With Wednesday's ruling in Judge Frank J. Otte's Federal courtroom in Indianapolis, the next era of open-wheel racing has begun. The new stewards of the Champ Car series, Open Wheel Racing Series, were awarded the rights to purchase the assets of...
With Wednesday's ruling in Judge Frank J. Otte's Federal courtroom in Indianapolis, the next era of open-wheel racing has begun. The new stewards of the Champ Car series, Open Wheel Racing Series, were awarded the rights to purchase the assets of the bankrupt Championship Auto Racing Teams despite a determined effort from the Indy Racing league to take complete control of American open wheel racing with a purchase of selected assets.
Judge Otte's decision was based primarily on the analysis of the two competing bids made by the CART Creditors Committee. The creditors group's attorney, Jim Knauer, led off the day in court with that analysis - which came down strongly in favor of the OWRS bid. The two groups' original bids were quite comparable in direct value, but the OWRS bid included a pledge to assume (and perform) all of CART's contracts to operate races. The value of that pledge was represented by the creditors committee as the cost to cover the losses to the promoters of those races should they not be run.
The IRL substantially sweetened their bid at midday, adding approximately $10 million in cash (to $13.5 million) and offering to add several Champ Car races to their schedule beginning with the 2005 season. Several recesses were called while the creditors' group analyzed the revised bid. When the parties returned to the courtroom, Knauer reported the bottom line of the group's analyses, and declared the OWRS bid "the highest and best offer."
After Knauer's report labeled the IRL's offer as "not near meeting the value of the OWRS offer", the IRL's attorneys, led by David Mattingly and Henry Efroymson, responded angrily. Mattingly categorized OWRS' (and the creditors' group) representation of promoters' damage claims as "wild speculation," and described the improved IRL offer as "a bird in the hand" that the creditors should accept.
Jim Moloy, representing OWRS, responded with a breakdown of their bid. In addition to the $3.2 million in cash, they included in their bid an assumption of $1.5M to settle previous CART disputes, $2.6M in prize monies owed to 2003 CART competitors, and conservatively estimated $10-30 million in promoters' losses should Champ Cars not run in 2004. Moloy offered testimony from several promoters' representatives to substantiate that loss claim.
Representatives of Champ Car events in Australia (James Ashworth), Mexico (Joe Heitzler) and Canada (Molson's Bob Singleton) were called to testify to the losses their respective employers would sustain if the Champ Cars would not race this year. Heitzler and Singleton each stated that their companies could each have losses in excess of $70 million if their races didn't occur. When IRL's Mattingly had his turn to cross-examine these witnesses, he attempted to minimize the stated claims, but was mostly ineffective in that aim.
At 5 pm, Judge Otte rendered his decision, stating that he was satisfied with the Creditors' Committee's assessment of the bids and declaring that selecting the OWRS bid was the "best business judgment."
With that decision, the OWRS era of Champ Car racing has begun. Much work is to be done before the 2004 season begins on April 18th - ten short weeks away - in Long Beach. Now that the series' future is assured, expect a flurry of announcements from OWRS and Champ Car race teams about their plans for the season.