Continued from part 1 JOE CHRNELICH: As you see on the schedule, that's our season finale. It's in the largest population center of Mexico. Our promoter partner down there does a great job, absolutely great job, of driving attendance. ...
Continued from part 1
JOE CHRNELICH: As you see on the schedule, that's our season finale. It's in the largest population center of Mexico. Our promoter partner down there does a great job, absolutely great job, of driving attendance. That's why they hold the attendance record in the series.
The citizens of Mexico, if you don't know it, are terribly passionate about our product, but even more so about their drivers. In fact, that's one of our challenges moving forward. We need to identify and develop more top-flight Mexican drivers to get into our series, and we're doing that. What you can also expect to see is a lot more your long-term promotion of Champ Car and our brand. We need to expand the awareness, make sure that they see us year long because that does pay dividends here in the US because of the Hispanic demographic. Obviously, it's a premiere destination, we're happy to be there, going to be there a long time.
In closing, if I may, I want you to know we feel we have made a lot of progress in a very short period of time. By no means have we everything fixed. We have a lot to fix. We're going to do this. We're going to rebuild this brick by brick.
More importantly, relative to the schedule, what I want you to know is it's not so much how many races we get on the schedule, as it is how healthy is the schedule itself and the venues drop. If the venues are healthy, the promoter is economically sound, we're economically sound with the equation, it's good for the city; that's going to be a strength in the schedule. We'll always move things around and adjust a little bit, but our goal is to build strength in the schedule, not necessarily length of the schedule by number of venues. We'll continue to grow incrementally one or two here or there, but at the end of the day the focus is health of each of the venues.
Lastly, I just want to thank you for being here today. Before we go to question and answer, we'd like to invite our new promoters up to say a word about Houston.
MICHAEL LANIGAN: Some of you people that may or may not know me, they call me Big Bear, they call me the heavy set guy; they also call me the guy from Mi-Jack. I go back to racing with open-wheel as a sponsor since 1992 and as an owner the past several years. When this opportunity came up with Kevin and Joe, I enthusiastically believed in it. I believe in the City of Houston, I believe in Champ Car, and I believe in the model that Champ Car is doing.
On that, if you have any questions, we're going to have a kickoff in September. We'd be more than happy to answer those at that time. Thank you.
JOE CHRNELICH: We'll open the floor for questions for all three gentlemen up here.
Q: Will there be any additional races added the next year's schedule?
JOE CHRNELICH: As I mentioned earlier, there is a possibility of maybe an additional race coming on. What we do is, we constantly restate, we will not put a race on unless we have a firm deal. So there is a possibility, but if it doesn't happen, we are very comfortable with the schedule as its being presented.
Q: There have been announcements from Champ Car about racing in China, it is not on the schedule now but will we see it added?
JOE CHRNELICH: Absolutely. Again, that speaks back to the process. But for those of you who haven't been to China, Kevin and I have, it is a very different culture. How they do business, they're quite frankly catching up to global standards on how you do business.
Our discussions are very, very deliberate, painstaking at times because they are very detailed in nature and they want to learn. But we have not completed those discussions. Until we get those done and they're satisfied and we're satisfied, we're not going to be in a position to announce.
MODERATOR: Kevin, take us through your overall thoughts for the schedule and what it took to put those together, please.
KEVIN KALKHOVEN: Sure. First of all, one of the things that is kind of great about the job that Dick Eidswick has done is the way he's built the management team inside Champ Car and continues to develop that. Joe was a relatively new addition to the company and has done a fantastic job of developing the schedule. I can't even remember when we released the schedule last year, but it was some horrific date. Here we are August the 15th, exactly as Joe promised us, we would have the schedule. We have 15 races signed. We have the potential of more. I have to congratulate him on just doing a fantastic job.
For those of you who think that what we do is just road races, I'd remind you that we've actually got five track events, if you like. We've got three airport/temporary and we've got five road races and two ovals. In fact, what we've got is a series that still continues its tradition of being very, very varied and very tough on the drivers. Guys who can win in these environments really are winners in every sense of the word.
The one thing, though, we are finding, and I think it's obvious, is if we bring racing close to the urban centers, whether it's a track like Montreal, which is very close to the center, or whether it's a street circuit, and if you turn it into a three-day festival, the fans will come, the families will come. That actually is kind of one of the important things. We're creating new fans as we go along. That fan base is developing very, very rapidly.
People say, "Well, does that really matter if there are new fans?" Well, sure it does. "Well, they're not real race fans because they just come for the fun." Well, that's it; they're coming for the fun. What's wrong with that, guys? You don't have to stand out in some mud-ridden field to watch cars come by. You can come out, have a great deal of fun, see the new sort of series we're doing.
It's not just street racing. It's this urban festival that's bringing racing closer to the urban centers and allowing the growth in the new families, which in turn will generate additional television watching and in turn will generate new sponsors. The rate of sponsor activity is certainly increasing. If you just look at the number here in Denver, from a very small number to in excess of 50 in one year is indicative of the acceptance of the sponsor base of this strategy.
It's been argued equally that it's kind of a shame that we're leaving behind some of the history of Champ Car, some of the old circuits. Well, that's life. Nothing stays as it does. There's nothing that's fixed in life. It evolves, it grows and it develops. That is very much part of the strategy that we have here in Champ Car, is this growth and this evolution. We could just not rely on the history of the series because we had seen that that was not necessarily a winning formula.
The winning formula we've got is, again, this urban approach, bringing racing to the centers or close to the centers, and allowing entire families to come, and allowing the fan base to grow, which in turn will complete the prosperity of both the city, the promoters, and our own race series that we love so much. So that's what we did.
MODERATOR: Dick, your thoughts?
DICK EIDSWICK: Well, I think Kevin has covered the philosophy pretty well. You know, I, too, commend Joe on the enormous amount of work it takes to put these races together. If you just multiply the number of races times three to five trips per race, you get an idea why he's set the record for the air mileage this year. He's really put together a major effort.
What we have done is we've set the platform of how we're going to build in the future. Some of the new races, particularly the foreign races, which we discussed earlier, will take more than just contract negotiations. We have to build those markets. We have to build those as Champ Car markets, markets that are good on television, markets that are good in attendance, markets that know who Champ Car is and want us to come back and will come to the race in droves like we've seen this year.
So I think we're on a roll. We really feel good about the way we're putting Champ Car together, and I think that you're going to see more of the same in the future.
Q: What is the maximum number of races we will see on the schedule?
KEVIN KALKHOVEN: I think we've stated that we consider 16 races as a good number. We also believe that at least half of them must be in the United States, and we will continue that. If we go to 18, which is possible as the series evolves, cities are literally actually amazingly enough competing to have us come to their cities now. That's a heck of a change in 18 months, which again is a remarkable achievement on behalf of Joe. We could get 18 over. Again, a minimum of half of them will be in the United States. That's part of our policy.
Q: Is Champ Car helping to promote the Cleveland event? And what benefits are there to announcing the schedule this early?
JOE CHRNELICH: Your first question, we're working with several interested parties in Cleveland, in terms of a promoter group, one of which is integrated with our current group that's heading up Rena's team. We're working towards that. That obviously is our business model.
We're in the self-promotion position because January of '04, coming out of court, Kevin and the owners said, "Hey, we got to put on a series and we have to have venues." Not all of them were firm with promoters. That's how it started going that direction. Actually, it was that direction even prior to Kevin and the owners coming on board.
Our business model is to have an independent promoter, the series, and the city, the city being a large umbrella. Those are your three participants for a successful venue. That's the direction we want to work.
In terms of the schedule coming out early, I tell you that the series has never had an owner like Kevin. When Kevin says, "I want it early," we get that done. Actually, the rationale behind it is when you get the schedule out early, the teams can start planning for it. Sponsors can start planning for it. It has in essence a domino effect in motion, if you will, for people to begin dialogue about the next year.
Right now, everybody is working on the budgets. Corporations, teams want to be in there. We want to be in there. You have to tell them where we're going to be so they can identify: Is that a good market for us or not? There are a lot of reasons to have the schedule out early. You can expect this to be the case moving forward.
Q: The have been rumors of Champ Car racing in Philadelphia, what are the chances of that happening?
JOE CHRNELICH: Firstly, I'll tell you if you've never visited a town with Paul Newman, you've got to try it. He's an amazing man and has an amazing impact on people. It was like a Hollywood story when you arrived at City Hall with the attention. That's the beauty of our No. 1 ambassador.
We visited at the request of the city, and they had asked us to put together an assessment on a circuit and viability of the race, which we reported on there. We have done that. The meeting went very well. There were no negatives -- no people pulling in an opposite direction. That was what we walked away with.
However, whenever you deal with a city of that size, these people are elected officials, they have to talk with their constituents; they have to go to their touchstones before they make a final decision. That's what's going on right now. We're continuing to provide them information. We're on-call to go back to have meetings with people so we can explain to the people what it's like to have an event, what impact they can expect, the positives, kind of subside some of the fears that people have initially, the thought of a car going 200 miles an hour past their house.
That's a long explanation, but we're making progress. The one thing you can expect out of us, we will be very patient in our decisions of our venues. We rush into a decision, force it, try and jam it through, that is maybe a good short-term value, but in the long-term we're going to pay dearly for it. We'll be patient and it will tell us, quite frankly, if it's for real next year or if it will work further out.
Q: There are gaps in the schedule in April and September on the schedule, are you looking to fill those this season?
KEVIN KALKHOVEN: You know, you're really very good with your questions (laughter). The answer is, yes, there are gaps which we obviously will need to fill. It doesn't take too much imagination to work that out. We've got to finish the year with a highlight in the United States. Hopefully we'll be able to announce that sometime.
Q: Ford has been involved in a variety of events, do you expect them to increase their involvement?
KEVIN KALKHOVEN: Their level of involvement actually has been quite remarkable, particularly in some of the events that are in, say, places like Canada, where at Edmonton they were very, very strong. We are working with Ford to get greater activation here in the United States as well, and they're being very cooperative with helping us. We have good relationships with Ford at the senior level. They're just continuing to evolve.
Q: When can we expect to see the television schedule announced?
DICK EIDSWICK: We'll probably have the TV schedule out within four weeks. It is, as you say, a very important component of what we need to get to the teams, their sponsors, our sponsors, and we're working on it right now. We're trying to close up a couple of dates. We should have it done soon.
Q: What should we expect to see on the television schedule?
KEVIN KALKHOVEN: No. No hints. Any other questions (laughter)? By the way, no rumors either.
DICK EIDSWICK: We're trying to add one or two more races on network if we can get them. It's the coordination of the network times available versus the race start times.
Q: How are things progressing toward having a race in Japan?
KEVIN KALKHOVEN: Actually we have a gentleman here from Japan who can tell us a little more. Come here, Hiroshi. It's new is to put somebody else on the spot. Is it rumor or fact he's from Japan? It's definitely a fact.
HIROSHI NAKAJIMA: My name is Hiroshi Nakajima. I worked with Kevin and Dick and Joe about Japanese involvement, Japanese venue hopefully for 2007. As a matter of fact, last week we brought Jim from Long Beach to Japan and we spent a weekend there. We had a press conference in Tokyo at the Imperial Hotel, along with the mayor of Long Beach as a special guest. We made Otaru as a city that is trying to host a Champ Car race. They elected Champ Car as their event. They had several different choices, starting with Formula One, our touring car races, but they elected the Champ Car because Champ Car made more sense with their business model.
That actually happened on Monday, the press conference in Tokyo. We announced there's going to be an effort to bring Champ Car into Japan in '07. That was the official announcement. About 50 media people showed up to the press conference. We made a very positive impression about that press conference.
Hopefully it's going to happen in 2007. We don't know the racetrack or we don't know exactly which date it's going to be, but we're still working on it. We're working with a lot of possible corporate sponsors. Hopefully it will happen in two years.
KEVIN KALKHOVEN: It is one of the most beautiful cities I've ever seen. I was there in March of this year. It is an absolutely gorgeous site, it really is. If we can pull it off; this thing, it will be just a beautiful place.
JOE CHRNELICH: Kevin liked the sake factory the best.
HIROSHI NAKAJIMA: I thought he was going to buy the factory (laughter).
Q: What city are you looking at for the race?
HIROSHI NAKAJIMA: The city is called Otaru, in Hokkaido prefecture. It's right next to Sapporo, which is the northern part of Japan. Japan is the small island, and it's the second biggest island on the northern part. There's a city called Sapporo. It's the fifth largest city in Japan. Right next to it that's the city called Otaru. That's the city planning to host Champ Car.
KEVIN KALKHOVEN: It's a beautiful resort city. Sapporo of course hosted the Olympics a few years ago. It's got a great infrastructure for hotels.
HIROSHI NAKAJIMA: It is a growing city.
KEVIN KALKHOVEN: Isn't it great there's a city called Sapporo that makes great beer and Otaru has a great sake factory. Is there something happening here (laughter)?
Q: By having two events in May are you discouraging your teams from entering the Indianapolis 500?
DICK EIDSWICK: I think we're making our decisions independent of other series. We're doing what we think is best for Champ Car and for our teams, our sponsors, drivers.
KEVIN KALKHOVEN: Good thing he didn't allow me to answer that question (laughter).
MODERATOR: Closing comments from Champ Car.
JOE CHRNELICH: I'll just tell you I'm very happy we finally got this announced. There's a lot of work that goes into it. I can't tell you how much I appreciate the support of Kevin, Dick, our organization behind it. This doesn't happen with one person, it happens with a lot of people's participation.
There's a lot of work ahead yet. As I said, you may see a surprise - maybe not. We'll keep working on '07 and beyond that. That never ends. Hopefully all of you can appreciate our candor. We're trying to make sure we are very clear in our direction so you understand it. Certainly appreciate the turnout today.
MODERATOR: Thank you, gentlemen.