In November 2004, Kevin Kalkhoven and Gerald Forsythe acquired Cosworth Engineering and Pi Electronics from the Ford Motor Company as a means of guaranteeing engine supply for another of their recent acquisitions, the Champ Car World Series. Kalkhoven and Forsythe had emerged victorious over Tony George and the Indy Racing League in the battle for CART’s assets at a bankruptcy auction ten months earlier, and the IRL was still doing everything in its power to put Champ Car out of business.
Kalkhoven took Robin Miller and myself and a couple other journalists with him to England to announce the acquisition to the Cosworth staff and to the world. Robin and I agreed to meet Kevin in Detroit for the flight to the UK. Robin drove us up there in his Ford Explorer, and it was amusing but borderline terrifying: he used the cruise control as the accelerator/brake, tailgated inches from the cars in front, and screamed profanities at every hapless, errant motorist that we passed. Good times!
I wrote the following story for Racer magazine:
KEVIN’S LATEST ADVENTURE
Somewhere over Nova Scotia, Saturday November 13 –
WELCOME TO KALKHOVIA, which is not so much a destination but a state of mind; where the colors are green and gold (except for the wine, which is often red) and the possibilities are limited only by the imagination.
Kalkhovia is the vortex that surrounds Kevin Kalkhoven, a 60-year old native of Australia via London and Silicon Valley, who in his second career as a venture capitalist breezed into the motor racing world 22 months ago. Since then, Kalkhoven has become a major player in the sport, starting a Champ Car team in conjunction with Craig Pollock before joining forces with Gerald Forsythe and Paul Gentilozzi to purchase and ultimately save the bankrupt CART open-wheel series.
Kalkhovia is a moving target, usually in the form of Kalkhoven’s Gulfstream G5 jet. He jokes that “N-one-four-four-kilo-kilo” should be listed as his permanent residence because that’s where he spends most of his time. At the moment, N144KK is cruising at 45,000 feet, whistling eastward at more than 600 mph. Kalkhoven is leading a group of his associates and a handful of shell-shocked racing journalists in a round of “Moscow Martinis.” This involves slurping a lump of caviar off the back of one’s thumb and washing it down with straight vodka. Trust me, you will not find this on the drink menu at the Working Man’s Friend or Union Jack’s in Indianapolis.
Kalkhoven is in a celebratory mood because he is on his way to London to announce to the world (and to the employees themselves, for that matter) that he and Forsythe have bought Cosworth Racing from the Ford Motor Company. ‘Project Tango,’ as Kalkhoven’s team dubbed the Cosworth acquisition, holds vast political implications, both in the fight for control of American open-wheel racing and in the overall spectrum of world motorsport. Suddenly Kalkhoven has a presence in Formula 1 and World Rally circles in addition to being a key engine supplier to Champ Car and the Indy Racing League.
Conrad Hotel, London, Sunday November 14 –
With the Cosworth announcement set for Monday morning, the bleary-eyed journos figure they’ll have the better part of a day to rest upon landing Sunday morning. But Kalkhoven has other ideas. He’s decided we must have lunch at a favorite restaurant, the Waterside Inn in Bray, operated by the Roux brothers, who served as personal chefs to the Queen.
The ensuing conversation went something like this:
“Good afternoon, Waterside Inn.”
Kalkhoven: “Hello. I wonder if it would be possible to arrange a lunch table for 12 on short notice – say an hour?”
“I’m sorry, sir, but that’s quite impossible. It is our custom to take reservations 90 days in advance.”
Kalkhoven: “Tell Diego that it’s Kevin Kalkhoven calling.”
(Long pause) “Mr. Kalkhoven, would 1:30 be suitable? We can arrange a private room.”
“We usually book for 20, just to be safe,” laughs Pierre Wildman, an associate at Kalkhoven’s KPLJ Ventures, as we hurtle westward toward Bray on the M4 Motorway. “Kevin has friends everywhere we go.” Lunch lasts until 6 p.m.
Wildman and Jim Cox, an Ernst & Young auditor who is more or less permanently assigned to the Kalkhoven account, have been in the UK for the last three weeks hammering out the complicated deals that shifted possession of Cosworth to Kalkhoven and Forsythe while negotiating Formula 1 engine supply contracts with the Red Bull (nee Jaguar) and Minardi teams.
Kalkhoven dropped the Cosworth bomb on Wildman and Cox while they walked in the Surfers Paradise pit lane on October 23. End of holiday, gents! Not only would Kalkhoven and Forsythe undoubtedly face opposition in the race to acquire Cosworth, there was the small matter of the FIA’s November 15 deadline for entries into the 2005 F1 World Championship. There was no margin for error in ‘Project Tango.’
Remarkably, Kalkhoven bought Cosworth sight unseen. That’s how much he trusts Wildman and Cox. But then, Kalkhoven himself is remarkably direct and easy to do business with. Fun, too.
“Kevin and I sat down about a month ago and wrote down an outline of the deal on a single piece of paper. The final contract came out just like we summarized it that day,” says Cosworth Racing Managing Director Tim Routsis. “That’s a testament to the integrity of a man like Kevin. He and his team had the best plan for moving Cosworth forward into the future.”
Northampton Rugby Club, Monday November 15 –
Kalkhoven, accompanied by Wildman, Cox, Dan Pettit and Russ Johnson (the ‘P’ and ‘J’ of KPLJ Ventures) flies to Northampton aboard a hired Agusta 190 helicopter. All are aircraft enthusiasts; Wildman, an engineer by education, serves as a back-up pilot when spontaneous Kalkhovian adventures force the regular pilots into overtime. Pettit got one of the first Gulfstream G500 jets, prompting Kalkhoven to upgrade to the upcoming G550. Kalkhoven, who is licensed to fly his Gulfstream, trades in his jets every couple of years.
Routsis has called together an unprecedented meeting of all of Cosworth’s 520 employees at the Northampton Rugby Club. In the car on the way there, Kalkhoven chats up the driver Cosworth has dispatched to pick up the party. He picks up on that theme when Routsis introduces him to the staff.
“I had a beautiful speech that I had written to communicate with you, but I decided to throw it away for one simple reason,” Kalkhoven begins. “On the way over here I was talking to Brian, the gentleman who was kind enough to pick me up. I asked him, ‘What do the people at Cosworth want to hear?’ And he said, ‘Will we still have a job’ and ‘Will we still carry on in motor racing?’
“The management of the company is going to stay the same and we are very mindful and conscious of the careers of all the employees here. Will we go racing? Absolutely…and that is very much why I am here. I’m a businessman; I’m an investor. I don’t run companies anymore – thank God! But I’m passionate about motorsports and motor engineering and I consider it a great honor to be able to adopt the heritage of Cosworth and to be able to allow you to develop into the future.”
With not a minute to spare on a carefully choreographed timeline, the Kalkhovia crew, accompanied by Routsis, choppers back to London for a press conference to announce Ford’s sale of Cosworth and Jaguar F1. Having announced on September 17 that it was bailing on F1, the Kalkhoven and Red Bull deals helped Ford emerge smelling like a rose.
“It was quite a complex deal but we were able to broker the best feasible outcome,” remarks Richard Parry-Jones, Ford’s Vice-President of Global Development. “We secured the best future for those businesses and brokered a deal that minimizes the impact or fallout on the sport.”
Parry-Jones says that around 60 bids were received for Cosworth, of which five merited serious consideration. But he refuses to identify other bidders for the company.
“We gave all of the bids and offers very serious consideration and we found that on balance the Kalkhoven/Forsythe bid was decisively the one we wanted to go for,” Parry-Jones replies. “Kevin and Gerry moved quickly and were able to complete the deal on time, which was important because Formula 1 had a deadline of November 15 for registration for the championship. Their business conduct was exemplary.”
Cosworth Racing, Northampton, Tuesday November 16
Travelling by train from London, Kalkhoven sets out to tour his latest acquisition. Accompanied by a film crew and a 12-strong entourage, he walks among Cosworth’s sprawling layout of factories.
Over a lunch of finger food in the Cosworth Octagon’s meeting room, Kalkhoven talked about the strange path that had led him to purchase Cosworth – and the opposition he encountered on the way. He believes that Indy Racing League founder Tony George made a silent bid for Cosworth in an effort to derail the Champ Car World Series – an allegation that George denied through an IRL spokesman.
Kalkhoven is unconvinced. “I seem to have an amazing propensity for dodging bullets,” he said. “It’s the third time they had the opportunity to kill off Champ Car and failed. We came out ahead because our plan made better business sense. But anyone can buy legacy and a bit of history. The important thing is what you do with it.”
It appears Kalkhoven and Co. won the battle for Cosworth because they were better prepared, in a manner reminiscent of when OWRS LLC walked away with the assets of CART even though George offered $10 million more cash. Ironically, George failed to gain control of Champ Car’s Cosworth engines on that occasion as well…
“In negotiating a deal like this, you spend a lot of time establishing your position with the seller,” Kalkhoven says. “You have to demonstrate that you understand the whole package. We did the groundwork involving trade union laws and labor laws with teams of specialized lawyers. They hadn’t fully explored the consequences if contingent liabilities, which total about $60 million. In other words, we were prepared to take the risk on a very substantial sum.
“But I have made a career out of companies and growing them into successful businesses,” he adds. “Cosworth is no different than JDS Uniphase in that regard. We see it as having tremendous potential and we intend to grow it into a hugely profitable business.”
Meanwhile, Kalkhovia glides on to destinations unknown, with more acquisitions to conquer. “If you want to get Kevin interested in something, just tell him he can’t afford it,” quips one Kalkhovian.
Pi Electronics? Given. The largest Aston Martin dealer in England? Why not Aston Martin itself…
Lead image of Paul Tracy and Patrick Carpentier at Milwaukee in 2004 by Dan Streck/LAT
