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APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
APBA Offshore Racing League Business Plan 9.13.03
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APBA Offshore Racing League Business Plan 9.13.03

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APBA Offshore Racing, LLC had a 99yr license for Offshore Racing from the APBA parent organization. KHAMAN Holding, Inc. owned ORL - Offshore Racing League. LLC Founders...

APBA Offshore Racing, LLC had a 99yr license for Offshore Racing from the APBA parent organization. KHAMAN Holding, Inc. owned ORL - Offshore Racing League. LLC Founders...

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  1. CONFIDENTIAL CORPORATE OVERVIEWPrepared: September 2003By Michael D. AllweissChairman/CEOOffshoreRacingLeague100 2d Ave. N.E. Ste. 704S727-821-APBA (2722) Mallweiss@aol.com__________________________________This document and its contents are confidential and the property of KHAMAN HOLDINGS, INC.. No reproduction of all or any part of this planor any redistribution thereof is permissible without the prior written consent of KHAMAN HOLDINGS, INC.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 offerto buy securities.
  2. Table of Contents Table of Contents..........................................................................................................................2 .....................................................................................................................................................................3Executive Summary..........................................................................................................................................4 HISTORY............................................................................................................................................................4 THE BUSINESS.............................................................................................................................................................6 APBA OFFSHORE RACING LEAGUE...........................................................................................................................7 THE NEW COMPANY.................................................................................................................................................12 THE OPPORTUNITY........................................................................................................................................ 13 The Offshore Racing League (ORL)...........................................................................................................16 THE PRODUCT .....................................................................................................................................................16 THE SPEC RACING PROGRAM ..................................................................................................................................18 Super Cat (Numbers Only) - ...............................................................................................................21 Super Cat Light (Numbers Only) -...................................................................................................... 24 Super V (Numbers Only) - ...................................................................................................................25 Super V Light (Numbers Only) -...........................................................................................................26 Factory I and II -..................................................................................................................................27 Outlaw.................................................................................................................................................. 29 STADIUM STYLE RACING - ...................................................................................................................................... 31 The Offshore Powerboat Racing Circuits .......................................................................................... 33Overview – ....................................................................................................................................33...................................................................................................................................................... 33The ORL National Circuit – GMC Pro Grade Championship Series............................................35 The Season – .................................................................................................................35 Site Selection Criteria – ................................................................................................36 Venues – ........................................................................................................................37 National Race Format – ................................................................................................38 Pro Series Championships ............................................................................................ 40The ORL Divisional Circuits – .....................................................................................................41 Overview .......................................................................................................................41 Purpose ..........................................................................................................................41 The Divisional Circuits and Management ................................................................... 42 Divisional Circuit Sponsor Opportunities......................................................................43 ORL MANAGEMENT ................................................................................................................................................44 ORL DIVISIONS AND AFFILIATES.......................................................................................................................49 OBJECTIVES – IN GENERAL......................................................................................................................................52 ECONOMICS OF ORL........................................................................................................................................... 54 Overview...............................................................................................................................................54 Revenues...............................................................................................................................................58Series Sponsorships.......................................................................................................................58Competitor Contingency Sponsorships......................................................................................... 59National Television Advertising....................................................................................................60Sanction Fees.................................................................................................................................60 2
  3. Entry Fees......................................................................................................................................61Boat Registration Fees...................................................................................................................61Membership Fees...........................................................................................................................61Licensing........................................................................................................................................63 Apparel...........................................................................................................................63 Merchandise...................................................................................................................63 Racing Related Products and Services...........................................................................64 Expenses...............................................................................................................................................64Event Related Expenses.................................................................................................................66 National Staff.................................................................................................................66 Prize Money and Insurance...........................................................................................66 Television Production.................................................................................................... 67General Overhead.......................................................................................................................... 70Administrative............................................................................................................................... 70 PROMOTION AND PUBLIC RELATIONS...................................................................................................................... 72 INTERNET..................................................................................................................................................................73 THE MARKET............................................................................................................................................................74 THE COMPETITION....................................................................................................................................................76NEWCO.........................................................................................................................................................77 5.8 COMPANY VISION AND GOALS..........................................................................................................................79 5.9 MARKET ANALYSIS...........................................................................................................................................815.10.5 Membership Marketing ..................................................................................................... 81 7.2.3 THE FAMILY ORIENTED ENTERTAINMENT FESTIVALS....................................................................................81Injecting Professionalism into the Sport.........................................................................................................90Strong Business Model...................................................................................................................................96 5.10 MARKETING PLAN...........................................................................................................................................985.10.1 Overview...........................................................................................................................98 5.10.3 TELEVISION MARKETING..............................................................................................................................99 5.10.4 Local Television, Radio, and Print Marketing/Advertising...............................99 3
  4. Executive Summary History The American Powerboat Association (“APBA”) is a New York not-for-profit corporation founded in 1903 that, among other things, had historically actedas the primary organizational and sanctioning body for offshore powerboat racingand related special events throughout the United States and North America. APBAalso is the national governing authority in the United States for the UnionInternationale de Motonautique (“UIM”), which is the worldwide governing bodyfor all forms of powerboat racing. Historically, APBA had conducted its offshoreracing operations through an unincorporated division known as the OffshoreCategory (the “Category”). The functions of the Category included oversight andmanagement of racing competition, including technical rule making, event rulesenforcement, and event production and television production of those events atboth the national and divisional/divisional levels. APBA transferred all of thesefunctions in April 2000 through an exclusive license agreement, to APBA OffshorePowerboat Racing, LLC (“LLC”) a Florida for-profit limited liability company,which had been formed by a group of then Category members (the “LLCFounders”). 4
  5. In March of 2003, a dispute arose between the LLC and APBA over feepayments and corporate governance issues, which led certain APBA officials topurportedly terminate the license. The LLC initiated litigation against theseofficials in Florida shortly thereafter claiming that they acted without legalauthority thus damaging the LLC. The APBA officials then filed an action in NewYork seeking a declaration from the state supreme court that they had thatauthority. In July of 2003 the New York court ruled against these officials. As aconsequence all parties, including the LLC and the LLC Founders, recentlyreached a global settlement of all outstanding issues. The settlement produced anew license (the “License”) between the LLC Founders and their newly formedFlorida corporation, KHAMAN Holdings, Inc. (hereinafter “KHAMAN”) and theAPBA. The License becomes effective November 1, 2003. The License grants KHAMAN full right, power and authority to exercise allaspects of the sport of offshore power boat racing (and related activities and specialevents) under the APBA name and sanctioning authority and, correspondingly,provides that APBA will not, itself or through any other party or in any manner,conduct any such activities. Under the new License KHAMAN assumes allresponsibility and authority relating to, and conducting the foregoing businessactivities of the former Category and other business activities relating to the sportincluding but not being limited to membership marketing and sales, licensing and 5
  6. merchandising, poker run event sanctioning and production, endurance runsanctioning and production, speed record run sanctioning and production, marinemanufacturer show production, television production and promotion of suchevents, product development and sales, and sponsorship sales. The new licensealso permits KHAMAN to opt out of the arrangement within five years or sooner ifmanagement believes that there is no longer any value in the APBA relationship. The Business Over the past 5 years, APBA Offshore management has revolutionized thesport by: 1) developing and executing a NASCAR (National Association of StockCar Automobile Racing) style rules model which emphasizes close, excitingcompetition for fans, sponsors and competitors, and 2) creating a new stadiumstyle racing format which brings the action close to fixed shore locations such asdowntown waterfronts and parks, where admission can be charged, VIP andcorporate entertainment and hospitality venues can be established, marketed andsold, and where concessions, merchandise, apparel, product expositions and vendorbooths can be marketed and sold as well. The result is a fabulously exciting motorsports entertainment businesscapable of generating huge event crowds and significant television audiences witha very broad demographic that appeals to a wide variety of potential sponsors and 6
  7. business partners. For the first time in the history of the sport, offshore power boatracing has become a legitimate, credible motorsport that thrills audiences both atthe race site and on television with speed, high flying and colorful racing craft,passing, come from behind victories and photo finishes. To capitalize on theopportunity presented by the successful development of the racing product and thenew License, KHAMAN shall create two separate and distinct but relatedbusinesses, one to operate the sanctioning body business and the other to operatethe event promotion business. The first business is the Offshore Racing League, Inc. (“ORL”) a newlyformed Florida corporation ___% owned by KHAMAN that shall operate andmanage the sanctioning body business. In other words, the ORL will be to offshoreboat racing what NASCAR is to stock car racing. The second business, a yet to beformed Florida corporation, shall be a private motorsports entertainment andpromotional company that serves as the exclusive promoter/producer of all ORLevents (“Newco”). APBA Offshore Racing League The ORL will be the organization that performs the traditional functions ofthe sanctioning body, to wit: technical and competition rules making andenforcement; competition and competitor management; national series sponsorship 7
  8. sales and marketing; national contingency sponsorship sales; prize pursedevelopment and payout, national and divisional points tracking andchampionships, membership sales, marketing and fulfillment, licensing of teamand ORL merchandise and apparel; securing national television networks fordistribution of the TV product; production of national series television; racing andnon-racing membership programs; National Medical, Safety and Rescue programs;Marine mammal protection programs; event production and management of racerelated activities such as medical, safety and rescue, race course management, dry,wet, and hot pit management, etc. In short, ORL shall be responsible for thedevelopment and management of the actual boat racing product and related aspectsof the business. The principal revenue centers of the ORL are as follows: 1. Series Sponsorships 2. Competitor Contingency Sponsorships 3. National Television Advertising 4. Sanction Fees 5. Entry Fees 6. Boat Registration Fees 7. Membership Fees 8. Licensing 8
  9. a. Apparel b. Merchandise c. Racing Related Products and Services The principal expense areas of the ORL are as follows: 1. Administrative 2. Payroll 3. Marketing 4. Advertising 5. Event Related Travel 6. Television Production 7. Television Time Buys 8. Equipment 9. Legal 10. Insurance 11. Prize and Contingency Purses APBA ORL is uniquely positioned for rapid growth and to become the nextsuccessful motorsports entertainment property in large part due to the following: 1. ORL has an exclusive 5year license agreement with the APBA thus creating a very strong barrier to entry to a start-up organization; 9
  10. 2. The ORL has secured General Motors and GMC as the Title Sponsor of its national racing circuit for the 2004-2005 seasons. This flagship sponsorship parallels NASCAR landing its first major sponsor, Winston, in 1971; 3. ORL faces virtually no competition in its niche market – high performance professional powerboat racing events and entertainment; 4. ORL racing offers a unique, exciting, and rich television product that combines extreme competition, beautiful destinations and an upscale lifestyle in fast paced 60minute programs; 5. ORL boasts a very experienced and diverse management/operations team that over the past several years has created an effective and profitable sanctioning body with an incredibly fresh and exciting motorsports entertainment product; 6. The new license also will yield as much as $200,000.00 - $300,000.00 in additional revenue to the core sanctioning body business, thus enabling it to commence operations immediately without a significant infusion of new capital. Offshore powerboat racing, moreover, is the last frontier of motorsports both interms of entertainment value and as a business opportunity. The U.S. is saturatedwith various forms of automobile racing many of which have become 10
  11. indistinguishable to the general consumer and thus of questionable value to newsponsors. NASCAR, which is the dominant force in U.S. automobile racing today,moreover, has become too expensive for many companies to participate in anymeaningful way. Further, traditional powerboat racing in general has not had any commercialsuccess due mainly to the amateur nature of the governing associations such asAPBA, and most event organizers. The demand for entertaining outdoor eventsremains high, however, among consumers as well as companies that recognizeevent marketing as an effective sales and marketing tool. ORL racing, with thespeed, excitement, pageantry, professionalism and affordability it offers, thuspresents a unique motorsports entertainment opportunity for consumers and arelated event marketing opportunity for these companies. All of the above factors, efforts and resulting successes have created anopportunity for a new and separate company dedicated to the potentially far moreprofitable event promotion and related ancillary entertainment aspects of thebusiness (concerts, event sponsorships and media, event planning, and production,festivals, etc.). Through the successful development of a new company dedicatedto the sale, marketing, promotion and production of Offshore’s events, the sportand thus the overall business will grow faster and become far more profitable over 11
  12. the next 5-10 years. This new company is the second business to which thefollowing discussion is addressed. The New Company Newco will be similar in concept to International Speedway Corporationhttp://www.iscmotorsports.com/ (“ISC”), which is the publicly held entity dedicated tothe acquisition and development of the speedways which host NASCAR events. 1The function of Newco shall be to develop and implement the following businessesrelated to ORL and its core sanctioning body business: 1) Owner, operator,promoter, producer of all of ORL’s race venues; 2) Develop new venues in majormarkets; 3) Develop a national radio/internet broadcast network similar to MRNwhich is owned and operated by ISC; 4) Develop event related catering services,food and beverage concessions, and merchandise sales businesses for its eventvenues; 5) Develop ORL’s interactive rights business such as its official websiteand those related to its events; 6) Develop a national sponsorship sales, marketingand promotions company which can generate event related sponsorship sales aswell as national sponsorship sales for ORL – for which it would receivecommissions – and fulfill those sponsorships with limited outside assistance.1 List the other businesses of ISC 12
  13. KHAMAN or its designee shall seek to raise approximately $1,000,000.00 -$1,500,000.00 from outside investors for Newco in order to begin the developmentand implementation of the foregoing six businesses. KHAMAN shall seek fundingprimarily from three sources: 1) Current race team owners and participants; 2)Performance boating enthusiasts who currently participate in poker runs, attendORL events and serve as volunteers for these events; and 3) individuals andentities that are located in currently successful ORL event venues. The goal is tocreate this entity and hire the appropriate staff and management to commenceoperations no later than January 1, 2004. The Opportunity The demand for such events and the corresponding opportunities for bothconsumers and corporate America are what create the business opportunity forNewco, and thus the investment opportunity for potential shareholders. Here ishow: First, from an event production standpoint, ORL events do not requiremassive infrastructure like a speedway, road course or a downtown street racewhere expenditures for construction, maintenance, repairs and facilitiesmanagement can reach well into the multi-millions of dollars. On the contrary, tocreate an ORL “racetrack” Newco needs only a large body of water like a lake, 13
  14. ocean, bay or river, within close proximity to a fixed viewing location such as abeach or public park, and 6-10 “turnbouys”, which cost approximately $100 each. Second, the actual costs to produce the event are low relative to othermotorsport events. For example, most of the physical labor necessary to executethe on-land and on-water event plan can be satisfied through volunteers. So laborcosts are minimal. Indeed, most of the related labor costs for the events arise fromsales and marketing personnel whose job it is to generate revenue. The facilitiesrequired for the event are minimal as well since the viewing venues, whether abeach or park, already exist. While there may be some costs such as leasing a park,securing grandstands, and city services such as police, fire, medical personnel,security, port-o-lets and waste management, these expenses rarely exceed 5 figuresfor an entire event weekend. The bottomline is that a high quality turnkey ORLevent can be produced for roughly $250,000.00 including sanction fees.2 These events on the other hand can be extremely profitable for Newco. Forexample, a properly marketed and advertised event can generate on-site crowds of10,000 – 20,000 or more. Ticket sales alone thus could cover 50% or more of theevent production costs. Apparel and merchandise sales are yet another source ofpotentially $50,000 - $75,000 in revenue per event. An ORL event also offers aunique corporate hospitality and entertainment opportunity capable of generatinganother $50,000 - $100,000 in VIP sales at each event. Then of course, there are2 financials for event company 14
  15. local and divisional sponsorship opportunities which should generate another$250,000 - $500,000 in event revenue. Thus, the events each should generate$100,000 - $250,000 in net profit. With a minimum of ten national events per yearNewco should be able ultimately to generate $1,000,000 - $2,500,000 in net profitsfrom its core event production business alone. 15
  16. The Offshore Racing League (ORL) Newco will produce a significant return on investment for its shareholdersbecause the ORL, free to concentrate exclusively on its racing product, shallachieve its primary strategic goal and objective: to become a nationally recognized,highly respected, top tier professional sports entertainment property. In short, theORL will create an exciting motorsports entertainment product that the publicdemands and that city, county, state and national leaders compete to secure fortheir communities. Newco then will market and sell the ORL events and the relatedapparel and merchandise, licensing, concessions, tickets, local, divisional andnational sponsorships, and ORL interactive rights. The Product Traditional offshore racing events were participant oriented endurance runscovering vast distances mostly on ocean courses well out of sight of land andobviously, spectators, and thus of limited commercial value to any sponsor. Theracing was boring. There was very little passing, few winners over the course of aseason; a high rate of attrition and few close finishes. The rules were controlled by 16
  17. the team owners and thus were convoluted and poorly enforced. This led tocheckbook racing where the teams with the most money won. Often there weremore classes than there were boats so participants could almost guaranteethemselves a checkered flag, which further eroded the credibility of the racingproduct. This also led to a very high rate of turnover in participants and thus aninconsistency in the “product” that made it nearly impossible to develop adedicated fan base. Certainly fans had no idea what was happening on the water asorganizers often placed 50 or more boats from 20 or so different classes in a race atthe same time. In short, there was no racing product and therefore, no eventproduct for anyone but the participants. Today, ORL has moved in shore and become a consumer based, spectatorfriendly motorsport that places a premium on competition as entertainment andconnecting the consumer with the corporate sponsor. While racers remain one ofthe core groups of customers, the racing, race boats and the race teams form thefoundation of the ORL product. This fundamental shift in philosophy wasnecessary to transform the sport from a participant based club/hobby not-for-profitbusiness to a for-profit consumer based professional motorsport entertainmentbusiness capable of attracting significant outside investment. The primaryingredients to future successful growth of the ORL product are: 1) The Spec 17
  18. Racing Program for the boats, engines and propulsion systems, and 2) the StadiumStyle Racing format for the events. The Spec Racing Program The first key component to the continued growth and development of theORL product is a stable fleet of race boats and teams that remains so regardless ofthe state of the economy, and close, exciting competition for spectators andtelevision viewers. In short, the racing related entertainment, excitement and fungenerate fan interest, which in turn generates sponsor interest. ORL managementthus places a premium on creating a close competitive racing “show” for the eventand for television. After years of research and analysis ORL managementdetermined that to create such a show it must develop, implement and strictlyenforce a very tight, yet stable technical and competition rules program (“SpecRacing Program”) that produces a fast, agile, yet tough racing fleet with reliablepropulsion systems across all 6 of its featured racing classes. The boats also mustbe audio-visually stimulating to the average fan/spectator/viewer. As opposed to the technology based rules model that dominated offshoreracing for so many years, the goals and objectives of the ORL Spec RacingProgram are as follows: • Relatively low cost, affordable, “level playing field” racing for competitors and participating marine industry manufacturers; 18
  19. • Participation of the marine industry from a competition and financial perspective; • Closer more exciting competitive racing through correspondingly tight yet stable competition based technical rules management and enforcement; • Multiple winners throughout the season; • Close finishes; • Close, dramatic national championship battles designed to be settled at the last event of the year; • The racers are the “stars”; • Winners and champions decided by skill, courage and preparation NOT by who has the biggest checkbook; The Spec Racing Program thus has four essential components: 1) tight length,weight, height, beam and manufacturer production based rules and restrictions forthe boats; 2) engines produced by one to two CRE approved suppliers that alsomust be sealed, certified and matched by CRE prior to competition; 3) approvedsterndrive systems produced by one to two CRE approved suppliers, with limitedpermitted modifications; and 4) Strict requirements on commercial availability aswell as limitations on development of propellers. Accordingly, ORL has enteredinto a management agreement with an independent Florida company, CertifiedRacing Equipment, Inc. (“CRE”) to develop and manage the rules and the 19
  20. technical inspection process, and conduct the research and development programsthat are integral to the Spec Racing Program. Over time, the Spec Racing Program has produced and will continue to producemore competitors, less participant turnover, better professional competition andthus an exciting, entertaining experience for consumers. The stability andconsistency of the Spec Racing Program also produces a stable cost environmentfor the racing teams relative to their equipment purchase, repair and maintenanceprograms, and thus will yield a far better return on investment once theirsponsorship and prize revenues increase. Similarly, the costs of the ORL technicaland competition rules development and enforcement program will remainrelatively constant as well thus producing increasing margins as revenues grow. Indeed, despite the economic downturn since 2001, the Spec Racing Programhas produced 70-80 boat racing fleets at national events whereas in the past suchdownturns generally led to severe reductions and fleets in the 30-40 boat range.Management thus believes that the Spec Racing Program will produce fleets of 100boats or more per event simply with a turnaround in the economy. 3 Moreimportantly, the Spec Racing Program combined with the consolidation of classesfrom 12 in 1999 to 6 today, means more boats in the premier classes. This, in turnwill lead not only to better more exciting racing, but more events and thus moreopportunities for Newco as the classes can be separated and run at different venues3 100 boats average in 2000 with the introduction of the spec racing program 20
  21. and times. More boats, more competitors and more events also leads to morerevenue and with the stable costs associated with the Spec Racing Program, moreprofits for ORL and the race teams.Super Cat (Numbers Only) - 20 Boats Nationally 38’ to 40 38’ Catamaran 9500lbs 1600 Total Horsepower 140mph Top Speed Super Cat is the premier ORL class. In 2004, ORL will continue with itssingle approved sterndrive, the Mercury Racing SSM #6, which has proven to be atough, resilient, safe and cost effective system for the teams especially with thelong duty cycle and limited repair and maintenance required, and its fixed hullrules. ORL will, however, commence the transition from a multi-approved buildervarying spec engine program to a single approved builder fixed spec engineprogram. This same basic system (GM and Mercury Racing supplied engines,Mercury and Imco supplied drives) has been utilized by Offshore for years in theFactory, Super V, Super V Light and Super Cat Light classes with great success.The sole ORL/CRE approved engine provider, Sterling Performance, is the 21
  22. unquestioned leader in marine propulsion systems over 600 horsepower and hasactually designed and built the engines for every national champion and the last 3world champion Super Cats. In addition, the contract requires Sterling to pay ORLa $150,000.00 guaranteed sponsorship fee plus royalties, which helps pay fortelevision and other costs associated with the class. The goals of the spec engine program are to: 1) increase competitive balancethroughout the fleet; 2) develop a “5 race engine”; 3) reduce maintenance andoperating costs for the majority of the teams during an entire season; 4) increasereliability and durability; 5) increase performance and acceleration so the SuperCats can negotiate the tighter multi-turn ORL courses more effectively and safely;and 6) increase the number of teams that can afford to field competitive Super Catentries. To accomplish these goals, the ORL has developed a transition plan thatminimizes the financial impact on the teams and should at the very least maintainthe size of the current Super Cat fleet. First, Sterling will retrofit every currentlyexisting engine regardless of the builder, to a specific specification. The retrofitcost shall not exceed $15,000/engine, which is the approximate cost of a normalrebuild today. Second, each engine will be matched on a dyno then sealed andcertified to ensure each competitor has the same amount of horsepower and torque, 22
  23. but cannot perform their own upgrades to gain an advantage over theircompetition. Third a newly designed engine shall also be made available at an initial costof approximately $45,000.00ea. which is low relative to other motorsports andcertainly to the old-style huge horsepower engines formerly used in APBA. Fourth,the new and retrofitted engines will be designed to operate with minimalmaintenance over 5 races, which will lead to drastically lower operating costs forthe teams. Indeed, teams will be required to use the same engines a minimum oftwo to three times before changing and the maintenance and rebuild fees will befixed for everyone. Fifth, while the engines ultimately will be assigned to the teams at random toensure the integrity of the program, during the interim period when there areretrofitted engines in the mix, a commercially reasonable engine-claiming rule willbe established. With a stable, relatively low cost engine program that guaranteeseach competitor matched engines the national Super Cat fleet should grow to aconsistent 10-15 competitive boats at each event. This should also increasecompetitive balance throughout the fleet, thus furthering the goals of the program.Finally with more boats ORL receives more revenue from entry fees, registrationfees, and royalties from the Sterling contract, and Newco receives more qualityopportunities with an improved and consistent show to promote at each event. 23
  24. Super Cat Light (Numbers Only) -The Boats: Slightly smaller versions of the Super Cats, these boats are 8000lbtwin engine racing catamarans (canopies only) ranging from 35’-38’. Top Speedsare approximately 120mph. Manufacturers include Marine Technologies, Skater,Eliminator, Motion and Specter.The Engines and Drives: The engines are stock Mercury Racing 502cid HP500EFI’s, and new for the 2003 season include the Mercury Racing HP525 EFI andthe GM Vortec HP3 8100. All engines are dyno tested, sealed and certified to bewithin a certain specification by Offshore through CRE, to ensure competitivebalance. CRE is negotiating with Mercury to transfer the inspection, tech, repair,sealing and certification, and rebuild programs to them for Mercury engines and toInnovation Marine for the GM engines. The Mercury Bravo One, Sportmaster, XZ,XR, and Imco, and Mercury #6SSM drives may be used. 24
  25. Super V (Numbers Only) - 15 Boats Nationally Up to 40 V-Bottom 1100 Total Horsepower 110mph Top SpeedThe Boats: Super V’s are the biggest and fastest of Offshore’s V-Bottom classes.Super V’s are 8000lb twin engine racing v-bottoms (canopies only) ranging from38’- 40’. Top Speeds are approximately 110mph. Manufacturers include Fountain,Extreme, Cigarette, Donzi, Outer Limits, Skater and Wellcraft.The Engines and Drives: The primary engine is the GM Vortec HP3 – 8100496cid. Mercury Racing HP525 EFI engines currently existing in registered boatsare also approved for competition, however, beginning in 2004, no new enginesother than the Vortec shall be permitted. The engines are CRE dyno tested, sealedand certified for competition. Innovation Marine is the sub-contractor to CRE thatperforms these services. CRE personnel, however, oversee the program and 25
  26. conduct random spot checks through the season to ensure compliance with therules. The Mercury Bravo XR, XZ and Sportmaster drives are approved as are thestandard and 4x4 Imco drives. The Mercury Racing SSM #6 drive is also approvedwith a weight penalty.Super V Light (Numbers Only) - 10 Boats Nationally Up to 40 V-Bottom 550 Total Horsepower 90mph Top SpeedThe Boats: Slightly smaller versions of the Super V’s, these boats are 5000lbsingle engine racing v-bottoms (canopies only) ranging from 28’-32’. Top Speedsare approximately 95mph. Manufacturers include Extreme, Phantom, Activator,Warlock and Eliminator.The Engines and Drives: Same as Super V. 26
  27. Factory I and II - 35 Boats Nationally Up to 30’ V-Bottom 30’ 500 Total Horsepower 80mph Top Speed 35 Boats Nationally Up to 39’ V-Bottom 39’ 1000 Total Horsepower 90mph Top Speed Factory 2 (designated by F2)The Boats: These boats are stock 35 to 39 twin-engine production based v-bottoms with a fixed weight of 8300lbs. These boats appear virtually identical tothe pleasure performance v-bottoms that can be purchased from a local new boatdealer. Minimum production number and dealer network requirements ensure thatthe boats are not dedicated race boats produced by non-mainstream builders. Top 27
  28. speeds are approximately 85 mph. Manufacturers include Donzi, Baja, Fountain,Cigarette, Formula, Hustler, Warlock and Eliminator.The Engines and Drives: Beginning in 2004, CRE will produce a single 475hpengine from the GM Vortec 8100, 496cid platform. Innovation and GM Powertrainwill assist in the design and production of the engine. A lease program in the$6000-$7000/season range will be available as will an engine purchase programthat will cost substantially less than the Mercury Racing HP 525 that was used in2003 as the standard Factory Class engine. The engines are CRE dyno tested,sealed and certified for competition by Innovation. CRE oversees the program andwill conduct random spot checks through the season to ensure compliance with therules. Full on-site parts and service will be available as part of the program. CREalso will be offering a trade-in program for used HP500 and HP525 engines thatwill be designed to produce at a minimum a zero cost transition to the new spec forparticipating teams. The Mercury Bravo XR, XZ and Sportmaster, and standardImco drives are approved for competition. Factory 1 (designated by F1)The Boats: Slightly smaller versions of the Factory 2 boats, these boats are stock26 to 30 single engine production based v-bottoms with a fixed weight of 4750lbs. 28
  29. These boats appear virtually identical to the pleasure performance v-bottoms thatcan be purchased from a local new boat dealer. Minimum production number anddealer network requirements ensure that the boats are not dedicated race boatsproduced by non-mainstream builders. Top speeds are approximately 80 mph.Manufacturers include Baja, Fountain, Formula, Hustler, Extreme, Activator,Kryptonite, Warlock and Eliminator.The Engines and Drives: The engines and drives are the same as the Factory 2boats.Outlaw 100 boats nationally 24-40’ 24-40’ 400hp-4000hp, Gas, Diesel, Turbine 60-200mph This is Offshore’s grass roots divisional racing series and caters to the highperformance offshore sports boat market. The purpose of the series is to developnew racers for the Pro Series classes. One of the most exciting aspects of offshoreperformance power boating is the great diversity of engine and boat productsoffered to consumers. The Outlaw Series shall be promoted as an exciting yet cost 29
  30. effective way to showcase these products while complimenting the featured racingoffered by the Factory and Super Series boats. Reindl Powerboats V-24 SeriesThe Boats: Exclusively 24’ Ocke Mannerfelt Design V-24’s manufactured andsold by Reindl Powerboats. Known as the “Bat Boats”.The Engines and Drives: Currently the Volvo Penta 315hp small block and DPXstern drive. 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, provided, however, that twin engine boats over 28’ capable of speeds in this range must compete in P4. 30
  31. Stadium Style Racing - THE PIER “The Stadium” BEACHES DOWNTOWN BRIDGES ORL races will be conducted using the “Stadium Style Racing” formatwhere the race boats compete on a relatively short (4-5miles) multi-directional“roadcourse” style track situated immediately adjacent to fixed facilities such asmajor downtown piers, bridges, or beaches. The key elements to the ORL StadiumStyle Racing program are as follows: • Spectator Excitement – Spectators can view the entire course from land based primary viewing areas mere yards away from the racing action where they can literally feel the spray of the boats and the roar of the engines. 31
  32. • Sponsor to Consumer Contact – Event venues are selected based on the close proximity of the “racetrack”, dry pits, sponsor and vendor exposition areas, and primary viewing areas to ensure corporate sponsors, close, easy access to the contact the fan/consumer throughout the event.• “Apocalypse Now Effect” - With up to 15 TV and rescue helicopters flying directly overhead less than 50 feet off of the water and on the decks of the race boats as they scream through the “stadium”, the visual senses of the fans are stimulated beyond anything ever experienced at a typical motorsports event;• Safety – These stadium courses, although more challenging and potentially more dangerous, ORL commits greater rescue and safety assets to the teams than ever before. Indeed, the Air/Sea Rescue program is entertainment in and of itself as rescue divers deploy from helicopters from 20-50 feet above accident scene mere yards from the spectators.• Short Courses - With multiple right and left hand turns to create more thrilling, faster racing the 4-5 mile ORL courses create a super speedway effect that often produces “trading paint” between competitors;• Low Production Costs – The “Stadium” costs approximately $700 in course buoys. All other on-water production elements involve volunteers using their 32
  33. own boats and equipment, and they love being part of the organization and often times many will travel from event to event at their own expense.The Offshore Powerboat Racing Circuits Overview – Since entering into the License Offshore has sanctioned a national racingcircuit consisting of 8-10 events per year, including a year-end WorldChampionship. Today the national circuit is sponsored by General Motors under a4-year contract and is known as “The GMC Pro Grade Championship Series.Under the License ORL also holds the exclusive sanctioning rights to the four-divisional/divisional series, which collectively consist of another 15-20 races.These series are commonly known as: the Pacific Offshore Series for the WesternDivision; the Great Lakes Silver Cup Series for the Central Division; and theNortheast and Southeast Divisional series for these sections of the country,respectively. Offshore has sanctioned both national and divisional races inCalifornia, Florida, Maryland, Canada, Texas, Michigan, New York, Georgia,Massachusetts, North Carolina, Ohio, Arizona, New Jersey, and the Bahamas. By necessity Offshore has focused most of its resources on the developmentof the Spec Racing Program and national circuit and thus left the divisional series 33
  34. and events to be managed primarily by volunteer members of APBA affiliatedclubs. As a result there has been virtually no joint planning or coordinationbetween Offshore and the clubs, which has led to scheduling conflicts and otherissues including a lack of development of these series, and significant missedrevenue opportunities for Offshore. In 2003, moreover, Offshore sanctioned ANDproduced all of its 9 National Pro Series events thus enabling it to control all salesand marketing, licensing, promotion, production rights, concessions and all otherevent related revenue/profit centers. Unfortunately, Offshore did not have theappropriate human and financial resources to adequately develop these profitcenters, which resulted in a further loss of revenue. Under the new license these problems will be corrected through thedevelopment of a comprehensive national and supporting divisional series racingand related event business. The primary objective will be to organize and centralizethe planning and coordination process of the various series within the ORL muchlike how NASCAR manages its national and divisional series (Winston Cup,Busch Series, Craftsman Truck, Winston West, etc.). While the ultimate goal willbe to create a minimum of two major national professional circuits (15-20 totalevents) and four complimentary divisional circuits (15-20 additional events) forwhich Newco would serve as the exclusive producer and promoter. This in turnwill produce more revenue for the sanctioning body business of the ORL. More 34
  35. importantly, the Divisional racing circuits need more professional management andgiven the even lower production costs associated with these events, this needpresents an additional business opportunity for Newco. The ORL National Circuit – GMC Pro Grade Championship Series 2 The Season – Initially the ORL National Circuit, currently known as the GMC Pro GradeChampionship Series, will consist of a minimum of 9-10 separate events, startingin April and culminating in a World Championships to be held annually inNovember.4 The goal again will be to produce 15-20 national events each seasonstarting as early as February or March, in the South to take advantage of thewarmer weather, and ending in late November or early December for the samereason. Additionally, a late November/early December season finale also shouldhelp ORL to secure a broadcast network contract to televise its WorldChampionships live, given that all other motorsports have concluded their seasonsby then yet the demand for such content remains high among fans.4 Attach tentative 2004 schedule 35
  36. Site Selection Criteria –Ultimately, Newco and the ORL will work together to determine the best venuesfor the national circuit using the following site selection criteria: • Body of water sufficient to stage a 4-5 mile racecourse located adjacent to a fixed facility such as a public park, downtown waterfront, pier, or beach that can be gated for purposes of charging admission to a minimum of 10,000 spectators. • The facility should be sufficient to stage the “ORL Experience” consisting of race boat staging (Dry Pits), spectator viewing including main grandstands, VIP, Corporate Hospitality, sponsor display, vendors, concessions, and product exposition areas, so that fans can watch the races, interact with the teams, view the boats and other sponsor displays and products, buy the official foods and beverages, and purchase licensed ORL and Newco apparel and merchandise. • The facility should be capable of staging a concert and related festival in the same area. • Adequate parking within walking distance of the race viewing facility. The need for shuttles or remote parking should be avoided in order to provide fans an easy experience. 36
  37. • Close proximity to a resort hotel preferably within walking distance and certainly no more than 10-15 minutes away by automobile. • Close proximity to a major metropolitan area, preferably a top 20 TV market, major airport, and active business community. • Close proximity to sufficient support facilities such as marinas, crane and fueling areas, boat ramps, grocery stores, and service stations. Venues –There are a number of venues within North America that satisfy most if not all ofthese criteria. • Milwaukee, WI • Detroit, MI • St. Petersburg, FL • Tampa, FL • San Diego, CA, • Toronto, Canada • Orange Beach, AL • New York, NY • Cleveland, OH 37
  38. • Long Beach, CA • Savannah, GA • Charleston, SC • Hilton Head, SC • Chicago, IL • Ft. Lauderdale, FL • Miami, FL • Corpus Christi, TX • Sarasota, FL • Fort Myers, FL • Key West, FL • Seattle, WA National Race Format – These events will generally include 2 days of weekend competition. Thiscompetition schedule is designed to permit the public to arrive early, experiencethe boats and teams, secure their merchandise and apparel, food and beverage,view the racing, repeat the process between events, and once Happy Hour 38
  39. concludes on Saturday, proceed to the ORL Experience area for the eveningentertainment. Race Boats - Super Series, Factory Series and Outlaw Series boats areeligible to compete at the event. At this type of event the Outlaw Series boats willcompete on Saturday with the Super and Factory Series boats competing onSunday in separate races. The Sunday boats will also participate in an organizedtesting session called “Happy Hour” at the conclusion of the last race on Saturday.The boats will be required to test on the established racecourse to enhance theentertainment experience for the fans. The personnel and equipment costs to ORLare essentially fixed regardless of the venue. Course and Race Length – The courses will be not more than 5 miles andnot less than 3 miles. • Saturday - There shall be 1-2 races on Saturday with each lasting approximately 45minutes and no more than 45 minutes in between races for refueling of the TV and Rescue helicopters. Happy Hour shall commence within 15 minutes of conclusion of last race. Racing will start at 12pm and all competition and testing should be complete by no later than 4:30pm followed immediately by the Winner’s Circle ceremony. 39
  40. • Sunday - On Sunday there shall be two races. The early race shall consist of the Super V classes and the second race shall consist of the Super Cat classes. The racing shall begin at 1pm with the second race at 3pm. Each race should last approximately 1 hour with no more than 1 hour between race #1 and race #2. The racing should conclude by no later than 4:30pm followed immediately by the Winner’s Circle ceremony. Pro Series Championships Pro Series National Championship Points will be awarded at every ProSeries event to each boat competing in the event. The boat accumulating the mostpoints through the entire season in its respective class will be awarded the ProSeries National Championship for that class. Pro Series Sponsorship Opportunities ORL sponsorship opportunities are set forth in the attached PowerPointpresentation. Based on the performance of management over the past 4 years, ORLwill generate a minimum of $1,000,000.00 in annual series related sponsorshiprevenues. 40
  41. The ORL Divisional Circuits – Overview APBA currently sanctions Divisional races in four divisions throughoutNorth America: West, Central, Northeast and Southeast. These events have beensmaller in size and scope typically than the national events occurring mostly insmaller communities and catering to divisionally based racing teams and fans. TheWest, through POPRA, and the Central Division, through the Great Lakes SilverCup Series (“GLSCS”) generally produce 6-8 races annually which also aretelevised on the Outdoor Network. A large group of racers from POPRA andGLSCS also typically attend the annual World Championships. Due to theindependent Offshore Performance Association’s (“OPA”) presence in theNortheast and the number of national events in the Southeast, moreover, there hasbeen very little Divisional racing in these divisions of the country. Purpose Notwithstanding the foregoing, however, ORL management believes thatDivisional racing can form a solid backbone for the business. Specifically,Divisional Racing offers more opportunities to expand the ORL membership ranksthrough relatively inexpensive grass roots racing programs. Divisional Racing 41
  42. further offers more opportunities for Newco to add quality profitable events to itsportfolio and thus more sales opportunities, both incremental and value-adds, fornew and existing corporate series, divisional and local sponsors. Divisional Racingalso broadens the reach of ORL and Newco, the sport and, therefore, the benefits tomore people. The Divisional Circuits and Management Commencing with the 2004 season, the ORL shall sanction Divisionalevents in four distinct divisional racing circuits in the West, Central, Northeast andSoutheast divisions of the United States and Canada. POPRA and GLSCS willmanage the West and Central Division divisional circuits, respectively. The ORLintends to secure a mutually beneficial working relationship with OPA to managethe Northeast divisional circuit and will directly manage the Southeast divisionalcircuit from the central office. These individual organizations shall each bereferred to as a Divisional Management Organization or “DMO”. ORL also willappoint an eleven member volunteer advisory council consisting of onerepresentative from each division as well as one from each of the six primaryracing classes, and a chairman to assist with the management of the DivisionalRacing Program. This new body will be known as the Offshore Advisory Council(“OAC”). 42
  43. Initially, management will encourage the OAC and each DMO to limit thenumber of races in each division to 5-6 including Pro Series events. This wouldenable the organizations to coordinate the Divisional and Pro Series schedules,thus making it easier on and creating more options for the racers. This should alsomake it easier for the ORL and Newco to oversee and assist the DMO’s with theirbusinesses and thus improve those businesses. The Company’s goal is for thesedivisional events, although initially smaller in scope, to nevertheless use the samebasic Stadium Style Racing format as Pro Series events. In short, these events willoffer the same classes competing under the same format, and where possible willbe produced by Newco or at the very least overseen by Newco. These events alsoshould be held in locations strategically selected as potential Pro Tour sites. Divisional Circuit Sponsor Opportunities ORL and Newco also will offer series sponsorship opportunities for eachDivision. The opportunities are set forth in the attached PowerPoint Presentation.Again with the organization and centralization of the Divisional Racing Programwithin ORL, sales of Divisional series related sponsorships, both incremental andvalue adds to existing sponsors should increase. 43
  44. ORL ManagementMichael Allweiss – Chairman, CEO & PresidentMr. Allweiss, 40, manages every facet of the ORL’s day-to-day activities and isresponsible for the formulation and implementation of the company’s strategicplan. He became Chairman of the Category in 1999 and then succeeded to hiscurrent position when the LLC was formed in 2000. He has served as a member ofthe Category governing board and legal counsel for the Category. He has alsoserved on APBA’s national legal committee and on APBA’s national board ofdirectors. He is an accomplished racer as well achieving boat racing’s highesthonor in 1998 when he was inducted into the APBA Hall of Champions. Inaddition to being a top competitor, Mr. Allweiss has produced several majorAPBA Offshore events including 2 World Championships, a NationalChampionships, and 3 national races including the inaugural Savannah OffshoreGrand Prix and World Speed Runs. 44
  45. Allen Allweiss – General CounselMr. Allweiss, 68, manages ORL legal affairs. He is a Former Executive V.P forSubsidiary Operations and General Counsel for the Home Shopping Network. Hehas been a practicing attorney for over 40 years and has served as legal counsel forthe Category. He also is a former member of the Category governing board and asuccessful former racing competitor as well, winning a national championship andestablishing a world speed record for his class in 1975.Gordon Kraft – Executive Director of New Business Development(FILL IN)Mark Nemschoff — National Sponsorship SalesOwner/CEO of Nemschoff Chairs, Inc., a large Wisconsin based family ownedcompany, which is the leading healthcare furniture specialist, as well as severalother manufacturing related businesses. (FILL IN)Nigel Hook – National Sponsorship Sales(FILL IN) 45
  46. Steve Miklos – Executive Director of CompetitionMr. Miklos also serves as the General Manager for CRE. He is responsible for theformulation of technical and competition rules and policy as well as the productsand services for CRE. He was largely responsible for the creation of the FactorySeries and current Super Series technical and competition rule platforms. As aracer Mr. Miklos is a National and World Champion, and 4 time world speedrecord holder. He still competes on a regular basis to stay connected to the sport.He also is the Chairman/CEO of Suncoast Toner Cartridge, Inc. a leading supplierof remanufactured toner cartridges, as well as several successful small businesses.(FILL IN)Jim Poplin – Vice President of National Race OperationsMr. Poplin also serves as the Chief Medical, Safety and Rescue Officer for ORL.He is responsible for the design, implementation and management of the raceoperations plan at all Pro Series events, including but not being limited to themedical, safety and rescue, and risk management programs. Mr. Poplin is a retiredfirefighting paramedic and works outside of boat racing as the Chief of theHamilton County, Tennessee Special Tactics & Rescue Services, a specialoperations tactical team on which many Offshore rescue team members also sharemembership. 46
  47. Theodore “Ted” Zoli – Executive Director of Special ProjectsMr. Zoli, 61, briefly served as the President and Chief Operating Officer forOffshore before assuming his current post. He was originally retained in July of2002 after a very successful and varied business career including ToringtonIndustries for which he served as President for the past 30 years. Mr.Zoli assistseach aspect of the business as an advisor and consultant, including but not beinglimited to national race operations, and marine industry and race teamcommunications. He is a successful former racer and team owner as well. National Staff ChiefsOther key members of the ORL team include:Randy Hegwood – Mr. Hegwood is the National Race Operations Director. Hisduties include general race logistics management and implementation functions forOffshore at Pro Series events.Deanna Richardson – Ms. Richardson serves as the Executive Assistant to theCEO. She also implements and manages the implementation of the Pro Seriessponsorship fulfillment program; and acts as the liason between executive 47
  48. management and executive staff and related support staff/personnel, Offshore andPro Series sponsors, the television division, other divisions and affiliates.John Potts & Robby Brooks – Mr. Potts and Mr. Brooks are Co-ExecutiveProducers of ORL Television. Each has over 20 years experience in the televisionproduction industry. They are responsible for the production, assembly andmanagement of the television production crews, television production logistics,distribution, sales and marketing, content and creative for the shows andsponsorship television benefits fulfillment. (FILL IN)Mike Tomlinson – Mr. Tomlinson serves as the Chief Referee for ORL and hasdone so for the last 10 years. As such he manages the rulebook and ruleenforcement process. (FILL IN)Paul Abreu – Mr. Abreu serves as the Chief Technical Inspector for ORL and hasdone so since 2000. Prior to that he served for 20 seasons as an assistant inspector,and assistant referee, as well as the chief inspector for POPRA. He manages thetechnical inspection process at Pro Series Events. (FILL IN) 48
  49. Dee Kimes – Ms. Kimes serves as the Chief Scorer for ORL and has done so forthe past 15 years. She manages the timing and scoring process at all Pro Seriesevents. (FILL IN)Andrew Corn – Website Director(FILL IN)NOTE: The complete APBA ORL Organizational Chart is attached hereto asExhibit “A” ORL Divisions and Affiliates ORL EventsProduces and manages several different ORL controlled events, and managesindependently produced ORL sanctioned events, such as ORL powerboat races,ORL personal watercraft races, boat shows, poker runs, speed record runs,endurance runs, and ORL fishing tournaments. ORL TelevisionProduces the television programs of ORL sanctioned or produced events andmanages ORL’s programming, broadcast and distribution rights and properties. 49
  50. ORL InternetProduces and maintains Offshore’s website and related video and audio broadcastsof Offshore sanctioned/produced events including the delivery of relevant up todate information to current and potential members, sponsors, and consumers, andonline sales of memberships and merchandise. ORL Sales and MarketingDevelops, implements and manages all Sales/Marketing, Public Relations,Publicity, Celebrity Participation and general promotion of the business and itsactivities on the national series level. ORL Membership Products and ServicesDevelops, implements and manages Offshore’s racing and non-racing membershipprograms, including racer and consumer programs, products and services. ORL LicensingDevelops implements and manages all licensing relationships for Offshoreincluding merchandising and apparel but excluding racing and marine performancerelated products and services. 50
  51. Certified Racing EquipmentAdministers the technical rulemaking and enforcement programs for Offshore’sracing activities, and also administers the sales and licensing of “APBA OffshoreProven” marine related products and services to race teams, and outside third partyvendors of boats and marine related products and services. This is a separateFlorida corporation that holds a license from Offshore to perform its functions. 51
  52. Objectives – In General1. Continue to develop a competition based rules model for its racingoperations that emphasizes: a. Competitive balance for all participants; b. Affordable racing for all participants; c. Close, exciting competition for everyone - multiple winners2. Continue to develop a professional staff that effectively develops,implements and manages the rules making and enforcement process with fairnessand integrity.3. Continue to develop a professional staff that effectively manages theoffshore racing specific logistics and operations at the events.4. Develop a strong, stable national racing series schedule with events inmajor metropolitan areas or destination locations.5. Develop a strong national sponsorship and racer contingency salesprogram.6. Develop a strong prize money program for the race teams.7. Produce first class, high quality, exciting television entertainment.8. Produce an exciting, interactive, informative and entertaining Internetpresence. 52
  53. 9. Produce high quality product licensing, merchandising and apparelprograms.10. Produce effective and informative public relations and media programs.11. Produce consumer oriented affinity membership programs.Conduct business in a manner that enhances and promotes the ORL brand and thesport of offshore powerboat racing for the benefit of all of our business partners. 53
  54. Economics of ORLOverview The sanctioning body business has experienced tremendous growth since1998 when the Category still operated under the control of APBA. Specifically, in1998 total revenues were less than $350,000. The average fleet count at nationalraces was less than 50 boats and the World Championships that year yielded only68 boats. In 1998 APBA had two primary competitors in the offshore powerboatracing sanctioning body business: US Offshore (USO) and SBI. Both organizationsachieved 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, seriessponsorship sales increased to approximately $350,000 and total revenuesexceeded $1million. The average fleet count increased to over 65 boats per eventand the World Championships had over 100 boats in attendance. In 2000,Offshore’s first year of operations, sponsorship sales exceeded $750,000 and totalrevenues 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 146teams attended the World Championships. 54
  55. In 2001 Offshore’s sponsorship revenues grew to over $1,000,000.00 despitethe severe downturn in the U.S. and World economies. Total revenues exceeded$2million for the first time in APBA history. The financial bottom-line forOffshore improved substantially over the previous year due to Management’sdecision to drop its TNN television package in favor of increased coverage onSpeedvision while maintaining its full compliment of sponsors. The loss fromoperations was approximately $100,000. The total Pro Series boat count was downslightly in 2001 due primarily to class consolidation and the economy. In 2002 sponsorship sales declined approximately 20% due to a number offactors including the continued economic recession, the severe decline in thesponsorship and advertising markets overall, the virtual depression experienced byOffshore’s primary sponsorship market, the high performance marine industry, andOffshore producing its own national events. Overall revenues also decreased due toa further reduction in the number of teams able to participate due to the continuingeconomic recession. In 2003, the number of participants increased by about 10% over theprevious year. Unfortunately, Offshore experienced four significant yetunforeseeable negative events that impacted the business financially. First, certainmembers of APBA unlawfully attempted to terminate the original License. Second,these same members unlawfully attempted to rescind a properly approved 55
  56. corporate restructuring of APBA that provided substantial financial benefits toOffshore and protected its long term interests and investment in the sport. Third, Mercury Racing management, angered by what it perceived as GM’sencroachment on its market, unlawfully terminated its sponsorship agreement withOffshore and refused to pay the remaining $100,000 balance due. Mercury Racing,though one of its top executives, Fred Hauenstein, also assisted the efforts of theabove referenced APBA members, and publicly yet falsely accused Offshore offailing to perform its contractual obligations and questioned its future under theLicense. Fourth, the LLC finance member reneged on his obligations to fundcompany operations through the balance of the year after causing the company toincur costs it otherwise would not have incurred, including on sales and marketingpersonnel who failed to produce any offsetting revenue. These led to expensive and time-consuming litigation; uncertainty amongsponsors, racers, fans, potential sponsors and event sites, a loss of focus on the corebusiness and a refocusing of human and financial resources on expensive non-revenue producing activities, which led to a substantial loss of income.Nevertheless, management prevailed in all related litigation and secured afavorable settlement, which included a new and improved License arrangementwith APBA. The settlement also enabled management to lawfully reconstitute theirownership group by eliminating certain members, and restructure the business, in 56
  57. the form of KHAMAN and the ORL. Most of the past obligations have beensatisfied through loans from the remaining LLC members and drastic reductions inoverhead during the past 90 days. By virtue of these aggressive moves bymanagement, the expected annual cash infusion from 2004 memberships, boatregistrations and World Championships entry fees, will enable the ORL segment ofthe business to commence the 2004 season in a relatively stable financialcondition, thus paving the way for the implementation of the new business planincluding the creation and capitalization of Newco. Overall, the economics of the ORL are favorable for future growth andprofitability, thus increasing the value of the enterprise to third party investors orpurchasers. Specifically, with the successful development and implementation ofNewco, the ORL fixed costs will remain very stable over the next 3 years evenwhile revenues grow at a faster rate. In other words, while revenues grow fixedexpenses will not, thus increasing ORL profitability. The reasons are three fold: 1)the core sanctioning body business relies primarily on volunteer labor for theexecution of its event production responsibilities; 2) national series sponsorshipsales primarily are executed and managed by ORL shareholders who arecompensated through commissions, with some outside commission salesassistance; and 3) ORL derives revenues primarily from sources which do notrequire additional personnel as those revenues increase. Most of the benefits 57
  58. contained in series sponsorship packages for example are self-executing, such asthose related to television, or are fulfilled on site by dedicated volunteers such assignage placement and VIP hospitality.Revenues The 2004 revenue projections for ORL are attached hereto as Exhibit _.ORL is profitable upon start-up assuming a slight increase in national seriessponsorship revenue; provided that Newco assumes the event production businessand corresponding expenses, and pays ORL a $50,000.00 sanction fee for each ProSeries event. In the first year, however, the profit shall be applied against theremaining past due expenses and the debt owed to the LLC members, which ORLassumed from the LLC. In the first 5 years, the profit shall be further limited byORL’s agreement to limit sanction fee increases in order to assist the growth anddevelopment of Newco’s business. By the end of this initial 5year period, however,Newco should be profitable and thus able to pay fair market value sanction fees toORL. Series Sponsorships Series sponsorships typically consist of a package of benefits that includestelevision commercials, in-focus exposure, in-show brand features, on site displayopportunities, VIP opportunities, and on-site signage. Management hasconsistently generated $500,000 - $750,000 in national series sponsorship income 58
  59. over the past four years. The GM contract runs through 2005 and pays ORL$400,000.00 annually. The Sterling contract runs through 2006 and pays aminimum of $150,000 annually thus yielding a guaranteed $550,000 each of thenext two years. ORL also has secured an additional $155,000 in verbalcommitments for next season and projects another $290,000 in sales over the next5-6 months based on current discussions with interested potential sponsors. The ORL has secured these sponsorships and commitments primarilythrough the efforts of its ownership group. Michael Allweiss, Mr. Nemschoff andMr. Hook will continue those efforts on a commission only basis, and they projectannual sales to grow to $1,500,000 by 2006. With the formation of Newco and itscorresponding assumption of the event production business, and formation of itsown national sales staff, ORL Management does not expect to add new salespersonnel for at least the next 3 years. Series sponsorships represent approximately38% of ORL gross revenues. Due to its relatively fixed overhead and eventproduction costs, however, ORL profit margins will grow corresponding with theprojected increase in ORL generated sales. Competitor Contingency Sponsorships These sponsorships generally come from marine related product suppliers.Teams receive product and/or money for using the product and finishing usually inthe top three at an event and/or for the season high points race. ORL must develop 59
  60. such a program to attract more competitors and lengthen the commitment ofcurrent racers. ORL will receive only a very small percentage of any suchsponsorship to administer the program. Management will spend the 2004 season toresearch and develop a workable program for implementation in 2005. Thefinancials do not reflect any income from this source for the first three seasons. National Television Advertising For the next three seasons ORL shall continue marketing and selling itstelevision inventory as part of bundled series sponsorship packages. Thus,management does not anticipate any revenue derived from sales of strictlycommercial inventory or in-show graphics and features. Sanction Fees Sanction fees are monies paid to the sanctioning body for the right toproduce an ORL sanctioned event. The Pro Series sanction fee provides theproducer with a guaranteed event date on the Pro Series calendar at which the topPro Series boats will compete for national championship points. In 2004-2005Newco will pay ORL a set sanction fee of $50,000 for each Pro Series event.Beginning in 2006 the sanction fee shall increase 15% annually through 2008 atwhich time management will re-evaluate the fee structure along with Newco 60
  61. management. This fee arrangement will allow Newco to become profitable soonerbut still return a slight profit to the ORL. The sanction fees representapproximately 20% of ORL gross revenues. Entry Fees ORL charges entry fees to competitors to enter Pro Series events inaccordance with a published fee schedule. The fees are set on a class-by-classbasis. Historically the conducting club retains entry fees for divisional events.Going forward, however, ORL will standardize the fee structure for Newcoproduced events and the fees will be split according to an agreed upon schedule.This arrangement will yield more revenue for both ORL and Newco. Currently,Pro Series entry fees account for approximately 22% of ORL gross revenues. Boat Registration Fees ORL also charges a one time annual equipment registration fee for eachindividual raceboat that competes in any ORL sanctioned event. These fees shouldbe increased on an annual basis to keep pace with inflation. Currently, these feesaccount for approximately 6% of ORL gross revenues. Membership Fees ORL shall produce a comprehensive, valuable, consumer oriented affinitymembership. The current total membership of ORL, consisting of racers, raceofficials and non-racers, is approximately 1500. The purpose of the plan is to 61
  62. increase ORL annual membership revenue and significantly grow the customerbase in order to efficiently and cost effectively serve its licensing andmerchandising program and thus increase its overall net earnings. Othersanctioning bodies such as NHRA (85,000 members), SCCA (55,000 members),and the AMA (250,000 members), have done this with great success. Once Newco is created and properly capitalized, ORL shall engage in aconcerted membership campaign to grow its non-racing membership. This planwill have several key components: • First, ORL will develop several levels of membership from a low cost base package to a high-end premium package that will be offered on a limited and semi-exclusive basis. Direct mail, Internet, television, event and voice relay shall be used to market and advertise the membership program; • Second, ORL 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 Formula products and its relationship with ORL, Formula will include APBA ORL membership displays in its dealerships and/or include the memberships as part of each boat sold. This way a sponsor can get the word 62
  63. to its customers about its relationship with ORL and drive these customers to ORL events where it can continue to develop the customer relationship; • ORL shall expand its current relationship with MBNA as part of the base membership marketing program; • ORL shall include an insurance component as part of its base membership package in much the same way SCCA and NHRA do in their respective programs;Membership fees currently account for approximately 10% of ORL gross revenues. Licensing Apparel Merchandise (FILL IN WITH LEROY BUSH INFORMATION) ORL currently has no licensing plan with respect to merchandise and apparelhowever, management is working on such a plan. Historically, sanctioning bodiesmake very little revenue marketing and selling merchandise and apparel thatexclusively feature its logos. The key to a profitable program is to market and sellthe stars of the sport and team merchandise and apparel bearing the ORL logo.ORL charges a license fee for use of the logo either in the form of a flat fee or a 63
  64. percentage of sales. The most cost effective way for ORL to generate license feerevenue is to grant third parties the right to market and sell the merchandise andapparel, thus eliminating any costs associated with that and with fulfillment. Racing Related Products and Services CRE handles this part of the ORL business and while it currently accountsfor less than 1% of ORL gross revenues it has the greatest potential to generatesignificant financial returns in the future. For example, CRE was responsible forvalidating the GM Vortec 8100 HP3 engine now in use in the Super V and SuperCat Light classes, and thus the GMC title sponsorship. CRE has also developedsolid business relationships with Sterling, Herring Propellers, HydromotivePropellers, Imco Sterndrives, and Innovation Marine, the largest re-power center inthe United States. Together, these entities control a huge segment of the veryprofitable high performance marine propulsion market. Going forward, CRE willdesign and implement a business strategy to strengthen, tighten and take furtheradvantage of these alliances to produce additional revenue for itself and ORL.Expenses The 2004 expense projections for ORL are attached hereto as Exhibit _. Thetraditional sanctioning body business has long been profitable. Indeed, 64
  65. Management has been acutely focused on developing the racing product over thepast several years. Unfortunately, the lack of professional promoters willing todevelop the event side of the business left management to handle this critical task.Management, however, had neither the human nor financial resources toadequately address the need for a comprehensive event production and promotionprogram. When combined with the APBA and Mercury Racing related problems in2003, this event issue became more acute particularly from a financial perspective. This also led to management’s decision to restructure the business and createNewco. Provided that Newco assumes the event production business andcorresponding expenses, and pays ORL a $50,000.00 sanction fee for each ProSeries event, ORL can focus on the traditional sanctioning body business. This inturn, will lead to a much-improved product for Newco to market and sell, and longterm profitability for the entire business. The 2 primary categories of expense areEvent Related and General Overhead. 65
  66. Event Related Expenses Event related costs constitute the largest category of ORL expenses,accounting for roughly 65% of the total. These expenses can be classified as: 1)staff related such as compensation, expense reimbursements and travel/lodging; 2)hard costs that are primarily comprised of prize money and event insurance; and 3)television, which will be handled separately below. National Staff Management anticipates adding very few additional staff over the next threeyears so those costs should remain relatively stable. This is primarily due to theSpec Racing Program, which requires far less personnel to manage and enforceeffectively even if the number of competitors and registered race boats increasesignificantly over that period. In addition, much of the on-site personnel is made upof local volunteers who are managed by the national staff. As Newco and ORLsolidify a consistent national schedule, the amount of time necessary to managethese volunteers also decreases thus enabling ORL to tightly control the growth ofits event related staff even more. Prize Money and Insurance Insurance costs may rise 10-15% over the next three seasons, but theadditional revenue generated by the small increases in sanction fees will coverthese increases. Prize money on the other hand is a fixed expense that will rise only 66
  67. with a commensurate increase in revenues. Nevertheless, one of management’schief goals is to double the prize payouts at the Pro Series events by the 2006season from $50,000 to $100,000. Management anticipates being able to do this bytaking advantage of the increased margins created by increasing series sponsorshiprevenue over the relatively fixed expenses associated with the Spec RacingProgram. Increased prize purses are important to the overall success of both ORLand Newco in that it helps to professionalize and stabilize a larger more consistentbase of national and divisional competitors as demonstrated historically in othersports. Television Production Television is a critical component to the future growth and success of theORL and Newco. The leaders of the two most widely recognized motorsports inthe world, NASCAR and Formula One, recognized this early on and designed theirrespective businesses around an aggressive television product and distributionplan. However, NASCAR did not secure its current groundbreaking televisionpackage until its member racetrack owners ceded their authority to negotiateindividual network contracts to the sanctioning body. ORL already has exclusiveauthority to negotiate the television deals for all of the National and Divisionalracing events. With Newco and ORL closely aligned, however, management forboth organizations shall work together during any future network negotiations to 67
  68. secure the best deal for the overall business. In 2003, television accounted forapproximately 30% of ORL gross expenses.Program Distribution Plan For the 2003 season Offshore had contracted for a minimum of 20 hours ofprogramming on the Fox Speed Channel (“Speed”). The contract required Offshoreto buy this time for $150,000. To date, Offshore has produced the requisite numberof programs but has not paid any of the time buy. Discussions betweenmanagement and Speed are ongoing and it appears that the network will continueto take the programming for the time being. Speed has indicated, however, that it is not inclined to enter into talks about2004 and beyond without a commitment from Offshore to pay the time buy for2003. ORL thus may have to assume that obligation in order to secure a new deal.Another potential option is for GMC and ORL to approach Speed together onrestructuring the relationship. Speed has indicated it might consider a plan thateliminates the past and any future time buys if GMC increases its advertisingspending with the network. Management has had very limited discussions withGMC on this subject but plans to aggressively pursue this option in the offseason. In the short term, Speed remains the best option for the ORL televisionproduct. The Outdoor Life Network (“OLN”), with similar distribution, is anotheroption as is the much smaller Outdoor Network. In the long term, ORL should 68
  69. secure a broadcast network contract to televise at least one of its WorldChampionships races live. Ultimately, the distribution plan should include apackage with Speed for most national and divisional events, and a broadcastnetwork for tape delay broadcasts of designated “major” events, and at least onelive broadcast of the World Championships on an annual basis.Program Content Plan For the short term the content plan for the GMC Pro Grade Series events isas follows: • ORL Television shall produce a one-hour season preview show featuring the top teams from each of the 6 primary classes, with particular emphasis, however, on the Super Cats and Super V’s. • ORL Television shall produce two separate and distinct one-hour shows for each of the regular Pro Series season events. One show will be dedicated to the v-bottom classes featuring Super V while the other show will be dedicated to the catamaran classes, featuring Super Cat. • ORL Television shall produce a one-hour mid-season review show. • ORL Television shall produce a one-hour Worlds Preview Show. 69
  70. • ORL Television shall produce three additional worlds programs, one featuring the mid-week races and the other two featuring the weekend “finals”. • ORL Television shall produce a one-hour season in review show. General Overhead This category includes the general expenses necessary to operate the ORLon a day-to-day basis and accounts for roughly 35% of the total expense budget.This figure includes the annual license fee that ORL must pay to APBA under thenew License. Administrative The Administrative expenses to operate the ORL, including rent, utilities,salaries, commissions, travel and general office account for approximately 30% ofthe total expense budget. Over the next three years the ORL will not need toexpand either its office space or the number of paid full time employees becausethe operation is fully automated. The official ORL website offers a host of onlineservices including event registration, annual equipment registration andmembership application and processing. The Spec Racing Program alsosignificantly reduces the volume of participant inquiries so from a customer service 70
  71. standpoint the ORL is adequately staffed even assuming significant growth inmembership. The Spec Racing Program also requires only minor maintenance from arules review and amendment standpoint, thus obviating the need for any additionalpersonnel dedicated to that task. The same applies to the enforcement aspects ofthe Program at the events. The technical inspection team is adequately staffed andcompensated for the next three years even assuming a 30% increase in the fleet.Moreover, even if the need for additional personnel arose, these would be part-timemodestly paid sub-contractors who would render services on an event-by-eventbasis. 71
  72. Promotion and Public Relations (FILL IN) 72
  73. Internet Drew Corn manages the website. He is currently redesigning the site for theupcoming season. Adding a “Store” is his top priority and he is working with TimGreen on this project. The site will be used for news, information on upcomingevents, event results, and company generated press releases relating to events andthe overall business. (FILL IN) 73
  74. The Market The relevant market of potential consumers of the ORL and Newco productsis the recreational boating industry. In 2001 nearly 70,000,000 people participatedin recreational boating activities in the United States. Consumers, moreover, spentmore than $25,000,000,000.00 at retail in 2001 for new and used boats, motors andengines, trailers, accessories and other associated costs. In addition, there are now over 15 million registered powerboat owners inthe US alone and that number is growing annually. These numbers should grow asthe US economy continues its recovery. ORL is uniquely positioned to capitalize on this growing market for three mainreasons: First, the primary and nearly exclusive event sales and marketing tool forthe marine industry today is the boatshow. These exhibitions are generally staticdisplays of available boats, engines and marine accessories but offer little to noentertainment value to the consumer. ORL events offer the same displayopportunities, plus a unique entertainment, VIP and corporate hospitality 74
  75. environment sponsors. In addition, ORL events offer perfect opportunities forpoker runs that benefit the high performance boat builders and dealers, andexcursion/getaway opportunities for cruiser and yacht makers and their dealers.ORL events also offer a very different interactive experience for consumers fromthe high-pressure environment of the typical boat show. Second, since GM provides nearly all of the engines for the inboard marineindustry, ORL offers GM a unique opportunity to communicate its “under thehatch under the hood” message directly to its target truck and SUV customers (i.e.non-GM vehicle owners who do own GM powered boats) without the usualcompetition from other automakers. In short, GM values the ORL relationshipbecause it produces incremental truck and SUV sales in a cost effective manner. Third, GM is the exclusive supplier of inboard engines to Brunswick ownedMercury Marine, which in turn is the largest supplier of marine power to the multi-billion dollar portfolio of Brunswick owned boat companies. Since Mercuryhistorically has been the dominant force in offshore racing engine and propulsionsystems, it has a similar opportunity to communicate directly with its targetcustomers at every level of its product offerings without interference from itscompetition. The synergies of all three companies create a very compellingbusiness case for a joint sales, marketing and promotional effort around the ORLevents and television product. 75
  76. The Competition In 1998 APBA had two primary competitors in the offshore powerboatracing sanctioning body business: US Offshore (“USO”) and SuperboatInternational Productions, Inc. ("SBI") which is a small organization based in KeyWest, Florida. Limiting the scope of the industry to domestic offshore powerboatracing, today the competition comes from only SBI, which has no nationalinfrastructure and a very small membership base in comparison to ORL. USO isout of business and SBI has lost virtually all of its corporate support and nationaltelevision exposure and is averaging approximately 20 boats per event. Also, SBIhas no coherent event-marketing program and suffers from chronic gross under-capitalization. SBI also caters to outdated and non-conforming equipment that isgenerally uncompetitive or illegal for ORL competition. SBI, however, is apotential acquisition target and management has undertaken some very preliminarydiscussions with people close to SBI ownership for that purpose. 76
  77. NEWCO OVERVIEWOver the next four years, Offshore’s primary strategic goal and objective will be to become thepremier offshore boat racing sanctioning body in the United States and thus a well recognized,highly respected, and financially successful motorsport entertainment property. To do thisOffshore must concentrate on developing its core sanctioning body business. The elements ofthis 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 sanctioningbody must be strong and stable. Thus, the goals and objectives for 2002-2005 can be summarizedas follows: 77
  78. 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. • Visiono Short Term – 2003 Season  National Sponsorship Sales  Contingency Sponsorship Sales  Event Sponsorship Sales  Television  Internet  Promotion and Public Relationso 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 Campaigno Long Term – 5-10 Years  Exit Strategy 78
  79. Offshore will seek strategic licensing relationships with qualified business partners to help itdesign and execute many of these programs.Additionally, Offshore seeks approximately $1.0 million in financing to enhance the operationsand management of Offshore’s business activities and further assist it in the achievement of itsgoals and objectives. The funds will be used primarily: 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 divisional racing series. 4. To allow Offshore to expand the scope of its television, public relations, promotional, membership, retail sales and internet programs.5.4 Projected Use of FundsThe Company intends to use a portion of the funds raised to hire the necessary professionalpersonnel, purchase the necessary equipment, and satisfy any shortfalls in the Company’s cashflow needs for the first year of operation5.5 Exit Strategy5.8 Company Vision and Goals5.8.1 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 79
  80. 5.8.3 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. • Teamwork. • Charity and Service5.8.5 Goals5.8.5.1 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 80
  81. • 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-even5.9 Market Analysis 5.10.5Membership Marketing5.11 OperationsThe Company will essentially become a motorsports entertainment company, producing andmanaging events and television broadcasts of the racing associated with those events. It will sellevent and television related entitlement sponsorships as well as offshore racing relatedmerchandise. The Company also will deal with rules and technical issues relating to the boatsand the conduct of its races and must deal with all of these issues from an operations standpointon a daily basis.6.7. Racing7.2.3 The Family Oriented Entertainment FestivalsEach Pro Tour and Divisional Tour event will be held in conjunction with a family orientedentertainment festival designed to generate profits for the company through area and eventsponsorships, admissions charges, merchandise sales, participation fees, and concession sales.These festivals will generally be 3-5 days long. The standard model will include most if not all ofthe following events, areas and activities: • Golf, fishing and/or tennis tournament(s) • Charity auction • Manufacturers expo • Kids activities areas • Wet and Dry pit viewing areas 81
  82. • National act concerts on at least one evening • Fireworks show on at least one evening • Boat show • Retail merchandising and sponsor display/sampling areas • Winners Circle • Offshore powerboat racing IntroductionAPBA Offshore Launches A New Era of Professional OffshorePowerboat Racing 82
  83. For the past 100 years offshore powerboat racing has been little morethan an unorganized, unstructured, hobby for rich boys and theirexpensive toys. The revolution from hobby to professionalmotorsports entertainment franchise actually began in 2000. That iswhen a group of entrepreneurs entered into an exclusive 99yearLicense with the American Power Boat Association (APBA) thelargest and oldest governing body for powerboat racing in the UnitedStates. The revolution is now over and the businessmen have won.Today, APBA Offshore launches a new era of professional offshorepowerboat racing with the laser like aim of becoming the next greatmotorsport entertainment property. o Company Profile  APBA o 100 years old - oldest motorsport sanctioning group in the United States o Exclusive national authority for UIM – world governing authority for all of boat racing o Offshore holds an exclusive 99year License Agreement from APBA to operate, manage, market and sell the sport of offshore racing and related events  Depth of Mgmt o Marketing o Public Relations o Operations o Legal o Finance o Membership o Sponsorships o Television o Technology o Entertainment 83
  84. o Celebrities o Event Management and Marketing o Competition Management o Investor Relationso Innovation – why we are different from any other motorsports entertainment company – “More than just a sanctioning body”  The lowest cost operator o Leveraging of higher margins with lower overhead as revenues grow resulting in huge percentage of revenue dropping to bottom-line. “Cashcow” o Biggest, most colorful and aesthetically exciting racing machines of any kind yet the least expensive to buy, power and campaign relative to other top tier national professional motorsports  Vertically integrated marine motorsports entertainment company o Event production, management and sales capabilities, television production and related sales capabilities o Participant Membership Program o Rules-making and enforcement o Competition management. o Affinity Membership Program o Owns and maintains exclusive control over the licensing, sales and marketing and production rights to the events, the Pro Series and all related television.o Stadium Style Racing  Past o Long courses 84
  85. oOut of sight of spectators oParticipant driven sport oWhat fans? oHigh attrition rates due to uncontrolled technical rules model  Today o Short courses, more thrilling and dangerous and faster racing o Closer more exciting competitive racing through corresponding tight competition based technical rules management. o We trade paint! o Spectator Excitement – view the entire course from primary viewing areas with the fleet only yards away – feel the spray and the roar. o “Apocalypse Now Effect” with tv and rescue helicopters flying directly overhead less than 50 feet off of the water and on the decks of the race boats as they scream through the “stadium” o Courses are more challenging and dangerous with the greater rescue and safety assets committed to the teams. o Air/Sea Rescue program is entertainment in and of itself. o Our “Stadium” costs = $700 in course buoys AND we only have to buy buoys once every few years!!!! o Greatest motorsport entertainment value to the spectators, sponsors and participants = low, low ticket prices affordable for the entire familyo Huge Growth Opportunity 85
  86.  Relevant Market o Over 70 million people participated in recreational boating in the United States in 2001 o Over $25Billion spent on new and used boats and equipment in 2001 o High level of brand loyalty o Upper Income Demographic o Cross Marketing potential with non-marine related retailers and consumer products and services Number of Events o Pre-APBA Offshore Acquisition – 6 with only 2 secure, none in major markets or true destinations, and none controlled or owned by Offshore – direct satellite television only o 2002 - 8 nationally televised Pro Series events 12 smaller divisional events o The Future – 100% Growth + expansion into other areas such as bill fishing tournaments, boat shows and endurance jet craft racing Media (Television, Radio, Internet, Print) o Pre ABBA Offshore Acquisition – direct satellite television only – 12million home penetration; no radio; no internet and no official website; small black and white newsletter o 2002 – Fox Speed Channel – over 50million home penetration, over 80 hours of tape delay programming, time buy/barter; live radio at each event; live internet broadcast at each event on APBA Offshore.com; color program at each event, 120 page program for the World Championships 86
  87. o The Future – Major Broadcast Networks and Cable, Live Programming, Rights Fees, Pay Per View, Special Features, Movie; APBA Radio Network; live internet streaming video of each event on APBA Offshore.com; Annual Guide to the sport, APBA Offshore Magazine Membership Programs o Pre-APBA Offshore Acquisition – Participants = 300; General = 800 o 2002 – Participants = 700; General = 1300 o The Future – Participants = 2000; General = 80,000 Licensing, Branding and Co-branding o Pre-APBA Offshore Acquisition - None o 2002 – minimal o The Future o Merchandise o Apparel o Die Casts and Toys o Product Endorsements = “APBA Offshore Race Proven” o Games  Video  Online o Race Marine Products and Services (“Certified Racing Equipment - CRE”) o Recreational Marine Products and Services Sponsorships o Pre-APBA Offshore Acquisition – 3 sponsors and $150,000 cash, minimal in-kind o 2002 – 100+ sponsors and $3,000,000+ cash and in-kind 87
  88. o The Future - $25,000,000+  Admissions – the “Gate” o Pre-APBA Offshore Acquisition - $0 o 2002 – $600,000 (Avg. $10/person) with only 4 venues gated o The Future - $10,000,000+ (does not include VIP)  Concessions (Parking, Beverage, Food, etc.) o Pre-APBA Offshore Acquisition - $0 o 2002 – $100,000 o The Future - $5,500,000+  Concerts o Pre-APBA Offshore Acquisition - $0 st o 2002 – 1 Major Concert to be introduced at the upcoming Key West World Event o The Future – “APBA Offshore Rocks” Concert Serieso Marine Industry Competition  Pre-APBA Acquisition – highly fragmented and loosely regulated with multiple sanctioning groups  2002 – APBA Offshore is the unquestioned leader in boat racing with one small private niche group remaining  The Future – APBA Offshore becomes the premier marketing vehicle for the marine industry in North America and the Caribbeano Marketing, Advertising, Public Relations and Promotion  Pre-APBA Acquisition – very limited television exposure, no promotion, marketing or advertising of any kind  2002 – Aggressive and highly integrated program including public relations, national television, radio, and internet, plus direct mail, print advertising, cable 88
  89. television advertising, telemarketing, signage and billboards, cross promotions and cooperative advertising, brochure distribution plan, newspaper inserts and flyers, government relations (TDC’s and CVB’s) etc. on an event by event basis  The Future – Exponential increase in these programs for each event as well as a series basis, cross promotions and advertising with other “non- competitive” sports and entertainmento Celebrity Involvement  Pre-APBA acquisition – None  2002 – Teen Singing Idols Nick Carter and Aaron Carter, Darian Hatcher (NHL), Rusty Wallace (Team Owner), Rock Group “No Secrets” with more under negotiation for appearances at the Worlds. Celebrity involvement this year resulted in an expansion of the APBA Offshore fan demographic to include a much younger audience and guarantee a long term, loyal fan base  The Future – APBA Offshore Celebrity Advisory Board led by prominent Manhattan Entertainment Attorney Steven Beer. Comprehensive Celebrity Program to include promotions, special appearance, APBA Offshore product endorsements, enhanced media exposure, broader demographicso Economic Impact to Participating Communities  Pre-APBA Acquisition – minimal; small attendance and participation bases  2002 - $6-12million based on the venue and length of event  The Future – exponential growth with increase in exposure, fan and participant bases 89
  90. Strategic Objectives • Inject professionalism into the sport • Broaden the sport’s appeal and accessibility • Create multiple channels for marketingInjecting Professionalism into the Sport • Brought law and order o Established guidelines, regulation, management • Leveled the playing field o Introduced and enforced boat weight and power plant limitations, cracked down on infractions o Ensured tight competition-based technical rules management Results: o Greater pro sports legitimacy and credibility o More participants, rid the sport of infractors o Closer races, more competitive excitement o Previously highly fragmented and loosely regulated with multiple sanctioning groups –> APBA Offshore today is the unquestioned leader in boat racing with one small private niche group remaining 90
  91. Broadening the Sport’s Appeal and Accessibility: Revolutionizing theCompetitive Arenao Past: Participant driven sport, long courses, out of sight of spectators, high attrition rate => what fans?o Today: Stadium Style Racingo Short courses  More thrilling and dangerous and faster racingo Multiple spectator viewing areas: Entire course can be seen, with fleet only yards awayo TV and rescue helicopters fly directly overhead, less than 50 feet off the water and on the race boat deckso Courses are more challenging and dangerous with the greater rescue and safety assets committed to the teamsResults: o Spectator-friendly venue draws more audiences o Greater viewer excitement in more competitive, thrilling races o “Apocalypse Now Effect”: Air/Sea Rescue program is entertainment in and of itselfBroadening the Sport’s Appeal and Accessibility: Media (Television,Radio, Internet, Print) o Pre APBA Offshore Acquisition: direct satellite television only – 12 million home penetration; no radio; no internet and no 91
  92. official website; small black and white newsletter o Today: Fox Speed Channel – over 50 million home penetration, over 80 hours of tape delay programming, time buy/barter; live radio at each event; live internet broadcast at each event on APBA Offshore.com; color program at each event, 120 page program for the World ChampionshipsBroadening the Sport’s Appeal: Celebrity Involvement Pre-APBA acquisition: None Today: Teen pop idols Nick Carter and Aaron Carter, NHL All-Star defenseman Derian Hatcher, NASCAR champion Rusty Wallace, up- and-coming pop sensation “No Secrets” with more under negotiation for appearances at the Worlds.Results to date: Expansion of the APBA Offshore fan demographic to include a much younger audience o Cultivating a long term, loyal fan baseBroadening the Sport’s Appeal and Accessibility: Marketing,Advertising, Public Relations and Promotion 92
  93.  Pre-APBA Acquisition – very limited television exposure, no promotion, marketing or advertising of any kind Today – Aggressive and highly integrated program including public relations, national television, radio, and internet, plus direct mail, print advertising, cable television advertising, telemarketing, signage and billboards, cross promotions and cooperative advertising, brochure distribution plan, newspaper inserts and flyers, government relations (TDC’s and CVB’s) etc. on an event by event basisResults: • Exponential increase in awareness • Phenomenal increase in sponsorships • Pre-APBA Offshore Acquisition – 3 sponsors and $150,000 cash, minimal in-kind • 2002 – 100+ sponsors and $3,000,000+ cash and in-kind • Future projections: $25,000,000+Broadening the Sport’s Appeal and Accessibiltiy: More Events• Pre-APBA Offshore Acquisition: 6 with only 2 secure, none in major markets or true destinations, and none controlled or owned by Offshore – direct satellite television only• 2002: 8 nationally televised Pro Series events, with 12 smaller divisional eventsCreating Multiple Channels for Marketing: Innovating Spectator-Friendly Event Sites 93
  94. • VIP and sponsor hospitality tents • Closed area grandstands • High-quality radio headsets for play-by-playResults to date:• Gate admissions revenues: $600,000 for 2002 tour to date, with only 4 venues gated – compared with $0 pre-APBA Offshore acquisition • Future projections: $10,000,000+ (does not include VIP)• Concessions (Parking, Beverage, Food, etc.): $100,000 for 2002 tour to date – compared with $0 pre-APBA Offshore acquisition • Future projections: $5,500,000+Creating Multiple Channels for Marketing: Licensing, Branding and Co-branding• Pre-APBA Offshore Acquisition: None• Today: Developing aggressive plan that includes APBA OS-branded merchandise: • Apparel, die casts and toys, video and online games • Product endorsements (“APBA Offshore Race Proven”) • Recreational marine products and services (“Certified Racing Equipment - CRE”) 94
  95. Creating Multiple Channels for Marketing: Membership Programs• Pre-APBA Offshore acquisition 300 participants; general = 800• Today: 700 participants; general = 1300• The Future: 2000 participants; general = 80,000APBA Offshore is Positioned for Breakthrough Success • Huge growth opportunity • Depth of management • Strong business modelHuge Growth Opportunity: Relevant Market • Over 70 million people participated in recreational boating in the United States in 2001 • Over $25Billion spent on new and used boats and equipment in 2001 • High level of brand loyalty • Upper Income DemographicDepth of Management: More Than Just a Sanctioning Body • Marketing • Public Relations • Operations • Legal 95
  96. • Finance • Membership • Sponsorships • Television • Technology • Entertainment • Celebrities • Event Management and Marketing • Competition Management • Investor RelationsStrong Business Model • Lowest cost operator: “cash cow”: New “stadium” costs = $700 in course buoys AND we only have to buy buoys once every few years!!!! ==> Leveraging of higher margins with lower overhead as revenues grow resulting in huge percentage of revenue dropping to bottom line • Greatest motorsport entertainment value to the spectators, sponsors and participants = low, low ticket prices affordable for the entire family  Vertically integrated marine motorsports entertainment company • Event production, management and sales capabilities, television production and related sales capabilities • Participant Membership Program • Rules-making and enforcement • Competition management. 96
  97. • Affinity Membership Program • Owns and maintains exclusive control over the licensing, sales and marketing and production rights to the events, the Pro Series and all related television.Looking Ahead…The Future of APBA Offshore: Media • Major Broadcast Networks and Cable, Live Programming, Rights Fees, Pay Per View, Special Features, Movie; APBA Radio Network; live internet streaming video of each event on APBA Offshore.com; Annual Guide to the sport, APBA Offshore MagazineThe Future of APBA Offshore: Celebrity Involvement • APBA Offshore Celebrity Advisory Board o Led by prominent NY entertainment attorney Steven Beer o Comprehensive Celebrity Program to include promotions, special appearances, APBA Offshore product endorsements, enhanced media exposure, broader demographics o Concerts: 1st major concert to be introduced at the upcoming Key West World Event; “APBA Offshore Rocks” Concert SeriesThe Future of APBA Offshore: Marketing, Branding, Licensing 97
  98.  Exponential increase in marketing/promotional/advertising programs for each event as well as a series basis, cross promotions and advertising with other “non- competitive” sports and entertainment Cross marketing potential with non-marine related retailers and consumer products and services APBA OS branded merchandise opportunitiesThe Future of APBA Offshore: Beyond Power BoatingGrowth + expansion into other areas such as bill fishing tournaments,boat shows and endurance jet craft racingThe Future of APBA OffshoreAPBA Offshore becomes the premier marketing vehicle for the marineindustry in North America and the Caribbean5.10 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 98
  99. 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 areas 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, divisional 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 Divisional Tour events.5.10.3 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 Divisional 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.5.10.4 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 divisional 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 divisional 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 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. 99
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