Editor’s Note: As of 12:30 this afternoon, the reported merger between Ginn Racing and Dale Earnhardt, Inc. has become official. Please click here for the latest edition of the Frontstretch newsletter, giving you all the info you need to know about the new team and what it means for all drivers, crew chiefs, and personnel involved.
In what has become the quickest and most dramatic rise and fall of a race team in recent NASCAR history, Ginn Racing has fans, drivers and other owners in the NASCAR garages wondering what in the world has transpired with the team that had been showing so much promise since the drop of the green flag at this years Daytona 500. Since owner Bobby Ginn purchased the two-team organization formerly known as MB2 Motorsports from its previous majority owner Nelson Bowers barely a year ago, what the NASCAR community has witnessed is an illusion, a highly calculated gamble, based on maintaining an appearance of stability to gain acceptance within the sport in hopes of securing significant outside financing, money that was desperately needed to continue the charade. And it was a fairly well orchestrated deception… one that almost worked. The plan’s downfall was simply that no corporate sponsor was ever found that would take the bait Bobby Ginn set out, and the ruse has now begun to unravel.
Ginn, a real estate developer from South Carolina, entered the NASCAR scene with a BANG! After Ginn, through his Ginn Clubs & Resorts, had agreed to become the primary sponsor for MB2 for a limited number of races in 2006, it was in short order announced that he had purchased the majority ownership of MB2, leaving minority owner (20%), general manager, and chief executive officer Jay Frye in place. Said Frye, who at the time had been working a deal with Dale Earnhardt Inc. to merge the teams, “If we hadn’t done something, maybe not next year, but at some point, we wouldn’t have been here (competing). Now we’re solidifying our future. Our organization is going forward. This is not a Band-Aid. It’s an opportunity to make this team better for a long time.”
Immediately things began to change for the better. New equipment arrived. The two veteran drivers, Sterling Marlin and Joe Nemechek, shortly thereafter saw a marked improvement in their on-track performance. Plans for shop expansion began taking form. A five-year plan to bring the organization into prominence was openly being discussed. Mark Martin was hired to drive on a part-time basis for what was reported to be a very generous price for a full-time driver. A first rate driver development program was initiated, and young drivers, including the accomplished motocross star Ricky Carmichael, were brought on board to be mentored by Martin. And all this achieved within just months of taking financial control of the previously underfunded company. Clearly, Bobby Ginn was a man in a hurry!
It appeared as if money woes were a thing of the past for the second-tier race team. As developments reached lightning speed, the “sky was the limit” as far as Bobby Ginn was concerned. “I do think that companies and people need to have the best. I have a saying I use in business all the time: You can do a little job with a big piece of equipment, but you can’t do a big job with a little piece of equipment,” said Ginn to his philosophy of growing a successful racing business.
And the very best is what Ginn was providing. He bought a $2.5-million seven-post shaker, for instance, a piece of equipment that few, except for the wealthiest multi-car NASCAR teams, actually owned; most are satisfied to only “time lease” the chassis-building aid. He expanded from a two-car outfit to three, along with purchasing a couple of jets for the race team. Holy cow! The guy even sent his Ginn blimp to the races!
The impact of the infusion of Ginn money was evident at this year’s Daytona 500, where Ginn’s new part-time veteran Martin lost in a controversial heartbreaker, finishing second to Kevin Harvick by a whisker. And possibly even more impressive was the ninth-place finish posted by Nemechek with the new No. 13 team, a car that was not guaranteed one of the coveted Top-35 “free passes” into the season opening points race. Along with Sterling Marlin’s 17th-place finish, Ginn made heads turn. Apparently, his Hendrick Motorsports-powered Chevrolets had arrived, and would be a team to take note of in 2007.
By and large, while the early momentum cooled off, the season has been a good one for Ginn Racing, at least up to last week. The No. 01 Army Chevrolet driven by Martin and developmental driver Regan Smith has been stellar, as even with the ride-share arrangement the team is presently sitting 10th in Nextel Cup Owners points. Nemechek has been able to position the new No. 13 team into a coveted Top-35 position in the standings, and Marlin has likewise kept the No. 14 ahead of the new well-financed Toyota teams.
Bobby Ginn provided the “seed money” necessary to dress up the race teams, even though two of them have struggled to achieve primary sponsorship this season. He had portrayed himself as a guy with the resources necessary, through his own “deep pockets” and that of his many real estate investment, development, and management companies, to be able to sustain viable race teams. Well, it was an illusion that he created that simply wasn’t true. By his own admission, he has spent “tens of millions” to upgrade the race teams, but it was not money that he could afford to not recoup. He gambled on attracting sponsorship dollars needed to not only recoup his initial investment, but to maintain the teams going forward, and hopefully accumulate a tidy profit, as well. But in the end, the big sponsors never materialized.
Ginn is no stranger to playing “fast and loose” with the finances. Rolling the dice and betting that he can stay one step ahead of the creditors until he can “right his ship” seems to come naturally to him. Just look at the history. In the mid ’80s, Ginn came onto the scene like gangbusters on Hilton Head Island in South Carolina, full of promises and, as it was eventually discovered, short on cash. The maverick owner bought tracts of land for development back then with what can best be described as “funny money,” purchasing in a period when Savings and Loans institutions were only too willing to play along with borrowers like Ginn, who were willing to misrepresent their actual worth to secure loans that if called on, they could not pay back. The plan, though intricate in the amount of paperwork that it takes to pull off, is not, in its premise, all that complicated. Ginn buys some property; he then, with his financing buddies borrows a bunch of money using the original property, appraised by his lending friends at a ridiculously high value, as collateral. The new loan money is then used to keep the creditors at bay on the original property and provide development capital for other properties bought with the questionable loan money. But for the plan to work, other investors and/or buyers, like sponsors for his race teams, need to be lured into contributing cash before time runs out – and no more cash infusions can be had.
The Hilton Head Island venture did not end well for Ginn. Creditors became nervous as Ginn failed to turn the shaky loan money into profit. People got burned. Lots were sold with promises of utility hookups that never materialized. Ginn filed bankruptcy, and the development properties were sold off to other investors. Ginn left the island a very unpopular fellow. It is reported that during that period, it was not uncommon on the island to see bumper stickers that said, “Honk if Bobby owes you money.” In the book titled Profits and Politics in Paradise: The Development of Hilton Head Island, authors Michael and Patricia Danielson summed up Bobby Ginn’s failed development activities by saying, “Ginn left a trail of broken promises, angry property owners, and dashed hopes.”
In fairness to Ginn, he did overcome his Hilton Head failures and misdeeds and has since regrouped during the last 20 years, building what appears to be a successful and extensive real estate empire. Ginn heads his numerous enterprises through a number of privately held companies supported by private investors.
However, events last week suggest that Ginn’s racing business is on the brink of collapse. He has suspended his NASCAR Busch Series operations. He has no new primary sponsors of any significance other than the United States Army sponsorship of his No. 01 team, a source of revenue that had come with the purchase of MB2 Motorsports. Both Marlin and Nemechek have been told they are free to seek employment elsewhere. Nemechek’s No. 13 team that had been carrying Ginn Resort sponsorship is not scheduled to compete at Indianapolis, barring the arrival of an unexpected new sponsor. Marlin’s No. 14 seat is to be filled by rookie Smith, a developmental driver that had been sharing seat time with Martin. And it is being widely reported that Ginn and Dale Earnhardt Inc. are in talks aimed at DEI absorbing some or all of the race teams. Others are speculating that the teams will be sold off piecemeal to more than one existing team owner. Editor’s Note: This merger was completed late Wednesday morning.
It seems that Bobby Ginn’s time in the NASCAR spotlight is coming to an end. He gave an award winning performance as a man with the wherewithal to compete on a grand scale with the sport’s best owners, and he played the part to the hilt. Two months ago, he even made a bold public pronouncement that he would try to entice Dale Earnhardt Jr. to sign with his team. Still keeping up a pretense of having a healthy organization, one that sponsors should be interested in, he tried to snag the hottest and presumably most expensive stock car driver of all time.
“We would stretch as hard as we could stretch to do it,” Ginn proclaimed after Earnhardt Jr. announced that he would be leaving DEI at the end of the 2007 race season. “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.”
“We have a five-year plan in mind and the conclusion is winning a championship,” Ginn said at the same time. “We took a risk on Martin, and that’s paid off in spades for us. We aren’t afraid to be aggressive.”
Listening to what Dale has outlined, his Busch operation would dovetail beautifully with us,” Ginn said. “We believe he’d be a good fit. Our DNAs match, our cultures are alike.”
Well, things were not as solid as Bobby Ginn wanted them to appear. Certainly Ginn knew that something had to happen, and happen fast before his gamble backfired. Possibly the recruitment of Earnhardt Jr. would have landed sponsorship deals that would have allowed the organization to recoup its large outlay of cash over the last year and enable the race teams to prosper. But certainly by the time Ginn started his campaign to sign Junior, he knew that his plans were unraveling for lack of money. By that time, the only thing “in play” was desperation on the part of Ginn.
Expect more news to come forth on the rise and fall of Ginn Racing. It is my belief that there is still more to this story than is clear at this point. But it is unlikely that the organization can now survive. Fortune 500 sponsors, seeing what has transpired, will now not come to Ginn’s rescue. It appears that Bobby Ginn is a man that isn’t afraid to take risks. Sometimes he wins big, but this time he lost big.