Long Term Health of NASCAR With Investors Coming In
By: Gregg A. Shultz, RaceFanVote.com 10-03-08
There are many things that happen in NASCAR now that have happened in the past and yet still get
reported on as monumental events in the sport. Drivers changing teams that you would have never
guessed, manufacturers dropping support or even race teams closing their doors completely. It’s all
happened before.
The one thing that is different is the number of teams that are merging, selling part ownership to investors
or selling out completely to companies who have never been involved in the sport. What’s even more
unexpected is that these are not small, one-car teams involved in most cases.
There are not many teams left that are unencumbered by some sort of mutual partnership agreement,
partial ownership deal or flat out the name on the building isn’t who owns it anymore situation.
In most cases the agreements are carefully thought out and offer a substantial boost to the team’s well-
being, but all of this is still pretty new yet. Partnerships go bad on a daily basis in the real world and deals
get sold to entities not of the partner’s choosing or in some cases, dissolved all together.
Imagine that one of the recently formed partnerships gets involved in a situation where there are
irreconcilable differences and the business has to be liquidated. There will be no contracts honored,
everyone gets a pinks slip and [insert company name here] is no more.
One of the closest examples of that is what happened with Ginn and their ‘merger’ with DEI. There were a
lot of personnel as well as drivers left out in the cold on that deal and possibly it is something that could
start happening even more with the infrastructure of the current business model developing in the sport.
Understanding the key focus of a competitive race team is simple. They need money to go fast. They go
fast and they command more money and then they go faster and win more. The key focus of an investor or
marketing company is to make money, period.
Their bottom line might not always agree with the bottom line of performance. How soon will there be an
appreciable payoff for buying a 7 million dollar testing rig or wind tunnel? What is the immediate financial
benefit to spending a couple of million dollars on testing? The fact is that there is no ‘immediate’ gain. A lot
of race teams tested all season long and are just now beginning to see the benefits of it. Will an investment
or marketing firm understand that?
Anyone who follows the sport knows that there are always teams that rise and fall as the normal ebb and
flow of performance occurs. This is not limited to small teams, as we have even seen it with the ‘super
teams’ especially with the implementation of the new style car. How patient will an investor be that is not as
familiar with the sport?
It also applies that in the ‘business’ of NASCAR, not every team & driver expects to go out and run in the
top 5 every week, nor do they need to in order to keep the race team operational. An investor may not see
it the same way and may rather force out a popular veteran driver who is holding his own and put a different
driver in the seat.
Some of this might be beginning to rear it’s ugly head with a driver who has a famous name in the sport
who has been in the headlines recently as possibly being forced out of his ride. It’s just a rumor at this point,
so I will not say any names, but I will say that there is a color of blue named after the [family’s] name.
It will be interesting to see over the next few years how the investor/race team partnerships fair and if it
causes any big shake-ups or shutting doors when the money doesn’t flow as freely as originally hoped.
It takes a racer to know how a race team works [and profits] and the expectations of earnings. To repeat a
popular saying in the garage area, to make a small fortune in NASCAR, start with a large one…
Let’s just hope that the marketing firms, investors and new partners in the sport understand that
performance is still the key to success and will allow the ‘experts’ in racing to have their input. Making
money is important, but it’s not the only thing that fuels our sport. The fans will vote with their dollars if there
are too many changes made just for the sake of the bottom line.
By: Gregg A. Shultz, RaceFanVote.com 10-03-08
There are many things that happen in NASCAR now that have happened in the past and yet still get
reported on as monumental events in the sport. Drivers changing teams that you would have never
guessed, manufacturers dropping support or even race teams closing their doors completely. It’s all
happened before.
The one thing that is different is the number of teams that are merging, selling part ownership to investors
or selling out completely to companies who have never been involved in the sport. What’s even more
unexpected is that these are not small, one-car teams involved in most cases.
There are not many teams left that are unencumbered by some sort of mutual partnership agreement,
partial ownership deal or flat out the name on the building isn’t who owns it anymore situation.
In most cases the agreements are carefully thought out and offer a substantial boost to the team’s well-
being, but all of this is still pretty new yet. Partnerships go bad on a daily basis in the real world and deals
get sold to entities not of the partner’s choosing or in some cases, dissolved all together.
Imagine that one of the recently formed partnerships gets involved in a situation where there are
irreconcilable differences and the business has to be liquidated. There will be no contracts honored,
everyone gets a pinks slip and [insert company name here] is no more.
One of the closest examples of that is what happened with Ginn and their ‘merger’ with DEI. There were a
lot of personnel as well as drivers left out in the cold on that deal and possibly it is something that could
start happening even more with the infrastructure of the current business model developing in the sport.
Understanding the key focus of a competitive race team is simple. They need money to go fast. They go
fast and they command more money and then they go faster and win more. The key focus of an investor or
marketing company is to make money, period.
Their bottom line might not always agree with the bottom line of performance. How soon will there be an
appreciable payoff for buying a 7 million dollar testing rig or wind tunnel? What is the immediate financial
benefit to spending a couple of million dollars on testing? The fact is that there is no ‘immediate’ gain. A lot
of race teams tested all season long and are just now beginning to see the benefits of it. Will an investment
or marketing firm understand that?
Anyone who follows the sport knows that there are always teams that rise and fall as the normal ebb and
flow of performance occurs. This is not limited to small teams, as we have even seen it with the ‘super
teams’ especially with the implementation of the new style car. How patient will an investor be that is not as
familiar with the sport?
It also applies that in the ‘business’ of NASCAR, not every team & driver expects to go out and run in the
top 5 every week, nor do they need to in order to keep the race team operational. An investor may not see
it the same way and may rather force out a popular veteran driver who is holding his own and put a different
driver in the seat.
Some of this might be beginning to rear it’s ugly head with a driver who has a famous name in the sport
who has been in the headlines recently as possibly being forced out of his ride. It’s just a rumor at this point,
so I will not say any names, but I will say that there is a color of blue named after the [family’s] name.
It will be interesting to see over the next few years how the investor/race team partnerships fair and if it
causes any big shake-ups or shutting doors when the money doesn’t flow as freely as originally hoped.
It takes a racer to know how a race team works [and profits] and the expectations of earnings. To repeat a
popular saying in the garage area, to make a small fortune in NASCAR, start with a large one…
Let’s just hope that the marketing firms, investors and new partners in the sport understand that
performance is still the key to success and will allow the ‘experts’ in racing to have their input. Making
money is important, but it’s not the only thing that fuels our sport. The fans will vote with their dollars if there
are too many changes made just for the sake of the bottom line.
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