Watch out

[rush1]

MPH hit another all time low today, currently trading at $2.12, down a whopping 17% in 2 hours! Financial guidance worse than expected. No one expects profits till 2006, a little too late for CART. Enough money to run the 2004 season?

Where is Bernie?

[Fogelhund]

http://www.tsn.ca/auto_racing/news_story.asp?id=48187

CART officials say if they don't get a cash infusion soon, they will not have enough money to complete the 2004 season.



The open-wheel racing series issued a revised financial forecast for 2003 and beyond and while the on-track product is strong, the same cannot be said for the balance sheets



"Due to the continuing downward trend in several of its critical revenue streams and a lowering of its expectations regarding the 2004 year, management now expects that it will need to raise additional capital to complete the 2004 season," read a statement released by CART.



"Projections beyond 2004 are, in management´s view, very speculative."



Series officials have hired investing banking firm Bear, Stearns & Co. Inc. to explore alternative financial solutions, including the possible sale of the publicly traded company.



Since becoming a public company traded on the stock exchange, CART stock has plummeted from a high of $33 in 1998 to a low of $2.22.



There have been a number of potential owners mentioned including Formula One boss Bernie Ecclestone as well as CART owners Gerald Forsythe, Craig Pollock and Paul Gentilozzi.



CART's statement on Wednesday says after the first half of the 2003 season, the series expects to receive between $24-million and $25-million in sanction fees. That's down almost $2-million from its original projections.



CART also expects to lose upwards of $7-million from self-promoted events this year. So far, CART has been the promoter for events in England, Germany, Portland and Cleveland.



A soft advertising market is blamed for lower than expected sponsorship sales, which are expected to be $1-million to $2-million less than originally expected. The series also expects to receive between $2-million and $3-million in television advertising.



Administrative costs are being pegged at $23-million this year due to higher than expected legal costs as well as a recent lawsuit settlement.

[Omega99]

Lower stock prices mean a cheaper take-over to go private. That'll give whoever does take it over more of their own money to actually spend on building up CART. It lives on.

[Snrub]

rush1: Do you have a CART stock ticker running on your desktop or something?

Doesn't look like Bernie's going to happen. I have to agree with Omega99, this is probably one of the few cases where a big drop in stock value may be possitive to the future of a company.

It would be very interesting to see if the current rumours about a group of team owners buying CART pans out. I'd really like to see Mario with a substantial chunk. It would be even better if Michael got in on it too, since he "likes the business side better." Before the objections start, keep in mind that it would be very for him to slap his father in the face.

Other people with atleast a few million to throw aroudn, who would be good to get involved: Emmo, Mansel, Stewart, Gurney. IMO ex-racers are the people we need in this series. I would say Rahal, but I don't think he has the right attitude.

Despite the poor advertising revenue, the cars certainly have more sponsorship now than at the start of the year. At the very least this means less Pookfare.

[Jay]

Mario's not getting involved in Cart ownership... he is looking to start a team though... and he's said so.

I wouldn't say the Bernie thing is out of the question yet. My feeling is that if there was no truth about Bernie's involvement, there would have been a denial somewhere by Cart, Pook or even Bernie himself - and that hasn't happened. With all of the buzz about it (and there's been a ton worldwide), you'd think Bernie would have denied it if there wasn't any truth to some of it. But it's not looking as hot as it did a few weeks ago...if for no other reason than we havne't heard anything new about it. Whatever it is, Forsythe will likely end up with a big chunk of it though. Pollock et al is probably plan B (actually he's said it was plan B).

[Fogelhund]

Talking down a stock in order to make a takeover purchase easier is downright stupid and opens one up to a rather nasty litigation.

[Omega99]

No one said anything about talking down the stock prices. CART's not doing well financially. What's your point? Is this news? The fact is, however, lower stock prices do make a takeover easier.

[f1manoz]

Ah, the moron posts the stock accounts like usual. You happen to work on the Stock Exchange or something?

[macdaddy]

Sure enough, now they've confirmed that they don't have the money to run a complete season next year. I'm sure all of the new sponsors we've been seeing on the cars are just thrilled by the news. And so I guess this is it. It's do-or-die time. If they don't start shining a bright light at the end of the tunnel soon, sponsors are going to look elsewhere and not include CART in their 2004 advertising budgets.

CART's statement also included the interesting tidbit, "Currently, however, management does not expect the company to have positive cash flow from operations or earnings any earlier than 2006."

But I'm not too worried. Somebody's gonna step up to the plate here. Of course, going private is really the lesser of two evils. No matter if it's Ecclestone, or if it's the P and the K from PK Racing, CART will never be the same again.

What I don't really get is why CART shelled out seven mill to run England, Germany, Portland and Cleveland. The Europe rounds were important to attract manufacturers, so that's understandable. But as for the lights in Cleveland, well they were awesome and all, but it's kinda like spending the family's last five bucks on a movie instead of saving it to buy bread and milk in the morning.

We'll just have to wait and see how this rumour about an Aug.7 announcement pans out...

In the meantime, stock prices mean little to me, and so...
BRING ON VANCOUVER !!!

[Liz]

What is the point of endlessly crying that the world will end next year? We're not living in Next Year. Not a one of us knows what will happen Next Year. On September 10th 2001 people were making all kinds of predictions about Next Year that were completely invalid on September 12th.

I'm tired of Gloom and Doom. Drop the flag!

As for spending the money to run Cleveland under the lights instead of saving it to give to Dale Coyne or something, here's my take: There are times when you just have to stop agonizing and enjoy the show. When I was a kid and we were living on whatever Dad could win racing on dirt tracks (which occasionally left Mom with $10.00 to feed 5 people for a week), our best times were those when the parents gathered up all the change in the house and we drove to Pennsylvania (about 10 minutes away) to get ice cream cones all around. Even if CART ends in 2004, we'll all enjoy talking about Cleveland, won't we?

[Jay]

I think it was necessary to spend the money on Cleveland because it was (IMO) the best showcase of the product all year. It was an exciting race, a clean race, lots of overtaking, some fireworks (Both literally and figurtively), and most importantly it showed what we were capable of. Much like England and Germany attract manufacturers, Cleveland attracts sponsors and showed the product at its finest. We may have lost a lot on paper, but the gains from that event will be seen overtime, in the form of new sponsors and new interest in the series. It's more of a long term investment I'd say...

[paul-collins]

Originally posted by Liz
As for spending the money to run Cleveland under the lights instead of saving it to give to Dale Coyne or something, here's my take: There are times when you just have to stop agonizing and enjoy the show.

Agreed, and would the $350-$500k saved by not running the lights be the amount that tips the scales? Not likely. It's a matter of materiality.

Fogelhund is right, though - even if the timing of the financial advisory and the buyback are entirely unrelated, the SEC is going to be very interested. CART had better tread very carefully. (I'd think a purchase offer that exceeds the stock price by a fair margin would help defray the negative spin, though).

[Liz]

I'd like to see the source of that information too.

[Jordi]

I'm tired. Let me talk about racing instead of money...

[gttouring]

why don't the dingleberry drivers buy CART themselves?
then sell it off? they can save it for while instead of letting it fizzle and die
if they don't they all are going to run over to IRL and there are too many cars there according to TG (24-33 in a field?) fill it to 50!

[Fogelhund]

Liz - the original source of both the TSN article and other statements within this thread come from CART's (MPH) filings with the SEC.

http://www.sec.gov/Archives/edgar/da...93aexv99w1.txt

Whilst this provides ammunition for some to sit around and laugh, it should cause concern to all fans of CART.

As a racing fan, I hope that someone is the whiteknight that is being looked for. This has been a great series, with great racing, and a particular boon to Canadian Racers. The double bad news of CART's troubles and Player's withdrawl is very troubling as a fan of CDN racing.

As someone involved professionally in the stock market, it is my job, interest and hobby to look at financials. The direction, management and future troubles me. Pook made a huge bet that someone will save CART, he certainly hasn't managed it for survival.

[Jay]

I'm not sure it was so much of a 'bet' actually... I think he knew things we didn't with respect to future ownership.

[Fogelhund]

Originally posted by Jay
I'm not sure it was so much of a 'bet' actually... I think he knew things we didn't with respect to future ownership.

As an investment advisor I'd call that speculative. (Knew - ? Does he have a contract on this? Then hope...)

As a fan, I sure as h.ell hope you are right on that.

[Jay]

Yeah, as we're not on the Cart board, almost everything here is speculative... he probably knew there was substantial interest anyways. Anyway, what was the alternative?

[Fogelhund]

Originally posted by Jay
Anyway, what was the alternative?

Cut expenses.

[rush1]

CART is making all time new lows for 2nd straight day. One hour left and down 24 cents to $1.93. Losing another 11%.

[Jay]

How could Cart cut expenses and hope to survive though? They have to get the product out there to attract interest - show the series at its best. If they'd run on a shoe-string budget odds are they wouldn't have any manufacturers or new sponsors lined up...which would be more of a death kiss than a lack of capital. They'd be series on the down with nowhere to go, but enough capital to maybe squeek out another year..but no future. Instead, they're a series on the up, with nowhere to go but up, building more interest every race with the possibility of eventually turning it into a profit making company....just in need of some extra capital for a few years.

[Fogelhund]

Jay - we are best to agree that we all hope that somehow CART survives and remains a great series. The rest of the details we will have to agree to disagree on. I would state emphatically that financially they are not a series on the up, rather further momentum down, but enough of that talk for now. Let's enjoy some great racing.

[Liz]

I agree -- why are we constantly arguing about things about which we have neither knowledge nor control ... let's talk about RACING!

Who's going to win in Vancouver?

[macdaddy]

Carpentier. And then Tags in Montreal.