Here We Go Again!

Dov · 19 Dec 2003, 07:18 (Ref:815813)

Nabbed from another forum.....

Road America: CART Breached Contract
Grand Prix of Road America Remains on Schedule

Elkhart Lake, Wisc., Dec. 18, 2003—Road America has notified CART that CART breached its 2004 sanctioning agreement when it attempted to assign its non-transferable contract with Road America to the Open Wheel Racing Series (OWRS), according to George Bruggenthies, president and general manager. CART signed over its assets to OWRS on Dec. 15 and filed for bankruptcy on Dec. 16. CART alleges that the Road America contract now is part of the bankruptcy proceedings to be decided by an Indianapolis judge. Road America's attorneys notified CART on Monday, Dec. 15.

"All of CART's assets are before a bankruptcy judge," said Bruggenthies, "and resolution of the bankruptcy issues could take quite a while. Everything is up on the air, and again this year Road America's race fans can't make definitive plans.

"No one can predict the future, and the future for CART at this point is uncertain," he continued, "because everything is in the hands of a judge who must make a decision on a complicated bankruptcy."

"The Grand Prix of Road America's schedule will go forward with the notation 'CART to be determined'," said Bruggenthies, because of the uncertainty. Other series slated to compete during the Grand Prix of Road America Presented by the Chicago Tribune weekend include Motorock Trans-Am Series for the BF Goodrich Cup, Toyota Atlantic and a Barber Dodge Pro Series doubleheader. Other series may be added.

"We have a business to run, and at the most basic level, products to sell," Bruggenthies continued. "Our product is racing entertainment and all that involves, from race fans making summer plans and buying tickets to corporate relationships.

"We need adequate time to market our schedule. This unexpected maneuver by CART has really placed things up in the air for 2004," he said. "We must be responsive to the motorsports business and work to deliver an excellent racing and entertainment experience for Road America's race fans, sponsors, riders and drivers."

In 2003 Road America negotiated, with race legend Mario Andretti's help, a two-year contract with
CART to end in 2004.

"It appears that there may be a new management group who may now define Champ Cars." Bruggenthies said. "We'll keep the lines of communication open, and like other open-wheel race fans, hope for the best."

I am so tired of this!

The Snout · 19 Dec 2003, 08:17 (Ref:815833)

Maybe a move by George to cut a better deal with OWRS. I had some respect for what he was saying until I read...

This unexpected maneuver by CART

...which says to me either a bit of grandstanding or our mate George really doesn't have his finger on the pulse of Motorsport affairs.

In any case it will give a few people something to hang their hat on.

indycool · 19 Dec 2003, 10:58 (Ref:815935)

http://www.jsonline.com/sports/race/dec03/193889.asp

macdaddy · 19 Dec 2003, 14:31 (Ref:816136)

That comment struck me as being kinda weird too, Snout.

blueflagger · 19 Dec 2003, 14:53 (Ref:816160)

The silly thing is that George is really only hurting Road America's reputation this way, not CART or OWRS. He's not really a grandstanding kind of guy so he must not be seeing the forest because RA's trees are in the way.

indycool · 19 Dec 2003, 15:04 (Ref:816170)

Not sure about that, blueflagger....after the way CART has jerked RA around, he's just protecting his race track rather than allow others to do what they want with it and its money.

Dov · 19 Dec 2003, 15:13 (Ref:816177)

What about people jerking CART around!?

indycool · 19 Dec 2003, 15:23 (Ref:816181)

Oh, I agree there's going to be some push-and-shove in this, Dov and some of it will be pretty nasty.

Some promoters have more issues than others, and CART has more issues with some promoters than others, but RA has been jerked around on dates throughout its history with CART and has never been able to establish a set weekend year-after-year.

The date change to drop RA's CART race in '03 to the same weekend as the EAA Fly-In in Oshkosh, because Pook screwed up and put Mid-Ohio against Kentucky's IRL race to the consternation of both of those promoters comes immediately to mind in Elkhart's case.

Flatspot · 19 Dec 2003, 16:19 (Ref:816207)

I don't see what Road America has to gain by taking this stance unless they don't like the deal they cut with C^RT (Mario) last year and simply want to renegotiate. I see them actually damaging themselves by making the date nebulous and thereby creating uncertainty in any marketing or sponsorship package the are (should be) trying to put together, beginning today.

I also don't understand the comment "unexpected maneuver by C^RT" particularly in light of the fact that they expected it enough to have their attorneys act in time to notify C^RT of the potential breach of contract prior to filing for bankruptcy. This actually gives them some fairly serious leverage. I would love to know if they used the term "breach" or "default" in their communtications with C^RT. Typically a breach can be cured where a default cannot.

This whole thing almost makes me wish I were in school again just to write a paper on the rise and fall of C^RT. The business dealings of the company, from beginning to end, are truly one of the most interesting cases of corporate maneuvering in America I have ever witnessed. And yes I know I'm sick.

blueflagger · 19 Dec 2003, 16:24 (Ref:816212)

Indycool, I still don't think he's grandstanding. He's got a legitimate issue. He has more groups who want to rent the track than weekends available. True, ChampCars is high profile and nets a small (and shrinking) crowd, but that also makes the event more expensive for George. Most groups sort out their calendars in November. Would you rather commit to a small-income but reliable group or to a high-profile event that may fall through? He's got a bottom line to think about.

The other thing he has to look at is that many ChampCar teams use RA for testing during the week. If OWRS/CART doesn't gel, he may lose that income as well.

indycool · 19 Dec 2003, 16:46 (Ref:816224)

Oh, I agree entirely, blueflagger. He said after the race last year that attendance was down 40 percent and the track lost money. That's a BIG issue.

OWRS doesn't own it yet, CART is certain history, it's Dec. 19 and nobody can tell for certain what product anyone's going to be able to offer for that show -- or any other, for that matter.

He has all kinds of reasons to question it now, rather than later.

Liz · 19 Dec 2003, 17:05 (Ref:816240)

Well isn't that the Dover Company's problem, not OWRS? And if that is so, why should we bother with it?

indycool · 19 Dec 2003, 18:03 (Ref:816283)

Liz, if you're referring to Road America, it's not owned by Dover. It's an independent.

Not sure who you mean as far as "bothering with it" is concerned. In the case of race tracks, if the race track can't pull enough people for the show to pay for it, it loses money and it does something else next time that doesn't lose money. Just a math problem.

Flatspot · 19 Dec 2003, 18:19 (Ref:816295)

Given that we here don't know all of the specifics this comment should be tempered with a grain of salt.

If I were running the show at Road America I beleive I would be most inclined to go with the flow here and allow OWRS to place the race on the schedule, solidly. I have to beleive that most of the downturn in attendance was due to the fact that the date last year was uncertain and people, meaning sponsors, fans, vendors, TV, everyone involved, couldn't make plans. I beleive this comment is true regardless of fault, which is irrelevant at this point. By not going with things now it is certain to perpetuate the problem, likely to the point of non-recovery in the future.

Nobody likes to lose money and I'm not suggesting Road America should do so but I think with the current goings on with OWRS and ChampCars it would make a great deal of sense to balance the present against the future and not burn any bridges. I'm just not sure this is the smartest posture for the track right now.

indycool · 19 Dec 2003, 18:26 (Ref:816304)

RA didn't burn the bridge. They want the race. They're simply saying, "new owners, new deal, new contract."

Flatspot · 19 Dec 2003, 18:30 (Ref:816313)

I just hope OWRS views it that way.

Liz · 19 Dec 2003, 18:35 (Ref:816320)

I meant didn't the responsibility for whatever financial problems the 2003 race had, fall under the CART company and not under OWRS. I don't know if it does or not.

indycool · 19 Dec 2003, 18:37 (Ref:816322)

IMO, if OWRS deals in good faith on the issue with RA, then all will be well.

IMO, if OWRS takes it as an indignant affront to their egos and wondrousness and plans and desires, as CART often did with promoters, it looks like RA is prepared to say, "tough."

indycool · 19 Dec 2003, 18:44 (Ref:816333)

Oh sure, Liz. Yes, '03 does fall under CART. Again, all RA is doing is saying is the contract with CART is not-transferrable in their view. If CART is bankrupt and can't perform, then RA says OWRS must come to RA and make a new deal.

To accept OWRS blindly would not be good business. Bob Singleton of Molson was quoted in a story the other day as saying tickets are being printed and he has every reason to believe in the new deal. But he did say, "we must approve the contract." OWRS shouldn't be viewed as a group of Pied Pipers by promoters.

Flatspot · 19 Dec 2003, 19:00 (Ref:816347)

Quote:

Originally psoted by indycool
IMO, if OWRS deals in good faith on the issue with RA, then all will be well.

Agreed 100%

Quote:

Originally psoted by indycool
IMO, if OWRS takes it as an indignant affront to their egos and wondrousness and plans and desires ...

That's what scares me...particularly the egos.

Tim Northcutt · 19 Dec 2003, 19:09 (Ref:816351)

If a contract is non-transferable and it is stated in that contract verbatim, OWRS can't legally buy the rights to that "asset" from CART and expect the contract to be valid...it would make the contract null and void without CART as the entity to perform it.

George is right...It would in fact be part of the bankruptcy...and Road America is correct in raising the issue and protecting its own business interests...

RA is fully within its rights...get a reality check if you don't believe this or understand it...

This is business...pure and simple...

and it has ZERO to do with the "Love of Open Wheeled Racing", or anything else...

Particularly in Road America's case, which has been treated like a step-child by CART in the past for dates and other scheduling considerations....

Now "George" is supposed to blindly accept the "New Owners"...who were an actively participating part of the previous regime that went down in self-inflicted flames?????

You can't be serious when you question why Road America would object to this....

and all of us knew this would be coming once this deal went through...there should be no surprises here...

many aspects of bankrupcty law, contract law and civil law will all become a part of the ensuing circle jerk that will take place in the coming weeks...

If you were looking for the OWRS/CART deal to make the problems go away with a stroke of the pen, you were looking at this situation through rose-colored glasses...

this process will not be neat, clean or quick....and frankly, I'll be stunned if it is resolved in weeks...

But I can Only hope that it will work out...

Because I really want this deal to go through...

indycool · 19 Dec 2003, 19:12 (Ref:816353)

First step in the process was this morning. Next step Dec. 30th.

http://www.indystar.com/articles/1/103800-2281-110.html

Liz · 19 Dec 2003, 21:15 (Ref:816425)

Well, of course a new entity must negotiate a new contract. That, I would have thought, goes without saying. But as the Montreal Grand Prix found out to its dismay, it doesn't do any good to make assumptions about which side needs the other the most.

I agree that OWRS are businessmen -- that's why I don't think sentimental appeals to RA's place in the hearts and minds of the 200 people who attend the races will do a bit of good. Frankly, I think they'd be better off financially by putting another race in Mexico.

Flatspot · 19 Dec 2003, 21:51 (Ref:816452)

Quote:

Originally posted by Tim Northcutt
George is right...It would in fact be part of the bankruptcy...and Road America is correct in raising the issue and protecting its own business interests...

Actually Tim, Road America is not claiming that the contract is part of the bankruptcy, but rather, the exact opposite. That is why their notice of breach being delivered to C^RT on December 15 is key as the bankruptcy filing was on December 16. Now they can make a motion to the court that their particular contract should be dealt with outside of the bankruptcy and is therefor not protected by certain provisions in the bankruptcy code which can include invountary assignment. George would like it removed from the bankruptcy so the contract's fate can be decided quicker than the court may allow.

I don't think anyone here has suggested that the new owners should be "accepted blindly". Working within the framework of a previously negotiated contract is hardly blind acceptance, provided, each of the parties fulfill the obligations of that contract. Unless there is something quite flawed or unfair within it, which there may be, why would you not be willing to let the new owners execute it?

indycool · 20 Dec 2003, 00:22 (Ref:816527)

Flatspot: One reason. If you lost your caboose on it.