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SBJ/June 18 - 24, 2001/Special Report
Championship Auto Racing Teams
Published June 18, 2001
Championship Auto Racing Teams
Championship Auto Racing Teams is a case study in the perils of a sports company going public. Everything seemed rosy in 1998 when the company reaped around $75 million from its IPO and became one of the first leagues ever to go public.
Since then, the reporting requirements for public companies have forced CART to air its dirty laundry.
And whereas before the IPO, CART answered to its race team ownership, shareholders now include some heavy Wall Street hitters. In April 1999, about a year after the IPO, insiders like league executives and race teams owned 32.4 percent of the company. In April this year, that figure stood at 20.6 percent, a 36 percent drop.
Now the rumor mill is swirling with talk that CART may try to go private again.
CEO: Joseph Heitzler*
Price as of June 11: $14.72
52-week price range: $14.31 to $28.25
IPO date: March 10, 1998
IPO price: $19
IPO performance: Down 23%
Underwriters: Jefferies & Co., A.G. Edwards & Sons Inc.
Shares outstanding: 15,765,467
Inside ownership: 3,115,100 shares; 166,200 vested options* (20.6%)
No. of employees: 83 full-time and about 203 race officials.
* Vested options were stock options that could have been exercised as of June 5.
Board of directors:
• Joseph Heitzler — Named chairman of the board on June 5. (Owns no shares, 200,000 options)
• Gerald R. Forsythe — Forsythe is president of Forsythe Racing. (Owns 1,183,000 shares, or 7.5%)
• Chip Ganassi — Ganassi is president and owner of Chip Ganassi Racing Teams Inc. (Owns 720,000 shares, or 4.6%)
• Carl A. Haas — Haas is managing partner of Newman Haas Racing. (Owns 650,500 shares, or 4.1%)
• James F. Hardymon — Hardymon retired as chairman and CEO of Textron Inc. (70,000 vested options)
• James Henderson — Henderson is chairman and CEO of Cummins Engine Co. (Owns 1,000 shares and 10,000 vested options)
• Barry Green — Green is the president of Team Green Inc. (Owns 103,500 shares)
• U.E. Patrick — Patrick was a founding member of CART. (Owns 248,100 shares and 7,585 vested options, or 1.6%)
• Derrick Walker — Walker is president and owner of Derrick Walker Racing Inc. (Owns 210,000 shares, or 1.3%)
• Bert Roberts — Roberts is the chairman of MCI WorldCom Inc. (Owns 5,000 shares and 10,000 vested options)
• Frederick Tucker — Tucker is president of Motorola's semiconductor products sector. (10,000 vested options)
Harold A. Whiteford*, president of racing operations (2000 salary: $213,462; bonus: $51,593; options: 15,000; other compensation: $13,699)
Roger Bailey, president of American Racing Series (2000 salary: $240,000; bonus: $28,139; options: 5,000; other compensation: $4,706)
Timothy Mayer, senior vice president of racing operations (2000 salary: $210,848; bonus: $7,000; options: 5,000; other compensation: $5,211)
* CART laid off Whiteford in April.
Largest outside shareholder:
Kern Capital Management — 1,287,400 shares (8.2%)