The story behind the fall of Furniture Row
Barney Visser has always been a bit of a maverick.
When he launched his NASCAR team in 2005, he shunned the sport’s North Carolina race hub and instead set up shop in Denver, headquarters to his Furniture Row retail empire. No other NASCAR team is based west of the Mississippi.
Conventional wisdom said the team could never be successful given its remote location, but Visser eventually formed an alliance with one of the sport’s top teams, which provided his Furniture Row Racing with the cars and technology it needed to be competitive.
By the end of the 2017 season, Furniture Row Racing had surprised everyone and won the Monster Energy NASCAR Cup Series championship.
It’s a captivating beat-the-odds story, only it doesn’t have a happy ending. Instead, it’s a story of how a perfect storm of factors can wreck the best plans, how alliances can get complicated, and how a sport’s ownership model is getting ever tougher to make work.
FRR executives declined to comment, so this account is based on conversations with several people close to the team, plus other key industry executives.
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When Visser first came into NASCAR in 2005, he used his Furniture Row retail chain not only as the team’s name but also as its primary sponsor, an arrangement some team owners use until they can land external funding. FRR’s black matte No. 78 paint scheme quickly became recognizable to NASCAR fans.
Like most new teams in NASCAR, Furniture Row got off to a slow start, with its first win not coming until 2011 with Regan Smith as the driver at Darlington Raceway.
But with its Denver base, FRR began to build a blueprint for how NASCAR could help grow the sport across the U.S. by having teams based outside of the Carolinas. FRR developed what eventually turned into a significant fan following in the Denver and greater Colorado area, with everything from routine social media shoutouts from the Broncos and general manager John Elway, to often having around 100 people waiting for tours on the day the team hosted them each week.
Visser’s maverick streak reached beyond the team’s location. While he’s respected by the industry, he opted against joining the Race Team Alliance, the coalition of NASCAR teams that each pay a mid-five-figure annual fee in order to be included. The group works with NASCAR to find ways to improve the sport and lower the costs to compete, and only a handful of teams have opted to not be in it. Visser declined to take on the added expense.
That’s not to say that Visser and FRR shunned other teams. Realizing the challenge of staying ahead of technology, and the cost of research and development, the team partnered with Joe Gibbs Racing in 2016 to build the team’s chassis and provide other support including pit crews. Such arrangements are commonplace in the sport and the relationship greatly improved FRR’s ability to compete with the sport’s top pedigree: multicar teams owned by Gibbs, Rick Hendrick, Richard Childress, Jack Roush, Roger Penske and Chip Ganassi. Through nearly 15 years racing, heading into last weekend’s race at Talladega, Furniture Row had 18 wins overall, with 16 of them coming in the last three seasons.
The pinnacle came in 2017, when the dominant Martin Truex Jr. drove to the Monster Energy Series championship after winning eight races.
FRR had firmly planted its flag.
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Fresh from the momentum of winning the championship, FRR looked ahead to the 2018 season and the next chapter of its success.
Instead, things quickly began to unravel.
This past summer, nearly midway into the 10-month 2018 Monster Energy Series season, FRR was in renewal talks with sponsor 5-hour Energy, which split sponsorship on the team’s car this year mainly with Bass Pro Shops and to a lesser extent Auto-Owners Insurance.
It shows that even billionaires can get tired of writing checks.
5-hour had joined in 2017, and after winning the championship the team was optimistic of getting a renewal deal done. But the sponsor pivoted and informed FRR that it would not return after this season. Suddenly, FRR had a massive $10 million annual hole in its coffers it would need to fill if it wanted to run another season. NASCAR teams rely on sponsorship for about 75 to 85 percent of their annual revenue.
The precise reasoning of 5-hour’s reversal was never confirmed by the sponsor’s parent company, Living Essentials, other than to say it was a marketing decision.
The timing was brutal. Normally, sponsors give teams as much notice as possible, often around a full year, given the long decision-making process brands face in making investments of this level.
As NASCAR President Steve Phelps said, “having a July announcement with a major sponsor leaving made it difficult for sure.”
The loss of the key sponsor was amplified by a change in FRR’s relationship with Joe Gibbs Racing. After FRR won a championship last year, Joe Gibbs Racing saw the deal — set to expire after this year — as undervalued and asked for an increase in the range of $10 million to $12 million annually, or around a threefold jump from the $3 million to $4 million FRR had been paying, sources say. Joe Gibbs Racing executives would not comment for this story.
The sharp increase raised eyebrows in the garage, particularly with it coming at a time when FRR was struggling to make ends meet. But history in NASCAR has shown that when the smaller team buying parts from a bigger team starts to beat that bigger team, the bigger team will naturally feel that its services have gone up in value. For example, Hendrick Motorsports supplied chassis and engines to Stewart-Haas Racing starting in 2009, but Stewart-Haas eventually started winning championships in Hendrick’s equipment, and the relationship eroded and eventually ended in 2016.
Furniture Row Racing owner Barney Visser will have his NASCAR team charter to sell, and sources say it is almost certain to go down as the most valuable one to be sold since the system was enacted in 2016. The charter could fetch a record $6 million to $7 million. NASCAR implemented the charter system in 2016 as a way to build enterprise value and give teams more power in the running of the sport.
FRR unleashed a sponsorship hunt as soon as it found out about the 5-hour move, including pitching local Colorado-based companies such as Molson Coors, but came up empty. Visser also didn’t want to go back to having to use Furniture Row as the main sponsor again and tie up so much of the retailer’s marketing budget on the one venture. Visser told ESPN that while his family initially saw using the company’s logo on the car as a marketing investment, NASCAR’s “TV audience has been falling off a little bit,” making the Furniture Row sponsorship “a little tougher to justify.” Visser’s outspoken comments were unusual in that an owner called out the sport’s ratings challenges.
“It shows that even billionaires can get tired of writing checks,” said Rob Kauffman, chairman of the Race Team Alliance and co-owner of Chip Ganassi Racing, who is not close to Visser. “Stock car racing would have a more sustainable model if it was structured like other professional sports.”
By mid-August, with no new sponsorship to speak of, Visser looked at a possible deal with NASCAR Xfinity/Truck series team GMS Racing that would have seen Visser sell FRR’s assets to GMS, which would have continued running the No. 78 team in the Monster Energy Series. But that deal was eventually nixed, something sources close to the matter attributed in part to the new terms of FRR’s technical alliance with Joe Gibbs Racing, which GMS decided were just too high.
By the end of August, with FRR running out of options to continue, Truex and his management were granted permission by Visser to look elsewhere and began talks with Joe Gibbs Racing that will see him and longtime corporate backer Bass Pro Shops join the storied NASCAR team next year. The move caught some people in the garage by surprise, since it all but assured that Furniture Row would close down. But others noted that this sort of hyper-competitive environment among the teams is just part and parcel of NASCAR.
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In September, with it set to lose Bass Pro Shops and Truex for 2019, FRR announced it would shut down after this year’s season. Its official news release cited the lack of sponsorship and the impact of the increased fee for the alliance with Joe Gibbs Racing.
Visser later tried to downplay that relationship, telling ESPN that the fee increase wasn’t “ridiculous,” and that the sides had been close to extending the deal before 5-hour pulled out.
NASCAR insiders were already well aware that the sport’s team ownership model was in need of major changes. The sanctioning body and teams have been meeting frequently for years to try to address the most pressing issues, which are rising costs and an over-reliance on sponsorship.
Nonetheless, FRR’s announcement — that a Monster Energy champion just a year earlier would be forced to shut down shortly after losing one key sponsor — has brought about an added layer of soul-searching in the sport. And for its part, FRR has taken to the grim duty of starting to shut down its operations. Crew members are looking for jobs that will likely see them get uprooted to North Carolina if they want to stay in the NASCAR industry. The team, which employs 60 to 70 people, even recently announced that it would no longer be offering shop tours as it gets ready to close.
“We don’t want to see owners leave or switch like that — particularly when you have someone who is your reigning owner of your champion,” Phelps said. “With that said, there are circumstances that happened as part of [Visser’s] deal from an expense and sponsorship standpoint that he didn’t feel he could make work, family stuff, etc. Do I think it’s systemic [of wider ownership problems in NASCAR]? I don’t.”