by Darrell Waltrip

Comment

Therein lies the problem for Richard Petty and Petty Enterprises as there are no more small problems in NASCAR when it comes to finances. I think about Richard and his brother Maurice, cousin Dale Inman and Petty Enterprises through the years. They were the flagship of our sport and Richard is the king of our sport and has been ever since I started in the 1970s. They were the ones we all looked up to. They were the ones we always set our goal to beat. They always won races and champions. They were the benchmark for all of us.

But our sport has changed so dramatically over the years, especially these last 10 to 15 years. From my own experience, it was only 12 years ago when I had Western Auto as my sponsor and I was able to hold my own pretty well — but then the price of poker shot through the roof. It was like a $5 million primary sponsorship had to be $10 million overnight. I was like the Pettys in that I had no other outside source of income and the clouds rolled in to make the future pretty bleak for me as an owner.

What racing gives you, you take in. What racing gives you, well that's what you spend. Along the way you get a sponsor and with a family-run operation you pay the expenses and take a salary out. The sponsor money helps cover all that plus naturally allows you to field the car week in and week out.

Things really began changing for the Pettys when they realized they couldn't operate out of Level Cross, N.C. anymore. So they decided to move to Charlotte and that was an expensive move. It takes a lot of money to simply turn the lights on in one of those new 150,000 to 200,000 sq. ft. shops, which is absolutely ridiculous — especially if you are a relatively small operation.

So you have a shop that's big and expensive. You then have to fill it up with people and people are expensive. With an organization that becomes that big then you need leadership and yup, you guessed it, leadership is expensive. Then to keep your sponsor happy you have to have a good driver and they don't come cheap either. Bobby Labonte was an expensive driver — he is a past champion and had won races. He earned the right to command a big salary.

So the expenses Petty Enterprises were facing far outreached the sponsors they had even with General Mills. But when General Mills left to go to Richard Childress Racing that really left them holding the bag. Unfortunately it was an empty bag. That's when things really got tough and Richard had to bring in Boston Ventures. Sure they wanted the race team, but they really wanted to gain control of the Richard Petty Driving Experience, which is Richard's driving school that allows fans to get behind the wheel of stock car. I have always been told it was a cash cow for Richard. In fact, that's what held up the deal with Boston Ventures because Richard didn't want to give up control of the driving school but he finally had to.

Folks I have said it from Day 1 when these investment companies started coming into our sport, that I didn't think it was a very good idea. They aren't racers and they don't truly understand our sport and what it takes to run a race team. I just didn't think it was going to pan out and now, unfortunately with the economy the way it is, it hasn't panned out well at all.

The bottom line for those folks is ROI — return on investment. They are interested in making money. When they spend $1, they want to get $1.50 back. Richard Petty and the Petty name is golden in our sport, however you can only push that so far. So now Kyle Petty is gone from the family business and they have turned to Gillett to absorb them or merge. Ironically Gillett looks to be in almost the same financial boat. This racing thing and the amount of daily and weekly cash it takes to run them is probably turning out to be a lot bigger than these outside investors ever imagined.

Folks, the cold hard facts are these race teams require cash and a lot of it. They aren't cash cows. They burn through cash quickly. You literally have to pay as you go. They take money week in and week out. I just think it's hard for these outside investment companies to understand that when they first come into our sport. When the cars are parked in the shops during the winter months, they really burn up a lot of cash. The winter months are brutal to race teams as they still have a lot of expense and overhead and not a lot of income. So you can see where they can become a problem in a hurry.

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So there sits George Gillett with a big organization and expensive drivers. AJ Allmendinger did a great job driving that No. 10 car for them in the last handful of races for 2008. AJ's a hungry young kid. In a lot of ways he reminds me of Carl Edwards a few years ago, who would basically drive for nothing. So I think the writing was pretty clear on the wall with an expensive driver in Sadler and a young aggressive and much less expensive driver in Allmendinger. So that became a huge savings to the Gillett bottom line.

Racing is no different than any other business right now in this economy. The strong are going to survive and unfortunately the weak aren't. Trust me, I know. I have lived this nightmare. When Western Auto pulled out at the end of 1997, I was facing bankruptcy, auction or shutting the team down and laying everyone off. I was blessed. I was able to sell my team. Although it broke my heart do it, it was the lesser of the two other evils because I didn't have to go through bankruptcy or watch it go to auction. Selling your team is what a lot of these owners are facing now 12 years later.

The point to all this is that teams are all struggling right now. Without major sponsors none can survive. Naturally if you have top of the line drivers and top of the line sponsorships you will be fine. But if you are a mediocre team and don't have a lot of good sponsors then you are going to find yourself in the midst of financial crisis. Look no further than what has happened to Bill Davis when he lost Caterpillar, or Hall of Fame Racing or a number of teams in the Nationwide and Truck series. Again, I lived this — when the sponsor goes, so goes the team.