An interview with: Walker Racing owner Derrick Walker, CART Vice-President John Lopes, CART Racing Operations Lee Dykstra Part 1 of 2 Merrill Cain: Good afternoon, everyone. Thanks for joining us for this week's CART media teleconference.
An interview with:
Walker Racing owner Derrick Walker,
CART Vice-President John Lopes,
CART Racing Operations Lee Dykstra
Part 1 of 2
Merrill Cain: Good afternoon, everyone. Thanks for joining us for this week's CART media teleconference. I'm Merrill Cain with CART Public Relations. Today we're joined by CART team owner Derrick Walker who will discuss Walker Racing's acquisition of property and rights to Reynard North America that was announced this past weekend. And John Lopes and Lee Dykstra of CART Racing Operations will also join us to discuss this topic. And later in today's call we'll hear from Michael Valiante. To lead off the call let's first bring in Derrick Walker to discuss this weekend's announcement.
Derrick Walker: Thank you. I appreciate the interest. Good afternoon, everybody. To kind of set the scene as to how we arrived at this point in acquiring the intellectual property rights and some of the stock and inventory of Reynard North America, which was the company in the U.K., Reynard Motor Sports, went into liquidation and the receiver in the U.K. wanted to dispose of as many assets as possible. So because our teas, who are running the Reynard tried to rally all the other teams in interest in trying to acquire this to keep going the marque and to support our racing programs, after numerous conversations with the teams there seemed to be little interest in acquiring those for whatever reason. And we at Walker Racing said well, let's try and see if we can go it alone.
We entered into discussions with Adrian Reynard and the receiver and to this day now have successfully completed that agreement and are in possession of the intellectual property rights which really is basically the rights -- sole rights of the design of the Reynard CART car which also includes all of the jigs and molds and fixtures, any software, any data that involves the design of the car. And we have acquired all of the stock, the car parts that are here in the U.K. of which were part of Reynard North America. So we have gained those assets and have set ourselves up as a distributor and a developer of the car going forward making available car parts to any interested parties who race these cars, and we obviously are continuing to develop the car. As we develop the car, we make these developments available to customers who may want to purchase them. That's in short order a quick rundown of where we are at this point in time.
Merrill Cain: Very good overview. We appreciate you kind of setting the table there for us. As we pointed out earlier, we're joined here in Indianapolis by John Lopes, Vice President of Race Operations. Many people believe the CART FedEx Championship Series as it was moving forward in 2003 looks to doing the one chassis with the Lolas in the fold, but it is important for CART to keep Reynard in the mix and the competition between chassis. Can you speak to the importance of maintaining the relationship with Reynard and Derrick's role and keeping it going?
John Lopes: Yes. I first want to commend Derrick because Derrick has served as a leader of the Reynard owners since it appeared earlier in the year that Reynard was in some financial trouble. I think initially, not to speak for Derrick, but this was a move for survival, really to allow the teams that have invested in the Reynard cars to continue operating them this year and ensure parts distribution. I think the second thing is it is a great opportunity for Derrick and his company to launch a new profitable business within the garage. But more directly to your question, Merrill, in the spirit of both the grandfathering of the car earlier this year and the -- and the aero freeze which we put into place what Derrick has done has helped us level the playing field by having multiple manufacturers within the series on a continuing basis. It creates environment for both Lola and Reynard through Derrick's company to both supply our teams for competition in the future. Both at a controlled cost, and secondly, by using current equipment which has proven itself among the finest in the world both from a competitive standpoint and a safety standpoint.
Merrill Cain: We'll open it up for questions. Thanks, John. Let's bring in Lee Dykstra. As John just pointed out, a freeze is on development for the next year. Can you address the thinking behind that and how this time with the freeze enables Derrick's company as well as Lola to look towards further development down the road?
Lee Dykstra: I think the freeze, the grandfathering of the chassis is part of sort of an overall master plan as far as our going into 2004-2005. With these two items in place, it eases the transition to the cause for the engine for the next two years because all these parts have been designed or existing the -- conversion to existing cars to Cosworth just made it much easier. It also I think makes for a very competitive environment looking forward to those for two years.
Merrill Cain: Excellent. Let's open it up for questions for the media that's on hold. We want to introduce what's going on with the announcement.
Q: Question for all three because the grandfathering and freeze also seems to grandfather and freeze dullness. Not from lack of technological development but from racing. We saw one of the dullest races in CART history in Milwaukee and even duller one in Chicago because the cars can't pass. I'm sure you guys are alert to this. Do you have any answer to it?
John Lopes: This is John Lopes. What I would like to let you know. Lee, you might want to jump in as well. We see this as an issue we have to address for benefit of fans and overall product. What's happened as you're aware is much of this is function of horsepower and competitiveness of the engine companies. Until we can control that and next year we can and can regulate it, we won't be able to get the car side by side on short ovals. We do have some plans for upcoming testing where we intend on testing the new motor for next year with the road course configuration on track such as Milwaukee where we believe we're going to get them back to side by side racing as we did in the past. Is vsomething we're addressing and Lee and his technical staff are hard at work on that. Lee, do you want to add anything to that?
Lee Dykstra: Because of our CART feel -- drivers are so equal that essentially it does make passing very difficult, even if you had more downforce or more horsepower in this case. In the case of Chicago, for instance, number of instances, the lap time difference between the leader and the person at the end -- end of the cue was less than 2/10th of a second per lap. Under those circumstances, even with excess downforce, you're going -- passing is going to be difficult.
Q: I guess you would expect similar lap times if nobody can pass and all queued up. But I'm delighted to hear you guys are working on it and alert to it. Derrick, you used the word develop twice. What kind of resources do you have to develop and particularly when things are grandfathered and frozen?
Derrick Walker: Bob, that's -- that's a two-part question -- two-part answer to that question. There are a number of areas on the CART car that for the 2003 season that can be developed. When we talk about a design freeze that we're going to, we're really carrying on from where we currently are. Right now, for example, the chassis and the gear box has been frozen for some years now. And we've really just added more bigger pieces of the aerodynamic package of the car to that freeze. So to add to those components that are frozen right now, you're going to see the side part configuration, the engine cover and very important areas, the underbody. The parts that really don't affect -- make a big effect on the show but do make a big effect on your pocketbook when it comes to redeveloping big components every year. There are a number of areas around the car that are not frozen which teams are currently developing and that will continue and probably be a lot more work spent in those areas, because we will have -- have to find gains as every team does.
The second part of that is when you look at the freeze, what you -- when you look at the development as far as Walker Racing is concerned and impact of the freeze, we are going to be more effective if we have more customers. And when you look at the future of CART, there is a lot of interest on the part of new teams, teams that are in existing formulas or new teams that are wanting to join the series teams that want to come back. When you look at a freeze stability like this, there's a lot of attractive features of that because you can buy existing cars, buy new cars and you will know they will have a shelf life, and you don't have to have a sophisticated bank book, bank account or a development program to do underbody or buy underbody every year when it is frozen. So you'll find a lot of teams coming in. More teams that come along and consider the Reynard car as an option, the more people we get on the list of interested parties, parties that race in this car, the more money we can funnel back into developing the areas that are still available. So it is not that developing goes away. Just big ticket items and wings and underbodies, side parts and engine covers, these components need to stay fixed. And two-year freeze will really help all of that. It will help everybody's budget and competition in general.
Q: Hi all three of you. Derrick, are you confident that right now there seems to be a stampede tour along us that maybe that will be reversed? And people will start buying the Reynard chassis again and if you believe that, why do you believe that?
Derrick Walker: You're right. It was a stampede over at Lola site because there wasn't any clear indication what was happening to the Reynard, and I'm sure you can appreciate, Rick, what it is like when you got a company that has gone into liquidation and dealing with receiver and dealing with people that in the U.K. are looking for money and bills to be paid. These things take time to sort out. So the Reynard has been on ice for some time as a car and a company only just recently. And that's why we're having this conference call so we can sort of alert everybody to the fact that Reynard is back and here is how it is going to function, is that we've got those issues dealt with.
Now we're out there putting together the programs so that people can really see whether a Reynard is worth considering. I will tell you I've had a lot of interest from new teams that are coming in looking at the Reynard as an option and believe it or not -- if I told you, I would have to kill you. Believe it or not, we've had existing Lola teams saying what are you doing on the Reynard teams over there? So I think there is -- there is some interest in seeing the Reynard continue. From a sales point of view, I would say if I was pitching Reynard I would say here is our selling points. We got a car that is simpler than the Lola, we believe. We think it is reliable. Certainly with the restructuring of the company and now the new ownership, they are certainly more affordable than they were. We cut out a lot of middlemen, dealing directly with the customer. And let's face it, it is in our interest to have people buy the Reynard parts and race Reynard because the more people come along the better return on our investment into the program and more we can put into the Reynard car going forward. So we want to make it affordable, and we want that brand to continue. CART wants it to continue so we've got to do a real good job in the next few months in racing and developing and setting up this new company to handle this new acquisition so that when people start making their decision they're going to think of Reynard as well as Lola; not just Lola as you rightly say it has been a bit of a stampede.
Q: Lee, if I might ask you a short question, in your capacity as Director of Technology and Competition, in Mid-Ohio when the balance starts going into cars in your estimation, experience, do you it will affect -- put a rein maybe on Cristiano da Matta running away with this series?
Lee Dykstra: It may help a little bit. Obviously he's the lightest person that we have as a driver, and his main competitor Paul is maybe one of the heaviest, and it may equalize things up a bit. I'm sure the competitor is looking for anything to slow him down.
Q: I'm sure they are. From a technical point of view is that going to make a whole lot of difference?
Lee Dykstra: We can do circuit simulations and stuff. Essentially it varies from racetrack to racetrack if the weight affects it. From instances 10 pounds is worth approximately 1/10th of a second, something like that. As close as our racing is, I'm sure it will tighten up the feel.
Merrill Cain: We want to explain that for the media that's on the call. That's a new move that CART has announced, equal out weight and balance on the cars beginning in Mid-Ohio. Can you talk about the process how we're going to do that?
Lee Dykstra: Owners have voted to do this effectively at Mid-Ohio. What we're looking at as we currently stand we have a weight for the car of 1,565 pounds without fuel in the car, eventually ready to go but without fuel. We will weigh the drivers, eventually get an average for the drivers and then adjust that -- that weight -- based on 1,565, we'll adjust that as plus and minus relative to average of the drivers.
Q: I have one for Derrick. Derrick, while primarily dealing with existing chassis, tubs and all, do you have plans to make -- develop new tub and chassis assembly or what's your plans in that direction?
Derrick Walker: Given there's a freeze on the chassis as it is right now for the next two years, we will -- we will reproduce those cars to those specifications because that's what the rules will allow us. But to be quite honest, my goal right now is to find interested parties, whether they be financial or technical with an ability to look at the future of this car and a car to meet the future rules. And I would think that there has to be a new car coming out sometime in 2005. So I figure we've got a couple of years to develop as a company to the point -- produce a car that's not a Reynard but a whatever. And finding the partners to help make that happen, that's one of my key business objectives to try to take advantage of this opportunity that I think I'm very fortunate I've got. I would like to take a little time to actually thank Adrian Reynard for helping us with a very difficult situation for him dealing with a company that he started and obviously benefited from and enjoyed. For him to, you know, scuttle it and have to deal with the breaking up of the company, it was a difficult situation. And he helped us out a tremendous amount. So I certainly want to maximize that opportunity that he's given us here and CART rules have fallen into my hands. They allowed me some time with a freeze situation to seek other partners, for their financial or technical to figure out how I can take this -- this foundation and do a 2005 car for CART.
Q I think part of my question was; are you able to reproduce the current chassis which you answered well?
Derrick Walker: Yes, I am.
Q: For the new chassis and all, are you looking toward previous or other manufacturers who have been in the series and who no longer are since there's at least Swift in California, and there's some other people in the country who are capable of producing carbon fiber tubs?
Derrick Walker: Yeah. I would say we've been looking in any direction to find the right kind of partners who are looking -- who see CART as a viable operation and investment to get involved in it again. I think there is a need into keeping CART going and a competitive format. Companies who are out there who look at this opportunity as a way to get in or to rejoin the CART series were interested in talking. In the meantime, the vehicle that we're using give you more of an explanation how we're doing what we're doing, is we talk to a few of the Reynard technical staff in England when this thing happened, and they were interested in keeping the mark going as well. And they've gone out and it is a group of four to five engineers and production manager, and they have formed a new company in England. They have a contract for us to do some additional development and manufacturing of the parts, and their company is called Oxford Racing Development. It is headed up by Barry Ward, mechanical engineer of Reynard and Simon Dawson who is the manager of Reynard.
They started their own little company because they have a contract from us that says we need their services and their help. It may be these young guys starting their own company in a couple years or less are able to step up and carry on from where Reynard left off. So we're not excluding any possibility. One of the advantages that's helped us get us to where we're at is a lot of the Reynard car, although designed and many parts were made by Reynard, when they had huge customer orders as they did, they actually sent out a lot of the components, the subcontractors who made the parts for Reynard and they controlled the design and the quality of the manufacturing. So when we go with our new company Oxford Racing Developments, they know the subcontractors very well. They go with the rights of the design, we can reproduce a lot of the car. You can see there's sort of an unusual situation that's involved and come out of what was, you know, a difficult situation for Reynard. It has emerged and has some life and there is a real goal for 2005 to try and see if we can really be a force to be reckoned with.
Walker, Lopes, Dykstra part II