Taking Stock - by Gordon Kirby, CART.com Editor Some CART team owners sold shares of their stock in the past month, following the no-sale policy during CART's first year as a publicly owned company. Roger Penske sold the majority of...
Taking Stock - by Gordon Kirby, CART.com Editor Some CART team owners sold shares of their stock in the past month, following the no-sale policy during CART's first year as a publicly owned company.
Roger Penske sold the majority of his CART shares in order to invest $83 million to take control of the struggling UAG Group, the second largest new-car dealership chain in the United States. UAG's stock plunged in recent years. Penske will hold 38 percent of the stock and control the majority of the board seats if the deal is approved by the Security and Exchange Commission.
Others, like Bobby Rahal, Barry Green and Derrick Walker sold smaller amounts in order to raise capital or pay off debts. CART's owners apparently agree the share price will remain strong. Thirteen months after going public on the New York Stock Exchange, CART's stock has risen steadily from $16 per share to around $28. "I think it's very important to get better distribution of the CART shares in the marketplace," team owner Jerry Forsythe said. "I'm glad to see there is a substantial quantity being offered. I am keeping mine because I'm very optimistic about CART's stock in the future, and I'm in a position to maintain what I have and look forward to acquiring additional stock in the future."
Rahal said, "I think the overriding thing that I see is how few people are selling. There was all kinds of talk that come March 10, the stock was going to drop and everybody was going to run and sell out. I think the reality has been far from that. We're selling a very small percentage to raise cash to pay bills, but we plan on keeping most of our stock for quite some time.
"I do believe in the long-term health of CART, and I'm very pleased with how the stock is performing. As Jerry says, with wider distribution of the shares I think the long-term possibilities are good. It was, I think, a great move when we did it, and I think the stock has performed as we had hoped and probably beyond the expectation of many.
"Historically, teams have come and gone because they've never built any value from their commitment," Rahal said. "The stock is a way for racing to finally provide some value for the people who work hard at it. I think more series will probably do something like this. Right now, us and Formula One are the only series where you actually create value by your participation. Otherwise there's no value other than the actual prize money. So I think it's the way to go." Rahal also talked about discussions taking place between CART and its engine manufacturers concerning a new engine formula for 2001. "I would preface any changes by the fact that one of the real unsung stories of CART has been about rule stability," he noted. "The engine package today is pretty much, in basic terms, the same as it was 20 years ago, and I don't know of any racing series in the world that can make that claim. Certainly, Formula One can't, and NASCAR went from big blocks to small blocks. But other than the boost coming down, there hasn't been any change to the basic CART engine formula, and I think that has accounted for the growth and competitiveness in CART.
"So, I think whatever changes that are made for the future have to be made with an eye towards again creating that kind of long-term stability. you don't want to make a change and two or three years later say, 'Oh, we need to make another fundamental change.' I know the engine manufacturers are working very diligently with the rules and technical committee to determine what the best solution will be for the future."
Rahal points out that it's necessary to reduce power to control rising speeds on ovals. "That's the reality. I think if we were just on road courses it certainly wouldn't be the issue that it is. But because we do run on ovals it presents a problem.
"There's been a lot of discussion, and I think that what will be decided upon will be decided with the agreement of all the various parties, and when that day comes I'll be confident that's the right package for the future."
John Della Penna is a classic "small team" owner. He reflects the opinion of owners reluctant to move away from the current formula.
"I really like what we have, " he said. "The reality is that we're almost down to atmospheric pressure now. We're down to 40 inches of boost, and there's not much more we can do there. The valve proved to be a really good adjustable limit over the years, but now we've run out of adjustment.
"But we've got to slow the cars down," he added, "and I think it's going to take a combination of aerodynamics and horsepower. The aero changes we've come up with last year and this year are maybe a temporary fix, but we need to come up with something long term. I think we're addressing that, and we'll have some good long-term solutions coming in the future.
"The engine formula is a real tough situation because we'd like to have the longevity we had up till now. So everybody's thinking real hard. The manufacturers are active participants, and we'll see what happens," Della Penna said.
Source: CART Online