the coverage in Europe to be -- to be better that be maybe what than maybe what it would have been and how that might influence a European race?
It's a pretty good service. It has a very, very broad coverage area, and it reaches potentially a very large audience, but actually, it's quite shallow in its market penetration in the many markets it goes into. I think for the stage of CART's development we were in three or four years back, Eurosport was just fine for us. It provided us with coverage on Sunday evenings of our races, events that we weren't having to battle our way through football and other sports events and other networks in the evenings, and it was a relatively straightforward thing to put together. However, as we go forward, we believe that Eurosport's time coverage is not appropriate for CART. What we need is tailor-made coverage, market by market, wherein if you're in Sweden, you have a Swedish commentary team and the focus clearly is on Kenny Brack. Or if you're in England, you're have an English broadcast team and the focus is clearly on Mark Blundell for example. In order to do that, you've got to make the change and we decided to make the change one year earlier than we originally planned. And the reason we did is it now is that Eurosport came to us effectively and said, look, we are struggling on the advertising sales side now. That's, frankly, not a story that -- I have to say -- they have not been a particularly successful partner in terms of selling the commercial air time, and that's normally their problem, but they really were struggling and they wanted to exercise an option to modify the contract. We accepted that and we hope by doing this we get the best of both worlds. And what we now have is Eurosport with a two-hour show on Wednesday nights, on delay, and that show will include Atlantics and Indy Lights as appropriate, so we think that's good. So it will be an update on those two series, plus the majority of each CART race in a two-hour show. The ratings performance an Wednesday nights in Eurosport is almost identical to what it is on Sunday nights; so we don't think we're going to lose that basic coverage. And then what we're doing is going market by market and entering into broadcast agreements terrestrial broadcasters. We have been successful in that respect in pretty well all of the key countries, with one very noticeable and concerning exception, and that is Germany. The reason we have been unsuccessful there and we were about to conclude an agreement with VOX, and VOX was bought by Murdoch, and as a consequence, those negotiations came to an end because they had different plans for the channel. So that's a big concern to us, a big hole in our European broadcast plans for the year 2000. However, I do believe that the strategy remains absolutely valid. We must have domestic broadcasters in each marketplace producing a tailor-made product to meet the needs of their viewers, not a catchall, coverall kinds of coverage that Eurosport provides. And I believe we have something which without question, we'll have more viewers this year, but there are going to be a couple of gaps, and one of the biggest gaps is Germany. Question: Do you think that it's a good or bad for CART having had the same winner so many years in a row?
I think where it's good is that one of the areas where CART is not so strong as, say, Formula 1 is that our teams don't quite have the same strong individual identities that you find in Formula 1. Target Chip Ganassi Racing is a brand in his own right and as is Williams and Ferrari and so forth. I think Chip's performance as a team owner in the last few years has really pushed him forward, and along with Roger Penske has established him as a known commodity, a brand if you like. That has to be very good. I think from the fans point of view, I guess it's natural that people would be more interested in this season if they can see that someone is going to topple the king. That remains to be seen if that happens, but it certainly provides with a great challenge and Chip] with a great challenge going into the year 2000 season. Can he hang onto it, will he lose it; I think that's probably pretty good for our sport. I don't think it hugely damages us by having the same winner four years in a row. I think it's probably provided more positives than negatives. Question: I would like to speak to Andrew about a situation that came up in Montreal. I am the one that caused all that trouble with the story about Montreal. When these people talk to me about the story, it seems that I found out about it a little bit too early and I printed the story before they really had the chance to talk to you, because the information I had was that they were ready to talk to you and it was already done, but it was not done. So that's the first problem that happened.
Question: And then I talk about the CART Championship with the promoter of the Formula 1 Grand Prix in Montreal, Norm Allego (ph)?
Question: He's a good friend of mine, too. So we talk about it and I said I was just curious with two French Canadian drivers in the series this year, you cannot believe the interest level of the CART Championship in the media and in the population here in Quebec, but we don't have the chance to see a race live, we have to go to Toronto or to Nazareth in Pennsylvania, but the people are getting so excited about it. So it's normal for a journalist to write -- to try to see if the CART Championship Management would be interested to have a race in Montreal. So by the way, when I talked to Norm, it took me by surprise by saying yes, I will personally be very interested to have a CART race on the ... circuit in Montreal, I think it would be great and blah, blah, blah. So I print that story that day, but at the end, I mentioned that there was some little talks already for -- between the other organization, the other group of businessmen of the South Shore Montreal with the CART series, but it seems that the aforementioned was premature and too early. So I'm sorry about that. That was my mistake. I should have double-checked that information. But still, for us in Montreal, we were just wondering if you would be open to the idea of having one day, a race in a market like that. I don't have to tell you, but the Formula 1 Grand Prix in Montreal, we break the attendance record year after year. I was just curious to have your feeling about it. I know you seem to have offers from all over the world now from England, from Germany and from other cities in the States like Phoenix and Las Vegas, but still, is the door closed for Montreal?
Question: If I can ask you that question, if Norm Allego would come to you and say: We are ready, we have all the installation, all the budget and everything, so we are -- we are coming on with a project of having a race in Montreal, then could you have a different look at it?.
Question: Can you talk a little bit about football? You referred to it earlier, the idea of getting away from competing with football, and is that high on the priorities for 2001?
Now, there's an "if" in that. Sometimes you can't avoid these conflicts, but where we can, it would make a lot more sense if we could. And one of the ways to avoid it is to start your season earlier and finish it earlier. Question: How early do you see as possible, what would be the latest you want to run then?
Question: Is it this something you see as it has to happen or is it simply an ideal?
Question: So is there a date in mind when you have the kind of schedule that you'll want to live with year after year?
Question: Two years ago, CART put on probably its most exciting race in history, yet three spectators got killed in the crash there, and last year you had a points race at the end of the year that Nascar would literally die for, and then you had the Greg Moore tragedy. I'm just wondering, do you look back on some things over the last several years where there were promotional opportunities where you could have beat your chest, but obviously your hands were tied? I'm just wondering if occasionally, has CART been under a little bit of a black cloud on occasion in your estimation?
It's been, you know, a profoundly difficult time for all of us. And it's sad and disappointing and concerning when you look back at two seasons in a row which have been tainted by tragedy. And then in a very different way, of course, we started this year with the loss of a very great friend and colleague in Tony Bettenhausen and Shirley Bettenhausen and members of his team. So it certainly has been great sadness for us. I don't think there's any -- anything that, you know, CART can say that alters any of that. The facts are the facts and you have to live with the circumstances you face. And I don't think that we have been somehow, you know, less fortunate than others. I mean, there are always issues you have to face in life, and those are some of some of the things we have to face, but certainly it's been a sad time for us. There's no question about that. Question: If you could just pass a magic wand and change one thing about your marketing aspect that would maybe shake people up or make them aware of your series, what would that be? I know it's an off-the-cuff question, but what's the message you would like to get out there about your series that maybe people aren't just getting as far as like tuning in on television, etc.?
We have a wonderful heritage you can trace right back to the turn of the century, and as anybody who knows who has been in our paddock, our series is a real center of excellence, and those of some of the messages we've got to communicate. And most important in all of that, this sport is about human beings and about people and about some of the most talented race car drivers in the world today. I mean, bar none, these are amongst best in the world, if not the best in the world. And we've got to make them better, we've got to make them better appreciated for what they do. But most important of all, make them better known. Question: My understanding, a bit of a marketing shuffle there at CART in the last year or so, and I think you second-guessed some things. Are there mistakes you think that have been made in the last few years, whether in relation to the IRL, or as you just talked about, why is it so hard to get into the American psyche?
But unfortunately, as much as we'd like there to be a silver bullet or a magic wand we could just wave and everything is perfect, it takes time. I am very confident in the team that we have in place on the marketing side of this company and on the public relations side. We've got more energy down in our marketing department than I've ever seen. We've got a lot of new stuff going on and we're doing all of the right things. We are absolutely confident we're doing the right things. We'd like to do more of the right things with bigger budgets and so forth, and that's something that will also happen over time. But we're doing all of the things we should do to help promote the sport. I just wish we had been doing this ten or 15 years ago. Question: In all of this. Have you felt at all like your leadership has been challenged by the folks you work for or have they been fully supportive, do you feel?
But would I hope we would be challenged by not just the immediate constituency but by our sponsors and everybody in our community to do the very best job we can. Question: When you say the "new money" you have to market, I guess I just don't understand?
Question: (Inaudible)?
Question: With Firestone being the only tire, was it necessary to name it the official tire?
Now, we were in that position for many, many years with Goodyear. But having said that, I do want Firestone's involvement in the sport to be as successful as possible, and if I can provide them with any additional tools, like being official tire of the series and so forth, we're going to do that because they are a partner and we want to make sure they get a good and successful involvement in the sport. Question: With the chassis situation, there was five chassis last year, and now there's only two. Does that concern CART along with the decline in American drivers?
Rather, what happened was both the concerned- there's probably a better way to do this, and that's to run a Reynard or a Lola. Now, don't forget that although Swift right now is somewhat on the sidelines, Swift is not out of this series, and I'm sure we're going to see them come back in the future. But no, I'm not concerned about the fact that we only have two chassis manufacturers. Question: How about the topic of safety barriers?
T.E. McHale: With that, we will wrap up for the afternoon. Andrew, thanks for being with us this afternoon. A remainder to all of you that the FedEx Championship Series opens its 2000 season this Sunday March 26 with the Marlboro Grand Prix of Miami presented by Toyota at Homestead Miami Motor Speedway. The race airs at 4:30 PM Eastern time on ESPN. Thanks to all of you for joining us this afternoon, and we'll speak to you next week. | ||||||
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