LBGP 15 Million does the Trick

Just as I pedicted TG didn't buy the LBGP and the price tag wasn't 25 million as rumored earlier. The going price for a business (that is making money and the LBGP does make money) is one and a half time sales. With Prix revenues at approximately 9 million this year they could reasonably ask 15 million and not be out of line. That's 1.5 times revenue with a little goodwill thrown in. So Kevin and Gerry's new entity AQUARIUM ASSET MANAGEMENT, LLC came away with the Prix for a reasonable 15 million and foiled the efforts of three others bidding on it.

It seems there was a certain other new promoter in the fray as well. The same one that promoted the IRL St. Petersburg race. Clears up the mystery behind the IRL's claim that they were not going to bid on the purchase of the Prix!

The IRL can still go to the LBGP Kevin said the tickets go on sale in July.

WickerBill sez;

Right on KK you are becoming very predictable.

Just Say No to Honda

Like many others I want to see one successful open wheel series I this country. However I have what might be called a passive aggressive approach to the problem. I want the Darwinian effect to determine the outcome. I know I have a lot of detractors that will say that OWR may not even exist by the time that happens. I don’t believe that and if I ever become convinced of it I will be the first to jump on another bandwagon seeking a different solution. I am convinced that one of the two series will function as a successful business and like most successful businesses one will outlast the other and perhaps even take over the other.

Another possible scenario would be for a third party/business to buy up both. I don’t think an engine maker regardless of wealth can force either of the two together. One thing that makes this situation different is the fact that these two companies are private and don’t have stockholders to answer to. Just as Forsythe used Indeck to buy up CART stock because it’s belongs to him, so can TG fund his operations from his many holdings without answering to stockholders.

But there will come a day when one will not exist. Someone will tire of the cost or the effort or run out of money or receive a tender that cannot be refused and the whole thing will change again.

But I seriously doubt that Honda can convince either side that one should be the leader and one should be a follower. And that’s precisely what it’s about for now.

Perhaps Honda’s reasons are more grounded in getting into the Champ Car’s growing worldwide market than getting the two series together.

BMW hybrid car or BMW hydrogen powered car

BMW hybrid car or BMW hydrogen powered car

Is BMW coming with BMW hybrid car. No, BMW is not coming with BMW hybrid car but hydrogen powered cars and fuel cell cars. BMW German carmaker's H2R is the world's fastest hydrogen powered car that has speed upto 185 miles per hour.

Generally, hydrogen-powered vehicles operate on fuel cells. In BMW Hydrogen, powered car uses a modified 6-liter, 12 cylinder combustion engine for its propulsion. Engine in BMW emits only water thus making is one of the most environment friendly car in the present times.

BMW hydrogen powered car has higher degree of efficiency due to higher combustion pressure of the hydrogen-air mixture. Though hydrogen powered BMW hybrid car would give a no exhaust car but the sources through which the hydrogen come is very damaging to environment. The sources might be either fossil fuel like natural gas or by the use of grid electricity both of which releases hydrocarbons while production.

BMW is also developing fuel cell cars. It is developing combustion engine as the sum total of features and characteristics offered by it has got largest number of advantages all in one.

Electric and hybrid cars, Difference between electric and hybrid cars

Electric cars, hybrid cars: Difference between electric and hybrid cars. Why hybrid car is better then all electric cars.

Batteries: Hybrid car batteries recharge while you are driving. There is no need for plug in where, as after certain miles, electric vehicle batteries need recharge. Most electric cars need a recharge every 50-100 miles.
Speed: Electric cars could go only up to 50-60 miles/hr where as hybrid cars can go much faster then that.
Size: For maximum efficiency electric cars are small whereas we have SUVs in hybrid cars.
Price: Electric cars are cheaper then hybrid cars

Since long, people have been working hard to improve the batteries for electric cars. Still electric cars can only travel a fraction of distance traveled by gasoline cars. Hybrid car is the result of efforts put by people in developing electric cars and having faith in cars powered by electric motors. Hybrid car development is only a change in tactics due to failure in improvement of efficient batteries. Hybrid cars could be defined as an electric car assisted with a gasoline engine.

CART By the Number$

There has been a lot written about CART and why it failed but I’ve not seen the supporting numbers. I hope to bring the reality of CART as a business to bare here with the financials that I have gathered from publicly available sources. During my search I was fortunate to find financials from 1993 to 1997, the last year CART was private. It isn’t often we get a glimpse of the financials of a private company and believe me CART was no shining star in the business world in the early nineties as I will show later.

The day to day operations of this company are not significantly different than any other privately held corporation. What must have been the most difficult hurdle to overcome was the fact that there was too many owners. Penske, Patrick, McCaw, Haas, Rahal, Horne et al were all successful businessmen in there own right but collectively were not able to synergize that relationship. I believe, as do many, their collective association had the opposite effect. As I study the financials I my feelings about that are reinforced. Unfortunately without data from the beginning it’s difficult to be certain.

CART’s Revenues came from three primary sources; Sanctioning fees, Sponsorships and TV. In 2000, Cart’s best year, sanctioning fees were 50 % of revenues, sponsorships were 28%, TV was 8% and the remaining 14 % categorized as other.

In 2000 CART reported sanctioning fee revenue of 38M for the 21 race schedule that’s a 1.8M average. To give you an idea of what these fees might be the highest reported fee I have found is 4.2M for the Rockingham event.

For years 94 through 02 TV revenues were essentially unchanged running at about 5M per year. In 93 they reported 9M in TV revenue and in 03 only 2M.

Sponsorship fees grew from 4M in 93 peaking at 21M in 2000 then falling to 8M in 03.

In 93 CART had revenues of 30M, expenses of 30M and showed an after tax profit of 272K. The next two years were similar in that revenues were nearly equal to expenses with profits nearly doubling to 800K in 95. In 96 a loss of 300K on revenue of 41M is claimed. 97 is a convoluted year with the end of the private company. Here’s my best interpretation. The company lost considerable money that year either 5M or 17M depending on which report you follow.

The following is a cut and paste from the report:

In December 1997, as part of our reorganization, each stockholder of CART, Inc. exchanged their shares for stock of Championship Auto Racing Teams, Inc. Prior to our reorganization, the franchise race teams received reimbursement of travel expenses, directors fees and franchise payments in an aggregate amount equal to $8.5 million and $19.4 million for the years ended December 31, 1996 and 1997, respectively. The franchise teams signed an agreement on December 19, 1997 to discontinue these payments after January 1, 1998.

Sounds like the owners were paying themselves at the expense of the profitability of the company.

The first year of CART as a public corporation was a successful one as they had a profit of 15M on 63M of revenue followed by a profit of 19M on 69M of revenue in 99. In 2000 expenses began to take on ugliness. Expenses increased 15M from 44M in 99 to 59M in 2000 while revenues increased only 6M. Although they posted a profit of 15M, the stage was set for the final fall.

The next three years were disastrous as the revenues fell and the expenses climbed as they began burning through the 115M in cash and short term investments they had to keep the series alive.

The end came in 03 with shameful numbers.
Revenue 50M
Expenses 143M
Income (92M) For those who don’t know the numbers in parenthesis are negative.

Draw your own conclusions!

All of the data herein was gathered from sources publicly available and transcribed to the best of my ability. The numbers were rounded for clarity and as a result may not total as expected. M=millions K=thousands

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