A lot of our readers have contacted us wanting to know if there is any
truth to the rumors that CART may not go back to Europe in 2004
because the races lost so much money.
While that decision has yet to be made we suspect, we can share with
you what we know and what we think should happen. However, in
the end it may be The Big Little Man that determines CART's future in
Europe.
Regarding 2003
Some wild, and we believe incorrect
numbers (losses) regarding the European races were published recently,
primarily a quote from Normand Legault that CART lost $9 million in
Europe in 2003.
In the recent Q2 Financial statement released by CART, race promotion revenue for the three months ended June 30, 2003 was
$5.0 million and race promotion expenses for the three months ended June 30, 2003 were
$10.6 million.
CART conducted three self-promoted events, Brands Hatch, England, EuroSpeedway
Lausitz, Germany and Portland, Oregon during that period. That is a $5.6 million
loss for all three 2003 events. Of that
$5.6 million loss, $3.1 million was for the two European events
in 2003 at Brands Hatch and EuroSpeedway.
At
EuroSpeedway, CART agreed to honor the 2002 tickets (cancelled event
in 2002) for this year's race. In June 2003, the company received
$1.0 million from proceeds received from a bankruptcy settlement
regarding claims filed against EuroSpeedway Lausitz for loss of
sanction fees and other damages that occurred when the 2002 event was
cancelled as a result of the bankruptcy of the promoter.
This year's EuroSpeedway event realized a loss of about $1 million,
mainly because the sales period was very short as they could announce
the race in January (race was originally cancelled, but then
reinstated in the 11th hour) and started pre-sales in February for a
May race date. Anyone in the race promotion business knows that
is nowhere near enough time.
Because they agreed to honor the 2002 tickets (about
13,000 tickets!), these fans did not have to buy new tickets
(one could assume they would have had the 2002 race run and 2003 been
a new event) and that directly affected the result of the event.
However, if you add the $1 million for the 2002 ticket lost revenue to
the loss of $1 million for the event, CART went out of the event with
a balanced result, or at least could have. This result is -
taking into account the difficult circumstances and the very short
marketing period - a very good one that demonstrates the potential of
this event in Europe.
In the end it also shows that it was the race at Brands that produced
a very poor financial result. We don't know the reasons for that.
Regarding 2004 and the future
We do know that EuroSpeedway President Hans-Jörg Fischer met with CART
President Chris Pook on July 24th in Germany in order to discuss with
him a long-term agreement (5 years). The agreement says (if
signed) that EuroSpeedway Lausitz would be the promoter (means taking
the full risk) again. EuroSpeedway forwarded an offer to CART at
the end of July and are waiting a decision by CART.
Last year's German 500 was one of the most exciting oval races in
CART`s history at what everyone views as an outstanding facility.
It looks certain that a big German multinational
company will sponsor the 2004 event, in fact it's a done deal,
but sorry we can't tell you the name. Suffice it to say they are
already negotiating with several CART teams that will support a German
driver (you have read in AutoRacing1.com that Nick Heidfeld will
probably be without a F1 ride in 2004, and behind the
Schumacher's is the biggest name in Germany right now) in the series (i.e. all races)
starting in 2004 and beyond. We were assured that this will
happen. Wouldn't it be a shame if a German driver would be in
the series and EuroSpeedway out!? That's what EuroSpeedway was
desperately waiting for since 2001.
Whatever CART will do in the US (focusing on street
courses with a couple of road courses and only one oval race) they
should, in our opinion, not turn their backs on Europe so quickly
after they invested so much to get it started. Most new business
ventures lose money the first couple of years. In the case of Germany
next year, CART has zero risk and they can showcase their product in
Europe, which ultimately has a huge potential.
What is needed is a second European race in order to share some of the
costs (freight, flights, etc.). There are talks with Estoril but our
Portugal moles tell us they are also waiting for a signal from CART. A
third European race would divvy up the freight costs even more.
It's up to CART's new ownership to decide what to do about Europe in
2004.......or is it?
The Bernie Factor
One reason the European races may get nixed is simply
economics. Although CART may at least break even on the races
themselves, if they are still supporting many of the teams in 2004,
every additional race costs the new owners money. Hence why we
have heard of a schedule reduction for 2004. Less races to
support teams and to buy TV time.
Another
factor is The Big Little Man (Bernie stands 5'-4" or so, but
he's big because of the power he wields). We were told that when Bernie Ecclestone was going to
buy into CART, one of his stipulations was that CART would not race in
Europe. We don't know if that was because of Bernie's
non-compete clause he signed with Kirch, or if he simply did not want
another open wheel series in Europe competing for the customer's money
that could otherwise be spent on F1 races.
However, Bernie has stated to the Toronto Sun, and to
the Guardian in the UK, that he has withdrawn his bid for CART.
Does this mean CART is free to stay in Europe, or does CART want to
honor Bernie's wishes (of CART staying out of Europe) with the hope of
renewing relations with him in the future when he is able to negotiate
a new Concorde Agreement which may not include such strong non-compete
wording?
We suspect that if CART bows out of Europe for 2004, it
won't be because of money as much as it will be The Bernie Factor.
Time will tell.......
The author can be contacted at
markc@autoracing1.com
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