During Game 4 of the 2007 World Series, Andrew Murstein found himself in a suite with MLB Commissioner Bud Selig. Murstein had recently put together a sports fund to buy or invest in a professional sports team, and he wanted the commissioner’s advice.
“What do you tell first-time owners?” Murstein asked.
|Andrew Murstein has fought to take it slow as the owner of Richard Petty Motorsports.
Murstein has thought of Selig often since buying his first sports property, Richard Petty Motorsports, in November 2010.
The team was on the brink of collapse when he acquired it. George Gillett, its owner at the time, had defaulted on his $90 million loan against the team, and Murstein, president of the New York taxi financing company Medallion Financial, and Doug Bergeron, CEO of VeriFone, snatched RPM for $12 million, a tenth of the $120 million that Gillett reportedly spent in 2007.
Murstein and Bergeron gave the team immediate financial stability; helped retain RPM’s two largest sponsors, Best Buy and Stanley Tools; and by showing some restraint during the course of their first year, have managed to get RPM through a complete season without pulling a penny out of their pockets.
“We knew the conventional wisdom at the beginning of the year was: Are they going to be around at the end of the season?” said Lisa Brown, who helped put together the deal with Murstein. “We’ve managed very tightly to a good budget and the company is EBITDA positive, which is good, and there’s no reason next year should be any different.”
The team’s survival has been good news for NASCAR, which will see both Roush Fenway Racing and Richard Childress Racing contract by one car in 2012 and may see Red Bull Racing shutter its shop at the end of this season.
“Richard Petty is an icon in the sport, so [NASCAR] and everyone in the garage wanted to see them succeed,” said Steve O’Donnell, NASCAR’s senior vice president of racing operations. “Andy was able to bring in that extra business sense to help the team, and the marriage of those groups — [the Pettys] who have been around the sport for a while, with some new thinking — has worked well.”
|Murstein, with Richard Petty, is president of taxi financing firm Medallion Financial.
That hasn’t been easy. Murstein had been pining for a sports team for years before buying RPM. He led a group that raised $200 million in a public stock offering to buy a sports franchise. The resulting company, Sports Properties Acquisition Corp., looked at more than 15 teams between 2007 and 2010. But it never bought one, and Murstein earned a reputation as a “professional tire kicker” — someone who expressed interest in a team, explored investing and then did nothing.
He looked at the Florida Panthers, Chicago Cubs, Kansas City Wizards and Yates Racing, but he never closed a deal. He shuttered the fund in 2010 and lost $8 million on it because he never bought a team.
“The sports fund in retrospect … I would say it’s the worst deal I ever did,” Murstein said.
It wasn’t until RPM was put on the market in late 2010 that Murstein changed his tune. He had looked at RPM in 2007 and considered paying more than $100 million for it. But Gillett outbid him. After buying the team for $12 million three years later, he put a new spin on Sports Properties Acquisition Corp.
“We lost $8 million, but I like to think of it as we saved $100 million,” Murstein said.
After buying the team, the first thing Murstein and co-owner Bergeron did was speak to RPM’s biggest sponsors. Stanley Tools, which sponsored the No. 9 car, had an out clause in its contract that it could have exercised, and Best Buy, which sponsored the No. 43, had begun inquiring about opportunities with other teams. But after being assured by Murstein, Bergeron and Richard Petty that the team would have enough financial support to make it through another year, Stanley and Best Buy both committed to sponsor the 2010 season.
“The one who got the sponsors to come back was Richard,” Brown said, “but the thing Andy did was give [the sponsors] the security of knowing that financially the team was going to be just fine. This was not going to be another Gillett.”
|Murstein helped keep sponsor Best Buy, as well as Stanley Tools.
It was the first and only time over the course of the year that he said he forgot Selig’s advice.
“Richard says to me afterward, ‘Are you sure you want to say those things?’” Murstein said. “I say, ‘I should probably talk to you about it first, but I think we should take the business to three or four teams.’ He says, ‘You’re right, but it’s probably too early for that.’ It probably was.”
The next time Murstein inserted himself was over the summer when he reshuffled the team’s management. He pulled Brown, who was commuting to Charlotte from her home in New York, out of her day-to-day role as CEO and gave her a position working on team sponsorship in New York. Brian Moffitt, Petty’s son-in-law, was promoted to the role of CEO.
The other things Murstein has done with RPM have been behind the scenes. He played a role in making it possible for the race team’s sponsors to buy discounted outdoor advertising controlled by his company, Medallion Financial, and he also integrated the outdoor advertising into some of the team’s sales proposals for new sponsors as a way to add value to deals.
His Medallion sales force has been working to find sponsors for RPM, as well. They brought one new sponsor to the team this year, Nautica, a division of VF Corp., which sponsored the No. 43 car at Richmond.
“He’s helped us think about different ways to approach sponsorship,” Moffitt said. “He’s definitely brought us opportunities for new partners to the industry, and hopefully we will announce some of those in the near future.”
Murstein talks to Moffitt almost daily and estimates he spends 25 percent of his time on RPM and the rest on his work as president of Medallion Financial.
The team has several challenges ahead of it. The most immediate is renewing Best Buy’s sponsorship, which is valued at more than $14 million a year. The team is making headway on the deal, and Murstein is optimistic it will get done, but both he and Bergeron recognize the challenging sponsorship market will make it tough to fill other open inventory across RPM’s two cars.
“The sponsorship business is still a tough biz, make no bones about it,” Bergeron said. “The number of departures from NASCAR this year is astounding. Red Bull. UPS recently. And it’s not just departures but sizing down commitments. We’re hanging on, but by no means is it easy.”
That reality has caused Murstein to back off his statements early in the season that the team needs to expand to three or four cars in the near future. He said he was approached about merging with another two-car team this year and rebuffed the offer.
“There was a time when everyone was thinking more is better … but it’s not a goal to grow it to a third or fourth team,” Murstein said. “I’d rather be 2-for-2 in a baseball game than 2-for-4.”