As the Deal Turns

LANCASTER, CA, November 16, 2004 – It’s been a very busy week in racing if you’re into how the money turns. Particularly with regard to open wheel motorsports, the news has been very, very interesting.

For Formula One, a new enterprise is in place as Dietrich Mateschitz, the owner of Red Bull – and #406 on the Forbes wealthiest list – confirmed purchase of the Jaguar Formula 1 team that began competitive life in 1997 as Stewart-Ford Grand Prix. Jackie, a Ford favorite did okay with his small band of merry men in amassing one victory, due in good measure to luck as technical advantage. And the fact that Johnny Herbert is one fine driver.

Ford Motor Co. saw something there and, in 1999 assumed full possession of the enterprise, lock, stock and auto clave oven. Seizing the opportunity to meld its Cosworth engine design and construction division with a Jaguar-badged F1 chassis, the folks at Ford thought they had a marketing goldmine on their hands.

Not so quickly, as history has borne out with nary a win in sight. There have been two podiums but that’s it. Top-heavy, continually rotating management and poor fiscal choices brought Jaguar down. Exemplary drivers could have assisted, but the merry-go-round of decision-makers stayed the course.

To stem the hemorrhage, on September 17th of this year, Ford offered both Jaguar F1 and Cosworth for sale. There were certain stipulations for buyers such as viable motorsport history, in addition to a keen knowledge of the sport’s business; a “reasonably coherent view”, according to Richard Parry-Jones of Ford, of what to do with either business; of course financial capability and the ability to move forward quickly with the purchase(s).

Two guys who met all the pertinent criteria on the Cosworth side are Open Wheel Racing Series’ primary principals and team owners Kevin Kalkhoven and Gerald Forsythe. Kalkhoven stated this was a business decision, which stands to reason as the Champ Car World Series (currently presented by Bridgestone, “powered by Ford”) owns its Cosworth engines and needs rebuilds after about 1000 miles of hard labor.

Mateschitz previously owned a majority of Peter Sauber’s F1 team, at one time tried to by the now-defunct Arrows squad and began the Red Bull Driver Search with spin-and-win Danny Sullivan – who has some F1 experience – all in the hopes of fielding an American-based F1 team. He finally has his prize.

Of course the new Red Bull team will use Cosworth engines, likely a part of the purchase haggling but Mateschitz, if nobody else realizes it yet, is serious about having Americans in F1. It’s been 11 years since Michael Andretti returned to the US from his aborted McLaren ride. Mario Andretti won the F1 title back in 1978 – a very long time ago. Only one other US-born driver owns an F1 title: Phil Hill in 1961.

The sad about part about Austria-based Mateschitz and Red Bull’s purchase of Jaguar with a goal toward American participation is that no American buyer stepped up on the premise of promoting local talent. Shame on ’em.

Entries for the 2005 F1 season had to be placed by Monday, November 15th, making fast contractual decisions imperative. That it all worked out, saving around 600 Cosworth jobs on either side of the Atlantic and permitting the former Jaguar team to stay intact speaks of the veracity of those who put their money up.

Mateschitz, together with Jaguar/Red Bull team principal Tony Purnell and managing director David Pitchforth, both of whom stay on have their work cut out for them. The folks at Jaguar have been putting tubs in place for the 2005 season as though there were no ongoing sale of their company; yet don’t have a driver lineup yet.

A test program starts November 24-26 at Barcelona, and two December tests are set at Jerez, using “an interim car and livery” for the Red Bull Racing team. It will be interesting to see who is in the drivers’ seats.

On the Cosworth side, plans to appeal to the US-based tuner market with upgrade kits of varying types are on the docket and Kalkhoven, making the announcement of his and Forsythe’s purchase of the engine division noted there are already three kits on the table. Marine applications for Cosworth’s engines are also under consideration.

Guaranteeing an engine supply for the Champ cars is essential and now done, but Cosworth’s new owners have bigger plans. With Toyota‘s contract to supply Atlantic engines fading at the end of the upcoming season the Atlantic Championship could go back to its roots. When the Atlantic series began in 1974, entrants had motive power by Ford-Cosworth BDA engines, a mill that lasted until the Toyota era began in 1989. Who says you can’t go home again?

As usual these days, there was a bit of paranoiac snippery regarding the 60 or so bids received for Ford’s Cosworth engine facilities. Kalkhoven intimated Chip Ganassi’s bid was a cover for Indy Racing League CEO Tony George, who tried to purchase CART back in January through Bankruptcy Court. And failed. George’s operatives in Indianapolis flatly deny the accusation.

Those who have been waiting for Champ Car to quickly fold its tents are going to be displeased by this latest movement, because it likely means there will continue to be two open wheel North America-based series in the foreseeable future.

Within the Indy Racing League community it’s pretty well known that Toyota is looking at their IRL program with tight scrutiny, especially since GM Racing is pulling out after the 2005 campaign. Toyota is committed for the next couple of seasons and, like Honda they want to beat more than each other on both the sales lots and race tracks.

If Toyota leaves IndyCar Series competition and goes fulltime to NASCAR, Honda will likely leave, too. Which would leave the IRL with ??

Dietrich Mateschitz, Kevin Kalkhoven and Gerald Forsythe are all shrewd businessmen. Their newest purchases could change everything.

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