RPM in default on $90 million loan
By Daniel Kaplan
Special to the Sporting News NASCAR Wire Service
Richard Petty Motorsports, the NASCAR team owned by George Gillett, has been in default on a roughly $90 million loan since at least February but expects to soon restructure the obligation, sources said last week.
The default on the debt underscores the harm NASCAR suffered from the economic collapse of late 2008 and, in particular, the impact of contraction among Detroit’s Big Three automakers on race teams. Gillett, who last year sold the Montreal Canadiens and still owns half of Liverpool FC, lost Chrysler’s backing of his race team when that company filed for bankruptcy protection. Ford is now supporting the four-car team.
“This is a very positive story,” Gillett said. “To lose Chrysler but regain the revenue and not go into the red, and the company is very healthy, that is an amazing story.”
Wachovia, which leads a syndicate of about a dozen financial institutions that issued the loan, declined to comment.
Gillett declined to comment on specifics of the restructuring because of the ongoing creditor talks, but he emphasized the default is technical in nature, meaning he did not miss a payment but, rather, failed to meet terms of at least one covenant.
Loans commonly have covenants that might, for example, require the borrower to sustain a certain level of cash flow. Before the economic troubles of late 2008, lenders were relatively lenient with these kinds of defaults, but they since have become more stringent and less forgiving.
One finance source, which requested anonymity because of knowledge of the deal, denied Gillett’s characterization, insisting the default was payment-related.
No one would dispute, however, that Gillett had unfortunate timing in his summer 2007 purchase of the team.
“George bought right at the peak,” said motorsports consultant Tim Frost. “Manufacturer support has dried up, and it was really strong when he bought the team.”
Upon purchasing what was then known as Evernham Motorsports, Gillett renamed the team Gillett Evernham Motorsports. According to a Uniform Commercial Code document filed Aug. 3, 2007, with the state of Delaware, where the team is incorporated, Gillett Evernham Motorsports obtained the loan from Wachovia. The document lists the collateral as being all assets of the debtor, meaning the loan does not have recourse back to Gillett personally; the debtor is the race team.
That likely bestows Gillett some leverage in his talks with the creditors because at best they could take possession of the garage assets and, perhaps, some contractual revenue from sponsors. They do not have recourse to his personal assets.
The team filed an amendment to the UCC document on Feb. 17, 2009, to account for the team’s name change to Richard Petty Motorsports. Gillett merged with Petty Enterprises in January 2009, bringing the stock car legend’s single car to the team.
While the name of the team is Richard Petty Motorsports, it’s owned by Gillett. The company’s application to establish the new entity in January 2009 with the state of North Carolina, where it operates, lists for its principal address Booth Creek Holdings, a Gillett-owned entity based in Vail, Colo.
Richard Petty Motorsports late last year merged with Yates Racing, which brought the Ford relationship into the fold.
Daniel Kaplan is a reporter with SportsBusiness Journal.
Elliott Sadler to drive Ford at Talladega for RPM
In the midst of finalizing a merger with Yates Racing, Richard Petty Motorsports will race a Ford-powered car at Talladega Superspeedway this weekend, the team announced Monday.
Elliott Sadler will become the first driver to ever drive a Ford in the history of Richard Petty Motorsports before he will switch back to Dodge, the team’s current manufacturer, for the final three races of the season at Texas, Phoenix and Miami.
Sadler drove in a Ford with Yates Racing in 2003-2005 before coming to what is now Richard Petty Motorsports and the No. 19 team. All of Sadler’s three Sprint Cup Series wins came in a Ford, with his last being in 2006 at California.
“Richard Petty Motorsports is working with Ford Racing as we get ready to make the full-time switch at Daytona in 2010,” Sadler said. “Since this is the final restrictor plate race of the season, we made the decision to run a Ford to get some work done in advance. This will be our first time to practice and work on a Fusion under real race conditions. It should help us get ready to make a strong showing at Daytona and put us in the best position to start next season. I’ll be back in a Dodge at Texas, Phoenix and Homestead, but since it’s important to start a season off on the right foot we thought we’d try to get a head start.”
Richard Petty Motorsports announced that they signed a letter of intent on Sept. 10 with Yates Racing to merge. While an official merger plan of the two teams has not been officially agreed upon, the team has confirmed that they will field the NASCAR-maximum of four cars next year. All of which will be Fords.
Upon the finalization of the merger, this will be the second consecutive year that a Richard Petty-owned team has merged. In January of this year, what was Petty Enterprises merged with Gillett Evernham Motorsports to form the current Richard Petty Motorsports.
April 14, 1985 was the last time a Ford owned by Petty hit the track. Morgan Sheppard drove it to an 18th-place finish at Darlington.
The last time Petty drove a Ford was Dec. 2, 1969 at the Texas World Speedway. Petty recorded nine wins, 29 top-five and 36 top-10 finishes in a Ford in 48 starts.
Kahne takes advantage of 11-lap shootout, wins at Atlanta
When Kasey Kahne and the No. 9 Budweiser Dodge crew came into Atlanta Motor Speedway this Labor Day weekend their focus was earning as many point as possible.
The easiest way to score the most points in a NASCAR Sprint Cup Series race is to win and that’s exactly what Kahne did on Sunday night. With that win, Kahne moved up an astonishing five point-positions to sixth, giving him 96 points to work with next weekend at Richmond International Raceway.
“The entire Budweiser Dodge team did great,” Kahne said. “The pit stops were awesome. (Kevin) Harvick was best on the long run, but when we got that last caution and the restart with 11 to go, I knew we had a shot at the victory. It’s all about making the Chase. That certainly put us in a better position going to Richmond. I knew Harvick and (Juan Pablo) Montoya were going to be tough. I hadn’t gotten through the gears all night and (David) Reutimann gave me a push on the front stretch and got me going. It was a great win for Richard Petty Motorsports and the Budweiser Dodge team.”
Race runner-up Kevin Harvick, who won the Nationwide Series race at Atlanta on Saturday, was the best on long runs after dominating much of the second half of the race. However, the race came down to an 11 lap shootout after Clint Bowyer spun through the tri-oval on lap 309. Even though Harvick’s crew chief Gil Martin added an extra pound of air pressure on the final pit stop before the final 11 laps to try and make the No. 29 Shell-Penzoil Chevrolet better on the short run, Harvick was unable to beat Kahne to the line.
“We had a great car tonight,” Harvick said. “The guys did a great job preparing the car. I knew we were in trouble there at the end because it took our car 15 or 20 laps to get going. But, hey, that’s a long ways from where we’ve been. We led a bunch of laps tonight, something we haven’t been able to do in a while.
“I’m happy. Obviously you want to go out and win. But from where we’ve been this year, I think tonight feels like a win. We’ll just take this momentum and hopefully keep it going.”
Juan Pablo Montoya continued his strong run towards his first career chase berth, finishing the Pep Boys 500 in third. Montoya is now positioned in the eight place points position heading into the final race to qualify for the 10-race playoff for the Cup title.
“Apart that we’re eighth in points, we got 88 points in or something,” Montoya said. “I think it’s just big. They got to have a very good day and we got to have a terrible day. It still can happen. In the position we are in right now, it’s just about go there, we have a great car for there, just be smart, get a top 10.”
David Reutimann finished fourth and moved into the 15th points position, 132 points from the chase-cutoff. However, even though Reutimann is still mathematically eligible for a chase berth, it is unlikely.
Rounding out the top-ten was Mark Martin, Denny Hamlin, Brian Vickers, Jeff Gordon, Ryan Newman and Greg Biffle.
Kyle Busch, who finished 13th, took advantage of the lucky dog he received from the lap 309 caution to gain eight positions in the final 11 laps.
The top four drivers in Sprint Cup Series driver points — Tony Stewart, Gordon, Jimmie Johnson and Hamlin — are currently locked in to the Race to the Sprint Cup playoff that begins at New Hampshire in two weeks.
Carl Edwards finished the race in 37th to stay in the fifth points position. He is not locked in to the chase yet, but has a 102-point lead over the 12th place cutoff. Edwards came onto pit road on lap 38 with sporadic puffs of smoke coming from underneath the hood. The No. 99 Aflac team returned to the track on lap 111 and finished the race 23 laps down.
“We had something go through the oil cooler,” Edwards said. “That’s too bad because we had a really good race car. I think we could have finished top three with it and maybe contended for the win.”
Kurt Busch finished the race in 38th after he made contact with Reed Sorenson on lap 247 for the seventh caution of the night. The accident caused Kurt Busch to drop one position in the points standings and trimmed his buffer over 13th place to 95 points.
“I had a loose race car all night,” Kurt Busch said. “We just couldn’t get the handle of our Mille Lite Dodge. I was sideways and I guess the 43 hit us, he had nowhere to go. It was a real hard hit; that was a bummer. We were just trying to get a handle on it. We just couldn’t do it. I felt like we were on the spring (race) tires and everybody else was on the fall (race) tires.
“I was trying to hang on to it and get to the next pit stop, but it kept getting looser and looser all night. It’s hard when you had a dominant car (at the spring race) and we didn’t want to change too much on it. We just got bit tonight by the loose bug.”
Newman now sits in the 10th position after scoring a top-ten finish. He is currently positioned 81 points ahead of the chase cutoff. Martin maintained his tenth place spot in the points and will leave Atlanta 69 points to the good.
Despite his tenth place finish, Biffle still dropped three spots in the overall points standings to 11th, just 68 points above the 12th place cutoff. Biffle’s teammate, Matt Kenseth, is now “on the bubble” in the 12th place points position. After struggling most of the night, Kenseth brought his R & L Carriers Ford home 12th, holding on to the chase field by just 20 points.
Vickers on the other hand is 20 points from being in the chase after his top-ten at Atlanta. Kyle Busch is currently 14th in the points standings, trailing the chase field by 37 point markers.
Top 10 to watch: Bristol
With all the focus on the drivers on the bubble of the Sprint Cup Series standings, we change things up a bit this week with a look at the top 10 drivers to watch in Saturday night’s race at Bristol Motor Speedway. All statistical references are for Sprint Cup races at Bristol unless otherwise indicated. Driver rating is based on the past nine races at the track.
6. Kurt Busch, 88.9 driver rating. No, Busch is not on the bubble. He has a healthy 178-point lead over 13th-place Brian Vickers with three races to go before the Chase field is set. It would take a monumental collapse for Busch to miss the Chase, and that’s not going to happen, especially considering he has five Cup wins at Bristol and won at the next stop, Atlanta, in March. The real action begins just below.
7. Juan Pablo Montoya, 69.9. Montoya finished ninth in March for his first top 10 in five races at Bristol. His average finish at the track is 18.4. He needs to improve that at least four or five spots to remain safe. He leads Vickers by 108 points.
8. Kasey Kahne, 91.5. Kahne finished fifth in March for his fourth top 10 in 11 Bristol races. On the flip side, Kahne has three DNFs for crashes, including in this race last year. Kahne, along with the rest of the drivers on the bubble, absolutely must avoid a DNF Saturday night. Kahne is 105 points ahead of Vickers.
9. Ryan Newman, 85.7. Beginning with Newman is where things begin to get dicey. He is 66 points inside the top 12, but he was 165 ahead of 13th place two races ago. Newman has never won in 15 starts but has eight top 10s, including in the past two races. Newman’s record at Bristol is glaringly feast or famine. In the seven races he finished outside the top 10, six were 30th or worse. He is desperate for another top 10.
10. Greg Biffle, 98.0. Biffle has seven top 10s in 13 starts. Even though he finished 39th in March with his first DNF (engine), his average finish is 12.1, fifth best among active drivers with at least nine starts. He leads Vickers by 42 points.
11. Matt Kenseth, 97.7. Kenseth has two wins and 11 top 10s in 19 races and an average finish of 13.3. But he finished 33rd in March and crashed out of this race two years ago and finished 39th. He is 32 points ahead of Vickers.
12. Mark Martin, 79.4. Martin is coming off a terrible points day at Michigan that left him 12 points inside the top 12. Martin won the pole in March and finished sixth in his first Cup race at Bristol since 2006. He has two wins and 22 top 10s in 41 starts but only two of those top 10s have come since finishing third in August 2000.
13. Brian Vickers, 57.2. When the Race to the Chase began, Vickers was 197 points outside the top 12. His win last week was his fifth top 10 in the past six races. Now comes Bristol, where he has been abysmal: zero top 10s in 10 races with a 26.0 average finish. If a top 10 is too much to ask, he needs a top 15 or, at the very least, a top 20 to keep his Chase hopes alive.
14. Clint Bowyer, 84.1. Bowyer’s streak of four straight Bristol top 10s ended with a 13th-place finish in March. Since finishing 29th and 38th as a rookie in 2006, his average finish is 6.8 in the past five races. If he finishes in the top seven again, Bowyer will cut into his 58-point deficit.
15. Kyle Busch, 103.2. Busch won in March and finished second last August. He has two wins and six top 10s in nine races. Just like Bowyer, if you erase his rookie finishes (28th and 33rd in 2005), Busch has a dynamite average finish in his races since—5.7. He is 70 points behind Martin. A top-10 finish is a must.
Richard Petty: RPM talking to any manufacturer who wants to talk
With Chrysler’s recent filing of Chapter 11 bankruptcy in May, the make has made several cuts to their motorsports program. These cuts did not exclude Richard Petty and his team, Richard Petty Motorsports.
Recently, rumors have surfaced of a possible switch of manufacturers as early as August.
Richard Petty said on Tuesday during a national teleconference that the team is indeed looking at all available options. Still, “The King” is unsure of the future that lies ahead for the team, as far as manufacturers go.
“I can’t say because I don’t know,” Petty said. “I do know that we are looking at all options, that is we have got. We’ve been with Dodge all these years, and you know, we don’t really know where they are at. We are talking to Dodge. We are talking to anybody that wants to talk.
“Right now we are in the process of trying to come up with what we think is going to be best for Richard Petty Motorsports, not only in the near future but in the future way on out there. So I really can’t speculate on that, or can’t say anything about it because it would be purely speculation.”
The most recent rumor includes Kasey Kahne, who broke a ten-year winless streak for the team this past weekend, going to Toyota this August and the other teams would continue running Dodges. Speculation on this matter was only added fuel to the fire when the team announced on June 8 that they had formed a five-race partnership with Braun Racing that would put two of their drivers, Kahne and Elliott Sadler, into Toyotas in the Nationwide Series this season.
Earlier this month, Petty told The Sporting News, “We have money that was due April 30 that has not been received yet and probably won’t be received for several weeks…they’ve stopped everything.”
Notebook: France: NASCAR open to new manufacturers
BROOKLYN, Mich.—The fact Chevrolet joined Chrysler and Ford in cutting support to racing programs in NASCAR’s top three series is hardly surprising, given the stark reality of the economy as a whole, but such moves may hasten the arrival of more foreign carmakers.
“We have been talking to people for off and on for a long time,” NASCAR chairman and CEO Brian France said before Sunday’s Sprint Cup race at Michigan International Speedway. “These are decisions in terms of the new manufacturers joining the sport that would take a long time to evaluate and actually enter.
“Of course, we’re the preeminent place in North America for car manufacturers to build their business with an auto racing group. We remain that, and clearly there’s some companies that are going to look at opportunities that may not have even been there in the past that could be presented in the future.
“We’ll have our philosophical approach to that in terms of welcoming new companies in, as we did with Toyota. It is under a very clear set of circumstances that the manufacturers come to NASCAR to compete. And that will not change.”
Though France declined to identify manufacturers that have had discussions with NASCAR, a logical entrant into the sport would be Honda, which competes head to head with its Japanese counterpart Toyota. NASCAR also may be looking across the Atlantic as well as the Pacific, given that approximately 33 percent of the world’s annual production of passenger cars occurs in the European Union.
“I’m not going to name names,” France said, “but we have companies that are interested in particular in developing the North American market as robust as they can. And you are well aware—as we all are—of the foreign manufacturers now producing cars here in America.”
Empty tank sours Johnson’s dominant run
Jimmie Johnson thought he had saved enough fuel to win Sunday’s LifeLock 400. He was wrong.
Trying to conserve gas and stay ahead of second-place Greg Biffle at the same time, Johnson overtaxed his fuel supply and ran out as he approached the white flag signifying the start of the final lap.
“What do you do?” said Johnson, who led 146 of 200 laps. “We raced hard. We led the most laps. At a time when it’s tough to pass guys on big tracks, we went up there and passed the No. 5 (race winner Mark Martin) and passed the No. 16 (Biffle, who was leading at the time).
“So on the bright side of things, I’m really happy with the performance we had, and we really closed the gap on these guys here at Michigan (where Johnson has never won), but unfortunately, we didn’t win. It’s part of it. We’ll take our lumps and go to the next one.”
In a move whose flavor was reminiscent of Carl Edwards’ sprint to the finish line after wrecking on the final lap at Talladega in April, Johnson nursed his car around the track, stopped at his pit stall for fuel and weaved his way through a crowd at victory lane—and past Martin’s winning car—to complete the final lap in 22nd place.
“Oh, yes, I did,” Johnson said. “There were people running out of the way, but I did finish the race.”
Biffle second-guesses departure from plan
Biffle, who finished fifth after running out of fuel on the backstretch of the final lap, felt he would have been able to make it to the checkered flag under power if he hadn’t gotten caught up in his race with Johnson.
Biffle started saving fuel at the outset of the final 44-lap green-flag run, but in trying to run Johnson’s pace over the last 20 laps, he didn’t save enough.
“We had to save that whole round,” Biffle said. “We were a couple of laps short. We would’ve made it, but the 48 (Johnson) came up there and put pressure on us. I felt like I had a faster car than the 48, but I knew running that pace we weren’t going to make it, so I backed it off a little bit.”
But when Biffle saw Johnson’s car get a little loose, he had second thoughts.
“I think I can get him. Can I try it, Erwin?” Biffle said over the radio to his crew chief, Greg Erwin.
“Go for it,” Erwin responded.
Biffle’s enthusiasm cost him an opportunity to win his first race since last September.
“There was only three laps, but if I would’ve let the 48 go—if I would’ve stayed with my program—I would’ve made it, no problem,” Biffle said. “I don’t know if I would’ve beat the 5 (Martin), though, because I would’ve had to pick up (the pace) when he came along.”
Petty: Chrysler bankruptcy affecting cash flow to Dodge teams
DOVER, Del.—Team owner Richard Petty says the Chrysler bankruptcy has put cash flow from the manufacturer to the Richard Petty Motorsports organization he co-owns with George Gillett “in a holding pattern.”
From the point of view of the Dodge Motorsports program, however, the commitment to racing is undiminished.
“They’ve stopped everything,” Petty said Saturday in the garage at Dover International Speedway. “They went into bankruptcy, and they’re sort of in a floating stage right now. They’re trying to see where they come out of this at. If they’ve got new people running the show, are they still going to continue to back everything exactly like they are, or whatever?
“They’re in a holding pattern right now. I think GM’s that way—I don’t know about Ford—and I know Chrysler’s that way. The rest of them I don’t know. I don’t deal with them.”
(Monday morning, General Motors filed for bankruptcy under a government-backed reorganization plan.)
Walter Czarnecki, vice chairman of Penske Racing, which has three Dodge teams, said Monday the legal proceedings also have held up payments to his organization. “In the legal procedure, you have to file what’s called a ‘Cure Letter’ that lists all the things that you are owed. And when it’s submitted and approved, they’ll pay. We have money that was due April 30 that has not been received yet and probably won’t be received for several weeks.”
Czarnecki expects, however, that with Chrysler’s imminent emergence from bankruptcy and the pending merger with Fiat, the situation will straighten itself out relatively soon.
Mike Accavitti, director of brand marketing and strategy for Chrysler, acknowledged the reorganization has affected the flow of cash from Chrysler but affirmed the company remains committed to Cup racing and that at-track services provided to the teams continue to be available.
“The amount of engineering and other technical services, along with supply of racing components we provide to the Dodge factory-backed teams has not changed,” Accavitti said in a statement to Sporting News. “NASCAR remains a strategic part of our marketing plan and the Dodge brand. … We have commitments to the sport and our teams and plan to continue our sponsorship into the foreseeable future.”
Cash payments, however, have fallen victim—at least on a temporary basis—to the supervision that comes with a bankruptcy filing. A race team might have to forgo a session on a seven-post rig, for example, if the money from Dodge that typically pays for such a simulation of suspension dynamics isn’t available.
“As we have previously stated, we remain committed to our Dodge factory-backed teams in the NASCAR Sprint Cup Series,” Accavitti said. “During our Chapter 11 reorganization, Chrysler has strictly followed each and every step of the court-supervised process according to bankruptcy law. Interruption to the normal course of business, including supplier payments, is inherent during this process.”
Clearly, Petty and Chrysler want the same thing. One of RPM’s drivers, Kasey Kahne, used the new Dodge R06 engine at Dover, qualified a season-best second and finished sixth. Petty expects to phase in the new engine with his other drivers—AJ Allmendinger, Reed Sorenson and Elliott Sadler—based on an evaluation of its performance with Kahne over the next several weeks. All three Penske teams already have incorporated the R06.
“We’ve got to figure is ‘Where is Chrysler going to go? Where are we going to be next year?’ ” Petty said. “So we’ve got to start planning right how for how we come out in February at Daytona. All those things are relative to each other, I guess, as far as whatever we’ve got to do to make it better than what it is. We’re still not giving up on this season, by any means. With the new engine deals, we’re going to really, really work hard this year to get us in a better position as far as next year.”
RPM Offically Signs Allmendinger
Kyle Ocker, FanZone Sports
Richard Petty Motorsports announced today that AJ Allmendinger will participate in a total of 9 races, which includes the Budweiser Shootout and the July Daytona race, as well as any additional races in which the team can obtain sponsorship. The contract is for 2009, with an option for 2010, that will have 27-year-old Allmendinger in the No. 44 Dodge.
“This is pretty awesome news for me,” said Allmendinger who posted two top-10 finishes in 2008 and a victory in the Sprint Showdown. “I just want to get behind the wheel of a race car and race. We have a lot of work to do on the track and need to sell some sponsorship, but this team has great equipment and I think there is a lot of chemistry here based on how we did at the end of last season.”
“AJ has a ton of potential,” said team owner Richard Petty. “I went testing with him a few weeks ago. When he climbed out of the car I think he went to everyone working on the car asking them questions and wanting to know what was going on. That’s the kind of thing you want out of your driver. He’s a young guy and I think we can help him and he can help us.”
Allmendinger joins Kasey Kahne, Elliott Sadler, and Reed Sorenson at Richard Petty Motorsports, a team formed from a merger between Gillett Evernham Motorsports and Petty Enterprises, in 2009. Sammy Johns will serve as Allmendinger’s crew chief for the effort.
