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APBA Offshore Racing,LLC - Business Plan - (99yr. License)
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APBA Offshore Powerboat Racing, LLC.
CORPORATE OVERVIEW
Prepared: July 2002
By Michael D. Allweiss
Chairman/CEO
APBA Offshore
111 2d Ave. N.E. Ste. 620
727-821-APBA (2722)
Mallweiss@aol.com
__________________________________
This document and its contents are confidential and the property of APBA Offshore Powerboat Racing, LLC. No reproduction of all or
any part of this plan or any redistribution thereof is permissible without the prior written consent of APBA Offshore Powerboat
Racing, LLC.
This business plan is intended to convey information only, and shall not constitute or be construed as an offer to sell or the solicitation
of an offer to buy securities.
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Executive Summary
I. INTRODUCTION
APBA Offshore Powerboat Racing, LLC. (“Offshore”) is a Florida Limited Liability
Company founded in April 2000. Offshore holds an exclusive 99year license (the
“License”) from the American Powerboat Association (“APBA”). The License grants
Offshore full right, power and authority to exercise all aspects of the sport of offshore
power boat racing (and related activities and special events) under the APBA name and
sanctioning authority and, correspondingly, provides that APBA shall not, itself or
through any other party or in any manner, conduct any such activities.
APBA is a New York not-for-profit corporation founded in 1903 that, among other things,
prior to the License, acted and was recognized as the primary organizational and
sanctioning body for offshore power boat racing and related special events throughout the
United States and North America. Prior to the License APBA conducted its offshore
racing operations through an unincorporated division known as the Offshore Category
(the “Category”). The functions of the Category included oversight and management of
racing competition, including technical rule making, event rules enforcement, and event
production and television production of those events at both the national and divisional/
regional levels. The License grants all such authority to Offshore for 99 years.
Offshore is a distinct for-profit business organization owned and managed by a small
group of current APBA/Category members (the “Members”). Offshore was formed for
the purpose of assuming all responsibility and authority relating to, and conducting the
foregoing business activities of the Category and other business activities relating to the
sport including but not being limited to membership marketing and sales, licensing and
merchandising, poker run event sanctioning and production, endurance run sanctioning
and production, speed record run sanctioning and production, marine manufacturer show
production, television production and promotion of such events, product development
and sales, and sponsorship sales
II. OFFSHORE’S CORE BUSINESS – SANCTIONING BODY
The APBA has been sanctioning offshore powerboat races throughout the United States,
Caribbean and Canada for over 40 years. Since entering into the License Offshore has
sanctioned a national racing circuit (“The Pro Series”) consisting of 8-10 events per year,
including a year-end World Championship, and 16 regional/divisional races, in
California, Florida, Maryland, Canada, Texas, Michigan, New York, Georgia,
Massachusetts, Ohio, Arizona, and New Jersey.
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The principal “profit centers” relating to Offshore’s core sanctioning body business are as
follows:
1. Series Sponsorships
2. Event Sponsorships
3. Competitor Contingency Sponsorships
4. Television
5. Sanction Fees
6. Profit Sharing with Event Organizers
7. Entry Fees
8. Boat Registration Fees
9. Membership Fees
10. Licensing
a. Apparel
b. Merchandise
c. Racing Related Products and Services
The principal “product” relating to Offshore’s core sanctioning body business shall be its
Pro Series national racing circuit and regional/divisional racing circuits. The Pro Series
Circuit shall consist of 8-10 events annually. The divisional/regional racing shall consist
of Western, Central, Northeast and Southeast Regions with a minimum of 10-20 races per
year. The racing shall be comprised of boats competing in 4 classifications: Super Cats,
Super Vees, Factory Vees, and Outlaws.
III. OFFSHORE’S STRATEGIC GOALS AND OBJECTIVES
Over the next four years, Offshore’s primary strategic goal and objective will be to
become the premier offshore boat racing sanctioning body in the United States and thus a
well recognized, highly respected, and financially successful motorsport entertainment
property. To achieve this goal, Offshore shall:
1. Continue to develop a competition based rules model for its racing operations
and activities that emphasizes:
a. Relatively low cost, affordable, “level playing field” racing for its
competitors, and participating marine industry manufacturers;
b. Participation of the marine industry from a competition and financial
perspective; and
c. Close, exciting competition for its racers and fans, that yields multiple
winners throughout the various racing series.
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2. Continue to develop a professional staff that effectively develops, implements
and manages the rules making and enforcement process with fairness and
integrity.
3. Continue to develop a professional staff that effectively manages the offshore
racing specific logistics and operations at the events.
4. Secure relationships with experienced, professional event organizers to
annually produce 8-10 high quality family oriented entertainment events,
which feature offshore powerboat racing, and a stable consistent racing
schedule, on a national basis, plus 10-20 similar but smaller scale regional/
divisional events.
5. Stage these events in major metropolitan areas or destination locations in
North America, the Caribbean and abroad.
6. Develop a strong national sponsorship and racer contingency sales program
7. Produce first class, high quality, exciting television entertainment through its
television division, APBA Offshore Television.
8. Produce an exciting, interactive, informative and entertaining website and
internet presence.
9. Produce high quality, comprehensive, product licensing, merchandising and
apparel programs.
10. Produce effective and informative public relations and media programs.
11. Produce a comprehensive, valuable, consumer oriented affinity membership
program consisting of racers and non-racers (consumers).
12. Produce these events, races and programs in a manner that enhances and
promotes the APBA Offshore brand and the sport of offshore powerboat
racing for the benefit of all of our business partners.
Offshore will seek strategic licensing relationships with qualified business partners to
help it design and execute many of these programs.
Additionally, Offshore will soon embark on a capital campaign to raise approximately
$2.0 million to enhance the operations and management of Offshore’s business activities
and further assist it in the achievement of its goals and objectives. The funds will be used
primarily:
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1. To develop a national sponsorship and racer contingency sales organization;
2. To develop a national race event production/logistics organization.
3. To build a management team that will allow APBA Offshore to grow and
develop its national and regional racing series.
4. To allow Offshore to expand the scope of its television, public relations,
promotional, membership, retail sales and internet programs.
IV. ECONOMICS OF OFFSHORE
Offshore has experienced tremendous growth since 1998 when the Category still operated
under the control of APBA. Specifically, in 1998 series sponsorship sales were less than
$350,000 and total revenues were less than $750,000. The average fleet count at national
races was less than 50 boats and the World Championships that year yielded only 68
boats.
In 1998 APBA had two primary competitors in the offshore powerboat racing sanctioning
body business: US Offshore (USO) and Super Boat International Productions, Inc. (SBI).
Both organizations achieved similar results that year.
In 1999, which was the first year under current Chairman Michael D. Allweiss and the
last year the Category operated under APBA control, series sponsorship sales increased to
approximately $750,000 and total revenues exceeded $1million. The average fleet count
increased to over 65 boats per event and the World Championships had over 100 boats in
attendance.
In 2000, Offshore’s first year of operations, sponsorship sales exceed $1million and total
revenues were slightly less than $2million. Offshore had a tax loss of only $187,000. The
average fleet count increased to over 90 boats per race and 146 teams attended the World
Championships. Offshore’s infrastructure also grew completing the year with 3 full time
staffers and 40 total national staff members.
In 2001 Offshore’s sponsorship revenues remained at 2000 levels despite the severe
downturn in the U.S. and World economies. Total revenues, however, exceeded $2million
for the first time in APBA history. The financial bottomline for Offshore improved
substantially over the previous year due to Management’s decision to drop its TNN
television package in favor of increased coverage on Speedvision while maintaining its
full compliment of sponsors. The loss from operations was approximately $100,000. The
total Pro Series boat count was down slightly in 2001 due primarily to class consolidation
and the economy.
In 2002 sponsorship sales declined approximately 40% due to a number of factors
including the continued economic recession, the severe decline in the sponsorship sales
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and advertising markets overall, the virtual depression experienced by Offshore’s primary
sponsorship market, the high performance marine industry, and the inability of Offshore’s
outside sales people and new VP of Sales to create any incremental sales since being
retained in 2001. Overall revenues also decreased dramatically due to a further reduction
in the number of teams able to participate this season caused by the continuing economic
recession. Accordingly, Offshore has cut expenses and raised another $150,000 through a
capital call of its current shareholders. Offshore further will drastically reduce its
expenses beginning in July of 2002, by further eliminating staff, reducing the pay of its
remaining staff and hiring a new CEO who can help with sales and cost containment,
reducing its television production commitment by 50%, and eliminating 2 events (St.
Petersburg and Atlantic City).
With these timely reductions in expenses and an expected fully funded event in the
Bahamas in October, Offshore will be able to meet its remaining financial commitments
for this year.
By comparison, as of this season, USO is out of business and SBI has lost virtually all of
its corporate support and national television exposure and is averaging approximately 20
boats per event.
IV. SHORT TERM TACTICAL PLAN
With respect to the near term (i.e. this year) Offshore intended to raise $500,000 in
additional capital through its current investors. When the Members founded the business,
the plan was to initially capitalize it with $500,000 and a total initial commitment of
$1,000,000. Since the inception of the company, the Members have bought out one of the
original Members thus reducing the actual initial paid in capital amount to $400,000 and
the total commitment to $900,000. The original plan also called for the company to reach
profitability within 5 years. Unfortunately, Offshore did not anticipate the severe decline
and ultimate recession that has afflicted the U.S. economy for the past two years. The
additional $500,000 would have funded the company’s programs this year, however,
since only $150,000 has been raised to date Offshore will implement the cost reductions
outlined above.
V. FUTURE OF OFFSHORE
As Offshore moves ahead, it is poised to become the premier boat racing sanctioning
organization in the United States as NASCAR is to stockcar racing, NHRA is to drag
racing, and Formula One is to open wheel racing. Offshore has no real competition. The
lack of competition and the now extreme financial barriers for third parties to enter the
business should allow it to grow and become a financially successful motorsports
entertainment property to the benefit not only of its Members but all of its business
partners including racers, sponsors and participating manufacturers.
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INTRODUCTION
Background
Since its inception in 1903, the APBA has been a not for profit enterprise, which mostly
sanctions races in numerous different categories, including offshore racing, throughout
the US and Canada. Until 2000 APBA conducted its offshore racing operations through
an unincorporated category (the “Offshore Category”) managed by volunteers and unpaid
elected members of the Category. This not for profit business model had left the sport of
offshore powerboat racing in a constant state of under capitalization and volunteer
workforce overload, which in turn led to constant leadership/management turnover and
institutional instability.
Furthermore, several groups had left APBA over the past 19-15 years to form their own
competing offshore racing sanctioning bodies. Only one, Super Boat International
Productions, Inc., remains today and it is almost out of business
The Category despite its rich history and affiliation with APBA had for years struggled
financially and had also failed to achieve any measurable recognition as a viable
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mainstream motorsports entertainment product. The Category also had been unable to
keep talented leaders and attract investors and sufficient working capital to grow and
prosper. This, in turn, prevented APBA from realizing the full financial and marketing
potential of its largest category.
In 1999 the Offshore Division made great strides, securing TNN and Speedvision to
televise its events and an impressive array of National sponsors. Nevertheless, it once
again required a substantial financial and time investment from its then acting Chairman.
Historically, the Category Chairmen had been asked to subsidize the sport, and work
exceptionally long hours at great personal sacrifice with no help and no expectation of
any real financial return, all for the “love of the sport”. That led to constant turnover in
the Category’s leadership and thus, a very unstable and uncertain business environment
and no real advancement of the sport.
The Members of Offshore and the leaders of APBA believed that the solution to these
problems was to combine the strengths of a for profit business entity (i.e. smart, pro-
active, private investors who are closely connected to the sport, sufficient capital, and
talented and experienced leadership) with those offered by the APBA’s 96 year history
(brand awareness and national/international recognition and credibility).
This combination was not possible, however, under the pre-2000 Category structure.
Investors would not invest in the APBA as a not-for-profit company because of their lack
of control over APBA and APBA’s institutional lack of focus on, understanding of, and
ability to operate offshore racing as its core business activity. Investors from inside the
sport also were not interested in forming or otherwise investing in an enterprise not
affiliated with APBA as that had been tried in the past and always failed.
To overcome these problems and give Offshore a chance to thrive APBA and Offshore
entered into a 99 year license arrangement which grants Offshore full right, power and
authority to exercise all aspects of the sport of offshore power boat racing (and related
activities and special events), previously held by the Category, under the APBA name and
sanctioning authority on a for profit basis and, correspondingly, that APBA shall not,
itself or through any other party or in any manner, conduct any such activities.
Offshore Today
APBA Offshore Powerboat Racing, LLC. (“Offshore”) is a Florida Limited Liability
Company founded in April 2000. Offshore is a distinct for-profit business organization
owned and managed by a small group of current APBA/Category members (the
“Members”). Offshore was formed for the purpose of assuming all responsibility and
authority relating to, and conducting the foregoing business activities of the Category and
other business activities relating to the sport including but not being limited to
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membership marketing and sales, licensing and merchandising, poker run event
sanctioning and production, endurance run sanctioning and production, speed record run
sanctioning and production, marine manufacturer show production, television production
and promotion of such events, product development and sales, and sponsorship sales.
The company currently has several divisions and a single affiliate for its operational
activities.
There also are currently over 40 members of the Offshore National Staff, a 5 fold
increase since 1999. A complete list of staff members along with their respective duties
and responsibilities as well as their reporting functions is attached as Exhibit ___. The
growth in this infrastructure has allowed Offshore to better serve its members and
sponsors, as well as to achieve its competition goals of close, exciting, fair, relatively
affordable offshore racing.
The Members
The Members and their respective interests in Offshore are as follows:
Michael Allweiss – Chairman of the Category since 1999 and current Chairman/CEO/
Managing Member of Offshore. Holds a 50% stake in the company.
Allen Allweiss -- Former Executive V.P and General Counsel for Subsidiary Operations
for the Home Shopping Network. Holds a 10% stake in the company;
Gordon Kraft – Former computer software and internet executive currently has
numerous business interests in this area. Holds a 10% stake in the company;
Mark Nemschoff—Owner/CEO of Nemschoff Furniture, a large Wisconsin based family
owned furniture manufacturing company, as well as several other manufacturing related
businesses. Holds a 10% stake in the company;
Nigel Hook -- Owner Dataskill Communications, a California based computer systems
business. Holds a 10% stake in the company;
Lee Mills – Former Chairman of publicly traded JanBelle Marketing, Inc. Mills holds an
option on 10% of the Company which is contingent on the fulfillment of certain business
agreements currently being negotiated by the parties.
Divisions and Affiliates
Offshore currently has several divisions and affiliates:
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APBA Offshore Events – Produces and was established to produce in the future, several
different Offshore controlled events such as offshore powerboat races, boatshows, poker
runs, speed record runs, endurance runs, and offshore fishing tournaments.
APBA Offshore Television – Produces the television programs of Offshore sanctioned or
produced events and manages Offshore’s programming and broadcast rights and
properties.
APBA Offshore Internet – Produces and maintains Offshore’s website and related video
and audio broadcasts of Offshore sanctioned/produced events.
APBA Offshore Sales and Marketing – Develops, implements and manages all sales/
marketing programs for Offshore, its affiliates and divisions excluding membership
products and services.
APBA Offshore Membership Products and Services – Develops, implements and
manages Offshore’s racing and non-racing membership programs.
APBA Offshore Licensing – Develops, implements and manages all licensing
relationships for Offshore including merchandising and apparel but excluding racing and
marine performance related products and services.
Certified Racing Equipment – Administers the technical rulemaking and enforcement
programs for Offshore’s racing activities, and also administers the sales and licensing of
“APBA Offshore Proven” marine related products and services to race teams and outside
third party vendors of boats and marine related products and services. This is a separate
Florida corporation that holds a license from Offshore to perform its functions.
Management
Executive Management
Offshore’s executive management staff consists of the following individuals:
Michael Allweiss – Mr. Allweiss, 39, is the Chairman/CEO of Offshore and manages
every facet of the company’s day to day activities and is responsible for the formulation
and implementation of the company’s strategic plan. He became Chairman of the
Category in 1999 and then succeeded to his current position when Offshore was formed
in 2000. He has served as a member of the Category governing board as well as legal
counsel for the Category. He has also served on APBA’s national legal committee and
currently serves on APBA’s national board of directors. He is an accomplished racer as
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well achieving boat racing’s highest honor in 1998 when he was inducted into the APBA
Hall of Champions.
Martin Sanborn – Mr. Sanborn, 40, is the VP of Sales and Marketing for Offshore. He
was retained in July of 2001 after a very successful career with Matco Tools and as the
top sales manager for Fountain Powerboats. Mr. Sanborn manages all sales and marketing
activities of the company. He is an accomplished racer having won a World
Championship and set a World Speed Record at over 140mph. He previously served as
the Executive Director of Factory Racing for the Category and has successfully secured
numerous sponsorships for his own racing programs.
National Staff Chiefs
Other key members of the Offshore team include:
Randy Hegwood – Mr. Hegwood is the National Race Operations Director. His duties
include general race logistics management and implementation functions for Offshore at
Pro Series events.
Lynn Eason – Ms. Eason serves as the Executive Assistant to the CEO and VP of Sales.
She also implements and manages the implementation of the Pro Series sponsorship
fulfillment program; and acts as the liason between executive management and executive
staff and related support staff/personnel, Offshore and Pro Series sponsors, the television
division, other divisions and affiliates.
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Steve Miklos – Mr. Miklos serves as Offshore Competition Director and the General
Manager for CRE. He is responsible for the formulation of technical and competition
rules and policy as well as the products and services for CRE. He was largely responsible
for the creation of the Factory Series and current Super Series technical and competition
rule platforms. As a racer, Miklos is a multi-time race winner, regional champion and 2
time world speed record holder. He still competes on a regular basis to stay connected to
the sport. He also is the Chairman/CEO of several successful small businesses.
Richard Mann – Mr. Mann is the Executive Producer of APBA Offshore Television. He
has over 20 years experience in the television production industry.
He is responsible for the production, assembly and management of the television
production crews, television production logistics, distribution, sales and marketing,
content and creative for the shows and sponsorship television benefits fulfillment.
Jim Poplin – Mr. Poplin serves as the Chief Medical, Safety and Rescue Officer for
Offshore. He is responsible for the design, implementation and management of the
national offshore medical, safety and rescue programs and also manages the Pro Series
event medical and safety activities and acts the Pro Series Risk Manager. Mr. Poplin is a
retired firefighting paramedic and works outside of boat racing as the Chief of the
Hamilton County, Tennessee Special Tactics & Rescue Services, a special operations
tactical team on which many Offshore rescue team members also share membership.
Mike Tomlinson – Mr. Tomlinson serves as the Chief Referee for Offshore and has done
so for the last 10 years. As such he manages the rulebook and rule enforcement process.
Paul Abreu – Mr. Abreu serves as the Chief Technical Inspector for Offshore and has
done so for three seasons. He manages the technical inspection process at Pro Series
Events.
Dee Kimes – Ms. Kimes serves as the Chief Scorer for Offshore and has done so for the
past 15 years. She manages the timing and scoring process at all Pro Series events.
THE BUSINESS PLAN
OVERVIEW
Over the next four years, Offshore’s primary strategic goal and objective will be to
become the premier offshore boat racing sanctioning body in the United States and thus a
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well recognized, highly respected, and financially successful motorsport entertainment
property. To do this Offshore must concentrate on developing its core sanctioning body
business. The elements of this business:
o Racing Product – includes racing classes and related technical and
competition rules, as well as management and support personnel.
o Race Event Organization – includes sanctioned events produced by
independent organizers and by the affiliated events company.
o Membership – includes racer and consumer programs, products and
services.
o Sponsorship Sales – includes series, event and contingency programs.
o Television – includes the production and distribution of race events related
television programs.
o Internet – includes the design and maintenance of an official website
which delivers relevant up to date information, and audio and videocasts
of its events to current and potential members, sponsors, and consumers,
as well as potential members and sponsors.
o Promotion of the Business – Public Relations, Publicity and general
promotion of the business and its activities.
Management firmly believes that for the business to grow and be successful, the
sanctioning body must be strong and stable. Thus, the goals and objectives for 2002-2005
can be summarized as follows:
o Near Term – 2002 Season
Raise $500,000 in operating capital
Complete the 2002 schedule but eliminate St. Petersburg and
Atlantic City and add the Bahamas
Collect remaining accounts receivable
Resolve Crouse and TNN litigation
Create $199.00 premium fan/consumer oriented membership and
sell 150 of such memberships by year end
Communications
• Create email database and identified groups for mass
communications for racers, members and staff.
• Vision
o Short Term – 2003 Season
National Sponsorship Sales
Contingency Sponsorship Sales
Event Sponsorship Sales
Television
Internet
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Promotion and Public Relations
o Intermediate Term – 2002-2005
Class Rules Development
Technical Rules Development
Competition Rules Development
Staff
Schedule
Membership
National Sponsorship Sales
Contingency Sponsorship Sales
Event Sponsorship Sales
Television
Internet
Promotion and Public Relations
Capital Raising Campaign
o Long Term – 5-10 Years
Exit Strategy
NEAR TERM PLAN – 2002 Season
Capital Needs
With respect to the near term (i.e. this year) Offshore needed to raise $500,000 in
additional capital in order to maintain its growth and fulfill its television and schedule
commitments. When the Members founded the business, the plan was to initially
capitalize it with $500,000 and a total initial commitment of $1,000,000. Since the
inception of the company, the Members have bought out one of the original Members
thus reducing the actual initial paid in capital amount to $400,000 and the total
commitment to $900,000. The original plan also called for the company to reach
profitability within 5 years.
The business suffered a loss of $187,000 in its first year of existence. In 2001 while it
was expected to earn a small profit, an unexpected loss of $70,000 in revenue due to
Amercian Express’s anticipated failure to pay the balance of its sponsorship obligations,
as well as a failure of certain other sponsors to pay their obligations in full or otherwise
on a timely basis, caused the company to lose approximately $80,000 for the year.
This year Offshore has experienced other losses such as non-payment or delayed payment
of sponsorship obligations due to declining economic conditions, as well as much greater
event production expenses relating to the events it produces on its own such as Daytona,
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Cape Cod, Savannah and Cleveland. Offshore also planned to produce events in Atlantic
City and St. Petersburg.
Remaining Races
Cleveland
The Cleveland race is on schedule. The event organizer anticipates approximately
$100,000 in event sponsorship sales as well as approximately $100,000 in concession and
admission revenue. Offshore has included in its budget a $100,000 sanction fee and no
direct expenses for the production of the event.
Atlantic City
Insufficient sponsorship sales, a lack of alternative revenue sources and insufficient event
production capital necessitate the cancellation of this event for the 2002 season. Eric
Treadwell has indicated a desire to produce the event in 2003 but unless there is
guaranteed advanced funding and a sanction fee the event should not be added to the
2003 schedule.
St. Petersburg
For the same reasons this event must be cancelled for the 2002 season.
Key West
The event is on schedule and promises to be better than last year. We are working to
produce a concert featuring Nick and Aaron Carter as well as other celebrities. We have
secured the use of the Truman Annex and Outer Mole as the Dry Pits and spectator
venues.
Bahamas
We have received a written Letter of Intent from the Bahamian government to stage an
event on Grand Bahama Island this October 18-20. The financial commitment is
$325,000 and we are awaiting the signed contract. We also have submitted a proposal to
the primary resort group on the island, Our Lucaya, which has preliminarily agreed to a
sponsorship package in the $300,000 range. We also intend to present a proposal to the
Grand Bahama Port Authority for a sponsorship in the $300,000 range. This event is
critically important to our financial success this year. We likely will designate this event
as our National Championships.
Racing Product – Classes, Rules and Staff
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Overview
Offshore must continue to refine its class structure to consolidate the classes that are no
longer yielding at least 10 boats at each Pro Series event, and create new ones based on
production boats and spec engine packages, to encourage the participation of the major
boat manufacturers and engine builders and marinizers such as General Motors, Ford,
Chrysler and Mercury.
Offshore must continue to develop a competition based rules model for its racing
operations and activities that emphasizes:
o relatively low cost, affordable, “level playing field” racing for its
competitors, and participating marine industry manufacturers;
o broad participation of the marine industry from a competition and
financial perspective; and
o close, exciting competition for its racers and fans, that yields multiple
winners throughout the various racing series.
Offshore must also continue to develop a professional staff that effectively develops,
implements and manages the rules making and enforcement process with fairness and
integrity.
Rulebook – Offshore completely revised and restructured its poorly organized rulebook
prior to the 2002 season.
Racing Class Development
For 2002, the goal was to develop the racing divisions/classes to look like this:
SUPER SERIES -
• Catamarans -
o Super Cat (designated by numbers only)
The Boats: Super Cat is the premier class of Offshore consisting of 9500lb twin engine
racing catamarans (canopies only) ranging from 38' to 40'. To control costs and increase
competitive balance the boats must be produced from dedicated molds and pre-approved
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for competition by Offshore. Top speeds are approximately 135mph. Manufacturers
include Marine Technologies, Motion and Douglas Marine Skater.
The Engines and Drives: The "Super Cat" engines are 510cid, 750hp, engines utilizing
specified aluminum Brodix heads and intake systems, and single Barry Grant carburetors.
To increase competitive balance virtually no engine modifications are allowed. Builders
include Mercury and Sterling Performance. Only the Mercury #6SSM drive is permitted
on new boats through the 2003 season.
o Super Cat Light (designated by numbers only)
The Boats: Slightly smaller versions of the Super Cats, these boats are 8000lb twin
engine racing catamarans (canopies only) ranging from 32’-36’. To control costs and
increase competitive balance the boats must be produced from dedicated molds and pre-
approved for competition by Offshore. Top Speeds are approximately 110mph.
Manufacturers include Skater, Eliminator, Motion and Spectre.
The Engines and Drives: The engines are stock Mercury Racing 502cid HP500 EFI's.
All engines are dynode, sealed and certified to be within a certain specification by
Offshore through CRE, to ensure competitive balance. Only the Mercury Bravo One and
#6SSM drives may be used.
o Super Cat Light Outboard Twin and Triple Engine (designated by
numbers only)
The Boats: Slightly smaller versions of the Super Cats, these boats vary in weight and
length depending on the number of engines and other factors delineated in the rules. For
the most part the boats are twin and triple outboard powered racing catamarans (canopies
only) ranging from 28’- 37’. To control costs and increase competitive balance the boats
must be produced from dedicated molds and pre-approved for competition by Offshore.
Top Speeds are approximately 110mph. Manufacturers include Skater, Eliminator,
Motion and Spectre.
The Engines and Drives: The engines are stock Mercury Racing 2.5 outboards.
• V-Bottoms
o Super Vee (designated by numbers only)
The Boats: Super Vees are the biggest and fastest of Offshore’s V-Bottom classes. The
boats are 9000lb twin engine racing v-bottoms (canopies only) ranging from 38’- 40’. To
control costs and increase competitive balance the boats must be produced from
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dedicated molds and pre-approved for competition by Offshore. Top Speeds are
approximately 115mph. Manufacturers include Fountain, Wellcraft and Extreme.
The Engines and Drives: The "Super Vee" engines are 510cid, 800hp, utilizing specified
aluminum Brodix heads and intake systems, and single Barry Grant carburetors. To
increase competitive balance virtually no engine modifications are allowed. The engines
are virtually identical to the Super Cat engines with a slightly larger carburator. Builders
include Mercury, Baker Engineering, Fluke Marine and Sterling Performance. Only the
Mercury #6SSM drive is permitted on new boats through the 2003 season, although the
boat known as Tommy Bahama remains eligible to compete with shaft drives. The Pier
57 boat with BPM drives that competed in 2001 remains eligible as well provided it
competes in a 2002 event.
o Super Vee Light 2 (twin) (designated by numbers only)
The Boats: Slightly smaller versions of the Super Vees, these boats are 8000lb twin
engine racing v-bottoms (canopies only) ranging from 32’- 39’. To control costs and
increase competitive balance the boats must be produced from dedicated molds and pre-
approved for competition by Offshore. Top Speeds are approximately 100mph.
Manufacturers include Fountain, Extreme, Cigarette, and Wellcraft. Donzi and Outer
Limits also are expected to field entries in 2003.
The Engines and Drives: The primary engine is the GM Vortec HP3 – 8100 496cid that
was validated by APBA Offshore during the 2001 season. The engine is a fuel injected
496cid creating approximately 525hp. The engine is marinized by CRE through its
primary sub-contractor Innovation Marine in Sarasota, Florida. The engines are CRE
dynoed, sealed and certified for competition. The only drive is the Mercury BravoXR
drive, although the Imco lower is permitted and one boat with Mercury Racing #5 drives
(Pier 57 Stainless Marine) is also grandfathered for competition.
o Super Vee Light 1 (single) (designated by numbers only)
The Boats: Slightly smaller versions of the Super Vee Light twins, these boats are 5000lb
single racing v-bottoms (canopies only) ranging from 28’-30’. To control costs and
increase competitive balance the boats must be produced from dedicated molds and pre-
approved for competition by Offshore. Top Speeds are approximately 90mph.
Manufacturers include Extreme, Phantom, Activator, Warlock and Eliminator.
The Engines and Drives: Same as the SVL twins.
FACTORY SERIES –
o Factory 2 (designated by F2)
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The Boats: These boats are stock 8000lb, 30' to 39' twin engine production based v-
bottoms. These boats appear virtually identical to the pleasure performance v-bottoms
that can be purchased from a local new boat dealer. To control costs and increase
competitive balance these boats must be produced from the same dedicated molds as their
production counterparts without modifications. Minimum production number and dealer
network requirements ensure that the boats are not dedicated raceboats produced by non-
mainstream builders. Top speeds are approximately 90 mph. Manufacturers include Baja,
Fountain, Cigarette, Formula, Hustler, Warlock and Eliminator.
The Engines and Drives: The engines are stock Mercury Racing 502cid HP500 EFI's.
All engines are dynoed, sealed and certified to be within a certain specification by
Offshore through CRE, to ensure competitive balance. Only the Mercury Bravo One
drive may be used.
o Factory 1 (designated by F1)
The Boats: Slightly smaller versions of the Factory 2 boats, these boats are stock
4000lb-5000lb, 24' to 30' single engine production based v-bottoms. These boats appear
virtually identical to the pleasure performance v-bottoms which can be purchased from a
local new boat dealer. To control costs and increase competitive balance these boats must
be produced from the same dedicated molds as their production counterparts without
modifications. Minimum production number and dealer network requirements ensure that
the boats are not dedicated raceboats produced by non-mainstream builders. Top speeds
are approximately 83 mph. Manufacturers include Activator, Baja, Fountain, Cigarette,
Formula, Hustler, Warlock and Eliminator.
The Engines and Drives: The engines and drives are the same as the Factory 2 boats.
OUTLAW SERIES
This is Offshore’s grass roots divisional racing series and caters to the high performance
offshore sports boat market. The purpose of the series is to develop new racers for the
professional classes. Indeed, many of today’s top professional racers started their racing
careers in these classes.
One of the most exciting aspects of offshore performance powerboating is the great
diversity of engine and boat products offered to consumers. The Outlaw Series will be an
exciting yet cost effective way to showcase these products while complimenting the
featured racing offered by the Factory and Super Series boats.
o Reindl Powerboats V-24 Series
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The Boats: Exclusively 24’ Ocke Mannerfelt Design V-24’s manufactured and sold by
Reindl Powerboats. Known as the “Bat Boats”.
The Engines and Drives: Currently the Volvo Penta 315hp smallblock and DPX
sterndrive. The plan is to convert the boats to the new 320hp Volvo diesel currently under
development in Sweden.
• Outlaw Performance Series
o PX – 110mph+ - Any boat and engine combination
o P1 – 100-110mph - Any boat and engine combination
o P2 – 90-100mph - Any boat and engine combination
o P3 – 80-90mph - Any boat and engine combination
o P4 – 70-80mph - Any boat and engine combination
o P5 – 60-70mph - Any boat and engine combination
The Super Series and Factory Series are the premier racing series. There are 7 total
classes in these series and 8 classes in the Outlaw Series for a total of 15 classes in
Offshore.
Technical Rules Development
Prior to the 2002 season Offshore took the following measures:
o The Super Cat and Super Vee engine and boat rules remained unchanged for the 2002
season. Nevertheless, the engine rules are currently under review and Offshore is
talking to Mercury Racing about adopting a one-engine program such as the one it
uses in the Factory Series for Super Cat. The purpose would be to further increase
competitive balance while reducing costs for the competitors and making it easier for
new teams to join the circuit.
o Amended its Super Cat Light Inboard boat homologation technical rules to mirror the
Super Cat rules except length and weight rules remained the same. This allowed
manufacturers to introduce new models and thus increase participation in the class;
o All Factory 2 rules remained unchanged;
o All Factory 1 rules remained unchanged;
o Commenced analysis of approving the new GM Vortec HP3 - 8100 and Mercury
Racing HP525 as approved Factory Series and Super Cat Light Series engine
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packages. The process is ongoing. If approved for Factory V-Bottom racing weight
and other adjustments will be necessary to maintain competitive balance among the
teams opting to continue to race with their HP500 engines;
o Commenced consideration of removing Outlaw A and B classes and placing those
boats in the Outlaw P division as these classes are not producing boats at Pro Series
events. This consolidation will make the sport easier to explain and understand and
will help the event organizers save money on unused trophies;
o Approved the new Super Vee Light classes, in both single and twin engine
configurations.
Competition Rules Development
The primary focus of the competition rules is the development of shorter racecourses to
enhance racer and marine mammal safety, and better spectator viewing and television
programs. The shorter courses enhance rescue response time and the effectiveness of our
marine mammal watch programs. The courses also enhance spectator viewing and the
television programs because of closer more exciting competition that results. All
racecourses should be no more than 4-6 miles.
Offshore will continue to monitor the competitive balance in all of the classes and make
rule changes when and where necessary to ensure that the racing remains exciting and
close.
Offshore is considering the following rule changes and event format changes:
1. Yellow Flag Procedural Amendment – Enact a rule clarifying that although
teams are permitted to race to the start/finish line in the event of a yellow flag
situation, they are required to race with extreme caution when coming upon an
accident scene and further prohibiting initiating, attempting or completing a
pass within 100ft. prior to or after the accident scene.
2. Pole Position Qualifying – For the Super and Factory Series Sunday racing
classes only. Prior to the Cleveland Race Offshore intends to enact a
qualifying procedure that uses a measured speed run or timed lap competition.
The competition will be held during the “Happy Hour” period on Saturday
afternoon during race weekend. Options include one boat on the track at a
time; multiple boats on the track using a staggered start procedure or multiple
boats on the track using a multi-boat start procedure similar to the normal race
starts. A points system will be created for qualifying finishing order.
3. Inverse Start Provision – For the Super and Factory Series Sunday racing
classes only. Commencing in Corpus Christi Offshore intends to enact a rule
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that requires the winning boat from the immediately preceding race to start at
the extreme outside of the starting grid at the next race.
4. Penalties – Offshore intends to enact a penalty assessment provision that
allows it to deduct points from a team for certain violations such as technical
or course infractions.
Racing Product – Sanction Agreement, Events, Schedule and Staff
Overview
Besides the actual boatracing, the most important element of the racing product is the
event and related activities surrounding the on-water competition during the race
weekend. Since the inception of the Category the events have been produced by mostly
local enthusiasts of the sport rather than experienced, professional event organizers. Most
events were established and produced without much strategic consideration of the
venue’s value either in the long or short term. Most of the events, moreover, were
produced without written sanction agreements. This, in turn, often led and continues to
lead to uncertainty over the parties’ respective duties and responsibilities, and thus
miscommunications and ultimately disputes. With some events, in particular Fort Myers
Beach and Sarasota, and to a lesser extent Corpus Christi, Texas, there developed an
adversarial relationship between the event organizer and Offshore that became very
unproductive and ultimately led to the parties parting ways.
To be successful in the future, Offshore must:
o Develop a written sanctioning agreement and require all producers, including
Offshore’s Production entity if it is an Offshore produced event, to sign the agreement
before approving an event for the Pro Series schedule. Offshore has developed the
agreement and it is in place for the Corpus Christi event only as of now;
o Secure relationships with experienced, professional event organizers to produce
annually 10-12 high quality family oriented entertainment events, which feature
offshore powerboat racing, and a stable consistent racing schedule, on a national
basis.
o Stage these events in major metropolitan areas or destination locations in North
America, the Caribbean and abroad.
o Continue to develop a professional staff that effectively manages the offshore racing
specific logistics and operations at the events.
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o Develop an event production staff that can assist the local producers in the sales,
marketing and production of the overall events, in particular in the area of venue
selection and layout, government relations and pre- and post event production
meetings with the local production team and officials.
The Sanction Agreement
In an effort to bring some consistency and order to its business, Offshore has developed a
uniform sanction agreement, including a supporting handbook, for use with its event
organizers. All event organizers will be required to execute this agreement as a condition
to producing a Pro Series event, and it shall govern the business relationship between the
parties and thus determine their respective duties and responsibilities. The goal will be to
secure a written agreement with each event organizer in 2003 using this new form, a copy
of which is attached hereto as composite exhibit _.
The Events
The goals for 2003 are as follows:
o Sanction 6-8 Pro Series events.
o Ensure all events are self-funded.
o Establish a new minimum $100,000 sanction fee for all IEO events, which
shall include prize money.
o Establish venues in major metropolitan markets or destination
communities.
o Form a new Offshore affiliate events/promotions company that will:
Produce the Daytona Beach, Marathon, Savannah, Bahamas,
Tampa Bay and Key West events.
Provide expert advice and assistance to the IEO events.
Develop the new race event template to be utilized by all events
and incorporated into the sanction agreement and handbook.
Perform the task of securing new venues.
Develop new revenue generating special events, such as a national
concert tour and corporate brand promotions to be incorporated at
the race events.
o Commence development and begin implementation of the APBA Offshore
event template to include the following elements:
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20 Banners bearing the Offshore logo to be posted throughout the
venue.
20 Flags bearing the Offshore logo to be posted around the venue.
The “Offshore Compound” to include the Volvo Tractor, High Tech
Trailer, Offshore Motorcoach, at least one merchandise trailer, the
banners and flags, and the CRE experience.
“APBA Offshore Experience” (formerly known as the Dry Pits)
template designating specific areas for the Super Series, Factory
Series and Outlaw Series boats.
Season Series credentials including parking passes issued to all
Offshore Staff.
Uniform schedule of events.
Consistent white uniforms for national staff bearing their names
and titles, Offshore logo on left front, and patches of primary series
sponsors.
o Produce timely, accurate online driver’s packets.
o Maintain current entry fee schedule and meet 2003 budget goals.
The Schedule
The goals for 2003 are as follows:
o Set the schedule, consisting of events that satisfy the event goals and
objectives, by no later than October 1, 2002.
o Set the 2004 schedule by October 1 as well in order to stabilize the
schedule for the longterm.
o Secure written sanction agreements with all event organizers.
Currently, the possible schedules are as follows:
PROPOSAL #1
Race # Date Location
1. April 24-27 Daytona Beach, FL
2. May 16-18 Marathon, FL; Fort Myers Beach, FL
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3. June 6-8 Cape Cod, MA;
Fort Myers Beach, FL
Corpus Christi, TX;
Tampa Bay, FL
4. July 3-6 Savannah, GA
5. July 25-27 Fort Myers Beach, FL
6. August 8-10 Cleveland, Ohio
7. August 22-24 Corpus Christi, TX
8. August 29-31 Sarasota, FL
9. September 19-21 or 26-28 St. Petersburg, FL;
Tampa, FL;
Atlantic City, NJ
National Championships
10. October 10-12 or 17-19 Grand Bahama Island,
Bahamas
World Championships
11. November 17-23 Key West, Florida
=============================================================
The plan to achieve the scheduling goals is as follows:
First, we must address the current racesites that do not fit the event template and/or are
unprofitable.
o Cape Cod
Offshore spent approximately $28,000 in direct costs on the event
in 2002 plus television, staff related costs and prize money.
According to the promoter, Maurice Wyman, the local committee
has another $3000-$7000 to remit to Offshore thus reducing
o Corpus Christi
Offshore loses money because the sanctioning fee and boat
attendance (which impacts entry fee revenue) are too low, and
travel and local accommodation costs are high.
Offshore also has no additional revenue sources there as we do not
receive a percentage of event gross revenues, and we are
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prohibited from securing independent deals with hotels and other
local sponsors.
There is little chance the boat attendance issue will ever change
and unless the event organizer agrees to pay the new sanction fee
and/or otherwise increase our revenue sources, the longterm
prospects of this event becoming profitable for Offshore are low.
The event is also not in a major metropolitan or destination area.
The primary reason to keep the event is for schedule stability as it
has been a part of the Offshore schedule for over 5 years.
Accordingly, Allweiss and the event organizer, Elaine Motl have a
meeting scheduled for the Cleveland race to discuss options. If the
event is to continue, however, Motl will be required to execute the
new sanction agreement.
o Sarasota
Offshore loses money as well although the losses are not as steep
as in Corpus Christi. The primary reason is the low sanction fee.
Moreover, Sarasota officials have become increasingly
uncooperative when dealing with racers and Offshore personnel.
Their focus is almost entirely on their charity and they do not see
the value of the race as part of the overall event and they thus
behave accordingly.
The boat count in Sarasota is also not as strong as it once was
when compared to our other events as these events have
improved.
The racecourse is too long and too far from the beach for viewing
purposes.
The weather is a consistent problem.
Further, the business deal is simply unfair. In the last two years
Sarasota has raised over $600,000 net for the charity while
Offshore has lost money. Historically the event has made money
and Offshore has lost money.
The problems are compounded by the death of a sea turtle during
this year’s event which is now causing the environmental
regulatory agencies to closely scrutinize the timing and local
control aspects of the event.
Kevin Brown’s poor treatment of these officials and Mote Marine
officials (manatee watch program coordinators) may cause us
problems with our other Florida events unless we distance
ourselves from them.
Finally, these problems are further compounded by the fact that
the Fourth of July holiday likely offers us greater opportunities in
other communities.
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We recently received a letter from Sarasota advising us that they
believe we have one more year left on a three year deal at the
lower sanction fee BUT that they cannot tell us for another
3-4months whether they will even be able to produce the event
because of the environmental issues. We have notified them that
there will be no event unless the course is shortened to 5-6miles.
In another letter we advised them that since they cannot guarantee
us that they can produce the event, we cannot guarantee them the
4th of July date or that we can award them a Pro Series event.
The primary reason to keep the event is its 17year history as the
premier event of Offshore racing. Many of our competitors
identify with the event and likely will not want us to leave the
venue unless it is for a far superior event with big prize money.
o Fort Myers
Offshore loses money here again because of the low sanction fee.
We had an agreement with them to increase the sanction fee to
$30,000 and pay the full $50,000 prize purse for 2001 but they
breached that agreement and have not responded to our notices
regarding same.
The event does not meet our requirement of major metropolitan or
destination areas.
We have notified them that we will not be returning there in 2002.
The reason to keep the event is its history and the logistics were
drastically improved this year.
For the short term, proposed schedule #1 provides the most preferable situation because it
would give Offshore a stable schedule for 2002 and guaranteed revenue. To replace these
races likely will require us to finance new events which will be more expensive than
keeping these races. This would also enable us to concentrate on the Detroit event for
2002 and work on securing the new venues we want for 2003 and beyond. This means
proposed schedule #1.
Second, we will address the other events on the proposed schedule #1 as follows:
o Daytona
Martin Sanborn is communicating directly with Glyn Johnston at
the Daytona International Speedway (DIS) regarding the
following:
• Developing the event plan which will entail creating the
World’s Largest Toybox on the ground in DIS to include a
high performance boat and marine equipment show, a
general boatshow featuring local dealers, rv show,
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motorcycle show, personal watercraft show, and several
other APBA category exhibition events which will occur on
the lake in DIS such as Prop Formula One, Outboard
dragboats, OPC and others. The plan deadline is September
1. Martin will be responsible for executing the racing
exhibition and high performance boat and marine
equipment show portions of the plan as well as managing
DIS’s execution of the other parts of the plan. Lynn Eason
and Carrie Rasmussen will assist.
• Developing the sales and marketing plan for DIS event
sponsorships as well as exhibitors. We will use a shared
revenue and commission formula with DIS. The deadline
for the plan is September 1. Martin will be responsible for
executing the high performance boat and marine equipment
show portions of the plan as well as managing DIS’s
execution of the other parts of the plan. The attached
budgets reflect the target revenue and expense figures.
Martin and Carrie are also working with Glyn Johnston and Don
Large to develop the race event plan. A local committee has been
formed and is operating, meeting at least twice per month now. We
are scheduling a meeting for the week of August 20 to discuss the
operating model for the racing aspect of the event. Our long term
preference will be for the local committee to assume the role of an
IEO. This year the event likely will remain an Offshore produced
event using the assistance of the committee for local sponsorship
procurement and race event logistics. The specific duties and
responsibilities of the local committee and Offshore, including
revenue expectations, target sponsors etc. must be set forth in the
plan. We must also assist the local committee in the development
of local sponsorship packages. We have our sales materials and
sample price list but most develop the specific local packages.
o Detroit
Offshore is working with General Motors on an event title
sponsorship package for $150,000 to help fund the event. We also
are working with Mike Raguso, a race event organizer for the
Great Lakes Silver Cup Series with strong ties in the Detroit area,
and Teresa Ewbanks, the IEO in Cleveland, to produce the event.
We have a meeting scheduled for August 9th with the USCG
regarding the timing, course location and permitting for the event
date set forth in proposed schedule #1, above. After the Cleveland
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event we will decide whether to secure an IEO to produce the
event (perhaps Raguso and Ewbanks forming an IEO company to
produce the Great Lakes Pro Series and select divisional races) or
make it part of the Offshore event/promotions division or new
affiliate entity.
o Cleveland
We will secure a written sanction agreement with the IEO for 2002
and 2003.
o Mississauga
We will secure a written sanction agreement with the IEO for 2002
and 2003.
o Atlantic City
This likely will remain an Offshore produced event for 2002.
We will explore an opportunity to conduct this event in
conjunction with the annual Beach Fest that is produced by Kay
Selig. Once the 2001 event is secured we will begin working with
Selig and Trump on 2002-2003.
We will also work with Dan DuVall to evaluate whether this event
is one that can be sold to an IEO.
o St. Petersburg
This event may shift to an Offshore produced event.
This event may be moved to Clearwater if the business deal
currently being negotiated with the City of St. Petersburg cannot
be secured.
We will secure a written sanction agreement for 2002 and 2003.
o Key West
We are working on a 99year license arrangement as well as several
other alternative scenarios.
Third, we must explore the other venue options in the event that any or all of the
Sarasota, Corpus Christi, and Fort Myers Beach events do not return.
3. Membership
a. Overview
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Offshore must produce a plan to build a comprehensive, valuable, consumer oriented
affinity membership program consisting of racers and non-racers (consumers). The
current total membership of Offshore, consisting of racers, race officials and non-racers,
is approximately 1500. The purpose of the plan is to increase its annual membership
revenue and significantly grow the Company’s customer base in order to efficiently and
cost effectively serve its licensing and merchandising program and thus increase its
overall net earnings. Other sanctioning bodies such as NHRA (85,000 members), SCCA
(55,000 members), and the AMA (250,000 members), have done this with great success.
The membership goals of Offshore for 2002 are as follows:
o Create a premium fan/consumer oriented membership
Target price of $199.00
Target cost (including amortized development and implementation,
fulfillment and commissions) of $99.99/membership
Target number of members is 2000 (150 for balance of 2001)
o Increase general participant membership by 10%
o Maintain membership in other categories
o Create a low cost fan/consumer oriented membership
Target price of $24.99
Target cost (including amortized development and implementation,
fulfillment and commissions) of $12.00/membership
o Increase the net earnings of the overall membership program from the
current $52,150.00 to $212, 170.00.
13. Develop a strong national sponsorship and racer contingency sales program
14. Produce first class, high quality, exciting television entertainment through its
television division, APBA Offshore Television.
15. Produce an exciting, interactive, informative and entertaining website and
internet presence.
16. Produce high quality, comprehensive, product licensing, merchandising and
apparel programs.
17. Produce effective and informative public relations and media programs.
18. Produce a comprehensive, valuable, consumer oriented affinity membership
program consisting of racers and non-racers (consumers).
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19. Produce these events, races and programs in a manner that enhances and
promotes the APBA Offshore brand and the sport of offshore powerboat
racing for the benefit of all of our business partners.
Offshore will seek strategic licensing relationships with qualified business partners to
help it design and execute many of these programs.
Additionally, Offshore seeks approximately $1.0 million in financing to enhance the
operations and management of Offshore’s business activities and further assist it in the
achievement of its goals and objectives. The funds will be used primarily:
5. To develop a national sponsorship and racer contingency sales organization;
6. To develop a national race event production/logistics organization.
7. To build a management team that will allow APBA Offshore to grow and
develop its national and regional racing series.
8. To allow Offshore to expand the scope of its television, public relations,
promotional, membership, retail sales and internet programs.
III. OFFSHORE’S CORE BUSINESS – SANCTIONING BODY
The APBA has been sanctioning offshore powerboat races throughout the United States
and Canada for over 40 years. In 2000 the APBA will have sanctioned 9 national events,
including a year-end World Championship, and 16 regional races, in California, Florida,
Maryland, Canada, Texas, Michigan, Ohio, Arizona, and New Jersey.
The principal “profit centers” relating to Offshore’s core sanctioning body business shall
be as follows:
3. Series Sponsorships
4. Competitor Contingency Sponsorships
5. Sanction Fees
6. Profit Sharing with Event Organizers
7. Entry Fees
8. Boat Registration Fees
9. Membership Fees
10. Licensing
a. Apparel
b. Merchandise
c. Racing Related Products and Services
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5.2 Business Opportunity
5.3 Funds Sought, Terms and Conditions
The total amount projected by APBA Offshore to be necessary to properly capitalize the
business is $2,000,000 with an initial capitalization of $500,000-$700,000.
5.4 Projected Use of Funds
The Company intends to use a portion of the funds raised to hire the necessary
professional personnel, purchase the necessary equipment, and satisfy any shortfalls in
the Company’s cash flow needs for the first year of operation
5.5 Exit Strategy
5.6 Revenues and Expenses
5.6.1 Revenues
The Company’s revenues initially will be generated primarily from the following
sources:
1. Membership Fees
2. Sanction Fees
3. Entry Fees
4. Boat Registration Fees
5. Safety Fees
6. Environmental Fees
7. Officials Fees
8. Marketing Fees
9. Sponsorship Sales
10. Entitlement Fees
11. Television Advertising Fees
12. Retail Sales
13. On Site Concession Sales
5.6.2 Expenses
The Company’s main areas of expense will be as follows:
1. Administrative
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2. Payroll
3. Marketing
4. Advertising
5. Travel and entertainment
6. Television Production
7. Time Buys
8. Promotions
9. Equipment
10.Legal
11. Insurance
12. Race Production
13. Prize and Contingency Purses
5.8 Company Vision and Goals
5.8.1 Vision
The Company’s vision is to create a total motorsports entertainment company
which produces made for television championship offshore powerboat races and
supporting family oriented festivals that benefit worthy charities, on a for profit
basis.
5.8.2 Core Philosophy
.3 Core Purpose
The core purpose of the Company will be to establish offshore powerboat racing
as a premiere American motorsport which rewards its participants and their
families, as well as its fans, volunteers and charities, with a wonderful all around
entertainment and life experience.
5.8.4 Core Values
•The customer is always right
•The racers always come first.
•Sacrifice in the short-term and the long-term will take care of itself.
•Reward positive attitudes and enthusiasm among employees.
•Reward the volunteers.
•Cultivate a culture of honesty and integrity within the organization.
•Turn problems into opportunities.
•Believe and you can achieve.
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•Teamwork.
•Charity and Service
5.8.5 Goals
5.8.5.1 Intermediate Goals: 1-10 years
• Create viable for profit motor-sports entertainment production company.
• Establish credibility of entity as well as the look and feel of our product.
• Increase membership to 100,000.
• Average 100 raceboats at all Pro-Tour Events.
• Produce 26 1 hour TNN shows each season.
5.8.5.2 Near Term Goals
1999
• Establish infrastructure
• Implement business model
• Implement new racing specs
• Finalize licensing deal with APBA
2000
• Capitalize the entity
• Successfully produce 4 profitable Pro Tour Series events, each with a
minimum of $100,000 in prize money, and at least 10 TNN shows.
• Increase membership to 10,000.
• Implement the Super Series, Factory Series and Outlaw Series competition
models.
• Break-even
5.9 Market Analysis
5.9.1 The Market
The demand for motorsports television programming and onsite event entertainment
is at an all-time high, as is the performance pleasureboat industry and the
powerboating industry in general. Indeed, consumers spent over $10 billion on new
and used powerboats and related equipment last year. Similarly, there are now over
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15 million registered powerboat owners in the US alone and that number is
growing. These trends are expected to continue due to the country's ongoing
economic expansion and prosperity.
There are, moreover, more people than ever travelling to beach resort destinations
all over the country for vacations. Major media outlets, corporate sponsors and
networks are seeking additional motorsports programming and event marketing
opportunities to exploit the demand for new motorsports entertainment. With car
racing fully developed through NASCAR, Formula One, NHRA, Indy Car and
others, APBA Offshore is distinctly positioned to capitalize on this new demand in
the area of professional powerboat racing where there is a complete dearth of viable
competition.
.2 The Competition
Limiting the scope of the industry to domestic offshore powerboat racing, the
Company’s competition comes from two other sanctioning bodies: US Offshore
("USO") which is a small club based primarily in the NE United States, and
Superboat International Productions ("SBI") which is a small organization based in
Key West, Florida. Both organizations were founded by former APBA members for
reasons similar to the current split in Indy car racing. Neither organization has any
national infrastructure and both have very small membership bases in comparison to
APBA Offshore. Also, neither organization has any coherent event marketing
program and both suffer from chronic gross under-capitalization. They mainly cater
to outdated and non-conforming equipment which is generally uncompetitive or
illegal for APBA competition. SBI is also in the final year of a 3 year "time buy"
agreement with ESPN2, a cable sports network which is considerably smaller than
TNN.
5.10 Marketing Plan
5.10.1 Overview
APBA Offshore intends to use a multi-tiered marketing formula similar to that
utilized by several successful motorsports entertainment companies. The purpose of
this program will be to produce value for sponsors and members, and revenue and,
thus, profits for its investors. The formula consists of the following components:
• Event Marketing
• Television Marketing
• Local Television, Radio and Print Marketing/Advertising
• Membership Marketing
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The primary difference between this and what the Division has done in the past is
that the Company will now be well capitalized and fully staffed to take advantage of
the incremental opportunities it has missed because of shortfalls in these areas.
5.10.2 Event Marketing
In addition to the racing, the event marketing model consists of family oriented
outdoor charity festivals supporting the race action. These festivals generally
include live music concerts, with at least one national level feature act, kids play
areas, sponsor exposition areas, boat shows, dry pit and wet pit areas, corporate
hospitality, fireworks shows and "Tastes" featuring the local area's finest
restaurants. The model is designed to safely attract the most number of fans as
possible in a concentrated area to maximize sponsor exposure. Revenue is
generated through national, regional and local sponsorships, as well as admission
charges, and sales of food, beverage and retail merchandise like t-shirts, hats,
replicas and pins. The model also emphasizes creating a first class event for the
racers and their families while treating volunteers as the most valued assets of the
organization. All Offshore events will have the same basic look and feel with the
Pro Tour Series events larger and more national in scale than the Regional Tour
events.
.3 Television Marketing
The television marketing model consists of televised broadcasts of the racing action
on TNN and Speedvision. The TNN shows will feature the Super Boats and Factory
Boats from Pro Tour events, while the Regional races including the Outlaw boats
will be carried on Speedvision. The shows will depart from the traditional "as if live"
coverage model usually accorded boat racing events. Instead these shows will
employ a hipper style featuring music, story telling and character development as
well as highlights of the best racing action for that event. Revenues from the shows
will be generated through the sale of entitlements and straight media advertising.
.4 Local Television, Radio, and Print Marketing/Advertising
With its staffing and capitalization needs met, the Company now also will be able to
promote its events more thoroughly on a local level through local and regional
television, newspaper and radio advertising. The plan also is to work with Cox
Enterprises to implement a more comprehensive national media plan similar to that
used for the World Championships. Here the Division works with several Cox owned
radio stations to sell local and regional sponsorships and lever those stations'
relationships with other media outlets to thoroughly promote the event and all of its
corresponding activities, as well as the chosen local charity. Of course the Company
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intends to thoroughly develop and strengthen its relationships with industry media
such as Powerboat, Hot Boat, Boating, and Raceboat International, as well as other
national non-traditional media outlets.
5.10.5 Membership Marketing
Once properly capitalized, Offshore also intends to engage in a concerted
membership campaign to grow its non-racing membership. The purpose of the plan is
not only to significantly grow the Company’s customer and revenue base, but also to
broaden the reach of the sport and its exposure throughout the country. Other
sanctioning bodies such as NHRA (85,000 members), SCCA (55,000 members), and
the AMA (250,000 members), have done this with great success. This plan will have
two components:
• First, Offshore will develop a comprehensive membership benefits package, the
value of which will exceed its price, which it will sell via direct mail and voice
relay to its target demographic. The package should include such things as: photo
id’s; official pins; discounts on race site hotels; pit passes; insurance etc.
• Second, Offshore will leverage its relationships with its marine industry sponsors
to include these packages as an added value to the products sold to the sponsors'
customers. For example, as a method of further promoting Baja products and its
relationship with Offshore, Baja will include APBA Offshore membership
displays in its dealerships and/or include the memberships as part of each boat
sold. This way a sponsor such as Baja can get the word to its customers about its
relationship with Offshore and drive these customers to Offshore events where it
can continue to develop the customer relationship.
5.11 Operations
The Company will essentially become a motorsports entertainment company, producing
and managing events and television broadcasts of the racing associated with those events.
It will sell event and television related entitlement sponsorships as well as offshore racing
related merchandise. The Company also will deal with rules and technical issues relating
to the boats and the conduct of its races and must deal with all of these issues from an
operations standpoint on a daily basis.
6.
7. Racing
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7.2 Racing Format
7.2.1 Overview
The Company's event marketing model has two inter-related/co-dependent components:
• The first component is the production of offshore powerboat races at select venues
throughout the United States and Canada.
• The second component is the production of family oriented entertainment festivals
held in conjunction with the races which benefit a local, regional, or national charity.
7.2.2 The Offshore Powerboat Races
7.2.2.1 Overview - Currently, APBA conducts national series races and multiple regional
series races in the West, Great Lakes, Northeast and Southeast regions of the United
States. There is virtually no joint planning or coordination of these various series which
has led to scheduling conflicts and other related problems. The Company's ultimate goal
is to centralize the planning and coordination process to avoid these problems and thus to
annually produce a single major national style professional tour and several
complimentary regional style tours, each with its own series title sponsor.
7.2.2.2 The APBA Offshore Professional Tour -
a) Pro Tour Events: Commencing with the 2000 racing season, the company
plans to stage a professional offshore racing tour consisting of 7-9 major race
events at strategic sites throughout North America in the Company’s 4 major
regions (hereinafter the "APBA Pro Tour" or "Pro Tour"). The Pro Tour will
culminate in a World Championships final to be held annually in late November
in St. Petersburg, Florida. World Championships will be awarded only to those
class winners in each of the Super Series and Factory Series Classes. These events
will generally include 2 days of weekend racing. The initial plan calls for the
Factory and Super Series boats to test, and qualify or compete for pole position on
Saturday, and then race on Sunday during a two day event. The Outlaw Series
boats will race on Saturday. The World Championships will be a week long event
with qualifying and several days of racing. The Company will also stage large
family entertainment festivals, including concerts, food fests, fireworks shows,
boat shows and sponsor expos in conjunction with the races. The Pro Tour will be
the Company's premier racing tour and Tour Title Sponsor entitlement
opportunities will be offered accordingly.
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b) Pro Tour Television: The television plan calls for each Pro Tour race to be
shown on a tape delay basis on TNN during the 4th quarter of the year in a
consecutive week “mini-series” style format. The shows are part of TNN’s
Outdoors programming lineup and will appear in one of its most successful time
slots – 11:30-12:00am. The purpose of this format is to drive current TNN
viewers to watch the show while making it easier for new viewers and fans to find
the shows and thus schedule time to watch those shows and follow the series. In
the past, the shows from other series such as SBI, have been shown in scattershot
fashion on other networks, thus, making it difficult to follow or even find these
shows with any consistency. The number of events and shows, as well as the
length of those shows should expand as the Company moves ahead.
c) Pro Tour Boats: All Pro Tour events will feature the top Super Series and
Factory Series boats in the country. As will be discussed below, the top Outlaw
Series boats from the region where the Pro Tour event takes place will compete as
well.
d) Pro Tour Race Format:
i) Number of days and race composition - The racing at each Pro Tour
event will be conducted over two days (except for the World
Championships which will be held over 3 days), typically a Saturday and
Sunday. The Outlaw Series boats will compete on Saturday with the Super
and Factory Series boats competing on Sunday in separate races. The
schedule of events and times, including drivers meetings, parties, sponsor
functions, expositions, festivals, and concerts, will be the same from event
to event.
ii) Course and race length - To ensure tight racing the boats will compete
on courses 5.5-7.5 miles in length. The smaller courses will be oval types
and the longer courses will be road types with a number of turns. The
Factory Series boats will race for 60-70 miles; the Super Series boats for a
minimum of 100 miles; and the Outlaw Series boats for 40-50 miles.
iii) Testing – All boats may test during race week according to rules of the
road criteria. The Super Series and Factory boats will also appear on
Saturday during a designated testing period known as "Happy Hour". The
boats will be required to test on the established race course to enhance the
entertainment experience for the fans. This will be the only test period on
Saturday. The testing period likely will be held in between races.
e) Pro Tour Championships:
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i) Super Series - Pro Tour Championship Points will be awarded to the
boats competing in the 2 premier classes comprising the Super Series:
Super Cat and Super Vee. The boats accumulating the most points through
the entire season in its respective class will be awarded the Super Series
Pro Tour Championship for that class. Thus, as an example, if Baja
purchased the title sponsorship for the Pro Tour the boat accumulating the
most points in Super Vee would be awarded the "Baja Super Series Pro
Tour Championship” and so on and so forth. This championship would be
awarded in lieu of a national championship as has been given in the past.
Again this is similar to NASCAR's model for its Winston Cup and Busch
Grand National series where the title sponsors have become synonymous
not only with the championships but the racing machines as well (ie.
"Winston Cup" and "Busch"cars). The sponsors have thus received a
tremendous "brand recognition" value in return for their investment.
ii) Factory Series –
a. Factory Constructer’s Championship - The participating
Factory Class manufacturer for each class accumulating the be
returned to the following year’s winner. The Champion will be
determined by tabulating the cumulative points of the top 3-5
of a manufacturer’s boats participating at each Pro Tour event.
The manufacturer with the most points at the end of the season
wins the Championship.
b. Factory Racer’s Pro Tour Championship – The boat
accumulating the most points in this series will receive the
Factory Racer’s Pro Tour Championship.
f) Pro Tour Prize and Contingency Money: By year two the Company intends
to offer prize purses of at least $100,000 at certain designated events. In 2000 the
minimum prize purse will be $40,000 for each Pro Tour event. The money will be
distributed on a 60/40 basis between the Factory Series and Super Series. The
class in each series with the highest number of boats at the event will receive a
proportionately higher percentage of the prize money allocated to that series.
Prize purses must be generated through sponsorships.
g) Pro Tour Sponsor Opportunities: In addition to television advertising, the
company will offer Pro Tour title and presenting sponsor entitlements, Pro Tour
Associate and Official product category entitlements, individual Pro Tour race
sponsorships (including but not being limited to title, area, product category and
event) team sponsorships, and Super Series, Factory Series and Outlaw Series title
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sponsorships. The sponsors thus receive a tremendous "brand recognition" value
in return for their investment.
h) Pro Tour Schedule: The proposed 2000 APBA Offshore Professional Tour
will be as follows:
Race # 1 - April 28-30 San Diego, California
Race # 2 - May 19-21 Fort Myers Beach, Florida
Race # 3 - June 9-11 Corpus Christi, Texas
Race # 4 - July 1-2 Sarasota, Florida
Race # 5 - July 28-30 Freeport, Bahamas
Race #6 - OPEN DATE
Race #7 - Aug. 25-27 Baltimore, Maryland
Race #8 - Sept. 15-17 Toronto, Canada
Race #9 - Oct. 6-8 New Orleans, Louisiana
WORLDS - Nov. 13-19 St. Petersburg, Florida
7.2.2.3 The APBA Offshore Regional Tours –
a) Overview: APBA currently sanctions Divisional races in four regions
throughout North America: West, Central, Northeast and Southeast. These
events have been smaller in size and scope typically than the national events
occurring mostly in smaller communities and catering to regionally based
racing teams and fans. The West, through POPRA, and the Central Division,
through the Great Lakes Offshore Powerboat Racing Association
(“GLOPRA”) generally produce 6-8 races annually which also are televised
on Speedvision. A large group of racers from POPRA and GLOPRA also
typically attend the Sarasota race and the World Championships each year.
Unfortunately, however, there has been virtually no communication or
coordination between APBA and these organizations. This lack of support
from APBA has led to an awkward competition between the groups for racers,
sponsors, and even race dates. Due to USO’s presence in the Northeast and the
number of national events in the Southeast, moreover, there has been very
little Divisional racing in these regions of the country. All of this has
hampered the sport’s overall growth and prosperity.
b) Purpose: Notwithstanding the foregoing, however, the Company believes that
Divisional racing forms the backbone of the sport. Specifically, it introduces
more people to its participant ranks through relatively inexpensive grass roots
racing programs and thus serves as a wonderful feeder system for the Pro
Tour. Further, it offers additional opportunities for corporate sponsors; it
broadens the reach of its charity programs; it provides additional revenue and
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profit opportunities to the Company; and it simply exposes the sport and,
therefore, its benefits to more people.
c) The Regional Tours and Management: Commencing with the 2000 racing
season, the Company plans to stage 4 distinct regional racing tours in the
West, Central, Northeast and Southeast regions of the United States and
Canada. POPRA and GLOPRA will manage the West and Central Division
regional tours, respectively. APBA Offshore will form a new company, the
Atlantic Offshore Powerboat Racing Association (“Atlantic Offshore”), to
manage the Northeast, and will work in conjunction with the Offshore
Powerboat Racing Association (“OPBRA”) to manage the Southeast. With the
approval of these regional management organizations (“RMO’s”) the tours
shall be renamed as follows to reflect their affiliation with the Company:
• APBA Offshore West or Pacific Tour
• APBA Offshore Central or Great Lakes Tour
• APBA Offshore Northeast Tour
• APBA Offshore Southeast Tour
d) Regional Tour Events: Initially, Offshore will encourage each of these
organizations to limit the number of races in their region to 5-6 including any
Pro Tour events occurring there. This would enable the organizations to
coordinate the Regional and Pro Tour schedules, thus making it easier on and
creating more options for the racers themselves. This should also make it
easier for the Company to oversee and assist the RMO’s with their businesses
and thus improve those businesses. The Company’s goal is for these regional
events, although initially smaller in scope, to nevertheless have the same look
and feel as Pro Tour events. They will run the same classes under the same
format, where feasible, and where possible they will be held in conjunction
with family entertainment festivals to generate profits for the Company and
the RMO’s. These events also should be held in locations strategically
selected as potential Pro Tour sites.
e) Regional Tour Television: The longterm television plan calls for each
Regional Tour race to be shown on a tape delay basis on Speedvision or TNN
if the financing is available. Currently, GLOPRA and POPRA televise their
events on Speedvision. The Company intends to assist these RMO’s with
funds to increase the quality of the shows starting no later than the second
year of operation. The Company also intends to invest in television for the
other two regions as soon as the funding is available. The number of events
and shows, as well as the length of those shows should expand as the
Company moves ahead.
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