I don't expect this thread will live very long but I don't see much optimism in CART's assessment of itself.
Proud to be a complainer.
It reminds me of a company I used to work for.
They went bankrupt and closed down.
Last edited by indyracer56; 06-16-2003 at 08:36 AM.
I don't expect it to last very long, either, so I posted it OT........
Why not?
Considering it's what I'd call "big news", let's see what happens.
As long as it stays somewhat objective, I'll let it stay here. If it turns into a predictable dung hurling contest, it heads to OT.
It'll likely be moved to OT so we can talk about Portland, unless the news items keep coming.
So if CART gets bought out, doesn't look like the series is folding.
However, with no ESP cash, you've got to wonder where some of these cars will come from, unless new ownership decides to continue the ESP.
However, at one point, 2003 looked impossible, so we shall see.
Well, okay, wrench, if you're going to allow it....
This is the first financial guidance release issued or discussed by CART in about 15 months. Pook shut those down in March, 2002.
It would appear to be a precursor to show shareholders the situation is bleak to woo them to accept a forthcoming tender offer to buy the company. There's a sports channel in Canada that reported this morning that Ecclestone would get 51 percent and Forsythe 49 percent.
The CART BoD is supposed to meet this week. The tender offer may be on the table for that meeting already.
They should be moving swiftly on this because the rumors have been around for a year about a buyout. If everyone sees this guidance as a chance to jump in and buy at $2.91, for example, and runs the stock price back UP, the tender offer is going to need to be for a lot MORE dollars. If everyone sees it as a "get out now" proposition, the stock price will go DOWN and the tender offer can be made for FEWER dollars.
It'll be interesting to see how it plays out.
What you're witnessing is legal @ss covering. I'm fairly familiar with the laws on disclosure, as well as corporate transactions. What you're seeing today is step one in CART's privatization. Now that the "For Sale" Sign is on the door for all the world to see, they can pursue some of the deals that have been talked about for a while. I seriously doubt they would put that sign on the door unless they already knew that somebody was interested in buying.
Whenever a public company takes part in a transaction that involves a change in ownership, you must ensure to your shareholders that you're getting the best possible deal. If you don't, it is lawsuit city (and there's almost always a shareholder lawsuit, but exploring all options is the key to winning that lawsuit.) Even if they have a solid offer from Bernie, they need to be able to prove in court that his deal was the best possible deal. Thats where Bear Stearns comes in. They'll be able to provide an independant analysis of any sale and ensure the shareholders are getting the best deal. What they're likely to do is take an existing offer to other possible buyers (likely other competitors in the market, like IMS and NASCAR) and give them an opportunity to make a higher bid.
Part of the sales process also means disclosing financial information about the company. They can't disclose that to potential buyers without also disclosing it to shareholders. Hence, laying it all out in today's press release. (It will also show up in an associated SEC filing, if it hasn't already.)
we ALL have known for about a year that something had to give for CART to survive.......
for me the big question is who are all the players involved?
I suspect we will all be suprised by one or more of the players involved
Understand, Joe Bob, and thanx for the legal info.
There are going to be investors (like Vannini, most likely to sue) who are going to lose their butts on this thing but the company is showing the shareholders how unviable it is to continue.
I'd guess they'd be looking at a tender offer of $4.50-$5 a share but I think shareholders would demand more in just shutting the company down while there was still a few million in the bank. It'll be an interesting process.
do you think one of the resons this has taken as long as it has is that CART is aware of the Lawsuits, past, present and future, and has made attempts to apease the major players such as Vannini?Originally posted by indycool
Understand, Joe Bob, and thanx for the legal info.
There are going to be investors (like Vannini, most likely to sue) who are going to lose their butts on this thing but the company is showing the shareholders how unviable it is to continue.
I'd guess they'd be looking at a tender offer of $4.50-$5 a share but I think shareholders would demand more in just shutting the company down while there was still a few million in the bank. It'll be an interesting process.
Yes, Fry, I think so. When Grosveld wanted out and threatened to sue, the BoD waived the "poison pill" provision on 15 percent ownership and allowed Forsythe to make a private deal for Grosveld's shares. The thing that'll be dicey is that Pook and the BoD have spent the money and driven the stock price down so Ecclestone or whoever can get a bargain-basement deal. For example, Walker, a BoD member, got $5.9 million for this season ABOVE ESP. That decision alone will be difficult to prove in the best interests of the shareholders.
Indycool,
Do you know why Walker got 5.9 million in addition to the regular welfare that every other owner received?
No, vino, I don't.....it was in the first quarter 10Q that Walker and (other directors) Haas and Patrick got some extra bucks. Think Haas got $2 million and Patrick $1 million. The 10Q doesn't say why.
I am interested as to the reason why? One of the good things that I thought Pook had done was to break up the good ole boys club of Cart--unless there is a good reason, this does not indicate that the club was broken??
I believe the stockholders will also be curious about Haas selling his contract at Milwaukee a few weeks before this 'For Sale' sign went up.
I would also suspect that John Judd and the others with pending lawsuits are fairly interested in the proceedings.
As for the rest, I have been convinced for a very long time that CART could not survive without a massive infusion of cash. I am also convinced that Bernie isn't going to be the guy with the checkbook. If he were involved, the deal would have already been done and there would have been no reason to go get Bear, Stearns and Company. If he were involved, the stock would be skyrocketing today and, so far, its only up $0.19, less than 7% and the volume is very low.
I suspect this is a fishing expedition by CART and they don't have much bait.
Jim,
If it has leaked that Bernie may be a buyer (again), that may be the reason the price is up 19 cents.
Only one analyst (Dennis McAlpine) follows CART, the price is next to nothing and the guys on Wall Street don't know who Bernie Ecclestone is or understand the nuances involved as we race fans do from following the sport. Those guys are dealing with the GEs and GMs in their mutual funds.
CART's stock price seldom goes up or down with the broader market anyway.
----indycool
The stock is now trading at $2.90, DOWN $0.01 under very light volume.
Again, if Bernie or anybody else was lined up, word would be leaking out and the price would be climbing.
I found it curious that Robin Miller had his article up and posted BEFORE the CART financial guidance came out to the public. That report out of Montreal on Pollock was also out ahead of the release and the article on Roger's SportsNet was up early this morning.
Much of Robin's article, including the Pollock quotes, came from an AP report and his ESPN.com story says as much. I first saw it yesterday at the Miami Herald website. The story is attributed to Jenna Fryer who may be a Canadian AP stringer:
http://www.miami.com/mld/miamiherald/sports/6096283.htm
That was the report out of Montreal that I mentioned.....Jenna covers some racing for 'em up there.....
Jim,
What is it with your links, they don't work unless you cut and paste into the Address field.
I too have my doubts that Bernie is buying. I think there is some action and CART is looking for a buyer, but just like the Haas Milwaulkee deal, I think time will tell what is happening behind the scenes. Perhaps we will see a law suite or two soon.
I just can't see why Bernie would pay, 40 million for CART (current value) plus the remaining loss for this year? (30-40 million?). Plus whatever is needed for next year (60 million?). Plus whatever is needed for 2005?
I mean 2006 would be the soonest (too soon if you ask me), that CART....oops "American Grand Prix Series", could make a profit.
Who would risk 140+ million on the prospects that CART...oops "The American Grand Prix Series", will somehow grab a hold of the American sports fan's imagination. The USGP at Indy has done ok, but certainly not fantastic. I just don't believe CART...oops "the American Grand Prix Series", can ride on F1's coat tails, because F1 doesn't have coat tails, in the United States.
Considering CART's crowds at the last 2 events, low TV ratings and unknown, mostly foreign drivers. I just don't see it becoming profitable in the US, anytime soon.
There is A) A deal in place for the BoD to consider or imminent; B) Bernie will let the price go down further with the cash burn before doing anything; or C) Bernie will let it crash and pick up the pieces.
The one and only single thing I can see of importance to Bernie, who also has a team and car count problem in F1, is to buy it and merge the two series into a new F1 to combat the new manufacturers group. I can think of no other reason for him to do it.
This is much the case for all OW in the US about now.Originally posted by Tara
Jim,
Considering CART's crowds at the last 2 events, low TV ratings and unknown, mostly foreign drivers. I just don't see it becoming profitable in the US, anytime soon.
Bernie has now bought into the Minardi team for a rumored $4 million. This is probably chump change to him. Do you think that this will hinder his rumored bid to buy 51% of CART?
It's a beautiful day for a motorcar race! - Jackie Stewart
Actually, the Indy Racing League taken as a whole (including the Indy 500) is almost certainly operating in the black this year. On average, the 15 events outside of Indy have sufficient attendance to allow the track to make money and more or less cover the IRL's purse (a "sanction fee" of perhaps $1.2 million per race). Some probably come up short, but these are offset by Chicago, Kansas, the two Texas races, Motegi, and Kentucky which are clearly profitable events. Figure that break-even on a sanction fee like that is probably somewhere in the neighborhood of 25,000 to 30,000 paid attendance with a title sponsor and decent hospitality for the event (thank-you Toyota and Honda).Originally posted by mesquite
This is much the case for all OW in the US about now.
Television is a revenue stream, not an expense item. The series isn't paying out signficant money in team support this season. There is sponsorship revenue from Firestone and the engine suppliers. And much of the administrative overhead is shared by the Indianapolis Motor Speedway Corp, the Brickyard 400, and the USGP.
I doubt that the series is showing much bottom-line profit, because most of the profits are being plowed back into the series. But, I would be surprised if it is operating at a loss. I suspect that both IMS Corp and the largest promoter, ISC, would be satisfied with a break-even situation at this point given that the trends are generally positive in terms of attendance, ratings, quality of teams, and signfificantly increased sponsorship.
If the IRL was properly promoting the series, I doubt they'd be making any money.
That's harder to evaluate. The national promotion of the series is up dramatically with the increased participation of Toyota, Honda, Marlboro, Target, 7-11, etc.Originally posted by mnkywrch
If the IRL was properly promoting the series, I doubt they'd be making any money.
The engine manufacturers are required to make a promotional commitment somewhere in the neighborhood of $25 million and it seems that the vast majority that is going straight into promotional spending: race sponsorships, race-market giveaways, television and print advertising, etc. Given the size of the IRL's annual revenues, that spending alone is a very significant amount of money.
Overall, I would say that this money is being spent wisely. Increasing the bottom line of the promotors (through title sponsorships) and ABC (through ad buys) is critical to the long-term stability of the series, so much of the promotional money serves a dual purpose.
I would say that the IRL's own advertising this season has been quite effective in promoting three of their drivers: Helio, Hornish, and now (this weekend) Buddy Rice. I like that they are creating an "identity" for individual athletes - this is really at the heart of fan interest in any sport.
Two posters early in this thread, including me, questioned whether the thread was within mnkywrch's new rules or not. Mnkywrch said they were if there wasn't mudslinging or name-calling. So, we went ahead and posted thoughts without mudslinging or name-calling. I thought it was one of our better, more civil discussions on the topic. So, it gets moved. Arms out, palms up.
Sorry- my bad. I moved it, not mnky. Just trying to be a good servant
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doitagain, well, I don't really know what to think....wrch came up with new rules banning financial threads, so I posted my original one at OT, where he said they should go from now on. Then a couple threads came up and we asked. He said okay but be nice. I'll gladly obey the rules as you folks see fit because I think this is a good forum. It'd just be nice to know what the rules are. This particular subject is one he termed "big news." I agree. The fate of this organization is in the balance with this morning's announcement. As I said before, arms extended, palms up.
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