Thursday, February 15, 2007

The ‘not’ so Great American Race

Sunday, NASCAR’s “Super Bowl” the Daytona 500 affectionately called “The Great American Race” by millions of NASCAR’s devotees undergoes its most dramatic shift forwards (or backwards) when for the first time in NASCAR history a foreign owned company (Toyota) will attempt to qualify as many as eight cars for Sunday’s Nextel Cup season opening event.

And if Nextel Cup competitors had paused to consider the implications of Toyota entering the Nextel Cup series like a herd of elephants, the news Tuesday that Toyota was at the center of four crew chiefs being suspended for violations (cheating) was the worst possible news Toyota racing officials wanted to hear with Thursday’s Gatorade Dual 150s set to take place.

Jim Aust, the president and CEO of Toyota Racing Development, was asked if this was his worst nightmare after spending three years working towards the Nextel Cup racing series.

"I would say that's pretty close to accurate," Aust told the media Wednesday. "This is a week we had looked forward to for many years. To begin this way certainly takes some of the limelight and happiness out of it."

In the last two days Michael Waltrip has been experienced life as bad as things can possibly become. Waltrip's crew chief, David Hyder, and competition director, Bobby Kennedy, were suspended indefinitely by NASCAR Wednesday after an illegal substance was found in the engine of Waltrip's car during Sunday's qualifying for the Daytona 500. A NASCAR source confirmed to ESPN Hyder will be fired. How upset are NASCAR officials, both Hyder and Kennedy were escorted from the Daytona Motor Speedway by the facilities security. Hyder was also fined $100,000. NASCAR accessed fines totaling $250,000 in the last 48 hours in relationship to the cheating scandal.

"I respect NASCAR's rules, its people and the sport's integrity, which is why I am so sad and embarrassed," Waltrip told "I am dedicated to get to the bottom of this because I will not let the independent act of an individual or individuals tarnish the incredible accomplishment my organization has made to be where we are today."

"This is not the way you want to enter NASCAR's Nextel Cup Series by any means," said Aust, told ESPN.

"For this to happen to him is extremely disappointing and extremely disappointing to Toyota. ... He has certainly apologized to just about anybody that would be associated with his organization. He's beside himself with what's happened."

All of this and three years ago Toyota had no direct association to NASCAR and the Nextel Cup series. Toyota first entered the Craftsman Truck Series in 2004, and a year ago announced they would enter the Nextel Cup series at the start of the 2007 season. In their first Nextel Cup season, Toyota will field seven teams. Toyota Motorsports have entered the Nextel Cup series spending some very serious money. Owner Chip Ganassi, who is affiliated with Dodge, told The Miami Herald Toyota teams have raised ''everybody's salary level'' in NASCAR race shops throughout North Carolina. He estimated as high as a $1 million increase in annual payroll for at least the next couple of years thanks to the standard being set by Toyota teams.

Its driver salaries that have raised the biggest concerns on the eve of Toyota’s Nextel Cup debut Sunday. According to The Miami Herald: Dale Jarrett's move from Ford mainstay to Toyota newcomer -- with a two-year, $20 million deal to drive for upstart Michael Waltrip Racing -- has been often cited by Ford officials as a prime example of Toyota's impact.

''If you add up all the money I get from my sponsors and you compare it to what Toyota gives me, it's 10-to-1 at least,'' Waltrip told The Miami Herald. ``It's really interesting for people to say Toyota has given the teams the money and funded them. They have not given us near the money our sponsors have given us.''

Waltrip and Toyota officials have repeatedly denied Jarrett's reported contract figures, and Toyota executives have gone out of their way to say the manufacturer doesn't finance driver salaries.

''There's only one way you can persuade people to move in [the] capitalistic society that we have -- it's wages,'' Aust, said. ``It's not Toyota that pays for whoever all the teams are hiring. The teams are the ones that are actually hiring these people.''

Ford representative Kevin Kennedy said: “[The money is] coming from somewhere. We cannot be getting in a spending war with them.''

Operating a Nextel Cup team isn’t for the faint of heart or those not prepared to invest tens of millions of dollars to field one Nextel Cup team. It costs between $16 million to $20 million a year to own and operate a Nextel Cup team. Kennedy insisted to The Miami Herald Toyota teams are being subsidized (by Toyota), which has allowed them to charge a primary sponsor $8 million to $10 million -- half the market price.

''The sponsorship market has been affected because of the amount of upfront cash that Toyota is willing to put into teams,'' Kennedy said. ``It's allowed them to take major sponsors and pay less for the same product.''

What exactly has upset as many Nextel Cup teams (everyone except those racing under the Toyota banner)?

''People always fear the unknown,'' said Ty Norris, general manager at Michael Waltrip Racing, a new three-car team that will race in Toyotas with the drivers Michael Waltrip, Dale Jarrett and David Reutimann. ''It's a new thing to be concerned about.''

If Kennedy’s comments have to concern Toyota, they pale in comparison to what Dan Davis; director of Ford Racing Technology accused Toyota of in a New York Times report.

''I think they have been predators, and people would say that might be extremely negative,'' Davis said. ''I would say that in the business world, people are predators. That's how you get things done. When anything new comes in with a lot of resources, then those entities are going to try to acquire the best people, the best equipment, the best that they can get. That's a bit predatory to me. And if you pay people more money than they were getting and you entice them other ways, in a way that's more than normal, then it's a bit predatory.''

Is Davis paying a backhanded compliment to Toyota, is he ‘jealous’ of what Toyota is bringing to the seven Nextel Cup teams they’ll be a part of in 2007, what exactly is Davis trying to say when he suggests Toyota is exhibiting ‘predatory’ business behavior. It is clear Davis has concerns about the financial resources Toyota is bringing to the Nextel Cup series, but is that fear a bigger sign of the times – if you don’t quite accept what someone is trying to do it seems the easiest reaction you can have is to lash out.

''We hear just like everybody else,'' Robin Pemberton, Nascar's vice president for competition, said in a telephone interview. ''We don't get into the book work of anybody. We don't know what people are paying. It runs in cycles. When you have new teams coming into the series, you're going to have to do something to ramp up.''

You can’t blame Toyota if they’re not somewhat defensive in trying to deal with the reaction their Nextel Cup debut has caused.

''We're not in the business of writing checks,'' Lee White, the senior vice president and general manager for Toyota Racing Development, said last month in an office in High Point, N.C. ''People go out and say, 'Oh, Michael Waltrip hired Dale Jarrett, and all that money had to come from somewhere, had to come from Toyota's deep pockets.' ''

White added: ''I would appreciate if Dan and some of those guys would get their facts straight. But really, the things that they say are really not about the facts, apparently. They're defensive about their own program, and it's easier to heave criticism over the fence at T.R.D. and Toyota. That's just the way it is. We're O.K. with that. We don't expect everyone to endorse us or be a big fan. We'll earn our stripes on the racetrack.''

"Toyota has been aware all along that there is going to be a percentage of the fans that are going to be upset," acknowledged Les Unger, national sports manager for Toyota Motor Sales USA. "That isn't a surprise to us, and it isn't a surprise to NASCAR. It's been an American sport for 50, nearly 60 years."

For his part NASCAR CEO Brian France was quick to welcome Toyota to the Nextel Cup series during Tuesday’s “State of the Sport”, “We're real happy with how Toyota has come into the series. I know it's early, but we certainly like the organization of their teams, how they're approaching it.”

NASCAR has represented American car makers since its inception on the beaches of Daytona more than 60-years ago. In December 1947, the NASCAR founder, Bill France Sr., organized a meeting in Daytona Beach, Florida, to discuss some of the issues surrounding stock car racing. It was from this initial meeting that the sport of NASCAR arose. World War II had just ended, Toyota, Honda and their amazing growth wasn’t a fantasy anyone who was involved with that fateful meeting 60-years ago could have ever imagined.

A fair question France was asked Tuesday, is Toyota’s Nextel Cup the first step forward in the evolution for foreign investment in the Nextel Cup series? And in the bigger picture is NASCAR about to take the next step forward in taking the sport outside of America?

“Well, we've been saying that we're going to take a nice, slow, careful international view of where this sport can go. The only parameters I've laid out to our team is it has to be additive to the industry. So that means when we take an event to Mexico, which we already have, or Montreal, which we will, that the whole industry has an opportunity to win. That will also be the philosophy should we look at expanding outside of North America. That may be Europe, that may be Latin America, may be Asia. Doesn't matter where it is.

“What my mandate is, how do we make sure that the industry is expanding? Whether that's building cars and exporting cars, whether that's information, promotion, technology, you name it. This industry has got the model built. When we have opportunities internationally, it will have to be that the industry comes together and gets the benefit.” France said.

Still despite France’s assertion that NASCAR has gone about things in a step-by-step method with Toyota, if you listen to what one Nextel Cup owner told the media last week before Saturday night’s Bud Shootout, there indeed may be a line in the sand when it comes to Toyota moving from the Craftsman Truck Series to the Nextel Cup series in three short years.

"We're going to war with them, and they should give us their best shot, because we'll be giving as good as we take," Jack Roush, a rival team owner who races Fords, told reporters recently.

Mr. Roush said Toyota is "upsetting the balance" in the sport, now dominated by Ford, Chevy and Dodge. "Toyota will bring changes in the way we conduct business," he said. "They have deep pockets . . . They'll try to put the rest of us in a catch-up scenario,"

Wednesday Roush and the Fenway Sports Group announced an agreement whereby the parent company for the Boston Red Sox led by John Henry have purchased a 50-percent interest in Roush Racing (for a reported $50 million) Toyota is a is a car marker, who build many of their cars in the United States. John Henry owns a Major League Baseball franchise. Maybe NASCAR fans should be asking Jack Roush if his new investors aren’t more ‘foreign’ to auto racing than a Japanese car maker.

Edward Collins, founder of, a popular NASCAR website, offered an interesting fans perspective in a Globe and Mail report.

"NASCAR is the No. 1 TV sport in America and its fans are the most loyal in the world," Mr. Collins said. "That loyalty shows in the products they buy -- Fords, Dodges and Chevys. Some fans are going to accept this, and some of them are going to put up a fight. I admire the fight."

"As my 18-year-old son likes to tell people: 'Don't you watch NASCAR on TV? Well, look on the back of the TV and see where it's made.' You don't have a TV made in America any more. It's just a fact of life that a lot of our products, even when they're made here, they're owned by foreign manufacturers."

One issue raised by France during Tuesday’s ‘State of the Sport” NASCAR being undercovered by the mainstream sports media. Nothing like the debut of a Japanese carmaker, an investment likely north of $200 million by that carmaker, an alleged cheating scandal, a quarter of a million dollar in fines – if France believes in the saying “any publicity is good publicity” the France family hasn’t seen nothing yet.

For Sports Business News this is Howard Bloom. Sources cited and used in this Insider Report:, The New York Times and The Miami Herald

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