Ford ends its relationship

[norman-normal]

Toyota, honda, Mer Benz, Nissan all have provided examples with current technology. You don't have to look in magazines, in California, to see them; people are buying them, they're on the street.

[Snrub]

A couple of examples: When the Fusion came out it was the only midsized sedan with a 6 speed automatic. Both Car and Driver and MotorTrend found in their testing that the V6 had better real world millage than the Accord or Camry. The new Camry now has a 6 speed auto so that may have changed.

For 2005 the Five Hundred had either a 6-speed auto or CVT. No one direct competitors had that. It gets good millage for a vehicle of its size. The same could be said about the 2005 Freestyle with its CVT.

Hondas, Toyotas and Nissans all cost the consumer a lot more from a payment perspective. I can understand paying substantially more for purchases due to resale, but I cannot fathom why anyone leases one of them. At least up here, at times it has been about the same to lease or finance a Fusion as a similarly equiped Civic. The rates and delivery allowances are the difference.

Fuel economy is a concern, but if everything was equal getting a Civic and paying 20% more vs. a Focus doesn't make sense for the average person to save maybe $100/year on gas. Most people are concerned about economy, but they just want to know that they're going to get "good" millage. Most of it has been blown out of perportion by the media and its created a perception that one is vastly supierior to the other. It stands to reason that Civics get better millage than F150s and that domestic vehicle sales of the last ten years have been heavily comprised of larger vehicles.

...Anyway, that's getting way off track.

[norman-normal]

I mentioned 'reliable'; it takes more than 20 years to build a solid reputation for reliability, and that, Snrub, is why Toyota and Honda can get away with selling their cars at a premium. They didn't rely on short cuts and advertising through the years. They took the long way, and now its paying off big time! American car company's have always assumed that (rightly or wrongly) the stock holders would not stand for it.
Incidentally US car makes were renown, the world over, for their reliability prior to the 70's; then we decided that, advertising was almost as good and a lot cheaper.

[norman-normal]

Auto Weak reports: Ford comp dir' says CC gave Ford the boot "pushed them off the island"
How now brown cow?

[indycool]

Read it all:

http://www.autoweek.com/apps/pbcs.dl...0004/1015/FREE

[paul-collins]

Ford’s annual investment in Champ Car was said to be $1 million, but Davis said, “It’s a lot more than that.”

Can't be that much more, if this reason for cancellation is true:

How so? “They killed the Hot Lap program,” Davis said of the promotion that featured modified Ford production vehicles touring tracks prior to races, typically with prospective customers in the passenger seats. Davis said one reason Champ Car killed the program was to allow individual race promoters to sell “official car” rights to other manufacturers.

Which races are KK properties or nearly so? LB, Toronto, Cleveland, Houston, Mont Tremblant? What would these official car rights be worth?

[Amar7605]

It could be worth a lot. I mean, any type of sponsorship dollars coming in are good. This is basically a way for KK to make more money. He probably wasn't making much with the Hot Lap program, if any. So this allows Champ Car to sell another marketing opportunity.

Look at it this way: given all of the marketing opportunities that Ford has had with Champ Car (presenting sponsor, badging, Hot Lap, etc.), $1 million is a bargain in terms of marketing. I mean, the Super Bowl commercials this year cost $2.6 million to air. So IMHO, Ford may not have been paying their proper share.

[Snrub]

Wow... That's all I can say. That's unbelievably stupid. There are not a lot of options out there and they clearly annoyed Ford.

The article isn't clear on whether Ford pulled "powered by Ford" sponsorship or if CC caused that to occur too.

Originally Posted by From the Autoweek article

But if Champ Car chooses another manufacturing partner, even Mazda’s participation in the Atlantic series could be affected. Ford owns a significant portion of Mazda.

“If we see something like ‘Champ Car, Powered by Kia’ happen,” the Mazda associate said, “I’m not sure Mazda would be interested in playing second fiddle for that.”

That would really stink. So in other words it's almost Mazda or Cadilac or no one. ...Or they could annoy Mazda and lose them in Atlantics and damage any potential future relationship. CC has to look at things from the perspective of attracting new sponsorship as well. "Sponsor our series or our team. Lots of other big name sponsors see the value of it such as WellBox and ...um... Indeck!"

[JohnSSC]

While I am sure the losses at Ford have something to do with it, after reading the full article I am now wishing that were the only reason. This is not a Series that is anywhere near strong enough to be able to throw Ford off the island so to speak.

It becomes a rather circular argument at this point, but if CC reaches an agreement with Mazda (which is 1/3 owned by Ford) to be the new series sponsor in order to "protect" Mazda's future participation in Atlantics, one has to ask the question of "Why go to all that trouble when you could just keep Ford as your title sponsor?" (sorry for the longish sentence!)

It just does not make sense. KK was going to make how much more by selling individual rights here that it makes it worth it to throw away years of involvement by Ford? Obviously they liked the cache Ford's name brought as they continued to brand Cosworth's as Ford's...

[paul-collins]

Originally Posted by Snrub

That would really stink. So in other words it's almost Mazda or Cadilac or no one. ...Or they could annoy Mazda and lose them in Atlantics and damage any potential future relationship.

I think that's grandstanding. Mazda never worried about optics when they were only running Star Mazda... They certainly haven't worried about being embarrassed in the ALMS.

Maybe they simply look at it as a chance for them to sew up the brand on all OW road racing in North America, and are trying to sow some seeds to keep the price down...

Perhaps CC powered by Hyundai goes along with Atlantics powered by Kia...

[norman-normal]

[QUOTE=Snrub]Wow... That's all I can say. That's unbelievably stupid. There are not a lot of options out there and they clearly annoyed Ford.

Common sense would lead one to believe that is true...
Common sense would also lead one to believe the world is flat.

KK didn't make it on looks alone.

[Snrub]

I'm not trying to be negative normal-normal, but I don't see a whole lot of improvement in the series in the last few years. Ford and Bridgestone were important. I don't think I'm the only one. There's a reason that GF is acting out regarding running a second car.

[norman-normal]

No offense Snurb, but, " unbelievably stupid" is an extravagant statement in mho, in view of our limited knowledge of his motivation. Looking back I can't think of single wrong move KK has made.

[indycool]

Motorock? Spike TV? Ansan?

[JohnSSC]

"Pacific rim Series?" No Pookfare? No self-promotion?

I'm sorry, but if no one had said: "can't think of a single mistake..."

[mountainstar]

Logic would assume the reason why champcar did not renew it's contract with Ford was for a good reason, not a bad one.

[Snrub]

normal-normal, the series does not have sponsors lining up at its door. Unless there was something very extreme going on behind the scenes I cannot see myself recanting my statement. If something like that does come up I will be happy to. There are very few legitimate sponsors landed on pure merit who would be paying a normal rate for exposure they're getting. Until this I would call Ford, Bridgestone, McD's and CDW as the only obvious ones. I think even Jani with Red Bull is suspect because of the way they throw their money around to support "their" drivers. Muermans is like that too. Pemex is a gov't monopoly... Don't get me wrong, at the moment the series needs whatever it can get. Pay drivers with talent, people with too much money who want to pay for stuff, it doesn't matter right now as long as its green.

If CC had someone better than Ford who out bid them then I'd say it was a good move. A big part of the problem is that Ford is now annoyed with CC. So now all three engine manufacturers from 2002 are miffed at the series. Watching the races last year, did you notice how there were few ad spaces sold? Most of them were to Ford, Bridgestone and CDW.

The Pacific rim idea was a concept rather than reality and it probably would have been a good idea if it had panned out. Clearly it did not, but it had panned out as aimed for it could have resulted in 6 properly sponsored cars and the potential for substantial growth.

I'm not sure what the no team subsidization refers to? There is and was no other choice. That said, if you were about to sit down at the negotiating table with teams, would you promise them $10M each before doing so or would you try to pay them as little as possible?

As for no self-promotion, they had no other choice. It was that or lose races. I cannot imagine the effect of the loss of Long Beach and Toronto.

As for Ansan, it made the series look foolish, but did anything bad happen by taking a gamble?

Motorock, wasn't that PG's baby?

SpikeTV... uhhhh... Let's call a spade a spade, their TV issues have been painful and have really hurt the series. To a degree I can understand it. What are the "worst case" TV costs numbers that people have been estimating, $15M or someting?!? They won't have much in the way of ads to recoup that cost so isn't it understandable that KK/GF are trying not to spend as much money as Chris Pook did? Of course its hard to tell, but their event and team costs seem to be way down. I bet they're kicking in more to pay for Forsythe and PKV racing than they do to partially sponsor all of the other teams combined.

[JohnSSC]

Good post Snrub, but I will stand by my own comments and also support (at the risk of being portrayed as part some sort of many-headed hydra) what ic said.

When "the Amigos" took over CC, they trumpeted their intention to return to stability by following the path of Good Business Decisions. They implied quite clearly that they felt Pook and Hetzler had screwed the pooch big-time with their decisions.

They made it sound, at the time, like there was a plan that included a sponsor base waiting in the wings and that once they got on their feet a firm base would be established and the Series would return to stability if not profitability.

We have had sunshine blown up our collective colons about the viability of the series and the directions the series was taking. In almost every case these things did not pan out as advertised. Ansan was a "great opportunity" and the beginning of the Pacific Rim thing as it would dovetail with the Aussie race. Spike TV was part of the whole appeal to the younger generation complete with sleazy advert features from Spike's less-then low-brow offerings - I was embarassed to try to watch these races with my kid.

Self-promotion for survival. Hmm. Let me think. Traditionally, if you had a racing product people wanted you had promoters coming out of the woodwork - errr, asphalt. If the series is that bad off that they have to self-promote and do so on an ongoing basis than that tells me that there really has not been an increase in demand for the product.

Don't even get me started on the Pookfare/KKGF-fare thing. And don't come along with the "prove it" questions as all it takes is about ten minutes of reading beyond Speed TV's site to pick up on the myriad references to that going on (in both Series to be fair). All the while we keep hearing how "great" things are.

The biggest "mistake" - and this applies to both sides of the split - is to pretend that both series' can survive independently of the other. All the announcements and plans and direction and stuff has been, essentially, nothing but smoke and mirrors.

[indycool]

"Logic" would assume if there was a better reason than Ford's participation out there, CC would've announced it.

I, too, think you have a thoughtful post for discussion, Snrub, and you also, John.

I think many people expected -- and thought of -- KK and GF as two doses of Superman for CC. Maybe KK and GF believed it themselves. Truth is, neither of them had played in THIS part of the ballpark before and what gets written down on the much-hallowed five-year plan looks fine on paper, but is low on reality. All the semi-hysterical excitement of The Amigos' takeover is gone and now it's settled down to reality, execution and all the other variables that take place in such an exercise.

If the "Pacman" concept of buying everything up it can and/or supporting everything they DON'T own which needs it to keep the series going with gobs and gobs of money is the five-year plan, then they're following it right along. I can't imagine buying Long Beach and Toronto just to keep them was part of the plan, though.

With the expense of new cars, the additional expense of an expanded TV deal, the scattered schedule and new races (which may not be done changing yet), this year is likely to be CC's toughest to date, financially and in execution. Time will tell how it goes.

[Snrub]

But put yourself in the position of the series owners. They have to present a certain amount of confidence. If you were an investor would you trust your money to someone who said that they weren't any good and things were going to be rough for a long time? Of course not.

To me it seems likely that they did have a number of solid plans. The problem is that they haven't panned out. CC is not like like a pipeline company or a bank, the environment is very volitile. Plans have to be adapted. If something isn't working you don't continue spending in the vain hope that it might work, you cut your losses at some point. I think that the series has mostly returned to good business decisions. They're simply decisions of necessity. They're clearly not spending what Pook did. GF is clearly frustrated with the way things are going, they hoped and obviously felt they could acheive more by this point.

A promoter normally would pay a sanctioning fee. In other words they take a risk on promotion, etc. and then need to be able to profit sufficiently to pay the series. If a marginal event exists in a volitile series, how many promoters would want to take that risk if there's little chance they can make a large profit? I can't imagine that there are a ton of promoters capable of creating such events. On a new event they are gaurentied to lose the first year and then they hope that they can make enough money in the next couple of years to make up for it. Given the nature of Champ Car, how many new events exist for long periods of time? So what's the alternative. Don't race, or in some cases the series has to self promote.

[indycool]

Understand, Snrub, but in taking over a bankrupt series, The Amigos didn't have any investors other than themselves to answer to. They appealed to CW and the public with their confidence.....and promoters and sponsors.

They may have had solid plans but I'm not sure they were realistic plans based on what they were faced with and I'm not sure their confidence was shared by all the promoters and sponsors. The original idea behind the PPG Indy Car World Series was that these were the cars and drivers of Indy coming to your town. The promoters hadn't had that with CART for some time and CC wasn't going to have it, either.

Dover dumped Denver pronto and leveraged KK and GF to buy Long Beach. Molson did the same with Toronto. The original statements about "no self-promotes" and "a surfeit of opportunities" have not happened. In truth, there are several races, like San Jose, where we don't even know who the promoter is.

I agree that they should be "clean deals" where a promoter pays a sanction fee, sells the tickets and makes his profit that way. CC has the problem of not finding those promoters to take the risk on its product for the price. To sustain a series and schedule, CC (or its owners) has had to do it itself in several cases. That tends to make them "leveraged." Need cars for a grid? Okay, show me the money. Need a race in our town? Fine, do it yourself. Sponsor? What's the ROI and ratings?

It's just a tough deal right now.

[climb]

reading these latest insightful posts, I can't help thinking of some CC fan who have recently open/fed threads about IRL as a dying series;no joke intended.
Resisting TG's attempts to take over CART's heritage, the Amigos have made a high-amount bet, including a new chassis, hoping the new things, albeit expensive, would have made the series more interesting: more cost + more customers
At the beginning of the new-era season things seem to have worked only on the first part of it.
13 cars on the grid at the first open test, ok there is time to enlarge the grid and some entries will surely join, but for now? Where are the 26 cars predicted by CC super fans? For a new-era season things should have been waaay better.

The "dying" IRL put 17 cars on track for the first test, with one more driver signed but not in time to run at Daytona. Once again all but exciting numbers, but, at least, the most important names of US open-wheel racing teams, a good percentage of paid drivers, a good choice of venues, and an appreciable TV coverage deal.

The next weeks will say a lot, IMO, but time is playing against the amigos.

[Amar7605]

Well perhaps this new TV deal with ABC/ESPN can spawn some new sponsorship. When you think about it, CC will now go head-to-head with the IRL in terms of TV coverage now.

[gttouring]

maybe the networks would force the merger- let's face it people love auto racing. they always do, in some fashion or another wouldn't the networks want to pit an awesome seris versus Nascar, and who ever can garner exposure better would win...NASCAR strength is the marketing not on track product, although good- it isn't champcar good in terms of actual exctiement i think....
going head to head may make this obvious- and ABC/ESPN might force it.

[Snrub]

I don't want to get into a CC vs. IRL battle but I think both series are in virtually the same position. Take the Indy 500 out of the equation and there is nothing between them (at that point an arguement could probably made in CC's favor). I do not believe that either model is sustainable. The IRL seems to have a steady errosion of sponsorship each year. One series having 17 cars vs. 13 cars at their first test means that both have issues. They need to merge now to have a reasonable chance of long term success, but for some reason both sides have their heads up their rectums.

Normally a sanctioning body would only worry about its immediate problems, but to keep the series going they have ensure that someone pays the bills for the teams, the events and the series operational costs. In effect the sanctioning body is required to have a relationship with each sponsor. Normally only the teams and promotorers would do this for themselves. The broad statements and publicized plans that haven't come to pass as presented are no different from TG's claims about what the IRL was created to do. It's not worth getting hung up over these kinds of statements. The important thing is to have a functional and sustainable series.

The ABC/ESPN thing may create some sponsorship, we have to hope that it will. The problem is, will the sponsorship outweigh the broadcast costs. Obviously this is the gamble KK is willing to try to make the series work.