In the Sprint Cup team owners’ quest for a better financial model, a businessman shall lead them.
Rob Kauffman, a co-owner of Michael Waltrip Racing, is the chairman of Race Team Alliance, an association formed by nine NASCAR teams seeking greater revenue and cost efficiency. He also is its primary spokesman. In seeking reaction from the other eight Sprint Cup organizations and their owners, all deferred comment to Kauffman, an entrepreneur who founded the Fortress Investment Group in 1998.
After 15 years with the hedge-fund and private-equity firm, Kaufmann cashed out his shares for $180 million. His net worth was estimated by Forbes in 2007 at $1.8 billion, but the magazine dropped him from its billionaires roll after the economic downturn.
Kauffman, 50, an automobile enthusiast who has raced the 24 Hours of Le Mans and owns a vintage car restoration company, invested heavily in MWR eight years ago when the fledgling Sprint Cup team was on the brink of financial collapse. The organization since has scored seven victories and appeared in the Chase for the Sprint Cup. It contracted to two full-time cars this year after weathering the departure of sponsor NAPA because of a team orders scandal at Richmond International Raceway that also prompted NASCAR to fine MWR $300,000, penalize each of the three cars 50 points and suspend general manager Ty Norris.
During a Monday interview with USA TODAY Sports, Kauffman expounded on the proposed structure of the RTA, its goals and its place in the auto racing history of drivers and team owners who have organized.
NASCAR’s most powerful teams form Race Team Alliance
Q: What was the genesis of the RTA and was it primarily your idea?
A: It wasn’t my idea. I don’t think it was a single person’s idea, necessarily. I think it was a culmination of things that have happened over time. I’m probably one of the newbie owners, being only eight years into it, compared to Richard Petty, for example.
Over the years, there been more interaction of the teams. There were town hall (meetings) and with the folks at NASCAR. I think it came together like, ‘Hey, there’s a lot of stuff we can do together to help ourselves.’ And certainly, there’s the ongoing financial pressure for the teams, whether on sponsorship or expenses. On some level, the recession never really ended for the teams. This was a good time to organize it, and I consider it an honor that my peers – Roger (Penske) and Rick (Hendrick) and Richard Childress and Richard Petty — nominated me to help organize it. I’m the business and finance guy who happens to like cars. I think they thought some of my background in organization would be helpful with a nonprofit business league to get the documents sorted. If all those guys are behind it, I’m happy to do it.
Q: So the RTA grew out of NASCAR encouraging owners to meet more often?
A: Exactly. How many employees do all of us have in total? We didn’t know. How much do we spend on travel? We didn’t know that, either. How much do we spend on parts and equipment? One of the things that’s fun and exciting is there’s so much to do. You have really smart folks in the room to help you do it, and they are all motivated. The key is we all have a vested interest in the growth of stock-car racing and the popularity of it. It’s certainly more interesting to write a story about some sort of a controversy or a battle, but in this case, there actually isn’t one. We’re just getting organized. If someone wants drivers, cars or resources, we’re the ones that have them. Up until now, there’s been no one person to call.
One of the first projects I want to do, maybe it’s not earth-shattering but it just makes sense, is ask how many hotel rooms a year we are renting. There are an awful lot, and we all rent them in the same place and at the same time. If we pool our hotel nights together into a big contractual request for proposal to the major companies, maybe we can get a hotel partner for the teams and have a better deal and more flexibility. That seems sensible.
All the teams have a similar issue, whether it’s with the shop people or the road crews, on disability (insurance) and pensions. These guys aren’t sitting around playing checkers. Instead of having Michael Waltrip Racing with 220 people trying to get an insurance deal, how about we pool thousands together into one big pool diversified across teams and see if we can get a better disability and pension deal for everybody?
There are so many basic good business things we can do. That’s our priority. Chip (Ganassi) said the goal is this is a long-term term organization. We’re just starting out. It’s a little baby just born.
Q: Will you have a staff to handle those projects and compile information?
A: I think we want to keep it pretty lean. The last thing you want is a lot of bureaucracy. But we’ll probably need a helper or two. We’ll probably lean on the teams that have big organizations with CFOs and marketing/communications departments. We’ll divide it into working groups. We’ll have a communications and marketing working group, an economic working group, a competition working group. We’ll have members in each of those that can work on issues and kick it back with a recommendation. That’s how normal businesses work for the most part. You have so many smart folks here, and it’s been untapped. You have Roger Penske, Rick Hendrick, Joe Gibbs, Richard Petty, Gene Haas, Chip Ganassi. If you just wanted to put together an advisory board of experienced people, it’d be hard to do. Now we have all of those guys aligned together.
By having one number to call, you never know what comes up. The ideas that NASCAR has about partnering with the teams to do things. The teams have the drivers, the assets, the cars and all that. So if you want to do something, promotional or otherwise, we’re the ones that have that stuff.
Q: So there’s leverage there?
A: Or centralization. By having a little bit of a hub, you can control it a little better.
7-7-2014 rob kauffman michael waltrip
Michael Waltrip, right, talks with MWR co-owner Rob Kauffman at Daytona International Speedway in February 2008.(Photo: Chuck Burton, AP)
Q: Will teams essentially open their books to each other? That’s normally sensitive, but there must be some degree of that, right?
A: There already is. The CFOs have been getting together for a while to benchmark things. It’s an extension of that. No team likes having their own air force for travel necessarily, so I think that’s a big thing. I don’t think anyone is going to swap profit and loss statements, but that’s not necessary. If it’s figuring out a hotel plan, everyone will fill out a spreadsheet from their controller and travel coordinator in the same format, we’ll give it to an analyst to grind it together and put a proposal together. It will require collaboration, but that’s the whole point. We’re not asking what right-rear spring rate they’re running. But at some point, it might make sense to coordinate parts and equipment. We all spend a lot of money on stuff. Maybe some of it is super top secret. Maybe a lot isn’t.
Q: How did you keep NASCAR informed of this and how would you characterize its involvement?
A: Our goal is to be collaborative with no surprises. Once we decided to formalize this, the call went out to those guys that, ‘We’re doing this just to give you a heads up.’ We’d shown them a much earlier version of the press release, and said if you want to put out something, great. If we did it together, that’s even better. They’ve taken a more neutral, wait-and-see stance, which is not surprising given their legal positions on things. We’ll see how things develop.
Q: When was NASCAR made aware of it?
A: We formalized this in the last 30 days, so they’ve known for some time. We see each other every weekend, if not more frequently. We all have an alignment of interests to promote and grow the sport. Collaboration is in the press release a lot of times for a reason. That’s our goal.
Brian France says 2015 schedule merits ‘robust’ talks
Q: But the timing comes with NASCAR entering a 10-year, $8.2-billion TV contract next year. Brian France said last weekend NASCAR was looking at reallocating those revenues. Are you seeking a greater slicer of that pie?
A: From the RTA standpoint, that’s a million miles from where we are. We just formed this thing. We’re working on our own stuff. We’re just getting going. That’s something outside our control. That’s something NASCAR is working on, and to the extent they want to engage at some level, we’d be happy to do so. We’re really primarily focused on our own things. Whatever happens on that will happen. We’re really focused on our own stuff at this stage.
NASCAR solidifies TV schedule; Fox picks up remaining Cup races
Q: Would you like NASCAR to assign a value to teams or implement a form of franchising?
A: The way I’d say it is it’s a great sport. The business model of team ownership is what it is. Could it be improved? Yes. I’ve said if the stakeholders want to engage in discussions around that, we’d be thrilled to do so. That’s not really a priority right now. No one forces you to own or run a NASCAR team. What this is about is teams working together to try to improve their positions. Revenue doesn’t necessarily mean taking more from someone else. There are things that we can do to generate revenue without taking from anyone.
Q: Whether it was Richard Petty and Professional Drivers’ Association, or Roger Penske and other team owners in the formation of CART, there has been a contentious history when it comes to groups that have organized in auto racing. Does that create a similar perception for the RTA?
A: That’s a fair question. A lot of it depends on what you actually do. If you pick a fight, it wouldn’t be surprising to get in one. We have our own agenda, which hopefully is pretty clear and productive and hopefully not controversial. As it relates to NASCAR, we have a lot of people as members that were integrally involved with those things you mentioned. I’m a keen fan of history. So I like to learn from what other peoples’ experiences are. So I certainly asked Richard Petty and Roger Penske about their experiences, and it’s helpful and interesting. But sitting here in 2014, the PDA probably stands more for ‘personal digital assistant.’ Times have changed. I think it’s all about what you try to do and how you approach it. I think the membership is quite united on there being lots of things we can do to help ourselves. We want to do this collaboratively. We’re in this together. That’s the high road and the right road, so why do anything other than that? There are other questions that are obvious and will be resolved over time. To the extent we’re a party to those, we’ll try to be productive and collaborative. We’ll see how it plays out. It makes for a less exciting story but a better business.
Q: So this isn’t about picking a fight but pursuing a better business model?
A: I think that would be a good tagline.
Nate Ryan, USA TODAY Sports 2:47 p.m. EDT July 7, 2014