(by Robin Miller speedtv.com 3-10-09)
IZOD is poised to launch one of the largest advertising and promotional campaigns in the Indy Racing League's 14-year history.
Beginning in a few weeks there will be a national television spot, promo trailers in movie theaters, ads in major magazines and newspapers and in-store promotions at Macy's stores across the country that will also include a special Indy 500 clothing line.
It's estimated several million dollars in media value has been budgeted for this project. But there is a little snag in clothing line's plan to take Indy-car racing to the mainstream. No, make that a big snag. The guy they put all the promotion behind, the guy in the TV commercial, the guy in the print ads and the guy on the 90-foot billboard in Times Square doesn't have a ride for the 2009 season.
Ryan Hunter-Reay, signed last summer as the face of the IRL for IZOD, is still unemployed 25 days before the season opener at St. Petersburg.
"I'm told that I don't have to worry, although I don't know what that means yet," said Mike Kelly, the president of marketing for Phillip Van Husen, the parent company of IZOD. "I know the the IRL is as concerned as I am and we speak about it daily.
"I do know we will have a significant problem if Ryan is not in a car."
If Kelly sounds concerned he's got a right to be. It's been a long time since any major companies outside of motorsports jumped into the open wheel game like IZOD and they hung their hat on a fast, handsome, articulate American because the IRL hand-picked the 28-year-old native of Boca Raton, Fla. By the same token, it's not the IRL's fault that Ethanol bailed as Rahal/Letterman's title sponsor and and RHR was left by the side of the road.
Because of Tony George's history of paying for drivers, cars, engines and teams, this situation needs to be rectified. Soon.
Terry Angstadt, president of the IRL's commercial division, understands the ramifications and is working hard to get RHR in a car. "I think we're going get there, we're hitting it from every angle," said Angstadt. "It's a massive opportunity for all of us. We have three different B to B opportunities they've (IZOD) already actively engaged which could help Ryan."
As it stands today, it would appear that RHR could be placed in the second seat with Keith Wiggins' HVM squad or possibly George's Vision Racing or KV Racing. Kelly, who had never seen an IndyCar race until last summer when Hunter-Reay pulled into victory lane at Watkins Glen, remains gung-ho about the product.
"It's got young drivers, unification, great racing and there's a lot of sexy stories about the IRL that we want to take to the masses through fashion and pop culture," said Kelly. "We're going to launch that clothing line at major department stores across the US and Canda. In Toronto, we're going to have trolley cars wrapped like Indy cars and we've got a huge publicity event planned for Macy's Herald Square in May.
"We want to create as much hoopla as possible. It's our first venture into motorsports and we want it to be a success." But getting the star of IZOD's promotions into a competitive car is front and center right now. Asked if IZOD considered being RHR's sponsor, Kelly replied: "No, our spend is outside the car space because our role as a partner is to leverage the sport into mainstream culture.
"And we feel like we've got a lot of avenues to do just that."
Wednesday, March 11, 2009
Accountant: Castroneves didn't seek tax evasion
(by Curt Anderson AP Legal Affairs Writer 3-11-09)
MIAMI -- Race car driver and TV dance celebrity Helio Castroneves never sought to break the law in his financial affairs but could have avoided all U.S. tax on about $5 million if he had relocated from south Florida to Monaco as envisioned, an accountant testified Wednesday at Castroneves' tax evasion trial.
Kevin Savoree, now an executive at Andretti Green Racing, said when he handled accounting work for Castroneves in 1999 and 2000, the plan was to set up a legitimate deal in which much of the two-time Indianapolis 500 winner's income would be deferred. That meant his taxes owed to the IRS also would be deferred until he actually got the money.
"Helio Castroneves never suggested that you do something improper, right?" asked Castroneves attorney David Garvin.
"Absolutely not," Savoree replied.
But Savoree acknowledged helping draft a memo describing the ultimate goal as having Castroneves "maintain a residence in a tax haven, such as Monaco." Castroneves, a Brazilian citizen in the U.S. on a work visa, currently lives in Coral Gables, Fla., just south of Miami.
Asked by prosecutor Jared Dwyer how much U.S. tax Castroneves would have paid on the $5 million if he had made that move, Savoree answered, "Perhaps zero."
Savoree said Castroneves had minimal involvement in his financial dealings, but he also said the race car driver got "mad as hell" at one point as discussions dragged on in 2000 about the deferred income account.
"He was upset. He wanted the matters resolved," Savoree testified.
Castroneves, his sister-manager Katiucia Castroneves and Michigan attorney Alan Miller all face more than six years in prison if convicted of conspiracy and tax evasion charges involving about $5.5 million in income. The years in question, 1999-2004, were well before Castroneves won TV's "Dancing With The Stars" competition in 2007.
The deferred income account was eventually set up in 2003 when Penske Racing, which had signed Castroneves in 1999, deposited $5 million in the Dutch firm Fintage Licensing B.V. Penske also directly paid Castroneves $1 million over three years, on which he paid U.S. taxes.
The original plan was for Penske to transfer the money to a Panamanian company called Seven Promotions. But Savoree said he balked at that because Panama's status as a tax haven meant Penske would deduct 30 percent for U.S. taxes from the $5 million before making the deposit.
"I wasn't comfortable with Panama," he testified.
Prosecutors say Castroneves secretly controlled Seven Promotions and therefore is liable for taxes on the entire $5 million, even though it eventually wound up with the Dutch firm. Defense lawyers contend the company was formed by the driver's father, meaning no taxes are owed.
MIAMI -- Race car driver and TV dance celebrity Helio Castroneves never sought to break the law in his financial affairs but could have avoided all U.S. tax on about $5 million if he had relocated from south Florida to Monaco as envisioned, an accountant testified Wednesday at Castroneves' tax evasion trial.
Kevin Savoree, now an executive at Andretti Green Racing, said when he handled accounting work for Castroneves in 1999 and 2000, the plan was to set up a legitimate deal in which much of the two-time Indianapolis 500 winner's income would be deferred. That meant his taxes owed to the IRS also would be deferred until he actually got the money.
"Helio Castroneves never suggested that you do something improper, right?" asked Castroneves attorney David Garvin.
"Absolutely not," Savoree replied.
But Savoree acknowledged helping draft a memo describing the ultimate goal as having Castroneves "maintain a residence in a tax haven, such as Monaco." Castroneves, a Brazilian citizen in the U.S. on a work visa, currently lives in Coral Gables, Fla., just south of Miami.
Asked by prosecutor Jared Dwyer how much U.S. tax Castroneves would have paid on the $5 million if he had made that move, Savoree answered, "Perhaps zero."
Savoree said Castroneves had minimal involvement in his financial dealings, but he also said the race car driver got "mad as hell" at one point as discussions dragged on in 2000 about the deferred income account.
"He was upset. He wanted the matters resolved," Savoree testified.
Castroneves, his sister-manager Katiucia Castroneves and Michigan attorney Alan Miller all face more than six years in prison if convicted of conspiracy and tax evasion charges involving about $5.5 million in income. The years in question, 1999-2004, were well before Castroneves won TV's "Dancing With The Stars" competition in 2007.
The deferred income account was eventually set up in 2003 when Penske Racing, which had signed Castroneves in 1999, deposited $5 million in the Dutch firm Fintage Licensing B.V. Penske also directly paid Castroneves $1 million over three years, on which he paid U.S. taxes.
The original plan was for Penske to transfer the money to a Panamanian company called Seven Promotions. But Savoree said he balked at that because Panama's status as a tax haven meant Penske would deduct 30 percent for U.S. taxes from the $5 million before making the deposit.
"I wasn't comfortable with Panama," he testified.
Prosecutors say Castroneves secretly controlled Seven Promotions and therefore is liable for taxes on the entire $5 million, even though it eventually wound up with the Dutch firm. Defense lawyers contend the company was formed by the driver's father, meaning no taxes are owed.
Monday, March 9, 2009
Keep an eye on Graham Rahal
(by John Oreovicz espn.go.com 3-9-09)
Graham Rahal is just 20 years old, yet he enters the 2009 season as the lead driver for the second-most successful team in Indy-style racing's modern era. His Newman/Haas/Lanigan Racing teammates will include one driver who has never competed in a race on an oval track (in a series in which two-thirds of the events are staged on ovals) and a perennial back marker who has been the subject of scorn and ridicule from every corner of the sport.
Yet if there is any upcoming driver in any form of motorsport who is up to the challenge, it's young Rahal, who possesses skill and maturity well beyond his years. The son of three-time CART champion (and 1986 Indianapolis 500 winner) Bobby Rahal is as polished in and out of the car as most drivers twice his age and appears destined for a long and successful career in Indy car racing -- and possibly Formula One.
It's a credit to the senior Rahal (and his ex-wife, Debi) that Graham was clearly ready to graduate to American open-wheel racing's top level when he was just 18 years of age. Thrust into the Champ Car World Series in 2007 with Newman/Haas Racing as teammate to multiple series champion Sebastien Bourdais, Rahal held his own, notching five top-five finishes on the way to fifth place in the championship.
The learning curve only got steeper for Rahal in 2008 when Champ Car folded and the renamed Newman/Haas/Lanigan Racing made the last-minute jump to the IndyCar Series. A testing crash forced Graham to miss the first race of the season, but a week later, he stood in victory circle after a heady drive in changing conditions at St. Petersburg made him the youngest-ever winner of an IndyCar Series race -- in his very first start.
The fairy tale didn't last. The rest of Rahal's season was a mixture of flashes of brilliance and rookie mistakes as NHLR sometimes struggled to come to terms with the IndyCar Series' Dallara-Honda spec car and preponderance of oval races. Still, he did enough to convince observers that he could definitely win more races in 2009 and possibly emerge as a dark-horse championship candidate.
"I think that the expectations that are put in place aren't necessarily because of my role in the team, but more because of the fact that I want to go out there and win races and be successful," Rahal said prior to the first IndyCar open test of the 2009 season. "Coming from a situation like Champ Car and transitioning here last year, it's all building blocks of leadership skills and a lot of learning that has taken place. Basically every step of my career has been a learning year for me. So this season I think the entire team comes into it with a lot more confidence, knowing that we ought to have a much better shot at being successful and winning races.
"That's the biggest thing, and for me it's exciting to be in the position that I'm in," he continued. "I want to go out there and win races and prove that I deserve the role that I've taken in this team. I feel like I've done a good job of building the team around me in the past couple of years and now hopefully that will all show through."
Although Newman/Haas/Lanigan Racing ranks second only to Team Penske in terms of Indy racing wins and championships, the team struggled to find adequate sponsorship until female racer Milka Duno stepped forth with what is reputed to be an eight-figure package from Citgo and Arctic Ice energy drink.
While many observers believe NHLR would be more successful in 2009 had it been able to carry over its driver pairing of Rahal and Justin Wilson (also an IndyCar race winner in 2008), it was only the arrival of Duno and Robert Doornbos (who also is bringing funding to the team) that allowed it continue as a multicar effort.
In effect, what looks like one step back for the team in terms of IndyCar experience could result in two steps forward for Rahal's personal progress.
"For such a long time it looked like it was just going to be me in the team, and there was going to be a lot more pressure because I was going to be the one holding things together," Rahal said. "It's exciting that we've got a few cars here now and something that we can really build upon. We've got good financial backing, which is important for us to develop the cars as we go forward and hopefully do some more testing. That will hopefully make us more competitive in the end."
Rahal said he's not worried about Doornbos' total lack of oval experience and Duno's perceived lack of skill and added that he is open to helping them along -- to a point.
"I'm the type that if they come and ask, I'll give them an honest answer," he said. "But I'm not going to go out there and share it. If you're new to a series, then you should be asking questions. Obviously I'm willing to help out in any way I can. Robert will catch on quickly and Milka's got experience. At the end of the day, the racing here will be a completely new experience for [Doornbos], but he will be quick -- there's no doubt about that -- and that's something that we as a team can build upon.
"For me it's good just to have the extra data," Rahal continued. "On a road course it's a different situation because there is a lot for Milka to learn, and we're going to try to help her along there. But on the ovals it's going to help just to have a couple extra cars to try different things on. Last year Justin and I were both learning the oval thing, we were both learning the cars, and the team was learning the cars. So it was pretty tough to have a strong comparison between one another. This year I think we again kind of find ourselves in the same position because Robert obviously has a lot to learn. But it's always a bonus if you can have more than one competitive car to learn from, and that's what we're hoping to have this year."
Doornbos noted that he will certainly rely on his young teammate as a resource as he gets to grips with the IndyCar Series.
"Graham is a great guy," Doornbos said. "I know him from Champ Car in 2007 and obviously he has a big name in the U.S. There is maybe some pressure on him to perform, but I think we should have a strong team this year."
One interested observer outside the Newman/Haas/Lanigan team who believes that Graham will have a breakout season is somebody who should know -- his father, who competed against NHLR for most of the past 25 years as a driver or team owner.
"From what I know, [NHLR] had some very good tests at the end of the year at Richmond and Texas," Bobby Rahal said. "That's a very strong team, particularly from an engineering standpoint, and it's one year later with a little bit more experience for everybody.
"This will be the first time in Graham's career that he's driven the same car for more than one year," Rahal added. "Every year it has been a new car and a new learning experience. This is the first year he'll be sitting in the same type of car and going back to the same tracks and everything else. I think he certainly had some good runs last year, so I suspect he and the team will be more competitive."
Graham Rahal is just 20 years old, yet he enters the 2009 season as the lead driver for the second-most successful team in Indy-style racing's modern era. His Newman/Haas/Lanigan Racing teammates will include one driver who has never competed in a race on an oval track (in a series in which two-thirds of the events are staged on ovals) and a perennial back marker who has been the subject of scorn and ridicule from every corner of the sport.
Yet if there is any upcoming driver in any form of motorsport who is up to the challenge, it's young Rahal, who possesses skill and maturity well beyond his years. The son of three-time CART champion (and 1986 Indianapolis 500 winner) Bobby Rahal is as polished in and out of the car as most drivers twice his age and appears destined for a long and successful career in Indy car racing -- and possibly Formula One.
It's a credit to the senior Rahal (and his ex-wife, Debi) that Graham was clearly ready to graduate to American open-wheel racing's top level when he was just 18 years of age. Thrust into the Champ Car World Series in 2007 with Newman/Haas Racing as teammate to multiple series champion Sebastien Bourdais, Rahal held his own, notching five top-five finishes on the way to fifth place in the championship.
The learning curve only got steeper for Rahal in 2008 when Champ Car folded and the renamed Newman/Haas/Lanigan Racing made the last-minute jump to the IndyCar Series. A testing crash forced Graham to miss the first race of the season, but a week later, he stood in victory circle after a heady drive in changing conditions at St. Petersburg made him the youngest-ever winner of an IndyCar Series race -- in his very first start.
The fairy tale didn't last. The rest of Rahal's season was a mixture of flashes of brilliance and rookie mistakes as NHLR sometimes struggled to come to terms with the IndyCar Series' Dallara-Honda spec car and preponderance of oval races. Still, he did enough to convince observers that he could definitely win more races in 2009 and possibly emerge as a dark-horse championship candidate.
"I think that the expectations that are put in place aren't necessarily because of my role in the team, but more because of the fact that I want to go out there and win races and be successful," Rahal said prior to the first IndyCar open test of the 2009 season. "Coming from a situation like Champ Car and transitioning here last year, it's all building blocks of leadership skills and a lot of learning that has taken place. Basically every step of my career has been a learning year for me. So this season I think the entire team comes into it with a lot more confidence, knowing that we ought to have a much better shot at being successful and winning races.
"That's the biggest thing, and for me it's exciting to be in the position that I'm in," he continued. "I want to go out there and win races and prove that I deserve the role that I've taken in this team. I feel like I've done a good job of building the team around me in the past couple of years and now hopefully that will all show through."
Although Newman/Haas/Lanigan Racing ranks second only to Team Penske in terms of Indy racing wins and championships, the team struggled to find adequate sponsorship until female racer Milka Duno stepped forth with what is reputed to be an eight-figure package from Citgo and Arctic Ice energy drink.
While many observers believe NHLR would be more successful in 2009 had it been able to carry over its driver pairing of Rahal and Justin Wilson (also an IndyCar race winner in 2008), it was only the arrival of Duno and Robert Doornbos (who also is bringing funding to the team) that allowed it continue as a multicar effort.
In effect, what looks like one step back for the team in terms of IndyCar experience could result in two steps forward for Rahal's personal progress.
"For such a long time it looked like it was just going to be me in the team, and there was going to be a lot more pressure because I was going to be the one holding things together," Rahal said. "It's exciting that we've got a few cars here now and something that we can really build upon. We've got good financial backing, which is important for us to develop the cars as we go forward and hopefully do some more testing. That will hopefully make us more competitive in the end."
Rahal said he's not worried about Doornbos' total lack of oval experience and Duno's perceived lack of skill and added that he is open to helping them along -- to a point.
"I'm the type that if they come and ask, I'll give them an honest answer," he said. "But I'm not going to go out there and share it. If you're new to a series, then you should be asking questions. Obviously I'm willing to help out in any way I can. Robert will catch on quickly and Milka's got experience. At the end of the day, the racing here will be a completely new experience for [Doornbos], but he will be quick -- there's no doubt about that -- and that's something that we as a team can build upon.
"For me it's good just to have the extra data," Rahal continued. "On a road course it's a different situation because there is a lot for Milka to learn, and we're going to try to help her along there. But on the ovals it's going to help just to have a couple extra cars to try different things on. Last year Justin and I were both learning the oval thing, we were both learning the cars, and the team was learning the cars. So it was pretty tough to have a strong comparison between one another. This year I think we again kind of find ourselves in the same position because Robert obviously has a lot to learn. But it's always a bonus if you can have more than one competitive car to learn from, and that's what we're hoping to have this year."
Doornbos noted that he will certainly rely on his young teammate as a resource as he gets to grips with the IndyCar Series.
"Graham is a great guy," Doornbos said. "I know him from Champ Car in 2007 and obviously he has a big name in the U.S. There is maybe some pressure on him to perform, but I think we should have a strong team this year."
One interested observer outside the Newman/Haas/Lanigan team who believes that Graham will have a breakout season is somebody who should know -- his father, who competed against NHLR for most of the past 25 years as a driver or team owner.
"From what I know, [NHLR] had some very good tests at the end of the year at Richmond and Texas," Bobby Rahal said. "That's a very strong team, particularly from an engineering standpoint, and it's one year later with a little bit more experience for everybody.
"This will be the first time in Graham's career that he's driven the same car for more than one year," Rahal added. "Every year it has been a new car and a new learning experience. This is the first year he'll be sitting in the same type of car and going back to the same tracks and everything else. I think he certainly had some good runs last year, so I suspect he and the team will be more competitive."
$5 million key to Castroneves trial
(by the Associated Press 3-9-08)
MIAMI -- To this day, race-car driver and "Dancing with the Stars" winner Helio Castroneves hasn't seen a single dime of $5 million in licensing money he was promised under a 1999 contract with Penske Racing. It's either been parked at Penske or is still idling in a Dutch investment account.
But the Internal Revenue Service says Castroneves owes U.S. income taxes on the money anyway, contending the 33-year-old driver can't avoid tax by simply refusing cash to which he's entitled. A complex concept known as "constructive receipt" is at the heart of the prosecution's case against the two-time Indianapolis 500 winner.
Testimony resumes Tuesday in the tax trial of Castroneves, his business-manager sister Katiucia Castroneves -- both originally from Sao Paulo, Brazil -- and his lawyer Alan Miller of Birmingham, Mich. All are charged in a seven-count federal indictment with conspiracy and tax evasion from 1999 to 2004.
The three defendants are facing more than six years behind bars if convicted. Trial is expected to last about a month.
Experts say jurors will have to decide if the Castroneves deal was real or contrived to make it appear he didn't have control of his Penske money.
"What the government is saying is, if you are entitled to some cash, and you leave it in your mother's bank account, it's still your cash," said Chas Roy-Chowdhury, a tax expert with the global industry group Association of Chartered Certified Accountants.
Castroneves is a top Indy Racing League driver, winning the Indy 500 in 2001 and 2002 and finishing second in 2003. In 2007, he gained even greater fame by winning TV's "Dancing with the Stars" competition.
Issues at trial have their origins in the final event of 1999 of the Championship Auto Racing Teams, or CART -- at the time a rival of the Indy Racing League. On Oct. 31 of that year in Fontana, Calif., Castroneves was driving in the final race for his soon-to-be-disbanded Hogan team and Greg Moore was about to sign a lucrative new contract with Penske Racing.
Moore crashed and was killed. In less than a week, Penske signed Castroneves, using Moore's contract by simply crossing out the old names and amounts and replacing them in handwritten notations. Miller negotiated that deal for $6 million -- $1 million in paid directly to Castroneves and $5 million to license Castroneves' name and image.
At first, the $5 million was supposed to flow to a Panamanian corporation called Seven Promotions.
In mid-December 1999, Miller sent a letter to Penske asking that the transaction be halted, according to trial testimony. Penske's general counsel, Lawrence Bluth, said the company held onto the Castroneves cash until January 2003, when it was invested with Netherlands firm Fintage Licensing B.V., where it remains today.
"We were ready to make payments to Seven Promotions. We were told not to," Bluth testified.
The IRS and federal prosecutors charge that arrangement was a tax dodge.
They contend Castroneves secretly controlled Seven Promotions -- disputed vigorously by the defense -- and should have paid U.S. taxes under the "constructive receipt" doctrine as soon as Penske was ready to start cutting checks.
"The individual's wishes do not control," said Assistant U.S. Attorney Matt Axelrod. "A taxpayer may not deliberately turn his back upon income and thereby select the year for which he will report it."
Miller, a former professional football player and architect of the Castroneves contract, contends the IRS is wrong. In court papers, Miller attorney Robert Bennett said Castroneves never had control of the $5 million and therefore owes no tax.
Castroneves planned to pay the IRS when the "deferred royalty agreement" -- a way of delaying income described as similar to a 401(k) -- at Fintage comes due to him in May of this year, defense lawyers say. It's not unusual for athletes to receive some compensation at later dates, they say.
"Athletes ordinarily have a short period of economic productivity in their youth, and they may not be responsible enough to manage the money for a lifetime if they receive it all at once," Bennett said.
Axelrod, however, said the whole arrangement is fictional, with Castroneves' ultimate goal to move out of the U.S. to a tax haven such as Monaco where he would eventually get the Penske money tax-free.
Castroneves attorney Roy Black said the driver, who lives in a $2.2 million home in Coral Gables, never schemed to hide money from the IRS. He said in opening statements that the driver knows nothing about U.S. tax laws and relied on experts to handle his finances.
"They've come up with a fiction," Black said.
MIAMI -- To this day, race-car driver and "Dancing with the Stars" winner Helio Castroneves hasn't seen a single dime of $5 million in licensing money he was promised under a 1999 contract with Penske Racing. It's either been parked at Penske or is still idling in a Dutch investment account.
But the Internal Revenue Service says Castroneves owes U.S. income taxes on the money anyway, contending the 33-year-old driver can't avoid tax by simply refusing cash to which he's entitled. A complex concept known as "constructive receipt" is at the heart of the prosecution's case against the two-time Indianapolis 500 winner.
Testimony resumes Tuesday in the tax trial of Castroneves, his business-manager sister Katiucia Castroneves -- both originally from Sao Paulo, Brazil -- and his lawyer Alan Miller of Birmingham, Mich. All are charged in a seven-count federal indictment with conspiracy and tax evasion from 1999 to 2004.
The three defendants are facing more than six years behind bars if convicted. Trial is expected to last about a month.
Experts say jurors will have to decide if the Castroneves deal was real or contrived to make it appear he didn't have control of his Penske money.
"What the government is saying is, if you are entitled to some cash, and you leave it in your mother's bank account, it's still your cash," said Chas Roy-Chowdhury, a tax expert with the global industry group Association of Chartered Certified Accountants.
Castroneves is a top Indy Racing League driver, winning the Indy 500 in 2001 and 2002 and finishing second in 2003. In 2007, he gained even greater fame by winning TV's "Dancing with the Stars" competition.
Issues at trial have their origins in the final event of 1999 of the Championship Auto Racing Teams, or CART -- at the time a rival of the Indy Racing League. On Oct. 31 of that year in Fontana, Calif., Castroneves was driving in the final race for his soon-to-be-disbanded Hogan team and Greg Moore was about to sign a lucrative new contract with Penske Racing.
Moore crashed and was killed. In less than a week, Penske signed Castroneves, using Moore's contract by simply crossing out the old names and amounts and replacing them in handwritten notations. Miller negotiated that deal for $6 million -- $1 million in paid directly to Castroneves and $5 million to license Castroneves' name and image.
At first, the $5 million was supposed to flow to a Panamanian corporation called Seven Promotions.
In mid-December 1999, Miller sent a letter to Penske asking that the transaction be halted, according to trial testimony. Penske's general counsel, Lawrence Bluth, said the company held onto the Castroneves cash until January 2003, when it was invested with Netherlands firm Fintage Licensing B.V., where it remains today.
"We were ready to make payments to Seven Promotions. We were told not to," Bluth testified.
The IRS and federal prosecutors charge that arrangement was a tax dodge.
They contend Castroneves secretly controlled Seven Promotions -- disputed vigorously by the defense -- and should have paid U.S. taxes under the "constructive receipt" doctrine as soon as Penske was ready to start cutting checks.
"The individual's wishes do not control," said Assistant U.S. Attorney Matt Axelrod. "A taxpayer may not deliberately turn his back upon income and thereby select the year for which he will report it."
Miller, a former professional football player and architect of the Castroneves contract, contends the IRS is wrong. In court papers, Miller attorney Robert Bennett said Castroneves never had control of the $5 million and therefore owes no tax.
Castroneves planned to pay the IRS when the "deferred royalty agreement" -- a way of delaying income described as similar to a 401(k) -- at Fintage comes due to him in May of this year, defense lawyers say. It's not unusual for athletes to receive some compensation at later dates, they say.
"Athletes ordinarily have a short period of economic productivity in their youth, and they may not be responsible enough to manage the money for a lifetime if they receive it all at once," Bennett said.
Axelrod, however, said the whole arrangement is fictional, with Castroneves' ultimate goal to move out of the U.S. to a tax haven such as Monaco where he would eventually get the Penske money tax-free.
Castroneves attorney Roy Black said the driver, who lives in a $2.2 million home in Coral Gables, never schemed to hide money from the IRS. He said in opening statements that the driver knows nothing about U.S. tax laws and relied on experts to handle his finances.
"They've come up with a fiction," Black said.
Friday, March 6, 2009
So many reasons to doubt U.S. in F1
(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.
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.
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.
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