INDIANAPOLIS CART is having a hard time, may sell
The CART series has hired an investment banker to consider its options.
INDIANAPOLIS (AP) -- The struggling CART series would consider selling the company and has hired an investment banker to consider its options.
Indianapolis-based Championship Auto Racing Teams, Inc., a publicly traded racing league, hired Wall Street investment firm Bear Stearns on Monday to explore alternatives as the league adjusts to the loss of sponsors and other revenue.
"We nevertheless want to help our shareholders and the larger investment community in measuring CART's progress as the year unfolds and in understanding management's own expectations for the year," said Chris Pook, CART's president and chief executive officer.
Possible buyers
One potential buyer is Formula One boss Bernie Ecclestone. BAR-Honda shareholder Craig Pollock, who also fields teams in CART, acknowledged Sunday he also is interested in buying an interest in the struggling Champ Car Series.
Pollock and Ecclestone met Friday with CART head Christopher Pook, and there's been speculation that Ecclestone could purchase the series and put Pollock in charge.
"I don't think it's inevitable," said Tom Carter, CART's chief financial officer. "It's one of the alternatives, but it's not the only one."
CART has been unable to generate much revenue from television. CART bought its own airtime, paying for its races to appear on CBS and Speed Channel. It bears all production costs, and television revenue comes from advertising it sells for domestic television productions and international rights fees.
Fees are down
Sanctioning fees also have taken hit, dropping from $36.6 million for 17 races in 2002 to about $26 million for 13 races this year.
The series lost nearly $3.1 million in its two self-promoted races.
Carter blamed a depressed economy for the series' fiscal woes.
"We just need the economy and corporations to get back to spending at levels they were previously," he said.
CART has been on a downward spiral following the creation of the rival Indy Racing League in 1996. A succession of presidents and CEOs have tried to turn around the embattled company. Sponsors, drivers, teams and manufacturers left the series in a steady stream, and TV ratings continued to shrink.
Started a turnaround
Pook became president and CEO at the end of 2001 and initiated a turnaround that has apparently assured that the series will continue. Now, the next step appears to be a new owner.
CART's stock, which was as high as $33 a share in 1998, has plummeted, closing Monday at $2.98. It may be in CART's best interest to return as a privately owned company.