WALTRIP RACING NO OVERNIGHT SUCCESS
NASCAR team’s perseverance pays
As Michael Waltrip left his new Sprint Cup headquarters in North Carolina and headed to his first NASCAR race as a team owner, his office’s first photocopier was being delivered through the front door.
On that 30-minute ride to the airport for the 2007 season opener, Waltrip couldn’t stop worrying. If his team didn’t even have all of its office equipment yet, what other ingredients were missing 10 days before the green flag of its inaugural Daytona 500?
He chuckles as he recalls the equipment and technology he lacked for his first season.
“They are expensive memories to have, but there was no way I could have said no (to being a team owner),” Waltrip tells USA TODAY Sports. “I know what a struggle it was, but I just love cars. It comes down to that.”
It’s the mantra of many moguls who excel in NASCAR’s premier series, and Waltrip can count himself among the elite after an inauspicious start.
Michael Waltrip Racing made a breakthrough in its sixth season, scoring its first multi-win campaign while drivers Clint Bowyer and Martin Truex Jr. earned its first two Chase for the Sprint Cup berths. Beyond Waltrip’s reward for enduring years of financial tumult and personal sacrifice, there’s also a measure of pride for
the Owensboro, Ky., native. He has blended the personas of court jester (which he plays in zany TV commercials) and savvy corporate soothsayer to maintain a 100% sponsor retention rate during down years.
Waltrip, 49, might be the last new owner to join NASCAR’s winning establishment for years to come.
“It’s a huge, huge undertaking, and it costs so much to put it all together,” says ESPN analyst Dale Jarrett, who drove for Waltrip’s team in its first two years. “Yet it’s not only the money but spending it the right ways. Look at Red Bull Racing (which left NASCAR in 2011 after five seasons). No one had more money than those people, but there’s more to it than that.”
While the patriarchs of the traditional NASCAR powerhouses are graying — Rick Hendrick and Richard Childress are in their 60s, and Jack Roush, Roger Penske and Joe Gibbs are in their 70s — there isn’t a new breed of breakthrough car owners such as Waltrip on the horizon. It’s attributable to several factors:
A continuing dearth of big-ticket sponsors amid costs that haven’t declined in a manner commensurate with the economic downturn.
A shrinking pool of manufacturers, which traditionally have helped startup teams gain a foothold through engine-building infrastructure and technical support.
The challenge of competing against established teams that have spent enormous sums over decades on state-of-the-art infrastructure and high-quality personnel.
But the simplest reason might be that turning a significant profit is virtually impossible.
For a deep- pocketed investor who would need to commit tens to hundreds of millions of dollars — with no guarantee of success — the sport seems more about blind passion than sound business.
It essentially has turned the Cup series into a sportsmen’s paradise of owners such as Hendrick, Penske and Roush, all of whom have other business empires and can race without their teams’ bottom line necessarily dictating their fortunes.
“I don’t think in these times that any owner at the top is in it for a return on investment,” former Roush Fenway Racing president Geoff Smith says. “These are industrialists with a lot of money that have loved cars and racing for a long, long time and been in NASCAR a long time.
“The category of entrepreneurs that would invest like that is pretty limited.”
Waltrip was fortunate to find such a partner in Rob Kauffman, a principal and co-founder of Fortress Investment Group.
An automobile enthusiast who races sports cars with Waltrip and has a muscle-car restoration shop near Charlotte Motor Speedway, Kauffman has described NASCAR as a great sport but mediocre business.
“I look at it from a different perspective from my day job,” Kauffman says. “If it was a third-party client I was advising, I’d say it’s completely the wrong thing to do, but it’s a reasonable risk for owning the team personally. If we break even, I’m thrilled.”
If it was a third-party client I was advising, I’d say it’s completely the wrong thing to do, but it’s a reasonable risk for owning the team personally. If we break even, I’m thrilled.” Rob Kauffman, Michael Waltrip’s partner and a principal and co-founder of Fortress Investment Group
So is Waltrip, who might stand as a cautionary tale for those who seek to become a successful team owner.
The two-time Daytona 500 winner got divorced and nearly went broke on his way to building a title contender.
Though he has amassed nearly $100 million in winnings as a driver and owner, Waltrip jokes he doesn’t have much of it since becoming an owner in a sport that can require a budget of up to $25 million a car to succeed.
“It’s been fun to see Michael’s excitement about making the Chase and being competitive each week,” says Truex, who joined the team in 2010.
“That’s all I think he ever wanted. . . . I do wish that we could probably try to make him a little bit more money, but we’re doing the best we can.
“He’s been so much fun to be around, especially this year.”
TOUGH FIRST SEASON
Before success there was perseverance. Waltrip’s three teams failed to qualify in 39 of 109 attempts in a disastrous 2007 season that began with a Daytona 500 cheating scandal (two team members were suspended for an illegal fuel additive in Waltrip’s engine after qualifying).
Two months into the season in April, Waltrip realized his team wouldn’t be able to pay its bills by September.
“I didn’t know I was going to lose it all, so obviously I must have underestimated it somewhat,” he jokes. “The thing I missed or underestimated more than anything was Toyota’s ability to be competitive right out of the gate. All the things we lean on so heavily from Toyota today, they just didn’t have it then.”
Toyota was boosted by the addition of Joe Gibbs Racing in 2008, and MWR has become closely affiliated with JGR on chassis building and motor development (the teams began using the same power plant this year).
“A lot of people were very skeptical this was going to work, and it made it difficult to get the top-level talent,” Jarrett says. “We were behind from the beginning getting quality people and equipment.”
It’s a testament to Waltrip that he kept sponsors NAPA and Aaron’s from deserting when their cars failed to qualify for several races, but the key to survival was the October 2007 addition of Kauffman.
“Rob was on a list of investmentbanking-type people that were going to make a billion dollars in NASCAR, or at least some of them thought,” Waltrip says. “Well, they’re all gone now, and Rob is still here.”
BIG MONEY NEEDED
Before Waltrip, the last owner who essentially started a Sprint Cup team from scratch was Ray Evernham, who launched with the backing of Dodge in 2001. Dodge’s departure next year lessens the pool of resources for a prospective new owner.
“If you want to compete with Hendrick and beat them their way, you better bring several hundred million dollars,” Evernham says.
“Rick has raced 25 years and spent over a billion dollars. You’d be naive to think you’re going to spend $50 million and be where Rick Hendrick is.”
Smith says Roush entered NASCAR’s premier series in 1988 with a nest egg of $5 million.
Smith estimates it now would take eight to 10 times that amount (plus primary sponsorships) to start a team and pay for driver salaries, engine leases, research and development, hundreds of employees and a travel schedule of 36 races annually.
Hendrick Motorsports and Penske Racing also have the advantage of offering business-to-business relationships (such as sponsorships with motor oil brands predicated on using their products in auto dealerships) and can write off NASCAR as a means of marketing their other companies.
Regardless of the treacherous financial path, Waltrip expects successful new owners to emerge.
“I can’t imagine there won’t be folks for 100 years who want to be part of this,” he says. “I don’t know who, but I bet they’re out there somewhere.”
If they bring vast patience, a strong stomach and a large wallet, Waltrip says, it’ll be worth it.
“I don’t envision ever getting all my money back,” he says. “But if I can just be a part of something as fun and gratifying as helping guide this team as we hopefully win more races and contend for championships, I don’t think I’d change a thing.”