Editorial

An in-depth interview with Jonathan Vannini 

 

 by Mark Cipolloni
October 30, 2001

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Jonathan Vannini has been in the CART spotlight lately.  One of CART's largest shareholders (currently owns about 8% of CART) has stepped out of the shadows and into the forefront to help CART exceed.  An accomplished businessman, Vannini first expressed his views publicly here on AutoRacing1.com.  We sat down with Mr. Vannini recently, for a one-on-one interview to find out what makes him tick, but more importantly, find out how he's going to help make CART tick...or make that skyrocket.

Mark Cipolloni:  Jonathan, thanks for being here with us today.

Jonathan Vannini:  It's my pleasure Mark, and I want to personally thank you and your AutoRacing1.com staff for doing what you do for CART and for the sport of racing in general.  I am an avid reader and your editorials are extremely insightful.  You have, shall I say, "the pulse of CART."

Cipolloni: How did you come to be interested in CART. Did you start as a fan?
Vannini: My interest in motorsports began in the late '70's and to be honest it really started with my interest in motorcycles and motorcycle racing, particularly motorcycle road racing. Motorcycles are such that they are rarely just a passive form of transportation to those who ride them unlike, say, cars are for the vast majority of people. Motorcyclist will understand what I am talking about immediately. Very few 16 year olds buy fast motorcycles without doing what they are intended to do which is to go fast on them. From there, it is very easy to see how somebody, anybody would become interested in racing in general. I was no different. In very short order, I was a motorcycle road racing fan. And shortly thereafter, a fanatic. That continues to this day.

Maybe this is true of all sports, but interest in motorsports seems to transcend almost every social barrier that exists in society. Go to a big motorcycle race and you will see a really good cross section of society. Something about it makes it able to get inside a lot of us.

Cipolloni: Did you race them?
Vannini: No, at that time I was in college and that took up most of my time. I went to UCLA and for your readers who are familiar with the hills just outside of L.A. I spent an inordinate amount of time on the back roads in and about Mulholland Drive. Frankly, it would have been much safer to have raced in a controlled environment, on a race track. I gave serious thought to quitting school to try to race but realized in the end that I really was not naturally gifted enough for that. Going to Laguna Seca in the late '70's and very early '80's and seeing the on track performances of Kenny Roberts, Freddie Spencer and guys like that was really very sobering. But it also reinforced my interest as a spectator.

Cipolloni: Have you found that your long time interest in motorcycle racing is at all helpful in analyzing the situation at CART?
Vannini: I don't know how helpful it has been but I definitely see some similarities. The first is that when I first got interested in motorcycle road racing it was almost a given that Americans couldn't do it. Not that they hadn't applied themselves or had not been given the proper opportunities or grooming but that they just weren't capable. If you were to dig into the archives of the influential magazines of the day, the point of view, mostly foisted by the European press, was that it was almost a genetic thing. "They", meaning the Europeans could do it and "we" meaning the American's, could not. It was the accepted wisdom of the day, without a doubt. Never mind that there was a gene pool of nearly 200 million people, the same gene pool that had dominated in virtually every other athletic undertaking known to man. Somehow, road racing was different and we couldn't do it. I see a lot of the same stuff today. Of course, Kenny Roberts went over there in '78 and on his first try won the 500cc World Championship, The F-1 of bikes, and ended up winning the World Championship 3 times. What's interesting is that he forged the way for an army of Americans to go over there, guys like Freddie Spencer, Randy Mamola, Wayne Rainey, Eddie Lawson and Kevin Schwantz. In the ensuing 15 years Americans must have won, I don't know, something like 10 500cc World Championships. By the early 1990's, the very same people who said American's couldn't road race were now saying that since these kids grew up dirt tracking all their lives, no one other than an American trained dirt tracker could really compete. Wouldn't you know it, along comes this Australian kid named Mick Doohan and wins 5 World Championships? My point being that the accepted wisdom of the day, the wisdom forwarded by people who have spent their entire adult lives at something is rarely correct. I study it, analyze it and if, in the end, I don't agree with it I pay it no heed. I am perfectly comfortable leaning against the winds of conventional thought. In fact, I prefer it.

Cipolloni: Any other similarities?
Vannini: Yes. In the late '80's World Superbike was started by a fellow named Flamini. As I mentioned earlier, the 500cc World Championship was really the F-1 of bikes. The notion of going head to head, toe to toe with what is now known as Moto GP seemed absurd. Ludicrous. The odds against success were staggering. Everyone thought so. Check the press reports. Everyone except Flamini. Well, fast forward 10 plus years and I think every argument can be made that World Superbike is at least on par with Moto GP. Frankly, I would rate it higher but that's just my opinion.

Cipolloni: How does this relate to CART?
Vannini: The point being, nothing is static. No franchise is unassailable. Not F-1, not NASCAR, not CART or the IRL. We shouldn't think it but neither should anyone else. CART has a very strong foundation upon which to grow. In my judgment it has the best on track product, great venues and great fan support. But that is just the starting point. Look, there are those who would like to think it will simply vanish and still others who think there is nothing you can do to destroy it. That is pure fantasy on both sides. Everything can be made stronger and everything can be destroyed through inattention, mismanagement or complacency. CART's job is to guard against the latter. By CART, I mean everyone involved with the series: The teams and team owners, the sponsors, the two boards, the promoters, the TV people, the list goes on. But everyone.

Cipolloni: Who or what do you see as CART's competition?
Vannini: Obviously, in the broadest sense CART is looking for people's attention to be diverted from the many things they could be doing during the course of any given weekend. Their golf game, football, the movies, whatever. In the more narrow sense in which I think the question was asked, clearly F-1, NASCAR and the IRL. Domestically, I would limit it more to NASCAR and the IRL. 

But that statement isn't just limited to the fans. In this equation, four main groups have to feel like they are getting their monies worth. The fans. The sponsors. The team owners. The promoters. You do not have a viable long-term proposition if any of these constituencies feels short changed.

The fan has to get his monies worth. As a fan, to me that means I have to get a novel product, something I can't get elsewhere, at a reasonable price. I think CART offers a fantastic on track product. Simple as that. To me, it is the best on track product in auto racing. Period. There is no shortage of those who would quarrel with that but I believe that to my core. It is at the foundation of my investment in CART.

The team owner and the sponsor, in my view, go hand in hand. The series has to make it economic to start and operate a team and, by extension, provide the proper price value relationship for the sponsor. This is best achieved via the rulebook to achieve parity in the series at the lowest possible cost. Without going into details, I think there is a lot to be done there and I think CART is working on that very hard. But the team owner has to be, for lack of a better expression, the partner of the series. CART went public under the assumption that the team owners, as shareholders, would prosper under a model in which they didn't share in the revenue stream of the parent company but instead on the price of the stock. Fast-forward a couple of years and we see that doesn't work. Most of the team owners have sold all of their stock and are now seeing the model doesn't work on an ongoing basis. But recognize that a lot of these teams sold tens of millions of dollars in shares so it has not been so one sided. But that is history. In my view CART clearly has to evolve into some sort of revenue sharing model which when coupled with lower costs achieved via the rulebook dramatically improves the health of the teams. This is critical.

The promoter is your primary interface to the fan. The job the promoter does largely determines how your product is perceived, on track performance aside of course. Some of our venues do a great job, some less so. 

I believe that in the past CART thought they could just come to town, not work with the promoter in any meaningful way and leave with a fist full of money. While that view is seductive in theory, it doesn't work. Some venues will prosper, some will not but either way the onus is on CART as an organization to take on an increasing role in the promotion of their events. They can no longer paper over past sins simply by going to the promoter well time and again. That being said, there is little doubt that some of the venues aren't cutting it, for whatever reason. This is an expensive sport. With something approaching $250mm in annual budgets for the entire grid, it simply is not economic to go to venues that draw small crowds. If CART were to ignore these economic realities, it would cease to exist in very short order.

The point being, we compete for fans, teams, sponsors and promoters. None of it comes easy.

Cipolloni: How do you view the IRL as a competitor?
Vannini: As I've said elsewhere, Mr. George owns IMS and it is really the Yankee Stadium of motorsports. I literally think you could hold a horse race there and draw 200,000 people to it. It has that kind of aura. It is a franchise in and of itself. That being said, I don't think the rest of the series can even begin to compare to the franchise CART has built. As much as guys like Eddie Cheever and Forrest Bond want to pretend otherwise, outside of Indy, CART currently has the IRL completely covered in my book. No contest. Just look at last weekends race at Surfers Paradise. It would be interesting to compare that weekends attendance figures to the entire IRL schedule ex-Indy. I bet you would find that the Australian race compares favorably to their entire season draw. The problem is a guy like Mr. George is never standing still. So, if we just bask in our own arrogance and self satisfaction, we will wake up behind the eight ball big time. Mr. George is adding venues, working the TV angle, the sponsor side, etc. He doesn't let any grass grow under his feet. If CART isn't careful, it will wake up one day with a noose around its neck. That is many years away but I think a lot of people in the CART paddock WAY underestimate this guy. I can assure you that I am not one of them.

Cipolloni: Do you advocate the merging of the two series?
Vannini: It is not a matter of advocating or not advocating a merger. I simply analyze the situation and ascribe a probability of it ever happening. Here is Mr. George. He is the unquestioned authority in the IRL and at the IMS. He is "the guy". His company is private and can move without being beholden to shareholder scrutiny. No second-guessing by guys like me. Why would he ever change that? I think the simple truth is he wouldn't. Therefore, since I think it is highly unlikely he would ever do it I don't waste any time engaged in fanciful thinking. Look, it would be nice if I looked like Brad Pitt or Tom Cruise but it ain't gonna happen. So I don't worry about it. Ditto the merger! 

We are in a marketing battle with Mr. George. It is a real fight. Make no mistake about it. But I don't come from that politically correct, sort of Peace Corp. mentality of "oh well, we fought the good fight." I might be accused of being shallow here, but I subscribe to the notion that the only good fight is the fight you win!

Cipolloni: There has been a lot of speculation since your filing with SEC last Thursday as to your motives regarding CART. Can you explain for our readers in simple terms what you meant (see related article)?
Vannini: Sure. First, what it isn't is a call for Joe Heitzler's head. If I wanted Joe out I would have asked for it explicitly. I think a lot of the problems we are seeing at the company now were set in motion by past regimes at the company and fostered by the current board structure. That being said, I just think Joe needs help running the Company on a day-to-day basis. The press focused on the title and frankly that is not really my concern. Call the position what you will, CEO, Chief Operating Officer, I think everyone, including Joe and Jerry, understands what I am asking for. I think the company needs a day-to-day operating guy. And I think that we need that person to come on board in the very near term. The press has speculated as to who that may be. As I have said, the characteristics necessary for success at that job are such that the universe of candidates is very limited. We all know the names of the potential candidates. 

The second part really had to do with broader corporate governance issues. While I recognize the vital contribution the teams make in terms of delivering the racing product, I think it is abundantly clear that the current corporate structure does not work. At any point in time, the team owners have real and potential conflicts and incentives, which may be counter to the current or long-term success of the franchise i.e., CART. In most instances, these conflicts of interest are pretty severe. As businessmen, I expect them to protect those interests. However, I find it beyond the pale that they do it as Directors of this company. When you create a situation where 5 or 6 of these gentlemen literally control the board, the situation becomes completely untenable and I simply do not believe that the shareholders will tolerate that situation any longer. At the time the company went public, the team owners owned a ton of stock. At that time, it could have been argued that they had the same interests as the company and therefore their presence on the board did not represent as much of a conflict due to the overwhelming size of their ownership stake in the public company. Well, if you look at the situation now, all of the team owners except Jerry Forsythe have been massive sellers of their stock. And only Chip Ganassi and Carl Haas have an investment that is large in relation to their racing operations. Pat Patrick has dramatically reduced his investment. Barry Greene has virtually none at all. Ditto Mr. Walker. What's more, Mr. Walker is a full time participant in a competitor's series. I have no problem with that per se, but the argument for Mr. Walker having any role in the management in the company escapes me completely. I find it absolutely unbelievable. That he has any input on the rules side leaves me speechless…which is hard to do!

These conflicts are such that instead of picking and choosing who stays and who goes, I think it would be preferable for all of them to immediately resign their positions on the Board and have a few qualified independent directors appointed in their place. Then the Board can function as it is meant to. .In an advisory capacity to management and as advocates for the shareholders.

Cipolloni: Some people say that CART would be better off run as a benevolent dictatorship rather than by Committee. I take it from your comments that you agree?
Vannini: I think the record is there for all to see. F-1, NASCAR, WRC, World Superbike are run by individuals not committee's. The models are abundant and obvious. They were the pioneers. They took all the arrows. We just need to do what has proven to be successful in this industry.

Cipolloni: CART seems incapable of making timely decisions. What is needed to streamline this process?
Vannini: Just what we have been talking about. You need one guy unambiguously in charge. And you need to get the team owners off the Board immediately.

Cipolloni: Joe Heitzler stated that his goal was to keep all the engines manufacturers in CART. The fact that we have now lost all 3 concerns a lot of people. What is your take on this?
Vannini: That is a very fluid situation. But I am sure of two things. We haven't heard the full story and we haven't heard the last as to how this is going to play out. My perspective on the engine is that there are a lot of possible solutions. What I want to see is a differentiated product. The look and feel of Champcars makes them unique and I think a lot of observer's way under estimate that. I would include some team owners in that category by the way. They are fascinating to the uninitiated because they are a spectacle. And those same qualities are what draws the rabid fan as well. With 900 HP on tap, they are by definition a little unstable. They squirm under braking, they buck under acceleration. That is all part of it. I think Champcars should be nimble and that they should sound a certain way. To my aesthetic, that would be a high revving engine. I am agnostic between turbo and normally aspirated. But the series should think long and hard about radically altering they're on track product. I understand the argument of having a lot of manufacturers involved but I am less than convinced that we should not adopt the Cosworth option. But I remain open minded. I am staunchly against a spec IRL engine and will do everything I can to prevent that. I view any suggestion that we should standardize on an IRL spec engine with a great deal of suspicion. Any notion of an IRL chassis I view as a complete non-starter.

Cipolloni: You have bought 8% of the Company. Will you try to take a more active role? Might we see you on the Delaware Board?
Vannini: As you point out, I own 8% of CART. I don't have $15mm toys I can assure you of that. My level of activism will be dictated by events. I clearly have a point of view and I'm not particularly bashful about making that point of view known. As we speak, I want us to hire a day to day operating person and to have the team owners step down from the Board immediately. I think both of those things are sound, reasonable and prudent. If I am stonewalled on either of these fronts, you should expect to see me dramatically accelerate my "activism", if you will. I don't think we have time to pick green bananas here. Am I amenable to going on the Board? Under the right circumstances, yes. I believe a truly independent Board would be very useful in this situation. Frankly, I believe a lot of our current detractors would be mortified to see CART adopt these changes. They realize that the current structure slows the decision making process dramatically and makes the whole company less effective.

Cipolloni: As a major stakeholder in CART, what is your view on the huge success enjoyed by CART's international venues while certain events in the U.S. struggle?
Vannini: As I have said before, I believe that CART's on track product is the best in all of auto racing. I have taken a lot of first time spectators to CART races and all of them have become fans. In time, I believe that it is well within reason to expect CART to have 12 to 14 domestic venues that are as popular as Long Beach is currently. Will it be easy? No. Will it take time? Yes. Can it happen? Absolutely. Will it happen? Yes, with the right people. CART already has some great domestic races and venues. You know the names. In fact, weakness in venues is much, much more the exception than the rule. I only see a couple, maybe, weak venues in 2002. The vast majority is great. The international races and venues are all great. The reality is that the passion for open wheel racing is greater abroad than domestically. That being said, the market in the U.S. is there, maybe just not in all the old places. I think CART is very actively exploring those opportunities.

Mark Cipolloni: Thank you Jonathan

Jonathan Vannini:  Again, it was my pleasure Mark. 

The author can be contacted at markc@autoracing1.com

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