Editor’s Note: The following is a special edition of Frontstretch‘s Side By Side. Occasionally throughout the season, two of your favorite Frontstretch writers will duke it out in a debate concerning one of NASCAR’s biggest stories. Don’t let us be the only ones to speak our minds, though… be sure to read both sides and let us know what you think about the situation in the comment section below!
Today’s Question: If DEI is indeed for sale, should Dale Earnhardt Jr. be the one to buy it and keep it in the family name?
Dale Earnhardt Jr. Should Invest In DEI
Though I in large part dismiss rumors circulated recently that have Teresa Earnhardt commissioning an investment firm to seek a major investor or buyer for her company, Dale Earnhardt Inc., I see such a scenario as completely plausible and, in fact, almost inevitable given the economics of owning a NASCAR Sprint Cup organization. The latest rumors of a no-longer-in-existence financial company hot on the pursuit for investors in DEI have been denied by the company’s President Max Siegel; and not only did Siegel offer that denial to the news media, but to his stable of drivers before last week’s race at Chicagoland.
Still, the fact team owners such as Richard Childress, Ray Evernham, Richard Petty and Jack Roush have sought outside financial help to keep their teams solvent down the road would seem to lend credence to the possibility that Teresa Earnhardt may eventually follow suit – sooner rather than later. And when that day comes, Earnhardt Jr. should be at the front of the line… checkbook in hand.
Now, there may have been no bigger critic of Earnhardt Jr.’s failed attempt to wrangle controlling interest in DEI last year than I. It was a scheme I termed at the time as a “strong-arm” tactic, wherein his position was that if he was not given a 51% stake in the company that bears his late father’s name, Junior would jump ship – taking with him the value of his immense popularity and the positive revenue flow that came into the company because of that corporate appeal. However, this time around would be a completely different situation. Instead of making a power play, Junior would be negotiating for control from an owner that is now agreeable to relinquishing the reins of the race team she helped build.
Indeed, a purchase of the company outright would be the ideal way for Earnhardt Jr. to accomplish for DEI all that he purported to be interested in when he sought to have power over its direction during his contentious negotiations with his stepmother last year. What better way to realize those dreams than to buy that position in the company? It’s as cut and dried as you can get. No favors, no arguments concerning sibling shares or concerns over his father’s desires. Teresa chooses to sell… and Earnhardt Jr. simply buys.
With the For Sale sign put on the door voluntarily, the move would also be strictly business between Teresa and Earnhardt Jr. There would be no need for any family drama or emotions to enter into the transaction. In fact, there would be no reason for Earnhardt Jr. and Teresa to even meet face-to-face if they preferred not to. Appraisers, bankers, CPAs and attorneys can hash out the details – no different than how other teams have reorganized in the recent past.
Upon completion of the unimpassioned takeover of DEI, Earnhardt Jr. can then set whatever course he chooses for the company without interference from his stepmother. He can bring his people in, set the short- and long-term goals for it, recruit profitable sponsors and preserve his father’s legacy – even merge it with the team he’s currently building, JR Motorsports.
But whatever path Earnhardt chooses, there would be no doubt DEI would be his company. In the future, he can decide on what, if any, portion of it his siblings are someday entitled to, while shaping the present the way he sees fit. Junior will have supplanted Teresa – whom he believed had neglected the race business – and can build the organization with his own know-how into profitable and competitive NASCAR race teams. In short, he would have the control to make DEI everything that he has wanted it to be; and most important of all, he will have taken control of the company his father and stepmother built the proper way.
So, the question isn’t really if Dale Earnhardt Jr. should buy DEI, so much as… who better to buy it? – Tommy Thompson
Junior Shouldn’t Buy Into A Crumbling Empire
A little over a year ago, Earnhardt Jr. made an offer for controlling interest (51%) in Dale Earnhardt Incorporated, the company that bears both his late father’s and his own name. Teresa Earnhardt – Dale’s widow and Dale Jr.’s stepmother – flatly refused, at best making a counteroffer that was so exorbitant that nobody in his right mind would bite. We’ll likely never know the truth of exactly what went on; but what we do know was it became the last straw for the driver affectionately known as “Junior.” Unable to reach a deal, he left as DEI’s premier driver to race under the Hendrick Motorsports banner.
The move was difficult, considering Earnhardt Jr. had the same hero as many race fans did – Dale Earnhardt Sr. Junior came into the then-Winston Cup Series in a DEI car, learned how make mistakes and then, how to win — sometimes to the chagrin of his father, and sometimes to his immense pride. As time passed, father and son grew closer than ever and Junior began to realize – and understand – his father’s vision for DEI. So, it was natural, after his father’s death, for Junior to want to build and mold the company in that vision.
But Teresa had her own ideas, and they included none of Dale Jr.’s budding philosophy. Some might argue that there was little of her husband’s vision in her plans, either; but regardless, she took the reins, and the results wound up speaking for themselves. Through the years, performance declined steadily, first in the No. 1 car, then the No. 15, then finally, the No. 8 – the car driven by the man whose name is on the company letterhead. Drivers handpicked by Earnhardt were treated like little more than livestock in the process; and finally, Dale Jr. had enough of it all.
Fast forward to 2008, and DEI is reportedly for sale – the last vestiges of Earnhardt’s vision on the blocks for the highest bidder. Teresa Earnhardt will of course keep the rights to his name and souvenir sales, but appears to want no part in the empire he built anymore. In the meantime, Earnhardt Jr. has ramped up the team he owns, JRM, teaming with Rick Hendrick and running two competitive cars in the Nationwide Series. Still, there’s nothing in his contract that prohibits him from making an offer to buy what’s out there for sale.
But somehow, I doubt that Teresa Earnhardt would take an offer from Dale Jr., even if it was the highest one. And Junior shouldn’t even make one. He passed the point of no return a year ago – and he shouldn’t look back.
First off, JRM is becoming a top team in its own right – the company snagged its first win at Las Vegas with Mark Martin driving the newly minted No. 5, then followed it up at Nashville with Brad Keselowski in the original No. 88. Relative newcomer Landon Cassill took the pole at New Hampshire and Keselowski has also done the same, with his coming at the Milwaukee Mile this June. Additionally, Keselowski is second in Nationwide Series points, the only non-Sprint Cup driver in the top five. Cassill is 35th in the driver standings, but has only run 10 of 17 races – he shares seat time with his boss as well as a few others. Earnhardt Jr., Jimmie Johnson, Martin and Martin Truex Jr. are among those who have raced the No. 5 this year – and all have done well. The car is currently 12th in the owner standings, a much better indicator of the team’s success.
It’s clear based on those results Junior is building a team, in his own vision this time, from the ground up. That’s not easy, and there have been bumps in the road; but there were bumps in the road for DEI, too, in the beginning. The team is showing real growth, and – especially with the guidance of Junior’s new boss, Rick Hendrick – has the potential to keep right on growing, right into the Cup Series someday if that’s what Junior wants. The son is picking up right where his father left off, growing a company in his vision while developing drivers and teams for a long-term future.
And at the same time, the DEI empire is crumbling. The team is reportedly sidelining the No. 01 car it acquired in the Ginn merger last year. Martin has already signed with Hendrick Motorsports for 2009, vacating the seat of the No. 8 for relative newcomer Aric Almirola – a talented young driver, but not yet a championship contender by any means. Truex Jr. wants out after this season, doing whatever it takes to ensure he wriggles out of his one-year option. And if that’s not enough, John Menard is reportedly considering pulling sponsorship of the No. 15 in favor of a Yates Racing car – more likely than not, current driver Paul Menard will be part of that package.
Earnhardt’s death left a void that Mike Joy compared to “a compass that has lost true North.” Joy said it was not until days later that he realized that the DEI logo is, in fact, a compass.
Now, it appears, the DEI compass has lost all direction entirely.
And that’s too big a mess for Junior to have to fix. Junior loved and respected his father, and has said that the early part of his career was dedicated to making that man proud. Perhaps in the past, bringing DEI back from what it has become would have put a punctuation mark on that. But Junior has his own vision now, a working and growing one that includes bringing his own drivers into the spotlight, something his father was known for doing for men like Steve Park and Michael Waltrip. JRM is a thriving business, and Junior would be wise to keep his focus there instead of the shell of his father’s company. He is in the process of building a team from scratch, one that is becoming more and more competitive in the Nationwide Series, with drivers who had been overlooked before – and making all of that the foundation for a Cup team a few years down the road. In fact, that vision looks familiar – it looks like one a man named Dale Earnhardt Sr. once had.
Seems like Junior is fulfilling his father’s dreams after all. – Amy Henderson