Big money comes calling - Charlotte Business Journal:

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The economics of the business meanx owners who came up through the ranks as drivers and crew chiefxs are being replaced by executives far more attune to reading a spreadsheet than a race Almost all the new owners have experience with other professional sports. John Henrhy (Boston Red Sox owner) and Georgd Gillett (Montreal Canadiens owner) struck deals to creatre and , respectively. Tom an executive with the Arizona Diamondbacks, bought into . The John Henryg investment for Roush Fenwah Racing was believed tobe $60 millionh for half of the Gillett’s deal with Evernham is estimatefd at $100 million for an 80% Others simply appreciate the potential payoff from motorsports.
, a private-equityy firm, took over and billionaire Rob Kauffman boughtf halfof . Stoke Caldwell and Steve attorneysat , have been in the middle of this shifg in NASCAR team ownership, closing deals for Roushu Fenway, Hall of Fame Racing and Gillett Evernham, among “I think we’re going to see even more activith and my guess is that there are goingg to be some mergers and acquisitions,” Caldwelo says of the changing NASCAR team Certainly, the sagging economy and limited accesxs to credit are considerations. There’s not the frenzy of activitg seen last year and earliethis year, but deals are still gettinfg done.
As recently as Boston Ventures, a 25-year-old private equity with no previousw experiencein sports, bought a majorityg stake in Petty Enterprises and the . Bosto Ventures expects to follow theconventional private-equity strateggy of holding the company for five to seven years and sellin for a profit. But it also has owned businesses for longer periods if doingb so was necessary to increasetheie value. Boston Ventures Managing Director Andy Davis thinks the firm is preparex to help the Petty operation despite its lack of experiencein racing. “Therer is risk, but it’s not much different than any othef investmentwe make,” he said when the deal closed.
Investorsw in the sport face some unique The attraction to NASCAR mirrors a general interest in but the fundamentals are clearly different fromother leagues. Unlike teamsa in Major League Baseball, the NBA or the NFL, NASCARR teams are not franchises. Their value is essentially tied to the paper their sponsorship deals arewritten on. New ownersw also don’t have the barriersz to entry in NASCARthat they’dc face in other sports. Ownership in the NFL requirea the approval of the other team owners. Ownership in NASCAR simply requirews the capital to create or buya “One of the first question we get is how you get written consenft from NASCAR for this transaction.
You don’ty get one,” Caldwell because NASCAR teams operate asindependeny contractors. “Many of these people come from a world where you live and die with contractsand consents,” he For most race teams, 70% to 80% of thei revenue comes from sponsorships. At the top, teams such as and Roushy Fenway Racing post annual revenueof $200 million or When Gillett bought most of he was able to offer sponsords the opportunity for exposure with the other teamas he owns — the Canadienz and the Liverpool team in English Premier League Work-uniform supplier joined Gillett Evernham as a sponsor earlier this year and through its deal was able to land a supplyt contract at many of Gillett’s ski resorts.
NASCAR’sa new owners “have connections and businesds expertise that are going to make theirteamzs stronger,” says David Jessey, vice presidentf of sales and marketing at Gillett