(by Ed Hinton espn.go.com 3-6-09)
When pigs fly, or Ferrari slashes its racing budget by 85 percent -- whichever comes first -- then a competitive Formula One team will be based in the epicenter of the NASCAR industry, Charlotte, N.C.
And even then, it wouldn't be something Americans necessarily would be proud of.
Still, even NASCAR fans and journalists are getting caught up in this notion of an American F1 team, floated last week by veteran British F1 executive and journalist Peter Windsor and American engineer Ken Anderson.
Wildfire fantasy has ensued in the chats, blogs, conversations and news stories. In essence:
I know! We'll have Kyle Busch as one driver! Yeah, that's the ticket! And -- and -- and -- Danica Patrick as the other! Or -- or -- or -- maybe AJ Allmendinger, star of the last days of Champ Car, would work! Or Scott Speed! Marco Andretti! Graham Rahal! Hey -- try this one -- what about Juan Pablo Montoya in a comeback?
To understand why the NASCAR community is abuzz, you have to recognize the undercurrent of fascination with F1 within NASCAR. In the motor-coach compounds at the NASCAR tracks on Sunday mornings, drivers and crew members turn on their satellite TV systems and watch F1.
The crewmen and engineers marvel at the technology, and the drivers just want to drive the magnificent little cars.
The greatest envy of Jeff Gordon I have ever heard from the mouth of Tony Stewart had nothing to do with Gordon's four Cup championships and three Daytona 500 wins. It was all about the fact that Gordon once got to test-drive a Williams F1 car, and Stewart didn't.
For years, I've sensed a sort of "We could do that" wishful thinking.
Now Windsor and Anderson are singing the song of the NASCAR mindset, touting the technological resources around Charlotte that were developed for the NASCAR industry and later Indy cars, and are now in critical oversupply because of the free-falling economy.
Minds, machines and materials are bargains around Charlotte nowadays.
So Windsor and Anderson reckon this is precisely the time to get in on a new bottom floor of F1, much as Jeremy Mayfield, Tommy Baldwin and Scott Riggs have seized opportunity to rush in at the bottom of a deflated NASCAR economy.
Windsor and Anderson say they've set a budget of $65 million (although they haven't made clear where that money will come from) for 2010 to start their team. That sounds great in NASCAR, where $65 million is plenty to run two Cup cars for a season.
But consider that Ferrari and McLaren have each been spending more than $400 million a year lately and that Ferrari at its peak with Michael Schumacher topped half a billion in some years.
The Formula One Teams Association on Thursday passed a resolution aimed at cutting team budgets in half by 2010, according to The Associated Press.
But that still would be $200 million or more, far above the upstart team's proposed $65 million, even assuming Windsor could raise that in a country where NASCAR sponsorships are dropping and on a continent where there won't be a single Grand Prix race this year for the first time since 1958.
There is talk in Europe that the FIA, in meetings later this month, will place a budget cap of about $64 million on all F1 teams.
Even if Ferrari and McLaren formally went along with such a paltry -- for them -- cap, then when pigs fly will they actually abide by it.
But for the sake of argument, let's say all F1 teams will operate on $65 million a year. Indeed, Windsor has heard from the FIA that his type of plan is "everything they're looking for" under current economic conditions, he told ESPN.com's Dan Knutson at a news conference.
Windsor conceded that he and Anderson "would just get laughed out of the ballpark" if these were normal times in F1.
But under cut-rate conditions, F1 would be a shell of itself, gutted of the essence of its appeal, which is ultrahigh technology on unlimited budgets.
I've always felt there has to be at least one racing league in the world without boundaries, just to see how far engineering can take automobiles.
Put clamps on that, and you have hardly more than a gussied-up IRL.
Tight, primitive rules, hard knocks and hardscrabble teams are part of NASCAR's charm. They would be the downfall of F1.
So even if the proposed American team turned out to be competitive, it would be in a league on the wane.
How does Formula One Management, run by F1 czar Bernie Ecclestone, view this? Windsor said as late as last week that Ecclestone was supportive and positive. Then Wednesday, the F1 Web site Pitstop.com reported that FOM apparently has objected to Windsor's original name for the team, "USF1," and demanded removal of the F1 brand.
So Windsor looks to have changed the name to USGPE -- United States Grand Prix Engineering, apparently -- reminiscent of the Williams Grand Prix Engineering team he managed in the 1990s.
Windsor learned much about logistics in his years at Williams in its heyday. But funding of the team was directed by others.
Logistics cost money.
F1's transport fleet of 747s flies out of London and Milan, central points for loading teams' equipment, and I doubt they're going to divert a plane to Charlotte to pick up one fledgling team's equipment on the way to Japan or Malaysia.
So USGPE, or whatever it is called, faces the expensive air freight of just getting its equipment to join the fleet out of London, or the exponentially costlier prospect of flying its cars directly from Charlotte to the Grand Prix venues around the world.
Windsor's tossing about of the names of Busch and Patrick as possible drivers for the team has drawn a lot of publicity, all the way to the London newspapers.
But both Busch and Patrick have said that, although flattered, they haven't even been contacted by USGPE.
And neither is remotely qualified, when you really think about it, to step into an F1car and be competitive anytime soon. Busch's background is all in stock cars. Patrick did spend a frustrating few years in the schooling formulas of Britain and Europe. Even so, road racing is the weaker part of her IRL game.
Andretti has yet to impress in the steppingstone formulas to F1. Rahal has been a fair to middlin' driver in the IRL. Speed is in NASCAR after being dropped by a shoestring F1 team. Montoya is in NASCAR because he was about to be squeezed out of the top ranks of F1. Allmendinger has digressed too long in NASCAR to transfer his open-wheel skills to F1.
Most of all, I must side here with T.E. Lawrence, aka Lawrence of Arabia, who wrote that "old and wise" really means "tired and disappointed."
I am too old and wise to believe USGPE will fly, much less soar, because I am too tired and disappointed after chronicling all the notions of a serious American presence in F1 that have arisen in the three decades since Mario Andretti won the world championship in 1978.
There hasn't been a serious American F1 constructor since the storied but ineffective Shadow team of the 1970s. And by the time Shadow folded, it was based in England out of necessity.
Even when Mario Andretti won the world title, it was for a British team, Lotus.
Since then, I've chased stories, beginning circa 1990, that Al Unser Jr. might go to Williams, that Michael Andretti (Mario's son, Marco's father) would go to Ferrari, then that Michael actually was going to McLaren … then when Michael crossed the pond in 1993, driver and team were so out of sync that he came home in midseason, having flopped or been set up to fail, depending on your viewpoint.
Then Jackie Stewart told me in the mid-'90s that Jeff Gordon was the best candidate to transfer, and I chased that notion for a while. Gordon, to his credit, was wise enough to quash the conjecture from the start, saying that, in his 20s, he was too old to focus on a vastly different discipline.
With the singular exception of Montoya -- who hasn't exactly set the NASCAR world on fire -- the time of the crossover drivers such as Mario Andretti, A.J. Foyt and Dan Gurney ended with Mario's '78 title. As the various forms of racing have grown more complex, they have moved too far apart for a Kyle Busch to master one form, then jump with any success to another. And sponsorship demands force drivers to declare in one form and stay there.
Another factor is intangible -- the question of whether the world F1 community really wants an American presence. I have come to doubt that, having covered F1 quite a bit for a time. This is one sport we can't beat the rest of the world at, and I think the rest of the world quietly likes it that way.
All in all, this talk of F1 in Charlotte, and these dreams of Kyle or Danica wheel-to-wheel with Lewis Hamilton, are fun and fascinating.
Unless you're tired and disappointed from so many flights of F1 fancy.
Friday, March 6, 2009
Windsor clarifies USF1 name change
(by Speed staff speedtv.com 3-6-09)
USF1 sporting director Peter Windsor has moved to clarify stories suggesting that the team has been told to change its name by Formula One Management.
Stories have circulated in recent days that FOM objected to the team's use of the trademarked phrase "F1" in their title, but speaking exclusively to SPEEDtv.com, Windsor has diffused the story, saying that it was never the team's intention to compete under such a name, and instead they plan on competing under the name US Grand Prix Engineering.
"It’s not true as written" said Windsor in reference to the original story. "Our original logo was basically a placemark for a project in progress. Now that we’re in business, it’s important to create a logo and team name that is fully in accordance with FOM rules. This we are now doing."
"In the meantime, we’re diverting web traffic to one of the many domain names we registered some five years ago. We kinda liked USGPE because of the early FW days (referring to Williams Grand Prix Engineering). We’ll be back soon – bigger and better."
Windsor also added that he has been encouraged by the response to the team since they formally announced their plans to compete live on SPEED on February 24. "The response to the announcement was overwhelmingly positive" said the former Williams and Ferrari team manager. "Over 4000 articles were published about us in the month of February alone, and the site was getting something like 350 hits per second during and after the show. For a 'minority sport', F1 in the US seems to be alive and well!"
USF1 sporting director Peter Windsor has moved to clarify stories suggesting that the team has been told to change its name by Formula One Management.
Stories have circulated in recent days that FOM objected to the team's use of the trademarked phrase "F1" in their title, but speaking exclusively to SPEEDtv.com, Windsor has diffused the story, saying that it was never the team's intention to compete under such a name, and instead they plan on competing under the name US Grand Prix Engineering.
"It’s not true as written" said Windsor in reference to the original story. "Our original logo was basically a placemark for a project in progress. Now that we’re in business, it’s important to create a logo and team name that is fully in accordance with FOM rules. This we are now doing."
"In the meantime, we’re diverting web traffic to one of the many domain names we registered some five years ago. We kinda liked USGPE because of the early FW days (referring to Williams Grand Prix Engineering). We’ll be back soon – bigger and better."
Windsor also added that he has been encouraged by the response to the team since they formally announced their plans to compete live on SPEED on February 24. "The response to the announcement was overwhelmingly positive" said the former Williams and Ferrari team manager. "Over 4000 articles were published about us in the month of February alone, and the site was getting something like 350 hits per second during and after the show. For a 'minority sport', F1 in the US seems to be alive and well!"
USF1 ready to roll
(by Tom Jensen speedtv.com 2-24-09)
It’s a plan as audacious as it is inspired: Build an all-new Formula 1 team from scratch, base it in Charlotte, N.C., hire two American drivers and go racing all over the globe against Ferrari, McLaren and the titans of F-1 in 2010.
But that’s exactly what engineer Ken Anderson and longtime SPEED reporter and former Williams team manager Peter Windsor plan to do with their new USF1 team. The duo was at SPEED headquarters in Charlotte on Tuesday to discuss their plans for the new team and in some cases not discuss the myriad specifics, which are still being kept tightly under wraps.
“How do you do a Formula 1 team? That’s an interesting question,” said Windsor. “There is no book about it. There’s lots of books on how to drive a race car, perhaps, but no book on how to do a Formula 1 team.” So in a very real sense, Windsor and Anderson intend to write an all-new book, or at least a historic new chapter in F-1’s rich history.
For the last four years, Windsor and Anderson have been quietly putting together their plans for USF1, which will be radically different than the traditional F-1 model. “We always wanted to do our own team, our way,” said Windsor. “It sounds very arrogant, perhaps, but we’ve got some history, we’ve got some things we want to bring into the sport that we think we can do well.”
Here are the highpoints:
• USF1 will be based in Charlotte, likely on the north side of town, very near SPEED’s headquarters. The facility will employ more than 100 people and will be modeled after modern NASCAR team shops, which allow fans to visit and watch cars being constructed. Windsor specifically mentioned Michael Waltrip Racing’s Raceworld USA facility in nearby Cornelius, N.C., as a shop he admired. The new USF1 headquarters also will have its own on-site television studio.
And it will be a facility that relies heavily on outside vendors in the motorsports-rich Metro Charlotte area and less on enormous budgets and lavish trappings. “For those of them out there who say, ‘Where’s all the money? Where’s the huge facility? Where’s the money falling out of the sky?’ That isn’t ever going to happen with USF1,” said Windsor. “We’ve always had a very different approach, and that approach will become evident as time goes on and this year unfolds.”
• The team intends to sign two American drivers. A variety of names were mentioned by Windsor and Anderson, including Marco Andretti, Danica Patrick and Scott Speed.
• USF1 will buy engines from another team, to be identified later. USF1 is essentially putting out an RFP for engines, looking for an appropriate supplier among the existing competitors.
• The team has four investors who own a minority share in the operation. Neither the amount they own, nor the identities of the investors were disclosed. Sponsors were not identified, either.
• USF1 will have a European satellite facility where it houses its transporters and other equipment, but the true base of operations will be in Charlotte.
• The team plans to race full-time in Formula 1 in 2010, and hopes to be in a position to finish in the points with some regularity by the following season. “After that, the sky’s the limit,” said Windsor.
It’s a plan as audacious as it is inspired: Build an all-new Formula 1 team from scratch, base it in Charlotte, N.C., hire two American drivers and go racing all over the globe against Ferrari, McLaren and the titans of F-1 in 2010.
But that’s exactly what engineer Ken Anderson and longtime SPEED reporter and former Williams team manager Peter Windsor plan to do with their new USF1 team. The duo was at SPEED headquarters in Charlotte on Tuesday to discuss their plans for the new team and in some cases not discuss the myriad specifics, which are still being kept tightly under wraps.
“How do you do a Formula 1 team? That’s an interesting question,” said Windsor. “There is no book about it. There’s lots of books on how to drive a race car, perhaps, but no book on how to do a Formula 1 team.” So in a very real sense, Windsor and Anderson intend to write an all-new book, or at least a historic new chapter in F-1’s rich history.
For the last four years, Windsor and Anderson have been quietly putting together their plans for USF1, which will be radically different than the traditional F-1 model. “We always wanted to do our own team, our way,” said Windsor. “It sounds very arrogant, perhaps, but we’ve got some history, we’ve got some things we want to bring into the sport that we think we can do well.”
Here are the highpoints:
• USF1 will be based in Charlotte, likely on the north side of town, very near SPEED’s headquarters. The facility will employ more than 100 people and will be modeled after modern NASCAR team shops, which allow fans to visit and watch cars being constructed. Windsor specifically mentioned Michael Waltrip Racing’s Raceworld USA facility in nearby Cornelius, N.C., as a shop he admired. The new USF1 headquarters also will have its own on-site television studio.
And it will be a facility that relies heavily on outside vendors in the motorsports-rich Metro Charlotte area and less on enormous budgets and lavish trappings. “For those of them out there who say, ‘Where’s all the money? Where’s the huge facility? Where’s the money falling out of the sky?’ That isn’t ever going to happen with USF1,” said Windsor. “We’ve always had a very different approach, and that approach will become evident as time goes on and this year unfolds.”
• The team intends to sign two American drivers. A variety of names were mentioned by Windsor and Anderson, including Marco Andretti, Danica Patrick and Scott Speed.
• USF1 will buy engines from another team, to be identified later. USF1 is essentially putting out an RFP for engines, looking for an appropriate supplier among the existing competitors.
• The team has four investors who own a minority share in the operation. Neither the amount they own, nor the identities of the investors were disclosed. Sponsors were not identified, either.
• USF1 will have a European satellite facility where it houses its transporters and other equipment, but the true base of operations will be in Charlotte.
• The team plans to race full-time in Formula 1 in 2010, and hopes to be in a position to finish in the points with some regularity by the following season. “After that, the sky’s the limit,” said Windsor.
KV hope to add second car from Indy
(by Matt Beer autosport.com 3-6-09)
KV Racing team boss Jimmy Vasser is optimistic that his squad can add a second car for the second half of the IndyCar Series.
Mario Moraes is currently KV's only confirmed driver for the 2009 season, and the team recently had to release a group of employees due to their lack of sponsorship. They ran Will Power and Oriol Servia in a two-car line-up last year.
But Vasser is optimistic that KV can get a second car in the field for the Indianapolis 500 and hopefully beyond. Servia and Paul Tracy are among the candidates for the seat.
"At the very least we're going to have at least one more car at Indy," he told Indianapolis radio station 1070 The Fan.
"Most probably a car from Indy on forward. I don't think it's probable that we'll have two cars for the full season. But I really believe we can put the second car together from Indy."
He dismissed any suggestion that he would contest the Indy 500 himself.
"I always thought that if I was going to do that I need my financing in place by last November, and quite honestly getting me in the car is at the bottom of the line," Vasser said. "I'm working on deals for Oriol Servia, Paul Tracy and so on. I think there's a very small chance for Jimmy Vasser."
Although Dale Coyne Racing convert Moraes will be KV's sole representative in the early rounds, Vasser is confident that the young Brazilian - who was sixth quickest in the Homestead test - can fight for victories.
"If anybody is surprised, they were underestimating his abilities," said Vasser. "He impressed me a lot on the road courses late last year. He was quicker than (teammate) Bruno (Junqueira), and if you saw him at Chicago, he was not afraid to stick his nose up in there.
"I think he impressed a lot of people at Homestead. I don't want to jump the gun and say that Mario's going to do all sorts of things, but I know what Mario wants to do - he wants to run up front. He's 20 years old and I think there's no discounting his natural ability.
"I think we can give him the car that he can take his break-out win in this year."
KV Racing team boss Jimmy Vasser is optimistic that his squad can add a second car for the second half of the IndyCar Series.
Mario Moraes is currently KV's only confirmed driver for the 2009 season, and the team recently had to release a group of employees due to their lack of sponsorship. They ran Will Power and Oriol Servia in a two-car line-up last year.
But Vasser is optimistic that KV can get a second car in the field for the Indianapolis 500 and hopefully beyond. Servia and Paul Tracy are among the candidates for the seat.
"At the very least we're going to have at least one more car at Indy," he told Indianapolis radio station 1070 The Fan.
"Most probably a car from Indy on forward. I don't think it's probable that we'll have two cars for the full season. But I really believe we can put the second car together from Indy."
He dismissed any suggestion that he would contest the Indy 500 himself.
"I always thought that if I was going to do that I need my financing in place by last November, and quite honestly getting me in the car is at the bottom of the line," Vasser said. "I'm working on deals for Oriol Servia, Paul Tracy and so on. I think there's a very small chance for Jimmy Vasser."
Although Dale Coyne Racing convert Moraes will be KV's sole representative in the early rounds, Vasser is confident that the young Brazilian - who was sixth quickest in the Homestead test - can fight for victories.
"If anybody is surprised, they were underestimating his abilities," said Vasser. "He impressed me a lot on the road courses late last year. He was quicker than (teammate) Bruno (Junqueira), and if you saw him at Chicago, he was not afraid to stick his nose up in there.
"I think he impressed a lot of people at Homestead. I don't want to jump the gun and say that Mario's going to do all sorts of things, but I know what Mario wants to do - he wants to run up front. He's 20 years old and I think there's no discounting his natural ability.
"I think we can give him the car that he can take his break-out win in this year."
Wednesday, March 4, 2009
Castroneves' tax trial offers lesson to his fellow drivers
(by Brant James sportsillustrated.com 3-4-09)
When Danica Patrick talks about Helio Castroneves, you can imagine her sitting on the floor of her Phoenix home amid hundreds of files, contracts and tax documents. It would be the middle of the night, Patrick with a flashlight in one hand, magnifying glass in the other, mumbling gibberish as she speed-reads the forms.
Patrick's pit-in-stomach moment was not so anecdotally perfect, but it was profound and jarring for someone who earned $5 million in 2007 (according to a Forbes.com list which ranked her as the 95th highest-paid celebrity in America) and, at 26, is one of the most recognizable, marketable and bankable figures in sports. The feisty Indy Racing League driver with the Swimsuit-edition portfolio was a virtual license to print money even before she won her first race last spring. Earning it is one thing. Keeping it is another. So is making sure bills get paid, like taxes. That point becomes poignant this week with two-time Indianapolis 500-winner Castroneves going on trial in Miami on seven counts of federal tax evasion, crimes punishable by more than six years in prison.
Castroneves -- whose business manager is his sister, Kati -- claimed in January that complex contract language so confused him that he did not understand at times what he was signing. Defense attorney Roy Black said in opening arguments on Tuesday that Castroneves is ignorant of United States tax laws, and his defense seems to partly hinge on how a jury factors ignorance of personal affairs when considering the guilt of the charismatic Brazilian who gained multi-national fame as a Dancing with the Stars champion.
"I feel strongly and positively about it, especially when I started educating myself in this matter," Castroneves said in January. "I'm reading stuff with the type of language, I have no idea what it is. Even if it was in Portuguese, it would still be confusing to me"
Castroneves, 33, is hardly alone in being bedeviled by the details. Weeks before the start of the NASCAR season, Sprint Cup driver Elliott Sadler admitted he was unsure of the contents of his contract with Richard Petty Motorsports even as the team attempted to depose him from the No. 19 Dodge and replace him with A.J. Allmendinger. Sadler eventually retained his job by threatening possible legal action.
Patrick is determined not to be snared. It was a revelation late in coming.
"Number one, it's sad when you have to revert to the contract all the time because it should just be... you all just should be upstanding with each other," Patrick said, "but anyway, I was reading my contract this winter -- I'll be super honest -- I didn't know much about my finances. I didn't know about how much was coming in, where it was going, when it was coming and going. I would ask 'Could I afford this?' 'Can I get this money here?' '[Do] I want to do this?' Remember those commercials where knowledge is power? I really believe that now. The more I know, the less that I can be taken advantage of. So I learned about all my finances and stuff."
Entertainers in general and athletes in particular have long been the prey of the unscrupulous. Insurance schemes, bogus investments, and high margins siphon the riches earned by those unwilling or unable to defend themselves by becoming savvy with regard to their finances. Retired Sprint Cup champion Bobby Allison, 71, reportedly went bankrupt, and former drivers such as Sam Ard reached old age bereft of their health and earnings. But Castroneves' alleged financial missteps threaten to end his career in its prime or send him to prison.
Black said on Tuesday that Castroneves never attempted to skirt U.S. income tax, but intended to pay the tax on about $5 million in income in question after a decade-old deal was completed.
"All his taxes were properly done. They were properly paid," Black said.
Prosecutor Matt Axelrod claimed Castroneves, with the help of his sister and sports attorney Alan Miller -- who listed Sprint Cup driver Kyle Busch as a client until 2007 -- used a Panamanian corporation to evade taxes since 1999.
"When it came time to pay taxes on the millions of dollars that he made, he turned his back. He didn't pay," Axelrod said.
Prosecutors claim Miller helped Castroneves avoid paying taxes on $5 million from his initial contract with Penske Racing in 1999 by having it diverted under a deferred royalty deal to a Dutch company. Axelrod claims Miller asked for the revision to the contract when he learned Penske would withhold 30 percent of the $5 million in taxes.
Castroneves was to receive the money this May. The defense attorney said Castroneves would pay taxes upon receipt, while prosecutors say taxes were already owed, even though he'd not received the money.
"It was the only way they could achieve their goal of having Helio Castroneves illegally get his money tax-free," Axelrod said.
Castroneves' bind is a lesson to young drivers like Patrick, but it's one many veterans had to learn as they grew up in the sport.
Sprint Cup driver Tony Stewart, who oversees a portfolio that includes 16 business entities including, for the first time this year, a two-car Sprint Cup team, employs a squadron of managers to run his enterprises and utilizes Motorsports Management Inc. to coordinate his finances.
"When it comes to major decisions involving Tony's career, whether racing or business-related, autonomous decisions are seldom made," said Brett Frood, his former chief operating officer who now an executive vice president at Stewart-Haas Racing. "Diligence is performed and ideas are always bouncing around between Tony and his executive management team, with valuable feedback from (MMI) and his company."
Sprint Cup driver Jeff Gordon tasked his stepfather, John Bickford, with setting up and maintaining his business interests when he became instantly wealthy in his early 20s.
Patrick called Castroneves' situation unfortunate and described him as a "really nice guy" who "would do anything for you if you really needed it." If Castroneves is exonerated after what is expected to be a six-week trial, he should do something for an IRL that needs star power of his degree: get wiser about his finances and protect himself. He should do what Patrick is doing.
"Trust me, I am still a little lost, because it is not my forte, but I just started learning about different spreadsheets and things, the breakdown of where all my money goes and how much we spend here and there and so on," Patrick said. "Now I look at it and I'm like, "We spent how much on what? What's this? What's this category?" I think it's a really good healthy step into a mature direction for me, as a person. I should know."
When Danica Patrick talks about Helio Castroneves, you can imagine her sitting on the floor of her Phoenix home amid hundreds of files, contracts and tax documents. It would be the middle of the night, Patrick with a flashlight in one hand, magnifying glass in the other, mumbling gibberish as she speed-reads the forms.
Patrick's pit-in-stomach moment was not so anecdotally perfect, but it was profound and jarring for someone who earned $5 million in 2007 (according to a Forbes.com list which ranked her as the 95th highest-paid celebrity in America) and, at 26, is one of the most recognizable, marketable and bankable figures in sports. The feisty Indy Racing League driver with the Swimsuit-edition portfolio was a virtual license to print money even before she won her first race last spring. Earning it is one thing. Keeping it is another. So is making sure bills get paid, like taxes. That point becomes poignant this week with two-time Indianapolis 500-winner Castroneves going on trial in Miami on seven counts of federal tax evasion, crimes punishable by more than six years in prison.
Castroneves -- whose business manager is his sister, Kati -- claimed in January that complex contract language so confused him that he did not understand at times what he was signing. Defense attorney Roy Black said in opening arguments on Tuesday that Castroneves is ignorant of United States tax laws, and his defense seems to partly hinge on how a jury factors ignorance of personal affairs when considering the guilt of the charismatic Brazilian who gained multi-national fame as a Dancing with the Stars champion.
"I feel strongly and positively about it, especially when I started educating myself in this matter," Castroneves said in January. "I'm reading stuff with the type of language, I have no idea what it is. Even if it was in Portuguese, it would still be confusing to me"
Castroneves, 33, is hardly alone in being bedeviled by the details. Weeks before the start of the NASCAR season, Sprint Cup driver Elliott Sadler admitted he was unsure of the contents of his contract with Richard Petty Motorsports even as the team attempted to depose him from the No. 19 Dodge and replace him with A.J. Allmendinger. Sadler eventually retained his job by threatening possible legal action.
Patrick is determined not to be snared. It was a revelation late in coming.
"Number one, it's sad when you have to revert to the contract all the time because it should just be... you all just should be upstanding with each other," Patrick said, "but anyway, I was reading my contract this winter -- I'll be super honest -- I didn't know much about my finances. I didn't know about how much was coming in, where it was going, when it was coming and going. I would ask 'Could I afford this?' 'Can I get this money here?' '[Do] I want to do this?' Remember those commercials where knowledge is power? I really believe that now. The more I know, the less that I can be taken advantage of. So I learned about all my finances and stuff."
Entertainers in general and athletes in particular have long been the prey of the unscrupulous. Insurance schemes, bogus investments, and high margins siphon the riches earned by those unwilling or unable to defend themselves by becoming savvy with regard to their finances. Retired Sprint Cup champion Bobby Allison, 71, reportedly went bankrupt, and former drivers such as Sam Ard reached old age bereft of their health and earnings. But Castroneves' alleged financial missteps threaten to end his career in its prime or send him to prison.
Black said on Tuesday that Castroneves never attempted to skirt U.S. income tax, but intended to pay the tax on about $5 million in income in question after a decade-old deal was completed.
"All his taxes were properly done. They were properly paid," Black said.
Prosecutor Matt Axelrod claimed Castroneves, with the help of his sister and sports attorney Alan Miller -- who listed Sprint Cup driver Kyle Busch as a client until 2007 -- used a Panamanian corporation to evade taxes since 1999.
"When it came time to pay taxes on the millions of dollars that he made, he turned his back. He didn't pay," Axelrod said.
Prosecutors claim Miller helped Castroneves avoid paying taxes on $5 million from his initial contract with Penske Racing in 1999 by having it diverted under a deferred royalty deal to a Dutch company. Axelrod claims Miller asked for the revision to the contract when he learned Penske would withhold 30 percent of the $5 million in taxes.
Castroneves was to receive the money this May. The defense attorney said Castroneves would pay taxes upon receipt, while prosecutors say taxes were already owed, even though he'd not received the money.
"It was the only way they could achieve their goal of having Helio Castroneves illegally get his money tax-free," Axelrod said.
Castroneves' bind is a lesson to young drivers like Patrick, but it's one many veterans had to learn as they grew up in the sport.
Sprint Cup driver Tony Stewart, who oversees a portfolio that includes 16 business entities including, for the first time this year, a two-car Sprint Cup team, employs a squadron of managers to run his enterprises and utilizes Motorsports Management Inc. to coordinate his finances.
"When it comes to major decisions involving Tony's career, whether racing or business-related, autonomous decisions are seldom made," said Brett Frood, his former chief operating officer who now an executive vice president at Stewart-Haas Racing. "Diligence is performed and ideas are always bouncing around between Tony and his executive management team, with valuable feedback from (MMI) and his company."
Sprint Cup driver Jeff Gordon tasked his stepfather, John Bickford, with setting up and maintaining his business interests when he became instantly wealthy in his early 20s.
Patrick called Castroneves' situation unfortunate and described him as a "really nice guy" who "would do anything for you if you really needed it." If Castroneves is exonerated after what is expected to be a six-week trial, he should do something for an IRL that needs star power of his degree: get wiser about his finances and protect himself. He should do what Patrick is doing.
"Trust me, I am still a little lost, because it is not my forte, but I just started learning about different spreadsheets and things, the breakdown of where all my money goes and how much we spend here and there and so on," Patrick said. "Now I look at it and I'm like, "We spent how much on what? What's this? What's this category?" I think it's a really good healthy step into a mature direction for me, as a person. I should know."
Tuesday, March 3, 2009
Lawyer: Castroneves would pay in May
(by the Associated Press 3-3-09)
MIAMI -- Race car driver and "Dancing with the Stars" winner Helio Castroneves never sought to evade U.S. income taxes and planned to pay the Internal Revenue Service when he received $5 million from a deal made a decade ago, his attorney told a federal jury Tuesday.
Defense attorney Roy Black said in an opening statement that the Brazilian driver, a two-time winner of the Indianapolis 500, knows nothing about U.S. tax laws and relied on experts to handle his finances. Black said there was no scheme to hide money from the IRS.
"All his taxes were properly done. They were properly paid," Black told the 12-person jury.
Prosecutor Matt Axelrod disagreed, describing a series of allegedly fraudulent deals dating to 1999 involving a Panamanian corporation created to dodge taxes. Axelrod accused Castroneves' business manager-sister, Katiucia, and Michigan sports attorney Alan Miller of playing a role in the fraud.
"When it came time to pay taxes on the millions of dollars that he made, he turned his back. He didn't pay," Axelrod said.
The three are charged in a seven-count indictment with tax evasion and conspiracy, which could land each of them behind bars for more than six years. The trial is expected to last up to six weeks.
Central to the case is the ownership of the Panamanian entity, Seven Promotions. Black said it was formed by Castroneves' father to promote his son's early racing career and that the younger Castroneves had no ownership. Axelrod said it was set up to appear that way, and that all three defendants repeatedly lied about the race car driver's control of the business.
When Castroneves was hired in late 1999 to drive for Team Penske, the contract drawn up by Miller called for about $5 million to go to Seven Promotions. But Miller then asked Penske not to pay the money, saying he wanted it shifted under a deferred royalty deal to a Dutch company called Fintage Licensing B.V.
Black and Miller's lawyer, Robert Bennett, said that was legal, and that Castroneves will pay taxes on the money when he gets the money in May.
Axelrod said the deal was a diversion because Miller discovered Penske would withhold 30 percent of $5 million for taxes before transferring the money to Seven Promotions.
Axelrod claims even though Castroneves has not been directly paid the Penske money, he should have paid taxes long ago. The ultimate goal, the prosecutor said, was for Castroneves to leave the U.S. and escape the IRS.
"It was the only way they could achieve their goal of having Helio Castroneves illegally get his money tax-free," Axelrod said.
Black disputed the theory and said Castroneves lives in Coral Gables, a Miami suburb.
Prosecutors also claim Castroneves neglected to pay U.S. taxes on income from a sponsorship deal with the Brazilian company Coimex and that he didn't declare as income thousands of dollars worth of clothes and airline tickets he got from other deals.
Castroneves, 33, won the Indy 500 in 2001 and 2002 and the TV dance competition in 2007. He has been temporarily replaced on Team Penske by Australian Will Power pending the outcome of the trial. The Indy Racing League season begins April 5.
MIAMI -- Race car driver and "Dancing with the Stars" winner Helio Castroneves never sought to evade U.S. income taxes and planned to pay the Internal Revenue Service when he received $5 million from a deal made a decade ago, his attorney told a federal jury Tuesday.
Defense attorney Roy Black said in an opening statement that the Brazilian driver, a two-time winner of the Indianapolis 500, knows nothing about U.S. tax laws and relied on experts to handle his finances. Black said there was no scheme to hide money from the IRS.
"All his taxes were properly done. They were properly paid," Black told the 12-person jury.
Prosecutor Matt Axelrod disagreed, describing a series of allegedly fraudulent deals dating to 1999 involving a Panamanian corporation created to dodge taxes. Axelrod accused Castroneves' business manager-sister, Katiucia, and Michigan sports attorney Alan Miller of playing a role in the fraud.
"When it came time to pay taxes on the millions of dollars that he made, he turned his back. He didn't pay," Axelrod said.
The three are charged in a seven-count indictment with tax evasion and conspiracy, which could land each of them behind bars for more than six years. The trial is expected to last up to six weeks.
Central to the case is the ownership of the Panamanian entity, Seven Promotions. Black said it was formed by Castroneves' father to promote his son's early racing career and that the younger Castroneves had no ownership. Axelrod said it was set up to appear that way, and that all three defendants repeatedly lied about the race car driver's control of the business.
When Castroneves was hired in late 1999 to drive for Team Penske, the contract drawn up by Miller called for about $5 million to go to Seven Promotions. But Miller then asked Penske not to pay the money, saying he wanted it shifted under a deferred royalty deal to a Dutch company called Fintage Licensing B.V.
Black and Miller's lawyer, Robert Bennett, said that was legal, and that Castroneves will pay taxes on the money when he gets the money in May.
Axelrod said the deal was a diversion because Miller discovered Penske would withhold 30 percent of $5 million for taxes before transferring the money to Seven Promotions.
Axelrod claims even though Castroneves has not been directly paid the Penske money, he should have paid taxes long ago. The ultimate goal, the prosecutor said, was for Castroneves to leave the U.S. and escape the IRS.
"It was the only way they could achieve their goal of having Helio Castroneves illegally get his money tax-free," Axelrod said.
Black disputed the theory and said Castroneves lives in Coral Gables, a Miami suburb.
Prosecutors also claim Castroneves neglected to pay U.S. taxes on income from a sponsorship deal with the Brazilian company Coimex and that he didn't declare as income thousands of dollars worth of clothes and airline tickets he got from other deals.
Castroneves, 33, won the Indy 500 in 2001 and 2002 and the TV dance competition in 2007. He has been temporarily replaced on Team Penske by Australian Will Power pending the outcome of the trial. The Indy Racing League season begins April 5.
Monday, March 2, 2009
Tax trial begins for Castroneves
(by the Associated Press 3-2-09)
MIAMI -- On top of the world a few months ago, Brazilian race car driver and "Dancing with the Stars" champ Helio Castroneves faces possible prison time if convicted at a tax evasion trial that began Monday with jury selection.
Castroneves, a two-time winner of the Indianapolis 500, smiled broadly as he entered Miami's downtown federal courthouse. Prosecutors say Castroneves, his business-manager sister Katiucia and Michigan attorney Alan R. Miller conspired to hide about $5.5 million in income from the Internal Revenue Service using offshore accounts.
Castroneves claims he relied on experts to advise him on handling finances. He also says his father controlled a Panamanian entity called Seven Promotions at the heart of the prosecution's case.
Castroneves claims the money Seven Promotions received wasn't his tax liability because the income was for his father, who had financed and promoted his son's career for over 10 years.
Castroneves, his sister and Miller also deny acting "willfully" to evade taxes and that they took improper deductions.
Under federal sentencing guidelines, Castroneves, 33, could get more than six years in prison if convicted of conspiracy and tax evasion from 1999 to 2004. That would short-circuit a brilliant racing career that began in Sao Paulo, Brazil, where a youthful Castroneves broke into the sport by driving go-carts.
Before the trial, U.S. District Judge Donald Graham rejected defense efforts to introduce a large amount of racing memorabilia and numerous photos of Castroneves' rise from obscurity to the pinnacle of his sport.
"It seems to me that many of these exhibits are far afield of the issues in this case," Graham said.
Graham said he hoped to seat a jury of 12 people plus alternates by late Monday or Tuesday. Many prospective jurors said they had watched Castroneves either in a race or on the TV dance competition, which he won in 2007.
"I watched him every week on 'Dancing With The Stars' and you feel like you know the person," one female juror said. Asked by prosecutor Matt Axelrod if that would impact her ability to be impartial, the woman answered, "Probably."
Another male juror said he had called in to vote for Castroneves 12 times on the TV show. "I was a huge fan of his," the man said.
Defense questions focused mainly on whether jurors relied on professional expertise to file their taxes and whether they expected to pay the least amount possible under the law.
The trial is expected to take up to six weeks, and Castroneves has already been temporarily replaced on Team Penske by Australian driver Will Power for the Indy Racing League season that starts April 5 in St. Petersburg.
Two other prominent Latin American drivers -- Brazilian Tony Kanaan and Colombian Juan Pablo Montoya -- may testify on Castroneves' behalf, along with Miami philanthropist Adrienne Arsht.
Miller, a former professional football player turned attorney, has former Buffalo Bills quarterback and ex-U.S. House member Jack Kemp and racing mogul Roger Penske on his witness list.
The defense legal team also sports some big names: Miller is represented by Robert Bennett, who was President Bill Clinton's lawyer in the Paula Jones sexual harassment case; Roy Black, who represented radio host Rush Limbaugh in his prescription drug misuse case is there on behalf of Castroneves.
Castroneves, who lives in Coral Gables, won the Indy 500 in 2001 and 2002, then rocketed to even greater fame in 2007 by winning the television show dancing competition with partner Julianne Hough. Castroneves and his co-defendants were indicted Oct. 2.
MIAMI -- On top of the world a few months ago, Brazilian race car driver and "Dancing with the Stars" champ Helio Castroneves faces possible prison time if convicted at a tax evasion trial that began Monday with jury selection.
Castroneves, a two-time winner of the Indianapolis 500, smiled broadly as he entered Miami's downtown federal courthouse. Prosecutors say Castroneves, his business-manager sister Katiucia and Michigan attorney Alan R. Miller conspired to hide about $5.5 million in income from the Internal Revenue Service using offshore accounts.
Castroneves claims he relied on experts to advise him on handling finances. He also says his father controlled a Panamanian entity called Seven Promotions at the heart of the prosecution's case.
Castroneves claims the money Seven Promotions received wasn't his tax liability because the income was for his father, who had financed and promoted his son's career for over 10 years.
Castroneves, his sister and Miller also deny acting "willfully" to evade taxes and that they took improper deductions.
Under federal sentencing guidelines, Castroneves, 33, could get more than six years in prison if convicted of conspiracy and tax evasion from 1999 to 2004. That would short-circuit a brilliant racing career that began in Sao Paulo, Brazil, where a youthful Castroneves broke into the sport by driving go-carts.
Before the trial, U.S. District Judge Donald Graham rejected defense efforts to introduce a large amount of racing memorabilia and numerous photos of Castroneves' rise from obscurity to the pinnacle of his sport.
"It seems to me that many of these exhibits are far afield of the issues in this case," Graham said.
Graham said he hoped to seat a jury of 12 people plus alternates by late Monday or Tuesday. Many prospective jurors said they had watched Castroneves either in a race or on the TV dance competition, which he won in 2007.
"I watched him every week on 'Dancing With The Stars' and you feel like you know the person," one female juror said. Asked by prosecutor Matt Axelrod if that would impact her ability to be impartial, the woman answered, "Probably."
Another male juror said he had called in to vote for Castroneves 12 times on the TV show. "I was a huge fan of his," the man said.
Defense questions focused mainly on whether jurors relied on professional expertise to file their taxes and whether they expected to pay the least amount possible under the law.
The trial is expected to take up to six weeks, and Castroneves has already been temporarily replaced on Team Penske by Australian driver Will Power for the Indy Racing League season that starts April 5 in St. Petersburg.
Two other prominent Latin American drivers -- Brazilian Tony Kanaan and Colombian Juan Pablo Montoya -- may testify on Castroneves' behalf, along with Miami philanthropist Adrienne Arsht.
Miller, a former professional football player turned attorney, has former Buffalo Bills quarterback and ex-U.S. House member Jack Kemp and racing mogul Roger Penske on his witness list.
The defense legal team also sports some big names: Miller is represented by Robert Bennett, who was President Bill Clinton's lawyer in the Paula Jones sexual harassment case; Roy Black, who represented radio host Rush Limbaugh in his prescription drug misuse case is there on behalf of Castroneves.
Castroneves, who lives in Coral Gables, won the Indy 500 in 2001 and 2002, then rocketed to even greater fame in 2007 by winning the television show dancing competition with partner Julianne Hough. Castroneves and his co-defendants were indicted Oct. 2.
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