Sports Business

Champ Car spinning its wheels: Open-wheel series facing many questions heading into 2007 season

April 2, 2007

What was supposed to be a breakthrough year for the Champ Car racing series is looking like a season of more pain than gain even before the first green flag has dropped.

A little more than a week before the season opener April 8 in Las Vegas, the openwheel race series had no confirmed car count, fewer sponsors than usual, and a lack of continuity in race schedule and television broadcasts that jeopardizes its fan base.

The series bought four years ago by billionaire businessmen Gerald Forsythe and Kevin Kalkhoven appears to be stuck in neutral-at best.

Champ Car President Steven Johnson canceled an interview due to an "emergency trip" to Phoenix, where the series has scheduled a race in December. Some observers said there could be trouble with the race there, though series officials denied that.

Champ Car-the Indy Racing League's main rival-has its headquarters in Indianapolis, but sources close to the series said the staff here is being downsized.

"Last year, Champ Car officials were talking about capping the series at 24 cars," said Dennis McAlpine, a New York-based financial analyst covering motorsports and entertainment. "Now, it looks as though they'll be lucky to have 16 cars for their opener. It's a direct reflection of the sponsorship market, and that market isn't there for Champ Car."

John Clagett, Champ Car vice president of venue development, said excitement in new markets for the series is escalating, and he expects to see solid attendance gains this season.

Champ Car's schedule has grown from 14 races last year to 16 this year, and Clagett projects 18 races in 2008.

"We've added six new venues to our schedule this year, and you can only do that if there is keen new interest from promoters," Clagett said. "We think when the viewership numbers come in from our new venues and [from TV], we'll really start to build momentum for 2008."

Outsiders see Champ Car's situation as more dire.

Last year, McAlpine said, there was a buzz about Champ Car, and even talk of a potential merger with the IRL.

But talks between Kalkhoven and IRL President Tony George broke down late last May and the two appear headed down separate roads.

"Kalkhoven and Forsythe are very deeppocketed individuals, but you have to wonder how long they'll want to expend the kind of resources necessary to do battle with Tony George," McAlpine said. "Despite the spin [Champ Car officials] are giving this season, they're definitely operating under a cloud of smoke."

While the IRL has its own problems, at least it has a multimillion-dollar television contract with ABC/ESPN and more than a dozen dues-paying sponsors, said local motorsports analyst Robin Miller.

"The Indianapolis 500 is still a great piece of leverage," said Miller, who was dropped in February as a free-lance writer for Champ Car after writing a critical article about the series for an independent publication.

Champ Car is forced to buy time to broadcast its races on ABC/ESPN, CBS and NBC. With Champ Car races drawing minimal viewership nationwide, advertising sales are likely far short of production costs.

The series' teams are also falling on hard times, with only three verified paying sponsors: McDonald's, Red Bull and CDW, Miller said.

Some of Champ Car's recent missteps include dumping the pace-car program; losing Ford Motor Co. as an ally; attempting to run a May race in China in competition with the Indianapolis 500; poor TV production quality; and having a drawn-out, 16-race schedule that includes just one race a month from October through December, Miller said.

"Some of the things they face make you wonder if they aren't on the brink of real trouble," McAlpine said.

But not all is lost, said Tim Frost, president of Frost Motorsports, a Chicago-based consulting firm, which advises motorsports properties on business practices.

"This series still has strong races in Mexico City, Long Beach and Toronto," Frost said. "And they essentially have an ownership stake in engine-maker Cosworth, so they have some assets to keep them moving forward."

New chassis specifications, which Champ Car has this year, is an added expense for teams that usually hurts car count, Frost said. He estimated that it would cost $3 million to run a single car in the series this season.

"Car count usually improves in years two and three when more used equipment comes on the market for secondary and backup cars," Frost said. "Champ Car has some venues I'm sure the IRL would like to have. Now it's time to leverage those assets into sustainability."
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