CART MEDIA CONFERENCE

February 25, 1999

Andrew Craig

David Grayson

Dick Rutherford

ANDREW CRAIG: I'd just like to know what snow is, we certainly don't have any of the snow here. In opening, let me just say we're delighted to be announcing that this event today. I think this is going to be a huge success. I think our drivers are going to love it, our fans are going to love it. We're looking forward to being here on November the 13th.

DICK RUTHERFORD: We decided that pay-per-view was the right way for us to go to ensure ourselves the financial success of the program. As far as the way we're going to produce the event for television, it's rather unique. I think that that's why we think we can get more viewers than would normally turn on to an auto racing event. What we're trying to do is bring more fans into it. We're trying to make it friendly to those fans by bringing Hollywood celebrities and a lot of other things into an intermission show which they will turn on just to see that part of the show. But by them turning it on, they're going to see a great race. I think it will bring more racing fans to it.

DICK RUTHERFORD: That was Mr. Rutherford.

DICK RUTHERFORD: 19.95.

DICK RUTHERFORD: No, because I'm going to beat the snot out of the drivers if they crash (laughter). No, I don't think so. I think that these guys know they're going to have to finish this race to get a chance at this $5 million. You might have that on the last lap or two, but I don't think -- I think these guys will drive better than that, I really do. By the way, not only by finishing, they're going to earn points for their qualifying position, they're going to earn points for their fastest lap. If a guy sets a fast lap, another guy sets that, he still gets that point. They're going to keep looking at this right to the very end. Passing cars, they get a point for passing cars at the end of the start/finish line each lap. It will add up at the end. I think it will be a very exciting race right up to the end.

DICK RUTHERFORD: No. We have asked for nothing from the state of Hawaii. It's kind of unlike anything that's ever happened here. It was wonderful to see the response of the state officials. But, no, we have not asked for anything. I didn't want any interference, either, as to how we ran this event. That was important because you get bureaucracy intermingled in this thing, it wouldn't just come out right.

DICK RUTHERFORD: Yes. I'm sorry.

DICK RUTHERFORD: The take rate is the number of homes that buy this event. Actually, the number that you need is very small. The take rate number is in the 2 percent range that would make us, say, like a break-even if we didn't get a lot of sponsorship and things like that. The people who are doing this pay-per-view event did a study, a telephone survey, and the survey numbers came out much larger than that, likely to buy was 5.8 percent. I think we're feeling very good about the event.

DICK RUTHERFORD: Yes and no. This is really an entirely different event than what was proposed back in the '92 range. Those were run with purpose-built cars. They were like Can Am cars and things like that. We didn't want any of that. We wanted to have the best racing event in the world, and I believe CART can give that to us.

DICK RUTHERFORD: We're proposing approximately 100,000. We're working with the seat people right now. As a matter of fact, they're scrambling to get 100,000. They're going even as far as Australia to get some extra seats for us.

DICK RUTHERFORD: Yes, that's correct.

DAVID GRAYSON: We have established a relationship. We haven't announced this yet, so I'd rather not name the company that's going to be doing the tour packages, both on an advertising through print media on the Internet, and also through the industry journals and trade magazines, to major sponsors and to the consumers to come here on packages.

DICK RUTHERFORD: Yes. We'll be making some announcement on corporate sponsorship here in the next 30 to 45 days at another big press conference.

DICK RUTHERFORD: Their universe right now is 36 million and growing at the rate of about 10,000 a month.

DICK RUTHERFORD: Correct.

ANDREW CRAIG: That's for the US market. Obviously, the potential of the event goes way beyond the US.

DICK RUTHERFORD: The track is about ten miles due west of the Honolulu Airport. The population of Honolulu is - I don't even know - 1.2 million.

DICK RUTHERFORD: I have to say that when we put this together, I wanted 10, 12, 14 cars, whatever it was going to be, I wanted it to be a race nose-to-tail for the entire race. I didn't want to see people that could be lapped and things like that. That's not what I wanted for this event. That is not how we planned it. That's kind of why we chose this 12 plus 4. Where the other 4 come from will be from CART race drivers. For example, to put it in real perspective, let's say a Michael Andretti gets hurt halfway through the season, has a small crash and is out for the rest of the season or that he's well enough to run after the end of the season, his bone healed or whatever it was, he's ready to race, and he didn't make the Top 12. I certainly would want Michael Andretti there. That's why the promoter option to add that. We'll have the top 16 cars available to race.

DICK RUTHERFORD: Well, again, I have to say that the event itself will be run with the qualified CART drivers. We're not looking at bringing Mario Andretti back or anybody like that. Maybe Carl Haas might (laughter). I'm sorry, I forgot the first question.

DICK RUTHERFORD: Yes. It's a three-day event, Thursday, Friday and Saturday. Thursday is a practice day, get used to the racetrack, about a half day's worth of running. Saturday is a qualifying day. They're running for $250,000 qualifying pole position. Then a warm-up at the end, kind of like a regular CART race is run, getting prepared for the Sunday race which goes off at one o'clock -- excuse me, Saturday. It goes off at one o'clock Hawaii time; that's six o'clock Eastern time.

ANDREW CRAIG: Andrew Craig that's certainly not our thinking here. We think at this stage this is a special event. Bear in mind, it's not open to all competitors, it's only open to a total of 16 competitors. It doesn't really fit within the championship. We think this is something which is very good for our sport in the off-season. We think it's a big enough event that it stands on its own. It will keep our sport in the public eye during the winter months, which obviously is attractive to us. We don't see this as being part of the championship. It could not be unless it was available to all competitors.

ANDREW CRAIG: No. We're paid a sanction fee for the event, and that's it.

ANDREW CRAIG: They very well may be. FedEx will be doing the air move.

DICK RUTHERFORD: We don't have any background in it. I guess that's what you're asking.

DICK RUTHERFORD: Not in pay-per-view. The people in pay-per-view will be the ones that will be doing the promoting with what they call the cable operators. They do all of these things. They do all the fights and things like that, so they know what they're doing. I'm counting on them to promote the heck out of this thing.

ANDREW CRAIG: First and foremost because Dick and David have the vision to bring us the opportunity. Part of that vision is they want to hold the event in a major resort area which in itself has strong attractive imagery, which is all a part of how you sell pay-per-view. That's really how it came about. If you're going to do an event that falls outside of the championship, obviously that dictates it's going to be an event in the winter, because we really wouldn't have the chance to do it in season. If you're going to do it in the winter, you have to go somewhere that's warm, and Hawaii fits the bill in every respect. We think Hawaii is going to be a very good venue for this. We think a lot of our fans are going to use this as an opportunity to take a holiday, come out here and enjoy the race and enjoy Hawaii.

ANDREW CRAIG: Well, I thought it was a very interesting concept, one obviously one should have a careful look at the financial dynamics to make sure this could be run along the lines being described. We've been working together now for quite some while. I guess it's probably two, two and a half years.

DICK RUTHERFORD: Middle of 1996.

ANDREW CRAIG: Since we first started all this. We're delighted to bring this to culmination today.

DICK RUTHERFORD: Well, some of my own people that I work with did at the beginning when I proposed it. Look, we have to do something spectacular. A $10 million purse is spectacular. Yeah, I guess, but I think by announcing it here and having Mr. Craig and the CART organization say this is what they're going to do kind of tells you that it's a real deal.

DICK RUTHERFORD: Thank you.

ANDREW CRAIG: I'll answer the second question first. The television coverage for this event is separate and apart from any of our current arrangements. I would anticipate you're probably going to see a completely different broadcast team running this event. This is not part of our standard television arrangements. I think anything that helps us create a worldwide stature of the sport is obviously good for us. An event like this does capture the public imagination. I would anticipate that a lot of people who perhaps don't follow motor racing that regularly will be interested to have a look at this. The curiosity factor is going to be very high. Plus, we haven't gone into great detail today, but there will be a number of consumer competitions that will drive people towards the telecast. I think what it will do for us, not just in the USA, but internationally as well, is getting a lot of people watching our racing who perhaps haven't seen our racing before. If they like what they see, there's a chance they'll come back for more.

DICK RUTHERFORD: There are several charities for events that we're producing during the week of the events. It's a week-long event, starts Sunday, ending the following Sunday. We're going to do Police and Firemen Benevolent Fund, Governor's Ball, things like that, all for charity. There will be a charity event every night of the week, with the exception of race day which will be our banquet ceremony.

DICK RUTHERFORD: I'll answer that by saying we looked at this in great detail. I think that the excitement of the first part will grab everybody so that they will want to stay for the second half of the event, but also there's going to be a great mid intermission entertainment that people will want to see. It will have nothing to do really with auto racing, which is kind of unique in the aspect of promotions of television in auto racing. I'm not at liberty to say exactly what that is, but it will be bang-up stuff.

ANDREW CRAIG: The entertainment and the gap between the two events is going to be something which will be broadcast and will have a strong appeal to the TV viewers as well as the people at the racetrack themselves. That's an issue for the promoter, they'll be announcing what they have in mind at a later stage. As far as the racing is concerned, you're right, this is an air field type of racetrack. In fact, tomorrow Tim Mayer and Kirk Russell will be out working with our promoter on the basic design of the track. They're going to be looking at this to make sure we build a racetrack which has all of the attractive attributes of Cleveland, wide straights, lots of room for passing. We're really going to try to produce a racetrack here which first and foremost has to be safe, as with all of our tracks. Secondly, it's conducive to close running, slip streaming, overtaking.

ANDREW CRAIG: Well, I think Wally Dallenbach always has to work overtime. Sure, there's no question about that. I'm sure the last few laps are going to make exciting television.

ANDREW CRAIG: I haven't had any specific feedback. Obviously you're quite right, it is an additional cost from a racing perspective. On the other hand, I think in the end, everybody sees the benefits of doing this now. I think the positive by far outweighs perhaps some of the negative.

ANDREW CRAIG: Well, bear in mind that racing at this level is very much a team effort. As a team effort, it's a combination of driver, car, personnel, engine, tires, et cetera, so forth. I would anticipate to those teams that want to win the $5 million, which is all of them, they're going to want to have the best possible combination, and the best possible combination is someone they've been working with all year. The criteria to qualify is you have to have a CART license. I think what you're going to find is the field will be filled by those guys who are going to be out there racing in the regular FedEx Championship, 20 races throughout 1999.

DICK RUTHERFORD: Yes, they'll have an hour intermission to do anything they want to get their car ready short of doing something illegal. The price of the tickets, that hasn't been set yet. I think they will basically be what our regular CART race is, between $70 and $40 for a three-day ticket.

DICK RUTHERFORD: There's two races, two 1-hour race events, then it's an inverted start in the second event. The winner of the race could possibly be fifth or 6th across the finish line at the end of that second hour. But that doesn't mean to say that we're going to have a unique timing process for at least our television viewers to see which car is leading in the points. If it changes during that lap, that will be shown immediately. You'll know the winning car, the car that's winning at that very moment, on every lap in the points.

DICK RUTHERFORD: There won't be any testing before, no. But the track, the runways right now, are really ready to race on. This is a naval air base even as we speak that's being turned over or deeded to the state of Hawaii on July 2nd of this year. But it has been kept up in remarkable shape simply because the Navy uses it. By the way, the Coast Guard also uses it. It's a very, very good airport, and there aren't any problems in the paving area. It's very, very wide. The main straightaway is 200 feet wide.

DICK RUTHERFORD: I worked with Bud Stanner (phonetic) on several aspects of this and will be continuing to work with IMG on certain aspects of this. As far as the airport being completely shut down, it is not. The Coast Guard is going to use one of the runways which is called four right during the entire weekend. The runways themselves are over eight thousand feet long. It's an enormous airport. You get to it and it's just awe-striking to see the size of this thing. We'll will not interfere with that part of the airport at all. We'll be 2000 feet from the runway where our part of the race is being run.

ANDREW CRAIG: A couple things there. I mentioned earlier on that Kirk Russell and Tim Mayer are over here, coming in tonight, to start looking at the track. Obviously, we'll be carrying out simulations to help our teams prepare for the event. I do not anticipate it will be necessary to put a car on the track. However, if after that review, after we've done simulations, we think that's necessary, obviously we can look again. This is a relatively straightforward exercise. I do not anticipate that will be necessary.

DICK RUTHERFORD: We can't divulge that right now. There's a press conference probably within a week on that. That pay-per-view operator wants to take the credit at that time.

T.E. McHALE: We'll take two more questions before we wrap it up.

DICK RUTHERFORD: Well, I wanted to have a racetrack where it we gave the drivers all the opportunity to show their skills. I didn't want a follow-the-leader type of an event. I'm not pointing a finger at any one race event. I'm merely saying I didn't want ours to be that way. Cleveland airport, as you know, is a great race. It's not any kind of a follow-the-leader race. There's opportunities to pass almost anywhere you want on that racetrack. That's what we wanted and that's why we chose what we did.

DICK RUTHERFORD: I don't quite understand what that means. I don't see that at all. This is going to be a huge event. It's going to be run and promoted as a very large sporting event.

ANDREW CRAIG: As far as we're concerned, we're going to have 16 world class race car drivers racing at a world class race facility with all of the standards that we normally have at our events. I don't know where that impression may have come from. This is going to be from an organizational point of view, safety point of view, racing point of view, it's going to be exactly what you'd expect from Championship Auto Racing Teams.

DICK RUTHERFORD: Quickly on the money deal, it's put up by really David Grayson took care of the financing on this thing. The kudos go to him on this. But we have put a bond in place, a performance bond, which assures that everyone will be paid the money that's owed them and that the race will come off, irrespective of how much sponsorship we get or the pay-per-view or anything like that. Going back to me, you know me, Robin, for a long time. I've been involved with Indy car racing since 1970, old Indy car racing, CART now, excuse me. You know, we've had three wins at Indianapolis. I've just won loved it. I went to Indianapolis 43 years in a row before I quit going four years ago. I loved Indy car, never had anything but love for them. It's my game of golf. I've never done anything else. I don't play tennis, do anything of those things. Racing has always been my deal.

DICK RUTHERFORD: This is it. This is for the grandkids. No, I've retired. I'm just working full-time. I've worked harder on this thing than I've ever worked in the oil business or for Pat Patrick when we worked together.