Though only nine weeks remain in the NASCAR season, Jay Frye, vice president and general manager of Red Bull Racing, remains confident the team will find a buyer this year.
Austria-based energy drink company Red Bull revealed in late June that it planned to discontinue support next year for the Sprint Cup team it started in 2007. Frye, who has led the search to find a buyer for the team since then, said the team and Red Bull are in active discussions with eight to 10 interested buyers and have had inquiries from more than 100 interested investors in the last two months.
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The Red Bull Racing team has fielded two cars since it started in 2007. |
Frye declined to disclose what the team was seeking from a buyer, but a source familiar with Red Bull’s search said it is asking for more than $20 million.
“A lot of times teams are in a critical financial situation where they have to get cash quickly,” Frye said. “That’s not the case here. There’s a commitment to run to the end of the season. I’m confident something will happen before then.”
Because of the sensitivity of the conversations, Frye declined to disclose the names of potential buyers. He said that executives at the company’s headquarters in Austria are fielding calls from European parties interested in learning more about the team, while Red Bull Racing officials are fielding calls in the U.S. from buyers interested in the team. The team hasn’t hired a sports advisory firm to assist with the sale.
Red Bull Racing is selling a limited amount of assets. The team hasn’t secured any sponsors or signed a contract with any drivers for the 2012 season. The team’s only assets are its equipment and shop.
Red Bull Racing has improved gradually on the track since its inception. The team, which has fielded two cars since 2007, finished 43rd and 38th in the standings in its first year. Its drivers, Kasey Kahne and Brian Vickers, currently are 21st and 27th. The team has recorded one Sprint Cup victory, with Vickers in 2009, in its five seasons.
NASCAR teams historically are tougher to sell than stick-and-ball sports teams. NASCAR teams aren’t franchised, so their value doesn’t automatically appreciate over time. They also have fewer revenue streams than NBA or NHL teams, which sell tickets, sponsorships and local TV rights. NASCAR teams’ primary revenue comes from sponsorship and purse winnings from races.
Richard Petty Motorsports was the last team sold in NASCAR. The team was put up for sale in 2010 after its owner, George Gillett, defaulted on a bank loan. The team was purchased by Andrew Murstein’s Medallion Financial Group and Doug Bergeron’s DGB Investments in a deal reportedly worth $12 million.
“There’s pluses and minuses to NASCAR,” Murstein said. “NASCAR is more profitable on average than any team in any sport outside the NFL. But the minus is you don’t have that built-in franchise, so you could be out of business if a sponsor pulls the plug. You don’t have a floor like you do in other sports.”
