SBJ/Aug. 18-24, 2014/Franchises
Why the RTA? ‘It’s best to have healthy race teams’
Published August 18, 2014, Page 5
Richard Childress started his NASCAR team in 1969, and he has had a front seat for the sport’s meteoric rise over the last four decades. But as the sport’s longest-standing team owner, with more than 200 victories and 12 championships among NASCAR’s top three divisions, he has grown concerned in recent years about the sport’s future. NASCAR teams face rising costs at a time when revenue has flattened. That combination led him to join other team owners to create the Race Team Alliance, a business association formed this summer to address challenges they face.
Childress spoke about the alliance earlier this month with staff writer Tripp Mickle, explaining why it was created and what he hopes it will accomplish.
■ When did the Race Team Alliance come together and how?
Richard Childress envisions savings for race teams on fuel, insurance and more, if they speak with one voice to suppliers.
CHILDRESS: The chief financial officers started working together to understand [team] financials. We were careful to make sure there’s no antitrust there. We’ve been trying to understand, “If we spent X on aviation and they spent Y, what could we do to save money?” With all we were spending, four of us got together — Jack [Roush], Rick [Hendrick], Roger [Penske] and me. We looked at tire costs, part costs, engine costs — everything we could combine to work as one. We wanted to see what we could do to help with expenses and keep the strongest race teams together for NASCAR’s future. We hope that helps the sport from a competition side.
■ What are the types of savings you envision?
CHILDRESS: RCR spends $500,000 a year in diesel fuel alone on trucks. If we put 43 trucks together and say all our trucks will buy [fuel] together, say they sell it 20 cents cheaper [a gallon], that could save us $100,000 a team. Insurance — there’s probably 7,000 or 8,000 employees across 18 teams. We could package that up for all types of insurance. Aviation. I don’t know how many planes we have, but we could save thousands. Those are the little things we can save at.
■ How can everyone agree to make cuts together?
CHILDRESS: Everyone’s not going to be happy with everything, but if it’s good for the sport, we’ll all go along with it.
■ Why are you all taking these steps now?
CHILDRESS: Costs keep going up and the revenue is staying flat. Hotel, planes, fuel — it’s expensive. The best way we can deal with it is with one voice, going in to a fuel or airline together.
■ How are you going to tackle these issues?
CHILDRESS: We’ve created subcommittees. Each subcommittee [which is made up of business executives from the teams] is going to work on issues. [RCR President] Torrey Galida is on an aviation and fuel subcommittee. And Rob Kauffman is doing an outstanding job of working with the attorneys at Jones Day. They’re some of the best attorneys in the business when it comes to antitrust.
■ NASCAR has reacted coldly to this at best, critically at worst. What do you think of their responses to date?
CHILDRESS: I think you’ll see the attitude change as we come along. It’s best to have healthy race teams. Ten years can happen fast. If we get to the end of 10 years and the TV partnership [with NBC and Fox for $8.2 billion in rights fees] and we have 10 to 12 quality race teams, you’re not going to get a good TV contract. We have 25 or more healthy race teams now, and we need to keep that. This gives us a chance to do that.
■ What makes you confident this is the right thing to do?
CHILDRESS: Every other race series have found savings. Formula One cut costs in half. IndyCar found ways to cut costs.
■ One of the things I’ve heard proposed is that NASCAR could look to cut costs by reducing engine costs. You have an engine business, so that could presumably hurt you. How do you feel about that?
CHILDRESS: Let’s say engines cost $3.5 million and you reduce the costs to $2.5 million by cutting RPMs or something. It would hurt us at [Earnhardt Childress Racing Engines], but if the race team is healthy and the sport is healthy, that’s the most important thing. Because if the sport’s not healthy, and the team’s not healthy, then there’s no ECR.
■ What would you change about the sport?
CHILDRESS: Our goal is to improve the product of racing. I’ve got to give NASCAR a lot of credit for what they’ve done. I wouldn’t like to have Brian [France’s] job, but I would like to see a different format that energizes every fan. …
Every major sport has change — the shot clock in basketball, replay in baseball. When NASCAR sits down with their people or the fan council, once they talk to them, I’m sure they’ll come up with something even better. I just think we need to change up some. We need something to spice it up. That’s just my opinion.