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Sprint Cup
CUP: When Money Stops, So Do Teams
Bobby Ginn had big plans, but they blew up in his face...
Mark Martin, driving for the now-extinct Ginn Racing, is nipped by Kevin Harvick at the finish of the 2007 Daytona 500. (Photo: LAT Photographic)
“These babies burn hundred-dollar bills out the tailpipe.” — NASCAR Nationwide Series team owner Rusty Wallace.
Rusty Wallace is right.
Racing is an enormously expensive proposition, one that prize money doesn’t come close to covering in any of NASCAR’s top three divisions. To make a race team competitive requires huge budgets, with the top Sprint Cup teams commanding more than $20 million per car annually and winning NNS cars as much as $6 million per year.
A more telling point — and one widely misunderstood outside of NASCAR — is the value of any team is only worth the sponsorship that team has at any given moment. A team can win races for 20 years, but if it doesn’t have a sponsor for the 21st year, it might go away entirely.
Sure, teams that own their buildings have a real estate asset and the cars, tools and parts have a nominal value, but without sponsors to pay the bills, race teams are essentially worth nothing.
That’s bitten outsiders on more than one occasion.
In mid-2006, real estate developer and resort operator Bobby Ginn bought out MB2 Motorsports and had grand plans to bring some of his vendors on board to sponsor drivers Joe Nemechek and Sterling Marlin.
By the start of the ’07 season, Ginn added a third car, this one split between Mark Martin and Regan Smith. In his first race with the team, Martin came within inches of winning the Daytona 500, finishing second behind Kevin Harvick and fueling audacious goals for the team owner.
In May 2007, Ginn told the Associated Press that his team was working hard to sign Dale Earnhardt Jr. to a long-term deal to drive for Ginn.
“We would stretch as hard as we could stretch to do it,” Ginn told the news service. “You want the best, the absolute best, and I love the idea that Dale wants to win championships. He could accomplish that here with us. We're in play.”
But that was just the start.
“We have a five-year plan in mind and the conclusion is winning a championship,” Ginn told the AP. “We took a risk on Mark Martin, and that's paid off in spades for us. We aren't afraid to be aggressive.”
Yet, just 75 days after boldly predicting he’d win a championship and would try to sign the sport’s biggest star to his upstart team, Ginn was out of NASCAR entirely, never to be seen again. Officially, Ginn Racing “merged” with Dale Earnhardt Inc., but the truth is, Ginn sold DEI its tangible assets for pennies on the dollar. More than 150 team members lost their job in the “merger.”
The problem was sponsorship. Ginn was reportedly unable to collect money owed by at least one sponsor and when the real-estate market tanked, he was forced to liquidate.
He wasn’t the only one to make such a mistake.
In 2007, Hall of Fame Racing founders Troy Aikman and Roger Staubach sold their team, which had been moderately successful, to a group led by Arizona Diamondbacks executives Jeff Moorad and Tom Garfinkel. The two had built a successful baseball team on a limited budget and vowed to do the same in NASCAR.
“I think it starts with a disciplined, strategic approach to how we allocate resources,” said Garfinkel prior to the start of the ’08 NASCAR season. “The racer’s mentality or mindset is just go spend as much money as you can to try and find another thousandth of a second. There’s a lot of opportunity to dig into statistical data and look at specifically, strategically where you want to allocate resources to try to develop a competitive advantage.”
Under new ownership, Hall of Fame lasted all of one season, before losing its sponsor. At the end of 2008, the team’s shop closed and it ran one more year in another hokey “merger” with Yates Racing.
The real bombshell, though, came four years ago.
In June 2008, investment-banking firm Boston Venture purchased Petty Enterprises, the team founded by Lee Petty in a dirt-floor North Carolina garage in 1948, for a reported $60 million.
When the sale went through, David Zucker, 45, the former CEO of Midway Games and Playboy Enterprises, was hired as the new CEO of Petty Enterprises. Boston Ventures executives confidently predicted they would return the team to its glory days.
“Boston Ventures will provide growth capital to support Petty Enterprises and leverage and further expand the Petty brand,” Zucker said when the deal was announced. “The Petty-Boston Ventures partnership will work together to enhance all aspects of the company, including expanding the racing team over several years, investing in personnel, testing and technology to upgrade the race teams.”
At the time, Zucker said he hoped to expand PE to four cars and contend for championships.
But at the end of 2008 — less than seven months after Boston Ventures made its enormous multi-million-dollar investment — Petty Enterprises was closed for good.
At roughly the same time that PE folded, DEI merged with Chip Ganassi Racing with Felix Sabates — an unlikely partnership if there ever was one — because neither of the teams had the sponsorship funding to run on its own.
When the 2007 season began, Ginn, DEI and Ganassi fielded nine full-time Sprint Cup cars. When 2009 ended, Earnhardt Ganassi Racing with Felix Sabates — the surviving entity of those three race teams — had just two full-time cars.
At the time, Richard Petty was philosophical about what happened. “You’ve got to look at the Earnhardt deal, look at the Petty deal,” he said prior to the start of the ’09 season. “We did all our stuff from the inside out, OK? Now, you’ve got companies from outside, businesses from outside and looking at it from a financial aspect. All these two teams ever did was try to get up in the morning and try to go racing. They didn’t look at it that far in the future.”
Tom Jensen is the Editor in Chief of SPEED.com, Senior NASCAR Editor at RACER and a contributing Editor for TruckSeries.com. You can follow him online at twitter.com/tomjensen100.
Rusty Wallace is right.
Racing is an enormously expensive proposition, one that prize money doesn’t come close to covering in any of NASCAR’s top three divisions. To make a race team competitive requires huge budgets, with the top Sprint Cup teams commanding more than $20 million per car annually and winning NNS cars as much as $6 million per year.
A more telling point — and one widely misunderstood outside of NASCAR — is the value of any team is only worth the sponsorship that team has at any given moment. A team can win races for 20 years, but if it doesn’t have a sponsor for the 21st year, it might go away entirely.
Sure, teams that own their buildings have a real estate asset and the cars, tools and parts have a nominal value, but without sponsors to pay the bills, race teams are essentially worth nothing.
That’s bitten outsiders on more than one occasion.
In mid-2006, real estate developer and resort operator Bobby Ginn bought out MB2 Motorsports and had grand plans to bring some of his vendors on board to sponsor drivers Joe Nemechek and Sterling Marlin.
By the start of the ’07 season, Ginn added a third car, this one split between Mark Martin and Regan Smith. In his first race with the team, Martin came within inches of winning the Daytona 500, finishing second behind Kevin Harvick and fueling audacious goals for the team owner.
In May 2007, Ginn told the Associated Press that his team was working hard to sign Dale Earnhardt Jr. to a long-term deal to drive for Ginn.
“We would stretch as hard as we could stretch to do it,” Ginn told the news service. “You want the best, the absolute best, and I love the idea that Dale wants to win championships. He could accomplish that here with us. We're in play.”
But that was just the start.
“We have a five-year plan in mind and the conclusion is winning a championship,” Ginn told the AP. “We took a risk on Mark Martin, and that's paid off in spades for us. We aren't afraid to be aggressive.”
Yet, just 75 days after boldly predicting he’d win a championship and would try to sign the sport’s biggest star to his upstart team, Ginn was out of NASCAR entirely, never to be seen again. Officially, Ginn Racing “merged” with Dale Earnhardt Inc., but the truth is, Ginn sold DEI its tangible assets for pennies on the dollar. More than 150 team members lost their job in the “merger.”
The problem was sponsorship. Ginn was reportedly unable to collect money owed by at least one sponsor and when the real-estate market tanked, he was forced to liquidate.
He wasn’t the only one to make such a mistake.
In 2007, Hall of Fame Racing founders Troy Aikman and Roger Staubach sold their team, which had been moderately successful, to a group led by Arizona Diamondbacks executives Jeff Moorad and Tom Garfinkel. The two had built a successful baseball team on a limited budget and vowed to do the same in NASCAR.
“I think it starts with a disciplined, strategic approach to how we allocate resources,” said Garfinkel prior to the start of the ’08 NASCAR season. “The racer’s mentality or mindset is just go spend as much money as you can to try and find another thousandth of a second. There’s a lot of opportunity to dig into statistical data and look at specifically, strategically where you want to allocate resources to try to develop a competitive advantage.”
Under new ownership, Hall of Fame lasted all of one season, before losing its sponsor. At the end of 2008, the team’s shop closed and it ran one more year in another hokey “merger” with Yates Racing.
The real bombshell, though, came four years ago.
In June 2008, investment-banking firm Boston Venture purchased Petty Enterprises, the team founded by Lee Petty in a dirt-floor North Carolina garage in 1948, for a reported $60 million.
When the sale went through, David Zucker, 45, the former CEO of Midway Games and Playboy Enterprises, was hired as the new CEO of Petty Enterprises. Boston Ventures executives confidently predicted they would return the team to its glory days.
“Boston Ventures will provide growth capital to support Petty Enterprises and leverage and further expand the Petty brand,” Zucker said when the deal was announced. “The Petty-Boston Ventures partnership will work together to enhance all aspects of the company, including expanding the racing team over several years, investing in personnel, testing and technology to upgrade the race teams.”
At the time, Zucker said he hoped to expand PE to four cars and contend for championships.
But at the end of 2008 — less than seven months after Boston Ventures made its enormous multi-million-dollar investment — Petty Enterprises was closed for good.
At roughly the same time that PE folded, DEI merged with Chip Ganassi Racing with Felix Sabates — an unlikely partnership if there ever was one — because neither of the teams had the sponsorship funding to run on its own.
When the 2007 season began, Ginn, DEI and Ganassi fielded nine full-time Sprint Cup cars. When 2009 ended, Earnhardt Ganassi Racing with Felix Sabates — the surviving entity of those three race teams — had just two full-time cars.
At the time, Richard Petty was philosophical about what happened. “You’ve got to look at the Earnhardt deal, look at the Petty deal,” he said prior to the start of the ’09 season. “We did all our stuff from the inside out, OK? Now, you’ve got companies from outside, businesses from outside and looking at it from a financial aspect. All these two teams ever did was try to get up in the morning and try to go racing. They didn’t look at it that far in the future.”
Tom Jensen is the Editor in Chief of SPEED.com, Senior NASCAR Editor at RACER and a contributing Editor for TruckSeries.com. You can follow him online at twitter.com/tomjensen100.
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