Message from Bob Jane

RaceTime · 18 Dec 2003, 22:30 (Ref:815617)

Message from Bob Jane
For the purpose of this correspondence, forget the Australian Auto Sport Alliance. This is a communication from Bob Jane and Calder Park. Just look at CAMS' current Public Liability Insurance. Forget the smoke screen. Forget the bull**** of the CAMS family versus AASA.

Look at CAMS' insurance any way you like, either a $100,000 deductible or more to the point, no insurance for the first $100,000 of any one incident. Can you afford this liability in the short- or long-term?

Also, keep in mind that it is possible to have multiple incidents over any period of your event on one or two or more days. Remember Le Mans in the 50's where more than 200 persons were killed or injured? So as you will see, the problem may not just be a $100,000 problem for a promoter or club using a CAMS permit on a CAMS licensed venue and insurance for a club renting a race venue.

Yes, CAMS promise to absorb this $100,000 or multiples of these $100,000 incidents. So promoters and clubs, you have the 2002 CAMS balance sheet. For your convenience, I have enclosed a copy of CAMS' 2002 balance sheet reviewed by John Lynas (Chartered Accountant and former Senior Audit Officer with the NSW Auditor General's Office). This report was professionally prepared and paid for by Calder Park.

Frankly, that is why Calder Park Raceway does not, and will not, rent our venue under a CAMS permit and Public Liability Insurance.

Ask yourself why the new deal from CAMS involves you paying your huge track license fee and then charge all your track renters to pay for this huge increase.

To all promoters and clubs, talk to your accountant to evaluate CAMS' balance sheet and consider the implications if CAMS failed to meet their promise to pay. Can you afford one or more $100,000 liabilities if CAMS failed? Remember also that CAMS transferred 32 of 34 insurance claims from prior to July 1st 2003 from Marsh to AON with 2 claims remaining with Marsh. Think about the 2 deaths and the number of incidents since July 1st 2003. Remember if CAMS cannot at any time pay, the liability falls back on the promoter or your clubs. This fact has been confirmed independently by AON. CAMS' liability for those 34 Public Liability claims gives CAMS a $850,000 contingent liability, which I suspect is not on CAMS' balance sheet.

Remember also that CAMS have as many as 58 persons on their payroll. CAMS have 33 directors for 4 companies. CAMS have 39 committees helping them manage motor sport. CAMS have lots of contractors and advisors. CAMS is a high cost, high overhead organization, and as such are unlikely to improve their balance sheet in 2003.

So, promoters, clubs and members, have a think about what I am saying. Do not be fooled by CAMS versus AASA. It is about the survival of promoters and clubs using CAMS who have no insurance for the first $100,000 of any incident in motor sport.

So I say again, do not be fooled by the smoke screen of CAMS (the family) versus Australian Auto Sport Alliance. Look at the facts facing motor sport.

Please find attached:

· Copy of CAMS balance sheet

RaceNews Note:
The attached CAMS Balance Sheet mentioned above is too large to attach to this message - therefore it has been placed on the RaceNews Web Site for download. Please be aware, however, that it is a 1.2 Mb PDF document - if you have a dial up account this IS a large document.

The URL for the document is:
http://www.racetime.com.au/racenews/...ce%20sheet.pdf

RaceTime · 18 Dec 2003, 22:33 (Ref:815619)

I received this media release two days ago and thought long and hard about posting it - either here or on RaceNews - not so much because of the content, but becxause of the way it is written - it isn't written as a media release, more a narrative.

However - after reading the attached CAMS balance sheet breakdown (and believe me - if only half of the things mentioned in it are true, then it would appear CAMS is heading for some real trouble) I had to figure out the best way of distributing the PDF document - I wasn't going to re-format it for posting and a 1.2 Mb PDF file was too large for RaceNews (beside which we have a self imposed ban on attaching any documents to emails).

So - for those interested - GTR, elephino etc - have a good read and see what you think.

**GTRMagic** · 18 Dec 2003, 22:51 (Ref:815632)

The attachment is presumably the summary of findings of the independent reviewer. It is not the actual statutory accounts of the CAMS Ltd legal entity.

It seems from the discussion that there are some cashflow issues to be addressed, which is why it would have been interesting to read the statutory accounts, to understand what the external auditors made of the same information. I presume with the detail presented here that there must be some doubts about whether the operation can continue as a going concern without a significant asset restructure.

Perhaps I shall do some more digging....

rdmdog · 18 Dec 2003, 22:57 (Ref:815636)

Didnt licences or something get a bit of a price cut recently? This wouldnt be the case if the situation was as dire as is being suggested. I can only imagine that we (the whole Motorsport Community) would benefit from a bit of Fed Govt assistance, maybe in more than just cash, like some other professional sporting bodies enjoy (Soccer Aus springing to mind) when they find themselves in a spot of bother?

**GTRMagic** · 18 Dec 2003, 23:01 (Ref:815639)

You are assuming that one arm of CAMS talks to the other...

From what has been presented so far I dont think the thing will fall over, more that some of the fixed assets may have to be realised should all of these liabilities hit at the same time....

RaceTime · 18 Dec 2003, 23:08 (Ref:815642)

What I did find interesting in the attached document (and yes, it is incorrectly named as the CAMS Balance Sheet) - the number of outstanding insurance claims that CAMS are liable for - 32 claims at $25,000 each and 5 at $100,000 each - a total of $1.1m - and yet they only have just under $263,000 set aside for these claims.

**GTRMagic** · 18 Dec 2003, 23:54 (Ref:815665)

That isnt impossible if you have an actuarial assessment that confirms the probability using statistical modelling makes the $263k sufficient to cover all likely claims.

If we had the statutory accounts (and I couldnt find them on first look at the CAMS website) there should have been a note on the accounts stating the methodology of calculating this value relative to outstanding claims, and indeed a note to the accounts regarding any of the other contingent liabilities not brought to account....

RaceTime · 19 Dec 2003, 00:21 (Ref:815677)

I believe that these were investigated - keep in mind the statement that was made on the last page of the report:

Quote:

.....CAMS is obliged to place approximately $1.1m in a trust account, to quarantine money for these payoutsand each amount of $25,000 and $100,000 must stay in that trust account for a period of six years following the relevant incident

CAMS themselves have stated (on July 2, 2003) that they are responsible for and will cover the first $100,000 of each and every claim that may arise.

With something like that it doesn't seem feasible that they can place only a percentage of this amount in trust on the basis that nothing may come of some of the claims.

CAMS currently have at least deaths during motor racing events to which claims would obviously be made - WA, VIC and NSW. Add to this injuries sustained in the WA rally accident (3 competitors) and there is already a possibility of 6 claims from this year alone. And, as I undertsnad it, the CAMS excess includes legal costs in that figure, therefore it is most likely that each claim will immediately eat the $100,000 excess just on legal costs.

**GTRMagic** · 19 Dec 2003, 00:30 (Ref:815680)

It is naive of CAMS to have offered the excess like this... especially to top up a trust fund with $100k on every claim...

Unless CAMS has insurance cover on its own for the excesses?

Go to http://www.cams.com.au/downloads/about/2002AnnRep.pdf for the 2002 annual report published in May 2003

RaceTime · 19 Dec 2003, 00:34 (Ref:815681)

The $100,000 excess, as I understood it, is the excess the insurance policy places on each claim - from what I can remember, CAMS claimed they took this excess amount to 'help keep insurance costs down'

As for insuring the excess - I thought this was discussed elsewhere (Procar??) and wasn't it pointed out that you cannot legally do that?

**GTRMagic** · 19 Dec 2003, 01:01 (Ref:815685)

It would depend if the excess is being insured, or re-insured. Most insurance companies reinsure their risk with other insurers and pay a premium for doing so, and if this is how CAMS structured it, then there could be benefit there.

Having taken a quick look over the CAMS financial statements, the audit report is unqualified, suggesting E&Y have no qualms about the issues raised in the review presented by Mr Jane.

According to the audited report on Note 19 P33 "The company has outstanding public liability claims at the time of writing of this report. These claims are covered by insurance, and where there is an excess on insurance, a provision has been raised"

Nothing to worry about then

RaceTime · 19 Dec 2003, 02:46 (Ref:815723)

CAMS have just issued the following in response to Jane's letter:

CAMS' response to Bob Jane's recent correspondence dated 16 December 2003 Memorandum
9 Dec 2003

Bob Jane, Calder Park Racing Promotions Pty Ltd, has recently circulated several documents which contain a number of untruths and assertions.

The following short summary provides CAMS' immediate response to the more significant claims in Jane's correspondence. A more detailed analysis of each of Jane's documents will follow in the coming days.

With regard to Jane's claims, we state unequivocally the following:

* CAMS has $100,000,000 public liability insurance cover.
* CAMS has a $100,000 excess on each incident, irrespective of the number of claims arising from that incident, which includes legal costs.
* CAMS will NOT pass the $100,000 excess on to any other insured party under the policy. This excess has been provided for within CAMS' financial capacity.
* Based on financial modeling studies by Aon Risk Services, CAMS has more than sufficient reserves to cover the excesses on current and future claims.
* CAMS' financial position is strong with a surplus approaching $600,000 forecast for 2003 and a similar surplus forecast for 2004 after meeting all insurance expenses and any excesses.
* CAMS' financial position at the end of 2004 is forecast to have net assets in excess of $3.3 million.

**GTRMagic** · 19 Dec 2003, 02:49 (Ref:815726)

Net assets of $3.3m which included buildings that account for most of that value.... yay... there are no operating surpluses/cash in the bank for immediate use it seems...

RaceTime · 19 Dec 2003, 03:12 (Ref:815728)

I can say that CAMS advised me that there will be a more detailed statement they willbe issuing on Monday.

Hmmm - when do I go away on holidays?

(Bugger - not until Jan 2...)

**GTRMagic** · 19 Dec 2003, 03:36 (Ref:815736)

So why doesnt CAMS just get out of the insurance business? Arrange for the AON insurance man to do the deals with the circuits, and perhaps CAMS gets a placement fee... if they keep spending a hundred grand every time someone stubs their toe at a race circuit, it wont take too long to burn up $3.3m

So how did you wangle holidays RT?

RaceTime · 19 Dec 2003, 04:39 (Ref:815762)

Holidays? What holidays...I'm heading off to Barbagallo Jan 2 to install new time lines - the entire track is being resurfaced betwen Jan 5 and 9...the new loops go in before the bitmuen and then have to be tested when it has cooled and started curing.

**GTRMagic** · 19 Dec 2003, 04:51 (Ref:815765)

That would be fun, the warmest part of the year, standing near freshly laid, hot bitumen

Any chance of installing those grid movement sensors at the same time?

RaceTime · 19 Dec 2003, 04:53 (Ref:815767)

hehe - you gonna pay for them? Cos the track, CAMS and AVESCO certainly won't

Intersting, now you mention it - two of the time lines are purely for AVESCO - guess who pays for them...

PVDA · 19 Dec 2003, 07:05 (Ref:815807)

While on the subject of the remote timing points has anyone done a risk assesment of the radio antenna that links them to the main timing system considering at one Victoria track it's mounted right next to a marshal post.

As a person who works with RF daily I know you never stand too close to a transmit antenna of any sort.

RaceTime · 19 Dec 2003, 07:13 (Ref:815811)

Don't believe so. As I understand it they operate in the 'community' 2.4GHz band - hmmmm so do wireless networks - wouldn't take much for something to disrupt them - hope they have secured them and have a licence for the transmitters...

Duketr4 · 19 Dec 2003, 09:44 (Ref:815887)

I find it quite amazing that on any occasion that numbers are dealt with regarding finances by Cams....they seem not to align with any body elses additions (funny that). Bob Jane isn't where he is today because his mathematics was poor, one could argue that he may have flowered the article to suit himself but you would have to be nieve to dismiss his call.

I may not be the brightest light bulb in the sock but i am at pain to understand how Cams believe they can keep the show on the road in the fashion it is traveling.I know of one club within the "family" that hasn't paid a permit fee for 12 months & not likley to buy any more for the future, unlike the past 20 years that i can remember where the club consumed an average of 10 permits per year in NSW. You don't need a calculator to work out you've lost income & this trend is not unique to only this club in the so called "family".

Anyway the answer is easy, make those left pay more!...Hmmm

RaceTime · 19 Dec 2003, 10:32 (Ref:815915)

Quote:

Originally posted by Duketr4
Anyway the answer is easy, make those left pay more!...Hmmm

I am presuming you actually meant 'those that left....'

But I would then answer with why should they? IN fact why should ANYONE have to pay more?

There are many reasons clubs 'leave the fold' - they believe they aren't getting the service they pay for, they believe resources are being misdirected - any number of reasons.

For instance - why should a race track (and I am picking figures from the air here, but the circumstance have happened at least twice this year) be told a permit fee for a particular race meeting is, say, $10,000 - but when the regs are sent in CAMS decides that one of the categories should not be racing at that meeting and, if the promoter wants to keep the category, the permit fee suddenly becomes $15,000.

(BTW - the figures are NOT that far removed from two instances of this happening this year).

The additional $5,000, btw, was NOT for insurance - it was a pure and simple CAMS fee.

Was there $5,000 extra work being done byCAMS? Was CAMS providing people for the meeting?

To both questions, the answer is a plain and simple NO!

It is because of this sort of thing happening that clubs (and promoters) are getting tired of the way things are being run.

mtpanorama · 19 Dec 2003, 10:58 (Ref:815934)

Quote:

Originally posted by GTRMagic
if they keep spending a hundred grand every time someone stubs their toe at a race circuit, it wont take too long to burn up $3.3m

You could be onto something here.........a $100000 would go a long way in the race car budget fund hmmmmmmmmmmmmm

**GTRMagic** · 19 Dec 2003, 22:12 (Ref:816462)

You could buy Whincup's Supercar ($100k including GST) and go Konica-ing

PVDA · 20 Dec 2003, 01:15 (Ref:816543)

I'm hearing that the event permit and racer licence fees are dropping but the track licence fee is going to sky rocket.

With 2 working days until most things shut down until January could someone at CAMS please release the fee structure for 2004.

Last I heard several circuits still haven't seen their renewal turn up yet.

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