Rahal Letterman Racing Media Conference

Topics:  Rahal Letterman Racing, Ethanol, American Le Mans Series

Scott Atherton
Bobby Rahal
Tom Slunecka
February 7, 2007

THE MODERATOR: For those of you who may be on the call and don't know, I'm Bob Dickinson. I'm vice president of public relations, media services for the American LeMans Series. Appreciate everyone taking time to be on the call today.
I will begin by stating that earlier today, literally within the last hour, the American LeMans Series announced it is going to partner with Ethanol Promotion and Information Council, known as EPIC, to make E-10, the official ethanol-enriched fuel the official of the American LeMans Series. It is the first major racing series to use what is described as a street-legal ethanol-enriched fuel for all of its teams, with the exception of the Audie diesel, of course. You will be receiving an email with this release a little later on in the afternoon about the partnership.
For the next 30 minutes, we are fortunate to have the principals who participated in this press conference at Rahal Letterman race shop. Now with us to share a few comments regarding the significance of this announcement and answer any questions that you may want to ask. I'm going to introduce the three principals first. We will ask them a question each, then open it up to some questions.
First on the list from epic, its executive director, Tom Slunecka; from the American LeMans Series, president and CEO Scott Atherton; and also from Rahal Letterman, principal and owner, Bobby Rahal. Those are the three people participating.
I'd like to start two, Tom. Will you explain a little bit about the partnership with epic and the American LeMans Series, how it will work.
TOM SLUNECKA: I'd be happy to.
On behalf of the U.S. ethanol producing members of the Ethanol Promotion and Information Council, I'd like to state that today is a very important day for the continuation of the promotion of ethanol to all consumers. American LeMans is truly a world class organization. When a group like them embraces ethanol in its many forms of racing vehicles, it really puts the exclamation point on the fact that ethanol performs. Most consumers understand that ethanol is a good fuel for our environment, for our economy, but to really demonstrate its ability to perform in all types of cars, is the importance of the American LeMans joining with us in this arrangement.
From a technical aspect as well as promotional aspect, the ethanol industry is proud to partner with American LeMans today.
THE MODERATOR: Thank you, Tom.
Scott, tell us a little bit about the significance of this partnership for the American LeMans Series.
SCOTT ATHERTON: Well, I consider this another perfect fit for the platform that is the American LeMans Series. Most of the people on this call today are very familiar with how we have positioned the series as being the most relevant form of motorsports in that the cars that are competing in the American LeMans Series have direct links back to their manufacturers and in many cases directly back to the showroom.
When you look at the practical application of ethanol in this form, unlike I believe any other application to date, this really has a direct link to the consumer. The same fuel, which in our case we will be starting with an E-10 blend, so 10% ethanol in our gasoline, this is in many markets around the country already what is coming out of the fuel pumps. As we've often described, the American LeMans Series providing a direct link for our manufacturers, the link from the racetrack to the showroom, and today we've established another direct link, and that is from the racetrack to the fuel station.
THE MODERATOR: Bobby, talk about what this partnership means for race teams and specifically Rahal Letterman which I think has some news of its own today.
BOBBY RAHAL: Well, we're very pleased to have announced an expansion of our commercial relationship with epic and ethanol into the American LeMans Series with our Porsche RSR. We're certainly pleased to see EPIC and ethanol want to join into the ALMS series let alone in association with us.
I think the reasoning for me at least is truly I think ALMS is maybe the only series left where technical innovation is promoted and, in fact, recommended by the teams and by the manufacturers and what have you. Bringing ethanol into that mix is only the right thing to do because it has been proven in the IRL. Certainly there's been no drop-off in performance by the cars switching in fact this year to a hundred percent ethanol.
I think that message needs to get out, and particularly needs to get out to the ALMS because of its relevance to the street market. That's very much a reason why we entered the American LeMans Series in the beginning, was because of that relevance.
I think this is just a continuation of that and expansion of that. We're pleased to see the ALMS join with EPIC and the ethanol industry, and obviously we're pleased to represent ethanol in this new venue for the two of us.

Q. Bobby, could you expand, you weren't real clear, your relationship? EPIC is sponsoring your car and team?
BOBBY RAHAL: EPIC and the ethanol industry is joining with us as an associate sponsor on our Porsche program. Of course, Bell Micro is our primary sponsor. We also had good news today that the Gail Company, which sponsored my son last year, is also an IRL associate of ours, has expanded into ALMS with us, as well. A couple of pieces of good news for us.
We're pleased. As I say, even though last year was a tough year for everybody with Rahal Letterman and with ethanol, the relationship got stronger and stronger as the year went on. I'm particularly pleased that Tom and his council and the ethanol group has a whole chose to join with us, where we became sort of an additional aspect of their ALMS commitment.

Q. The EPIC website features a prominent permanent link to the IndyCar Series. Will you do similar links soon to the ALMS?
TOM SLUNECKA: Yes. As a league sponsor with the ALMS, we're very proud of that relationship. We like to help drive new fans to the racing series. Equally important is their website's linkage back to more information about ethanol so that every consumer can get a taste of that ALMS performance each and every time they fill up.

Q. Tom, what type of promotion will you be doing during the race week to make sure the fans that are at the track and/or watching on TV understand the importance of today's announcement?
TOM SLUNECKA: Our promotion will include some television advertising, some radio, some print. We've also come to customize what's called a pump promotion. We'll go in advance of races and help to drive ticket sales before each and every race.
It's all about activation. It's all about experiential marketing. There's no better way to activate on that kind of platform than to do it through racing.

Q. Tom, when you say you'll be advertising, you'll be showing both the ALMS cars as well as the IRL cars in your advertising?
TOM SLUNECKA: Those spots have not been completed. I think the intention is to have separate spots. The two leagues seem to be very complementary. There may be times when they're seen together.

Q. Scott, on the ALMS side of the partnership, how will this look at the track? How will we visualize their participation other than we're using the fuel?
SCOTT ATHERTON: You'll see an identification on all the cars that are utilizing the product to begin with. You also have in many venues, I won't say all of them, there will be an interactive component that's part of the series involvement. You're catching us literally at the leading, leading edge of this relationship so we can't put too much meat on the bone.
Suffice it to say I think EPIC has recognized the target audience delivered by the American LeMans Series. They also have ongoing relationships with the same OEM manufacturers competing in the series. I wouldn't at all be surprised to see the manufacturers embrace this relationship as well, just as all of us work to educate people on the practical application of alternative fuels. That's what this is all about.
Stay tuned for more information.

Q. Last year the diesel Audie contributed a real buzz to the ALMS. Do you anticipate the use of street-legal ethanol will create a some buzz around the ALMS?
SCOTT ATHERTON: The short answer is yes, I do. I don't think it will be a direct lift of what occurred last year with Audi because that was a very focused effort on behalf of two cars, whereas this is a series-wide platform that's being launched today.
But I think the same development in terms of the educational process and demonstrating the performance capabilities of an ethanol-blended fuel will be the by-product of this, not indifferent to what Audi achieved with educating people on the practical application of what it's like to drive a diesel.
I used it today in our press conference, historical reference point, of how alternative fuels have been introduced to the mainstream consumer through the series. I think we just had the most recent chapter in that beginning today.

Q. At the Rolex 24, some of the most prominent teams had problems with the newly mandated ignition system that all the teams had to use. How much concern, if any, do you have about the teams adapting to a new fuel, one that's different from the type of fuel they'd used in the past at the Sebring 12 hour?
SCOTT ATHERTON: I'm not technically qualified to answer specifically, but I can tell you that I've been reassured by all of the people who are qualified that the fuel that will be utilized in 2007 is already an accepted, proven product. Many of our manufacturers have been utilizing the fuel in dyno testing and are very comfortable with the application, how it interacts with their existing equipment, and the performance that has been achieved is, if anything, improved.
I can't speak any more technically than that. But I guess the short answer to your question is we don't anticipate any problems whatsoever.

Q. Scott, this is a 10% blend now. Are you going to increase the ethanol content of your fuels in future years? If so, how much do you see this going? Will we achieve a hundred percent ethanol in the next several years?
SCOTT ATHERTON: That's an excellent question and one that is very actively being discussed right now. There was an earlier question today saying, What was the motivation for the timing of this? The same answer to your question applies to that question. The motivation and the timing is largely prompted by manufacturer feedback that we've received. Each manufacturer has their own take on how they are implementing ethanol and alternative fuels in general.
Today we are announcing the initial leading edge of our relationship, which is an E-10 blend. The opportunity for us to go to an E-50, to an E-85 and potentially an E-100 is very much part of the future. There is no established time frame. It really will depend on the manufacturer's desire to evolve this as we go forward.

Q. Scott, you already identified in the competitor bulletin the next fuel will likely be an E-50. That is termed fall 2007. Can we anticipate an entry on E-50 this season?
SCOTT ATHERTON: I honestly don't know. There have been many discussions that have been held with multiple manufacturers. Again, you know me well enough that when it's not our announcement to make, we don't make it. We'll wait for the manufacturers to individually make their plans known in this category.

Q. Bobby, do you anticipate a Porsche will run well on 50?
BOBBY RAHAL: On 50% or on the current situation?

Q. 50%.
BOBBY RAHAL: I think when the time comes, when we get to that point, certainly. Obviously there has to be some level of he equivalency, which I understand LeMans is working with in terms of fuel tank capacity versus types of fuel, what have you, because there's got to be -- obviously, gasoline has got greater energy in and of itself. The times come, there's no question. Heck, IRL are running a hundred percent this year. By the testing times at Sebring, doesn't seem to me there's -- I mean Daytona, there doesn't seem to have been any falloff in performance whatsoever.
When we get to that point, obviously the engines have to be developed or tuned to the fuel mixture in effect at that point in time.

Q. So you aren't making an announcement now?
BOBBY RAHAL: Regarding 50%?

Q. Right.
BOBBY RAHAL: No. We're going to play with the same rules. It's going to be tough enough for us. We're going to play with the same rules as everybody else. In the tests held in Sebring, I didn't see any issues with performance by people's cars. In fact, they went faster this year than pole time last year in GT2. But I do think it's important that ethanol and alternative fuels continue to be promoted in all of racing, but certainly now in ALMS. The relevancy to the automotive market is just huge there. I think that gives it even more credibility.

Q. Bobby, one thing I hear frequently said is that running ethanol in an engine does degrade engine components more so than other fuels. In your testing, has that been a concern for you, for the ALMS folks, any of the manufacturers expressing concerns on that?
BOBBY RAHAL: We've had to deal with that in IndyCars forever in terms of the corrosiveness of first it was methanol. Ethanol doesn't seem to be as bad. Of course, in this case we're at 90/10. I don't think it has any effect whatsoever. Certainly when you start getting up into a hundred percent, yeah, you have to be -- you have to shut the engine down a certain way, do what we call pickling it where actually you run gasoline through it, which it doesn't like in terms of running, but it cleans the system out.
It's no big deal. You just have to account for it, that's all.

Q. Bobby, as you did back in Detroit, could you elaborate on your feelings about the need for auto racing in general to be more in line with the manufacturers, to be part of the relevant developments?
BOBBY RAHAL: I definitely think it has to. Not that racing shouldn't be or has never been entertainment. It's always been entertainment. But it's had much more of a connection to the technical side I think than as of late with many, many series. If you look at NASCAR, it's great in terms of entertainment, but I doubt or I can't see very much the connection between what's racing and what's actually being produced, Toyota, Dodge, Chevrolet, or Ford for that matter.
The thing as I said today to the people at our press conference, our RSR is built on the same assembly line up to a certain point as your everyday street Porsche. At a certain point, the suspension gets changed a bit here and there, the bodywork. But the basic structure and a lot of the basic systems are no different.
I think the thing that makes LeMans and ALMS intriguing is the fact that technical development is welcomed and actually promoted. Look what's going on at LeMans this year. You have Peugeot going after Audi on diesel-power, alternative fuel powered vehicles at LeMans before that people haven't heard about, but they were the pioneers in this. I mean, we think, as I said in Detroit and I've said elsewhere, we think the relevance of the ALMS to the street market is a key factor in our making the move to it. I think now that companies like ethanol or groups like ethanol, what have you, are coming in, I think that just sort of bears witness to that. I think it's important for people in this country, let alone outside of it, to see that alternative fuels can work in applications where there's been some question about that.
Let's face it, the reality is gasoline-powered racing is a dinosaur. That is going away and going away rapidly. I notice there was some announcement about a liquid hydrogen powered series happening in 2009 or '10, I think it was. You're going to see more and more of this because of necessity for it and for the sporting reasons as well.

Q. How has racing changed the R&D in ethanol, the makeup as a component of the fuel?
TOM SLUNECKA: Ethanol has always been ethanol. The product that we produce in our facilities, that we provide to the average consumer, is identical to the product that is provided into the race industry.
I think all of automotive products are tested under race conditions, and maybe ethanol is a bit behind that. However, when we think bit, I guess it all got its roots back in the Kentucky hills.
The product that we'll be running in the American LeMans Series as well as in the Indy series is the same product, maybe different blend applications, but the same product you can put in your vehicle today.

Q. Bobby, obviously the IRL is moving to ethanol and also NASCAR is moving to unleaded which is a little less advanced, but still it shows there's more greening of this sport. How important is that to get across to the consumer?
BOBBY RAHAL: Well, I think it's very important because I think it's absolutely critical, and this is where motorsports, at one point in time motorsports could take the lead in regards to a lot of technology that would trickle down to the everyday street car. Today the technology of everyday street cars more often than not, more sophisticated than that you could find on any race car. So it's important this is an opportunity, it's the right opportunity, for motorsports to provide value to the automotive industry, to sort of reverse the last 20 or 30 years, I suppose.
Whatever the alternative fuel may be, now is the time to put it into application that will be the precursor of what we'll see a decade from now or what have you. Ethanol is leading the charge right now. But as everybody knows, there's other opportunities out there as well. But now is the time to take the lead on it. I think motorsports has a great opportunity in front of it.

Q. The teams that tested as Sebring, were they running this mix? The other teams that have not ran, have they had the opportunity to run with it yet?
SCOTT ATHERTON: I know that some of the teams were running the fuel, but not all of them. There simply wasn't enough notice for all the teams to incorporate it. Certainly by the time we go racing in March. There will be a hundred percent utilization.

Q. A few limited teams were using it at the Sebring test?
SCOTT ATHERTON: Correct.

Q. How does this tie in with the ACO? Is this a totally separate matter?
SCOTT ATHERTON: There is no direct tie to the ACO other than if you read the ACO rule book you see there has always been incentives there for manufacturers to pursue innovative technology, especially in the area of alternative fuel. This certainly has the blessing of the ACO. This is unique to the American LeMans Series. I think LeMans will still have two fuel choices this year, a 100% gasoline and 100% diesel product. This is completely in line with the philosophy, and as they refer to it, the spirit of LeMans.

Q. What is the difference in weight of the fuel, the E-10, 100? Difference in the weight?
TOM SLUNECKA: The specific gravity on an E-1- basis will be very slight. I think the weight difference will be determined upon the fueling times that are required for pit stops and tire rotation. As in the Indy league, they have shrunk the size of the fuel cell because of increased fuel economy over methanol. I think a lot of further testing will have to occur before we can give away the analysis as to the difference.

Q. Tom, could you elaborate on the audience that you hope to reach through the LeMans series as opposed to the IndyCar Series? How does this broaden the audience, the consumer audience, for ethanol?
TOM SLUNECKA: Certainly there are some differences in the consumer base or fan base of each of these leagues. I think that is crucial to ethanol's advancement, is to be able to reach new and differing audiences. Ethanol, when tested with consumers, still has a long ways to go for relevance within homes and purchase decisions. Our goal in working with racing leagues, especially world class racing leagues like American LeMans, is to demonstrate to the influencers, the car enthusiasts and the mechanics, there is no fear of using ethanol in your average vehicle. We watch it on the weekends and we can fill up with it Monday on the way to work.

Q. Bobby made the comment about in certain cases nowadays your street road technology is higher than that found in some racing series. On the issue of degradation of engine parts, this would seem a great opportunity, like we've seen in the Indy league, to be able to work on that under high-stress environments, really prove to people you can get performance out of ethanol without damaging automotive components and get that word out that this is a very viable green fuel for the future, maybe open up doors for a lot of other opportunities. Is that sort of encompassing what we're talking about here?
TOM SLUNECKA: From my perspective, the ethanol perspective, absolutely. There's over six million vehicles on the road today that are capable of running E-85. Those engine parts components are really no different than those that are able to run E-1-, which is every vehicle that has been built and sold in the United States since 1980.
The corrosiveness of ethanol within a race engine versus the average passenger vehicle is really apples to oranges. Ethanol is proving, especially right now in the Indy platform, with higher compression, we're actually getting greater low-end torque. It turns cooler. There's less engine wear. Actually compared to petroleum-based products it's cleaner and generates longer engine life in average vehicles.
All of these things can be tested in universities and automotive labs all across the country. Until we see it on Sunday winning a race, there's still a lot of information to be transferred.
You'll start to see the green of racing across many, many leagues. You'll start to see several major fuel distributors handling ethanol blends. We've got a lot of work to do. Right now we're four and a half percent of the U.S. fuel supply. We'd like to be much, much more. If we awareness and promotion can keep pace with production, I think our economy and our environment's future can be much brighter.

Q. Bobby, while this is very exciting news, you mentioned this is the associate sponsor for your entry at Sebring, was that your one entry or did you say your two entries?
BOBBY RAHAL: We have just one (laughter). No, we're just going to have the one. In fact, Scott and I were speaking of that a little while ago. I don't foresee us running two cars in 2007. Who knows for 2008.

Q. Two cars in the same class?
BOBBY RAHAL: Yeah. I don't think it would make sense to do it any other way. We're in GT 2 to stay for this year (laughter).
THE MODERATOR: One more comment. Early next week IMSA and the American LeMans Series does expect to announce a specific racing fuel. I understand that EPIC is creating this platform to develop the ethanol blends over the course of the next year or so. Early next week we will be announcing a specific race fuel that we'll be aligned with and expect to see a media advisory on that within the next couple of days.
Thank you, everybody, very much for being part of the telephone call. Thank you, Tom, Scott, Bobby for participating in the press conference.