BUSINESS PLANS

Wheeling and Dealing

The entrepreneurial set has taken wheeling and dealing to a whole new venue: go-kart courses. It's the new golf.
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Kart racing, which uses high-performance go-karts to re-create the thrills of open-wheel racing, has long been popular in race-crazed Europe, which is dotted with recreational tracks. Karting has caught on here--especially for business entertaining--with more than 30 indoor and outdoor tracks springing up coast to coast in the last few years.

At one of the nation's most advanced indoor karting venues, F1 Boston, the two high-performance tracks are just part of a facility that includes exhibition and conference space, a restaurant, bar, and billiard hall. "We've consistently run significant numbers of meetings and corporate outings every month," says owner R.J. Valentine, a veteran professional race-car driver and founder of the Boston-based MBA Group, which owns F1 Boston and the new F1 Outdoors nearby.

Many liken karting to golf, with some differences--and advantages. "I dreaded taking clients to play golf, because I'm not much of a player," says Pat Gallagher, founder and owner of Black Diamond Research, a boutique security analysis firm in New York City. "Plus, a lot of my clients are hedge fund managers, male and female, who may not play to begin with. But they all know how to drive. In fact, one of the biggest performance factors in karting is weight, so most of my female associates are much faster than me. It's a great equalizer, unlike golf, which makes some people feel inadequate. It's also cheaper, easier to arrange, and takes less time."

An indoor karting session typically runs about $25 per person; at a high-end golf course, greens fees can zoom to $200 per person. For corporate events and entertaining, large parties can rent an entire facility, like F1 Outdoors, where karts, gear, instruction, and supervision cost from $1,500 to $1,700 per hour.

Adrenaline junkies can jump right into competition with little or no vehicle know-how.

But once the racing bug bites, expenses can mount: A kart is not cheap. Jim Holloway, who co-owns Mothers Polishes Waxes Cleaners, a family-run automotive cleaning products business in Huntington Beach, Calif., recently purchased a Rotax RM1 for $7,995, a high-performance 34-hp kart that can reach speeds of nearly 100 mph and has helped to standardize the sport. Its sealed engine can be maintained only by authorized service staff, thus taking the tinkering out of racing and making it all about the drivers' skill. Industry slang for karts like the RM1 is "arrive and drive," meaning one need simply show up at the track to practice or race. This lets adrenaline junkies jump right into competition, from local league races to international race series, with little or no vehicle know-how.

Karting's popularity is fueling a demand for a new kind of track, patterned after a golf country club. "There's a clubhouse and private locker for your race suit, and your kart will be kept ready to go," explains Valentine. Memberships cost $2,000 to $3,000 per year for storage and service, plus an initiation fee of $25,000. Similar "country club" tracks are being built in Seattle, southern California, and Las Vegas, and many existing tracks are upgrading and adding clubhouse facilities.

Perhaps these costs help to explain why "growth has not come from our traditional buyers, 18- to 24-year-old males," says Joe Ramos, president of SSC Racing, a distributor of ready-to-race karts. "New buyers are in their 40s through 60s and financially more stable. Many are entrepreneurs or business owners."

Last updated: Jan 1, 2004




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