CHAMP CAR MEDIA CONFERENCE

September 28, 2005

Joe Chrnelich

JOE CHRNELICH: Thank you, Eric. Good afternoon, everybody. I won't give you a long statement here, I just will say we obviously are disappointed today on the news on Korea, and we've deferred the race into 2006. But as always, and I think most of you have had enough time with me now, we will be very honest about the circumstances to you. As we go through the Q & A, I think you'll come around to agree that there are a lot of positive elements here that we as a company can build upon moving forward, but we're going to look at this. In the meantime, I'm sure you have a long list of questions, so why don't we proceed into the question and answer session.

JOE CHRNELICH: Sure, yeah, you're right. I think you could see in my voice and how tired I looked. There were a number of issues here that we were trying to help the promoter and help the city overcome, but at the end of the day, we got to a point in time where we said, you know what, folks, it was a valiant effort but it's not there yet, and rather than force a race on a promoter just to prove that we could go in a race was not a good business decision for either Champ Car or our partners over at Ansan. The elements more specifically that caused the deferment decision today were, A, operational preparedness on the part of the promoter TRK; and secondarily, some of their lack of adherence to our contract terms.A while back, as some of you probably have learned, the general manager for TRK had been removed by the investors and at the request of the mayor because the performance was not keeping pace with the demands of the event. After the removal of the GM, there was a lot of scurrying around to try to find a replacement, and unfortunately it cost the promoter a lot of valuable time. So that is probably the single biggest issue.The circuit, if you will, would have been prepared and ready to race. Some of the esthetics around the borders and things probably would not have looked as nice as they would have liked, but the circuit was, and still is, within days of being complete. So that was less of an issue from our side.But at the end of the day, it was just operational preparedness on the part of the promoter.

JOE CHRNELICH: Well, there were a number of positives that we saw, which gave us the confidence to make the statement today that we're going to defer this into '06. You've got a circuit that is near completion, and it's a very, very nice circuit. It'll be competitive for us, good backdrop, so that's a big plus. You have to have a circuit to race on, obviously.Secondly, the mayor of Ansan has been incredibly supportive. Whenever we ran into a challenge and needed some additional emphasis or push, he was there for us, and he personally is committed on behalf of the city to making sure this race event is a success. So whether it's Ansan or anywhere else in the world, that is very, very important to us.The third is, and even though this is not public, there are some very, very major sponsors in the wings here waiting to come on board. They do want to see the promoter situation sift its way out, if you will, but when we step forward with those names, I think people are going to have a renewed sense of confidence on the progress made there.So those are the elements that told us, you know, we're not far off here, so let's be patient. We'll be back over there meeting with the mayor, working with him to make sure the promoter situation is stabilized properly, and we'll be prepared for next year.

JOE CHRNELICH: I think that's a real good question. To be honest with you, probably. I mean, when you go to a foreign land where you have language barriers and you have time differences, time zone differences, it just makes the challenge of fixing a problem that much tougher because you don't have the ability -- for instance, as an example, we had two new races here in North America; we had Edmonton and we had San Jose. There were challenges with those promoters, no doubt about it, in terms of things we had to fix. But we both spoke English, were within a quick plane ride of each other, and we solved the problems, not the least of which is a first-year race is always most challenging. When you take that idea right there and move it to Asia, it just makes solving problems that much harder.So back to your question, yes, we've come to learn it's much more challenging than we anticipated, but we're learning from it, we're moving things forward, and we're also learning you have to be patient, and that's what we're going to be.

JOE CHRNELICH: Good question, although Sebastien has not obviously won yet. The issue has come to the table, and between our series ownership and management, we're discussing that issue. I would suggest you'll probably hear something in the near future as to a decision on it.

JOE CHRNELICH: As usual, your antennas are always up high. We did talk about that briefly, thought about getting it to the market sooner, but at the end of the day when we talked internally, we said we put it at that position on the schedule for a reason, which is to bundle it to the Australian race, and there are a lot of benefits to doing it back-to-back when you travel that far of a distance. So we've decided to keep it at the current date on the '06 schedule as a result of that.

JOE CHRNELICH: Absolutely. That's a challenge that's probably one of the biggest challenges that fell in my lap when I took the job a year ago. What I've come to learn in the job is when you form a schedule, you can't just move dates around willy-nilly, if you will. There's a lot of considerations to it, which is, A, weather; B, whether events are going on in the city; C, network time availability. So you've got to look at all these variables before you take a date and move a date, much less find a venue and put a date on the schedule. It's a lot tougher than just moving it around.I think the first step forward we made this year to help ourselves a little bit on the April-May gap was to put Houston on the schedule. That narrowed it a touch. Every year when we added an event to the schedule, you're going to see those gaps start to narrow a little bit, but it's going to take time. But our objective is to do that, to answer your question.And to your second question, yes, we very much want to end the season in the U.S. Obviously it's much more convenient to everybody being here, but more importantly, it's back in the market, our home base market, if you will, so that is one of our top priorities, as well.

JOE CHRNELICH: Actually it will be back on over there in early October to continue discussions with BASM, more accurately their new company, which is IS. And back to the prior question on the difficulty of dealing in Asia, what we're also finding out not only on a logistical basis but on a business basis, people in Asia, the cultures of Asia, look at things a lot differently than we do back home here. And part of the challenge is reaching an agreement on key points but also how they're packaged together, and images and pictures are much more important in the Orient than they are in the U.S., which we're just the opposite, we're more focused on words.That's been a challenge for us, but we're continuing to talk with them. We think they're a good partner. We're a ways away on some money issues. We do have some track options there, as you know, but at the end of the day, we need to continue to be patient with our decision. We're not going to just race into an arrangement to say we've gotten that off our list. We just need to make good business decisions, and that requires patience.

JOE CHRNELICH: Well, I am impressed with the media attention that this garnered almost as much as Paul Newman at times. Obviously Bob Clark is a very recognizable figure in motor sports and in his company, and they're constantly talking with everybody. Depending on the timing of his visit, it can create a lot of speculation and whatnot, but I think what's most important maybe from all of your perspectives is just the fact that Honda is talking with Champ Car, communication issue. Whether it's Honda, whether it's some of the other -- the old business partners of our prior series, I think that's a notable point in and of itself. People want to talk with us again. That shows, I think, progress, and I think that shows kind of a renewed confidence in what we're doing with the company and how we're growing.So specifically in terms of the conversations, I was not involved in the meetings. He has stopped over to talk with Kevin, so I don't know the substance of the conversation, but we're always pleased that people from -- who used to be with this company as partners now feel comfortable coming and talking to us as a possible future partner somehow.

JOE CHRNELICH: Well, clearly it's a very important market to us. We view it as a strong market. It's proven it in the past. Not only with us, but you look at the F-1 appeal there. So you know the fans in that town like open-wheel racing; they're attracted to it.In our situation, there were some interesting variables that hit us this year, not the least of which was the International Aquatics Competition. That was an enormous event that really diverted a lot of resources away from our race. It's a one-time event. Our promoter happened to be involved in it, which obviously took some of his resource away. That's an issue we don't have to deal with next year.As is our policy with our promoters, we treat them like partners when things are going good and when things are not going quite so good. In this case we're going to roll up our sleeves with the promoter; we're doing a debrief with him on what worked, what didn't work and what we're going to improve upon next year.We both have a mutual goal of success. Promoters don't get in the business because they want to lose money; they get in because they want to have a healthy business. It's our job to make sure that our property and our event fits their business model, which it will. We think Montreal is a great market for us; we just need to reposition ourselves. Remember, we're rebuilding. This is only our second year out of the gate. Last year was pretty much a fire drill for all practical purposes.We believe in the market, and I think you'll see better things coming of it in the future.

JOE CHRNELICH: Yeah, we actually, going into this week -- and believe me, we've been in constant communication with the new general manager over there who has been very good for us. He wasn't a member of TRK, the prior promoter, so we've got a solid guy on the ground there, and just ask my wife, I've been on the phone weird hours of the night on these calls, but he said, "Look, Joe, here's what we're trying to do." They did make payment to us, as did the mayor. He kept his promise on some payments for some of the operational needs that we have, and they came through on that.We were hoping -- there were some additional payments that needed to be caught up on, if you will, and we were hoping that was going to happen today, and it didn't. They called last night and said, "Look, we can't get there, Joe. It's not our investors, the new sponsors behind us aren't prepared to move that quick."So we made a fundamental decision here among our series owners and our management team that, you know what, rather than try and force this thing just to say we did it, let's take a step back, let's examine the positives and let's decide right now whether there are enough good things here to proceed into next year, and based on our statement today about deferral, that tells you that our assessment that, you know, there's enough good equity in that market and positives that we're going to have a race next year. I will tell you after being over there three or four times now, that is going to be a great marketplace for us.

JOE CHRNELICH: Yeah, good point. What we are learning is when you're that far away, talking on the phone is okay, email is okay, but at the end of the day, you need somebody there on a constant basis making sure you facilitate the needs of the promoter, making sure that the communications are coming back on a regular basis to our office. So you can expect to see somebody there on a more regular basis from our perspective because that does pay benefits.

JOE CHRNELICH: Well, David actually is over there right now, and when the new TRK originally was formed, a step forward to us, they were in discussions with David about having him join the team. There were some relationships there.The best we could tell, they could not arrive at a mutual agreement on the contract, and so it kind of went to the side. David did -- when management change took place, the investors went back to David and talked to him a little bit, but again, they could not come to an agreement. There was just a little bit too much consternation from David's perspective, as well.So he's there, but he has not been involved in the effort.

JOE CHRNELICH: Good question, fair question. We actually -- this is important for everybody to know. This year is very, very different than last year. Last year there wasn't even a license agreement for the race, which is what we had come to learn because I entered the picture very late on that one.But this year between the city and the promoter, a significant amount of dollars had been paid to us, so we do have a buffer. We also had made pre-arrangements with our Australian promoter and our Korean promoter on how to handle the shipping and the airline tickets to achieve economies of scale. Now that we have to repivot, those questions were thought out. We had to think through a worst case scenario with our Australian promoter to say, "Look, if this doesn't happen again, how are we going to handle it." So we had thought about that in advance, and quite frankly at the request of Australia. So we're prepared for it, and it won't be a problem.

JOE CHRNELICH: Sounds like you have a couple questions here. In terms of the sponsorship interest, there are some very big names in Korea as we know, Samsung, Hyundai, Kia, LG; these are names that we recognize here in the U.S. on a daily basis as products we buy. Those are all domestic Korean corporations, if you will, which makes the market that much more attractive to us. They have been in discussions, all of them are aware of the race and there are varying interest levels. I would tell you to stay tuned as to who are really the sponsors that are intending on stepping forward on this.In terms of the promoter, TRK is the independent private promoter. They quite frankly are the ones that have not been prepared and who have not kept current with the contract requirements. The mayor, on the other hand, and the city have a license agreement tied to us and tied to the promoter, and they have, quite frankly, met and done all the things we have asked of them. So the mayor has been a very strong supporter in trying to move the promoter along here. So in that regard, that was one of the big positives we saw.

JOE CHRNELICH: Actually BASM, Beijing Asset State Management, that is a quasi-government entity, they actually acquire and hold assets on behalf of the state, but -- they're a quasi-government company. That's the best way to define them.Very early in our discussions with them, they had informed us they were going to form a subsidiary company to help attract sports events to the capital of China, Beijing, and that's the company IS which was ultimately formed. That company is involved with the Olympic effort, but it's also very keen on bringing racing to China. That's how they intertwined.