Q&A: Chris Pook and Don Panoz - Pt.1.

Less than a week to go before the inaugural Grand Prix Americas, and the respective 'heads of state' for the CART FedEx Championship and American Le Mans Series got together to answer questions about the Miami event, their race series and a lot more besides...

Merrill Cain:
Good afternoon everyone and thanks for joining us. We're very excited today to welcome the two gentlemen who are the guiding hands behind the respective racing series that will make history this weekend as the CART FedEx Championship Series and the American Le Mans Series will race together for the first time ever on the streets of Miami this weekend in the inaugural Grand Prix Americas.

We're joined by both Don Panoz, the founder of the American Le Mans Series, and CART president and CEO Chris Pook. Gentlemen, thank you very much for joining thus afternoon. We'd like to take advantage of your time and just get right to some questions.

We will start out with Mr Panoz. With his addition to his lead role with ALMS, he is also owner of the Panoz Motor Sports Group as well as a number of other business entities, including several race tracks and real estate venues. Mr Panoz, could you talk about the concept of the Grand Prix Americas bringing world-class road racing back to the streets of Miami, where it was so successful not only for Champcars, but sportscars as well in the 1980s and '90s. If you would maybe give us a little sneak peek of what we might expect to see this weekend....

Don Panoz:
Thank you, Merrill. First of all, I think the concept of the Grand Prix of the Americas coming back to race on the streets of Miami is just reliving history again and a history I think that was built over the years as one of the most exciting races in the United States.

I think that this ability to come back to Miami and resurrect the great street races in Miami is a fabulous opportunity. Of course, as far as our cars go, I think the fans are going to be very well served by our format of Le Mans racing - four different classes of cars, racing on almost 1.6 miles of circuit there in Miami. The top class [LMP900] will be about 60mph faster than the GT class, and I think that, with the drivers and the show that we will put on, I think the fans will really be excited and I think they will see a great race.

MC:
I am sure no one can dispute that.

CART president and CEO Chris Pook joins us from Miami. Chris, several of the forms of motor racing do stage events in and around the city of Miami, but this weekend will truly be a unique experience for the fans. As we pointed out before, a historical experience as well with CART and ALMS racing together at the same venue on the same weekend for the first time. In addition to that, what is going to make this weekend so special for the fans?

Chris Pook:
First of all, I think it is important to reiterate what Don said that, the city, downtown here has a great history. It started here when [racing entrepreneur] Ralph Sanchez put on the old what was IMSA - virtually the same type of racing cars that Don's series operates today. That was incredibly successful over the years, and then the Indycars came in and moved back to the streets here in Miami. The combination of the two series, I think, will reach out to the fans of the state of Florida and even further north.

I think the fact that the two of us are co-operating this weekend, and racing together, clearly shows a very high level of co-operation between two major sanctioning bodies. I think it also demonstrates that we can reach out to a set of demographics that's truly unique in motor racing - the demographics of the CART FedEx Series and the demographics of the American Le Mans Series. And, while there might be a little bit of crossover in certain areas, I think it is a very, very wide set of demographics that we're reaching. And what better place to do it than Miami? While being an incredibly important city in the United States in the sense of the size and capacity of its market and market reach, we must also remember it is the cultural and corporate gateway to Latin America, Central America and the Caribbean.

So, if you look at the two products that are on track - well the three products, excuse me, because I have overlooked the Trans-Am, which is a very, very important part of our weekend as well - look at the market reach of Miami, and then look at the heritage of what is here in downtown Miami, I think that you have a very unique combination - and a combination of huge value today and of incredible marketing ability in the future.

MC:
Thank you, Chris, as we mentioned, we did have a full slate of media on the call today so let us get to questions.

Q:
Would you classify this weekend's marriage as exploratory and if each of you can sort of maybe itemize the advantages to doing this and maybe some of the disadvantages of bringing two major series to one venue at the same time?

DP:
Well, I think it's not just exploratory, it is an opportunity for us to show our wares, as Chris very ably said. We both cover, with very little crossover, a unique demographic, and will certainly be able to show our respective supporters each other's show. That's point number one.

I think that, with us getting together in Miami - and anybody that hasn't been reading the newspapers for the last eight months should know that us joining together was a response that was necessary because of a lot of the opposition that was presented against us - is a good opportunity for us to turn a challenge into a real opportunity to put on a great show.

CP:
I echo what Don says - I would term this certainly more than exploratory. This is an effort that we have put on together to see what the challenges are of operating two major series on the same weekend at the same venue. And what are the yields that both series can get from the combined opportunity in the marketplace.

Now, as far as the challenges are concerned, absolutely there are challenges. We have two different types of race cars, two different sets of disciplines in the pits. We have a whole - both of us - have a whole bunch of support equipment and the various things that make up, if you will, the circus, and the logistics of putting all this together are a test of both our staffs.

The key, I think, for Don and I is to show the leadership that we want to work together, and that the staffs must work together, if we're going to succeed. And it is going on already because both staffs have been down here, both management teams have been down here, all week and we're working through the issues together one by one. It is a lot like a marriage, where if you want to have a successful marriage both parties have got to give 60 per cent. We're working in that vein here and, at the end of the day, what our responsibility is, both of our mutual responsibilities, is one to the other to make sure that the other one has all the breathing room in the world to demonstrate the quality of their product - of each one's products. My responsibility to Don is to make sure that his management team has all the room and space to demonstrate the quality of their product, and his management team to us vice versa.

The real delivery vehicle, who both our mutual responsibilities really lie with, though, is with the city of Miami, because the city of Miami is the de facto, our partner. We're using their streets, their city, and it is our mutual responsibility to deliver, not only the economic impact to the city of Miami that our two mutual series can bring to this city, but also to deliver all the marketing opportunities that the city of Miami is seeking from its port, from its airport, from its hotels, its restaurants, its redevelopment agencies, its community development agencies, its government relations agencies. This is what we have to do. We have to deliver and make sure that the city of Miami gets the value out of the investment that they have made in their time and effort in allowing us to use their city as our venue.

Q:
I wonder if both of you can talk sort of in the bigger picture as to how they see the future of this partnership developing and could we see races at places like Washington DC, Road Atlanta, Sebring even, for example?

DP:
Well, I think that certainly what we'll see this weekend, and we already know Chris has shared with me, that hospitality and everything else is really sold out and that we expect a very good crowd. A very good support group of fans have come in and, not only are just buying tickets, but are buying all the other things that are important for a race.

Chris said it so well a while ago when he said that this isn't exploratory. This is an opportunity for evaluation. And I think that it is like anything else in business, if this kind of model shows a good result, both of us will be looking at how we could explore that and what other venues it could make sense that we could do a show like this.

It could be that, when we evaluate them, maybe the event would be limited and maybe only be a couple of street circuits - or it could be that it could be something bigger. But I think both of us will be having - and our staffs will have - our eyes open to look at all of the events that are going on there this weekend. How they play out; how they are accepted by the fans and the media, and to look at what we can turn that into for the future.

I think we'll be going into this with eyes wide open, and we'll be there to judge it based on the facts. That's the way I think we'll be responding, and Chris can speak for himself.

CP:
I agree with Don there. I agree absolutely with what Don said. I think that we have to evaluate which venues make sense for both of us. We can't overflood the market, if you will. There are certain markets and venues where the American Le Mans Series will stand alone and has a very good track record and will work it. Likewise for CART, but then there are other markets, and this is a very good example here because, let's face it, this market has seen both of our types of racing before and has been very responsive to both our types of racing and had very successful events. This is a good one as a starting platform. I think there are, indeed, other markets but, I think, that that's for Don's management team and my management team to evaluate together and to come back to the both of us to say, look, it makes sense here; it doesn't makes sense there.

We have to thread very constructively together down the road, and we have to look at the impacts of what these sharing of markets or joining together in a market means to our respective sponsors. Are we able to deliver increased value to those sponsors by combining together in a single marketplace? I think that's the real key.

DP:
I think not only that, but I think that we could be looking at a possibility of a formation of what is really a super race weekend and where it's not just a Sunday afternoon main show with support racing, but just really a whole super weekend which includes Saturday and Sunday and value and entertainment. The fans can really get their money's worth and can enjoy it. And, also, a great shingle for the sponsors.

Q:
I have heard some concerns about the track that's perhaps it's a little too tight and narrow and so forth. Chris, you are a street racing expert. How does it shape up from what you have seen so far?

CP:
I think those concerns are valid, and both Don's team and my team have concerns in those areas. We have to work our way through them. We have already got a track layout for 2003 that I believe will work even better for both sides, but this is the deck of cards that the city of Miami have so graciously provided with us this year, and we're going to work with that deck of cards. Yes, it is tight in parts and, yes, maybe it is a little slow in parts, but I know our drivers will adjust. A couple of them will have a little bit of indigestion, but they will adjust. And I am sure Don's drivers will adjust too.

We have to look at these venues - it's what we can develop it mutually into in the future. That's what this is about. This is about building a business, building a franchise. I think that's what we and the American Le Mans Series want to do together. We'll have a couple of hiccups and we'll fix them and we'll move on - nothing that we haven't endured in the past. We had them at Long Beach when we started. We had a hiccup at Denver. We had a hiccup when we first did Las Vegas. When Toronto came on board, it had one. Montreal, when it first came on board, had one. It's the nature of the beast. At, the end of the day, we have got to remember that, for 362 days a year, these streets are for normal passenger cars to drive on and buses and trucks and what have you. It's only for three days that we turn them into a racetrack. So we have to make the necessary adjustments in each city we go to.

Q:
You guys are talking about going into it with eyes open and Chris brought up the word 'marriage' and Don brought up looking at a few events down the way. Has there been any discussion of Don taking more of an active hand with CART - maybe buying some CART stock or helping in the series more in a leadership role? What do you look at as being the positive of CART and being involved with it?

CP:
It is a hell of a deal right now.

DP:
Chris said it, it is a good opportunity for us to work together. As far as me looking at doing a leadership role in CART, I can tell you I have got my hands full doing a leadership role in the American Le Mans Series. And I don't think that, with the expertise that Chris has had over the years in not only putting on races, but now being CEO of CART, that there's much that I can contribute except moral support and 'attaboys', so let us go make some great racing.

My opinion is that CART shows a special type of show, open-wheel racing on road courses. It is exciting. There's passing opportunities that are coming up. Drivers have to be skilled in that, as our drivers have to be skilled in it with our different classes of cars. And so, we'll see how it turns out, and we'll go forward looking at what we can do together to make racing better and to provide a better show for certain venues if it happens to work out that way.

But I am a supporter of CART. I am a supporter of racing. I think that racing is important. It's an important part of American life, and I have said many years ago when we first started our series and the USRRC [United States Road Racing Championship] cropped up opposite, I said then that I believe in racing and, for that first year, my cars raced in both series - the American Le Mans Series and in the USRRC. Of course, when Grand-Am cropped up after that, that became a different story. But I do believe that good racing is what American people want to see. It's the largest sport in the country, and our job is to provide our segment of that type of racing in the best and professional fashion as we can., And anything I can do to support CART and also providing good racing, I will be there to do it.

CP:
I welcome having Don Panoz be a holder of stock in CART, and would welcome his involvement, his breath of knowledge of business is unprecedented and I can only tell you that he'd be a huge addition to us. So, if Don has got a few minutes to come and participate with us whenever he can, we would welcome it with open arms in our company.

Q
You guys talked earlier about making it worth it, and some of the challenges involved in having a dual effort and that you are going to have to see what the yield is. Do you have specific numbers, goals in mind as for sponsorships and economic yield and, as a two-part question, going into this, was there any economic challenge that you did not foresee that you have run into since you started the effort?

CP:
Obviously, [in terms of] economic yield, we sincerely hope that we'll be able to yield in the first year somewhere between 25 and 30 or 35 million dollars direct yield to the city of Miami and the greater Miami area. I mean, after all, that's why they have invited the two of us back. In [terms of] gross yield, somewhere in the area of 150 million dollars gross economic impact. That's what, hopefully, we'll deliver to the community.

As far as economic yield to our sponsors is concerned, that's something though that would have to be evaluated afterwards. We can think what we can deliver to the sponsors but, at the end of the day, the sponsors will tell us what they see the value in. But, just looking at the older sponsors that are involved, not only in our series but at the venue here, and I suspected in Don's series, we have got folks coming from the Miami market area. Now, for the Miami market area, let me remind you that is not only the south-eastern part of the United States, but it's the Caribbean, and Central America and Latin America. You look at the folks that are entertaining here and who are involved in cars and sponsorship et cetera, and you will see a huge, huge wide range of sponsors - probably the widest range of sponsors to ever appear in the United States in the recent decade.

So, all those things are very important to us as we go forward and [in terms of] how we measure it. And we'll get a feeling, certainly, I would say to you by the middle of the day Sunday, certainly the latest on Sunday. I think that Don's management team and my management team will be able to give us the read on what folks are saying about the value of the experience for them.