Thompson In Turn 5 · Tommy Thompson · Tuesday April 24, 2007
One thing the current controversy involving contract negotiations between Dale Earnhardt, Jr. and his stepmother, Teresa Earnhardt, has confirmed for me is that often times there is a lot of wisdom contained in those old adages we have heard all of our lives. In this case, there’s one in particular that comes to mind : “Family and business don't mix.”
Never has the toxin caused by the combination of the two become more poisonous than in this battle for control of Dale Earnhardt, Inc. Normally, a driver's contract negotiations garner little more than passing mention; however, from the start there has been nothing normal about the way this trip to the bargaining table has been conducted. The posturing between stepmother, stepson, and stepdaughter has transcended what’s supposed to be a simple business proceeding; at this point, it’s become something far more personal. Unfortunately, that’s what happens when you mix family and business, especially in this case. For everyone involved, it’s not easy to maintain the basics of dignity, class, and respect when you’ve got a stepson who’s set his sights on taking over a business however he can, wrestling away control of a company I feel he clearly has no rightful claim to.
What we’re seeing transpire right before our eyes, folks, is a business coup by Dale Earnhardt, Jr. for control of his stepmother's organization. It’s a company that Teresa Earnhardt, along with the her late husband, established back in 1995 with entries in two of NASCAR’s premier divisions : Busch and Craftsman Trucks. Since the team’s debut, Teresa has worked feverishly as the head manager of the company, taking the helm and guiding the ship all the way through the program’s ascension into full-time Cup racing in 1998. Of course, that simple history lesson teaches you that the establishment of the program came some three years before Dale, Jr. began his successful stint in the No. 3 Busch Series D.E.I. entry, a ride that earned him two Busch Series Championships and catapulted him into the national limelight as a popular and talented NASCAR driver.
Once hired by both the Intimidator and Teresa to take over that ride, the business association developed between D.E.I. and Junior seems to have been, up to now, highly successful. Over the past decade, it’s earned both the driver and the company untold millions of dollars. Unfortunately, the money is not enough for Junior and his sister / business manager Kelley Earnhardt Elledge, who have decided that Junior is simply better suited to manage D.E.I. than their stepmother. In ongoing negotiations, they have implied that unless Junior is given majority ownership of the race team, he will simply leave the organization when his contract expires at the end of 2007.
As an employee of Dale Earnhardt Incorporated, there is certainly no argument that Junior has every right, at the end of his legally binding contract, to seek employment anywhere. This is an important distinction to understand, for Dale, Jr. is an employee of D.E.I. Currently, he is not a limited partner in the company in any way, shape, or form. Its co-founder, Teresa Earnhardt, is the sole owner of the company. That’s right…it’s her company and no one else’s. Any belief held by Junior's supporters that there was ever any implied intent on the part of his father for Junior to wrangle, at some point of his choosing, control of D.E.I. from Teresa is simply unfounded. Nowhere has there ever been any direct quote attributed to the Initimidator expressing his desire that Junior one day take control of D.E.I.
Well, Junior has determined that he should have it his way anyways, and he is making a bold move to ensure it happens. Junior fired the first shot in his attempt to wrangle the controlling interest of D.E.I. away from Teresa during media day at Daytona in February; when questioned about his ongoing contract talks, he proclaimed in no uncertain terms that “The main factor (and/or stumbling block) is the ownership part.”
Junior continued, “It has nothing to do with money and nothing else, really. I would really like my team, I like how things are going … The motors are improving, everything is on an upswing. (It’s just that) my father has been gone for almost six years now, (and) I want majority ownership.”
At that time myself, as well as others, did not fully understand the scope of Junior's somewhat ambiguous demands. I, for one, simply believed that perhaps Junior was literally speaking about control of his No. 8 Budweiser team. But as time passed and the focus became clearer, it became certain that what Junior wanted was control of the complete racing operation. Now, I believe even a demand for control of his team was incredibly presumptious on his part; a push for control of all three race teams borders on the ridiculous. His absurd initial justification for wanting majority ownership, that his father has been gone “long enough,” leaves me even more convinced that Junior, with the aid of his sister, are doing this simply because they believe they can.
Make no mistake about it; this is simply a business move made by the stepchildren in order to advance their careers. Though there may be a sincere belief on their part that what they are doing is in the best interest of their father's legacy, Kelley Earnhardt Elledge, who is also President of JR Motorsports, is very candid about their motivations.
“51 is the right number because that gives us control,” she said in a recent interview. “We’ll take 75 or 95 or whatever we work out … (but) 51 gives you control. The biggest reason we want ownership in the Cup program is so that we can direct it to (the level) where we feel like it needs to go.”
“It is no secret that business has not been at its maximum potential. There hasn’t been someone solid in the business putting the resources back into the race team,” Elledge continued. “We want Dale to drive 10 or 12 more years. We’ve got to get on the race track and win and get competitive and win championships. We have to have a situation that provides that for him.”
Those statements raise obvious questions, such asâ€¦ what makes Dale, Jr. or Kelley believe they are more capable of running D.E.I. than Teresa? And why do their "wants" give them a right to take control of a company that isn't theirs? Are they basing their confidence to run D.E.I. on the business acumen they have demonstrated at JR Motorsports? That’s a Busch Series team wholly owned by Junior that, to date, he has certainly shown no hesitation to invest money in; as a result, the team has yet to realize any significant on-track success, with a handful of different drivers taking the helm over a two-year period.
I can answer this much for you; what the stepchildren are doing is nothing short of attempting to "strong-arm" their stepmother into relinquishing control of the company. They have taken a very calculated gamble that may or may not prove to be successful, but no one can doubt that they bring considerable, and possibly overpowering, muscle to the negotiating table. That muscle is the millions of dollars in sponsorship revenues that Junior provides D.E.I. through his tremendous commercial appeal as the most popular racecar driver in America. Because of that, they do not have to mince words as to what the impact would be if Junior were to leave D.E.I. There is no doubt that Teresa Earnhardt is fully aware of the company's financial reports and just how great the future health of the company depends on Junior's ability to generate sponsorship dollars.
However, might does not make right, no matter how many times the ambitious second born son of the late seven-time NASCAR champion proclaims that his intentions in this matter are entirely honorable. Even if Junior’s claims that he is not motivated by money, but by some deep-rooted desire to take D.E.I. to a higher level of competitiveness, are legitimate, the fact remains that D.E.I. is not his company. Any attempt to take control of it without Teresa's blessing is an act of absolute arrogance on the part of her stepson.
Ironically, the two Earnhardt children seem to have a tremendous amount of support from fans and racing peers in the NASCAR community that would truly like to see Junior head the company named after his legendary father. It appears to me that desire, as well as the selfish wishes of Junior and Kelley, has blinded them to the point where they either do not care or have not fully considered the right and wrong of the issue.
Regardless of which side ultimately prevails and has majority control of D.E.I. at the conclusion of all this mess, one thing is clear : things will never be the same for the Earnhardt family. Whatever happens, there will be a resentment that will linger long after the ownership question is resolved. And that is perhaps the lesson that will have been learned from all of thisâ€¦family is, and should always be, more important than business.
Right now, for the Earnhardts, it’s not.
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