Continued from part 1 Q: A question that stems from comments that you made, Kevin, about how this strengthens the association with Ford, and we will obviously see that Cosworth will be involved in the Champ Car World Series for a long, long...
Continued from part 1
Q: A question that stems from comments that you made, Kevin, about how this strengthens the association with Ford, and we will obviously see that Cosworth will be involved in the Champ Car World Series for a long, long time to come. I wondered if you might sort of on a more sort of philosophical level comment on how you see the role of manufacturers involved in racing, how you see that maybe evolving in terms of the Champ Car World Series where, as you said, it would appear for at least for the foreseeable future that it is going to be a single-engine series for as far as we can see.
KEVIN KALKHOVEN: As you probably know, I'm not very good at philosophy. If I were, I wouldn't be involved in Motorsports, let's put it that way.
But I think we see an interesting situation in Motorsports, particularly in open-wheel racing at this moment, which is that the manufacturer support is by definition a significant two-edged sword. The financial support that the manufacturers bring is obviously significant. The financial support, when it disappears, as well we know in CART and now in Champ Car, causes some significant heartburn.
We've lived through this and we've taken a very deliberate approach which is that we worked with one manufacturer very successfully, our partners at Ford, in order to provide something that is increasingly important in Motorsports, which is the fact that it is entertainment, it's not just a purist form of open-wheel racing. We have to provide entertainment for our fans, and that entertainment comes from not just only seeing manufacturers compete with each other but seeing close and competitive racing where the driver is the determining factor, not the manufacturer or the amount of money that they spend.
So what we've achieved in this year, Champ Car, is a series where the driver is very much the king, where any driver, now that they all have significantly the same package, can rise to the top. We've seen that clearly in the racing this year. New teams can come in and rise to the top, as we have seen with, for instance, RuSPORT and AJ Allmendinger.
What we have managed to do this, at least, without the embarrassment of riches coming from the manufacturers in the way that it has in the past, is revert to what we think is important for the future, which is to make Motorsports entertaining, make it exciting, close, overtaking, a lot of incidents on track, and not have it just dominated by money, but by the drivers.
Q: If not philosophy, then pragmatic philosophy. How is that?
KEVIN KALKHOVEN: I'll take that one (laughter).
Q: Tim had referred a little bit to the American market, Torrance and so forth. I wonder if both Kevin and Tim, if there's anything you could say at this stage of the game in terms of how you would see Torrance expanding at the moment, as you go forward.
TIM ROUTSIS: This is Tim here. I think one of the key aspects that Kevin has touched on is the sort of emerging importance of the tuner market. And one thing that is very clear for me is that although we may continue to do some of the design work that will be associated with the sort of genuine performance items that we will be provide to get market in the UK, we will certainly be looking to put much more of the manufacturing and distribution of those sort of components actually into the target market, and I see Torrance as being absolutely pivotal in that.
KEVIN KALKHOVEN: We've already released in the United States three different kits for the Ford Focus, which can take it up normally aspirated to 250 horsepower. We leased those a couple weeks ago. The interest level, the demand for it, has been very, very significant. We're looking forward to expanding our Torrance capabilities to serve this market.
Q: To update us, Tim, what are your total numbers of employees and how many do we have there at Torrance?
TIM ROUTSIS: The total number of employees in Cosworth sort of overall at the moment is just a tad under 600, and of that, we have about 80 in Torrance.
Q: It sounds, Kevin, like you basically said any other manufacturer participation, in the brand form or in the actual development form in Champ Car is probably not in the cards in the next several years?
KEVIN KALKHOVEN: For the 2005 season.
Q: So even though Cosworth will continue in 2005, beyond 2005, there is a possibility that other manufacturers might return to the series?
KEVIN KALKHOVEN: There's always a possibility of that, yes.
Q: Will Cosworth continue to supply Ford WRC?
RICHARD PARRY-JONES What we have arranged is that for the 2005 WRC season, we will support M Sport, who is the organization that campaigns the WRC Focus, in a manner which enables them to maintain and distribute the WRC V-Tech engine that is currently in the cars.
We are working at the moment with Malcolm Wilson, who is the principal of that organization, with a view to seeing if we can flesh out the terms of the deal whereby Cosworth will develop a variant of the Ford dura-tech alloy block engine for the 2006 WRC car, which will under current plans be the new Focus.
I'm sort of quietly hopeful and optimistic we will be continuing for a long and very successful relationship with Ford and WRC because certainly I think it's true to say that the current Ford-Cosworth WRC engine is still regarded as the class of the field.
Q: For Richard or anybody who can address it. We've heard different rumors about who else might have been involved in buying Cosworth, including gentlemen like Tony George and Chip Ganassi. Can you tell us about that interest and who else might have tried to buy the company?
RICHARD PARRY-JONES Once we announced our decision on September 17th to exit the business and sell these businesses, we have generated quite a wide variety of interest in people coming forward and expressing to know more about the companies and potentially even make an offer for them.
But we've spent a lot of time sorting through these offers and these expressions of interest with a number of critical criteria in mind. Just to quote a few of them, for a moment, one of them is the buyer must have a history in Motorsport and a really good understanding of the business that's involved in Motorsport. The reason for that is we fear that people who come forward thinking they understand a business like this, who haven't been involved in Motorsport before at a significant level, almost certainly don't know what they're getting into. That could be very dangerous for Cosworth in the future.
The second criteria we had was really, does the buyer have kind of a reasonably coherent view of what they want to do with the business, having understood what there is to understand about it, and a clear vision for taking the business forward.
A third, of course, was their financial capability, financial backup, the wherewithal not only to pay the purchase price, but also to sustain the company through its subsequent period and make sure it has a substantial and stable base from which to grow.
Another critical factor, of course, was the ability to move quickly, to move quickly into action and to conclude the deal at this time. The reason for that criterion was that we needed to know what Cosworth's future was in time to deport the date by which those companies and teams that wish to compete in the 2005 Formula 1 championship need to register. In registering, they need to declare what engine they're using and that they have a valid engine contract.
So we needed to complete the deal on time, both to support our sale of Jaguar racing to Red Bull, using the Cosworth engine, and to allow Menardi to allow their use of the Cosworth engine.
So speed and effective decision-making were also the criteria for selecting the buyer. Suffice it to say that Kevin Kalkhoven, Gerry Forsythe approach was significantly superior against those criteria, and we're very happy that having decided to work closely with them to bring the process to a successful conclusion, we have been able to do that in a very expeditious and smooth manner. This morning's press conference, I complimented Kevin and his team on exemplary performance during the closing process.
So for us, it was not so much a question of who has got the highest amount of money or who is shouting the loudest or who is making the best noises behind the scenes; it was based on solid criteria of where we could find a good future home as custodians of this fantastic company.
Q: Kevin, there's a comment in the press release from Jaguar about the Champ Car ladder series development of engines. I take it to mean that Toyota is at some point on its way out, and when do you expect that a Cosworth engine will appear in series such as Atlantics?
KEVIN KALKHOVEN: Well, first of all, we are completely committed to Toyota for the 2005 season, so that is something that we will be doing.
We will examine the 2006 season and beyond and discuss the engines with a number of manufacturers. Of course, at this moment in time it's just too early to say.
Q: Is it possible to know approximately how much has been paid to Cosworth?
KEVIN KALKHOVEN: I'm actually under a confidentiality agreement, so there's nothing I can add on that situation at all.
Q: Can we say in millions?
KEVIN KALKHOVEN: It depends on what currency. You can say whatever number you like (laughter).
Q: The top level administration. Will you keep the people in place that you have now?
KEVIN KALKHOVEN: Yes, one of the things that impressed about Cosworth was the strength and depth of its management team, which of course is pretty profound. Tim will remain on as the chief executive and managing director of Cosworth together with his team.
Q: You will be providing the new owner of Jaguar for the year of 2005. Do you have any deals with them after that fact, after that year?
TIM ROUTSIS: Yes, you're quite correct; we will be supplying the new owners of what used to be the Jaguar racing team, now Red Bull, with Cosworth engines for 2005. Beyond that, as I'm sure you've picked up through the European press, there are some pretty significant rule changes coming up that affect the engine arrangements for 2006. Right now I and all of our colleagues in Cosworth and our competitors are reviewing the details of those changes very carefully. Together with the teams, we're going to decide exactly what the best type of engine configuration to deploy in 2006 is going to be.
Once we've pinned that down, we'll then be in a better position to see who we will be supplying in 2006 and beyond.
Q: My question is in regards to the support series, comments that you made. I was wondering that perhaps with the stockpile of three-liter normally aspirated engines, maybe you might want to put those into a chassis and run those as a support series for Champ Car.
KEVIN KALKHOVEN: Let the dust settle before we announce some of these other plans on the ladder series, but there's certainly some interesting opportunities around.
THE MODERATOR: Thank you very much for joining us, Ladies and Gentlemen.