NASCAR Media Conference
BRIAN FRANCE: Let me just say, the direction we're trying to get to, and of course we're talking about how do you define what is an affiliate of another team. But the thing to mention that gets lost in this, while we're going to have a hard cap, while we are going to have a way to measure that hard cap. On the other hand, we still want to get the benefits of the multi-car teams and the infrastructure they have in place as they have in the past to help us launch new teams and new team owners. So while we want a cap, we want to go in that direction. We don't want to put such a most around, you know, the teams, like Hendrick or Roush or Yates or anything of the big teams; they can't help but assist us in finding new team owners to come into the sport. So that's why it's a bit of a work-in-progress to try to get to the right place.
MIKE HELTON: What is first certain, what we announced is that beginning in '06, there's a cap, understanding that that cap, if we institute it cleanly in '06, would put a couple of teams in a bad position, and we don't want to do that. So we're going to grandfather Roush in, and then Hendricks. For example, he had a two-year deal with Terry Labonte in the 44 car. We know going into '06 that Rick Hendricks is going to have five cars on the racetrack at least ten times next year. Once we get through all of the details of working that out with those two organizations for '06, then it's a matter of reaching that cap of four in a reasonable period of time in the future. Once we reach that cap, and as it applies to everybody else beginning in '06, there will still be a feature that will allow a four-car team to run a fifth car in a program that is getting a rookie ready for the following season with limited number of races attached to it. So it would be possible for someone to have five teams at one time, but that would be under a limitation as to who the driver could be, and the number of races you could put that car out there.
BRIAN FRANCE. It's a big change, you have to look at, that's what we're trying to do. It may not be a change sitting here today in November, but down the road several years from now if we didn't do anything, you could very well could have a situation where it's six, seven or more teams, that are under a common ownership. While there's parts of that that might not feel wrong, the reality of raising the barrier to a new car owner who is coming in in a daunting task of saying, well, I've got to own how many teams to be competitive, is it five, is it six, or whatever it might be. So we think that this is a good way to reverse that trend, but still recognize that multi-car team and the infrastructure, as I said earlier, is an important component of our growth. It's been well-noted how many teams and new teams that Rick Hendrick and Jack Roush and others have helped get into the sport, so that's a good thing. We want to preserve that. We want to give those guys a chance to sell technology, sell shortcut, if you will, to a potential new team owner. But we also don't want a concentration that's going out of control in terms of one ownership group having seven, eight, nine, ten; where would it end? So we do think we've taken a step to not only reverse it, but to stop it. I don't want to get hung up on it today. Let's just talk about the concept and I'll tell you how we get there. There are various or many definitions that are out there with the Securities Exchange Commissions, franchises, franchise law. There's all kinds of ways that we can get at the whole idea of recognizing who owns what and who is a benefit to one team or another. But remember, we're not trying to draw the ultimate moat around a team owner like Rick Hendrick whereby he can't be a supplier to a new team that's coming into the sport. So it's a fine line in terms of drawing a steel ring around the situation. We really want to be somewhat flexible. There's plenty of ways we can get at who is benefitting from another team over there and trying to disguise the idea of who owns what.
MIKE HELTON: Let me clear up something on the two-car deal. We never had a limit on two cars as far as who could own them. That limit was around the Winner's Circle Program. And that's when you saw other people in the same camp be listed as a car owner, but the entity itself was basically driving a ship, like Jeff Gordon on 48 car or Georgetta Roush on the 16 car. That's all that ever existed before. We've learned a lot from that, and like Brian said, there's the NBA has got it, the NFL, SEC, IRS. There's a million different definitions of who owns what out there. We're not after an IRS-type definition. We're after a definition that makes it work in the industry. We have no desire, like Brian said twice already, we have no desire to stop Yates and Roush from supplying engines, Hendricks from chassis and engines, Richard Childers, Joe Gibbs. Those organizations are actually making the sport better. Our fear is and has been is what happens in the future, not '06, not '07, but what if the sport -- if we didn't have a cap, what would the sport look like in ten or 15 years from now? So this isn't as much an immediate reaction as it is a reaction for the future and to lower the barriers going down the road. We think we've got a pretty good grip on one of our economic plans that has an affiliate group definition in it already. And we've been able to police that very cleanly and very well, and everybody adhere to it, and we think that gives us a good start on holding this procedure together.
BRIAN FRANCE: We considered everything and we felt like four was the number that met our short-term issues without trying to penalize too far what all of the team openers that have multi-car teams have done: Played by the rules, they have competed fairly, they have not done one thing in the wrong direction. So we have considered three, and we'll look down the road, if four is the right number, we feel like we're comfortable with that. Down the road we think that it may be different, we'll look at it but right now it's four.
Q. Do you think it helps?
BRIAN FRANCE: Oh, I think it helps. Again, whenever you have to -- if the whole idea to win is I have to go out and do, you know, climb Mt. Everest, not everybody can climb Mt. Everest. We have to lower that barrier to entry. We have to make it whether it's a manufacturer, a new team owner, a new driver, can realistically think that they can come in with a couple of teams and have an opportunity to compete fairly and evenly and all of those things, and that's what the policy is all about. I can understand that, he is the own one with five teams, so it's very understandable to think that he's disappointed. And again, Mike said it lots of times in the last couple of weeks, it's not focused on Jack Roush because Jack Roush didn't do anything wrong. He just happens to be the guy that has five and stands out and is most affected by; it's understandable to think that, but we're looking at a policy for the whole sport, not just one team owner. We were with Jack on Tuesday and Mike has been meeting with him regularly, as you can imagine. And the idea is to have a transition that is as soft a landing as possible, and we've committed to Jack that that's what we're going to do and not looking to penalize Jack for anything that he has in place today. On the other hand, there has to be at some point a transition to get him to where everybody else is at four, and we're going to work in the coming months and maybe years to figure out how to do that without crippling his organization, or that he thinks -- or not he thinks, that he's built up to a certain place. And that's going to be a bit of a work-in-progress, but we are committed to work with Jack and Jeff and Smith and the whole team there. I didn't say that. I said we are committed to working with him on a soft landing on particular agreements or situations that are contractual requirements that he's working under. So we're -- I don't know how we're going to do that yet, and I don't think he does. But he's got our commitment that we're not just going to be cavalier about it. We're going to be thoughtful and take our time with him to figure out how to make sure he has a soft landing. Because Jack Roush, he's just competed and signed up sponsors and drivers, hasn't done anything that he shouldn't have been doing. So we need to be careful, cautious, as we go down the line to make sure he has a smooth transition.
MIKE HELTON: Now, but to answer your first question, to simplify it, tire leasing is nothing new to motorsports. But what will happen in '06 in our national series is Goodyear will show up at the racetrack with all of the race tires that will be used at the event. And when the event is over, Goodyear will leave with every tire that was used at the racetrack for the event. If it coincides with our new test program, Goodyear will be at tests to provide tires for testing, but no team will leave with those tires after the test is over with, and that's how the leasing program will work. The economic package of it and everything, those things we're working out with Goodyear and the race teams. And it's not a matter of -- I'm confident that the economics is going to actually work out better for the race teams, because teams are not now going to be buying enormous amount of tires knowing that they are going to take them home after it's over with and go do something with them anyway. We'll help the teams minimize the number of tires that they even mount up at a regular racetrack. They can't use a 2006 tire to go and do anything with, other than what we do at a racetrack, and the six tests. Now, I will say that there's obviously in the pipeline, there's inventory of tires that's been used in '05 that the teams have purchased and then got back in warehouses. The value is minimized, though, because as the compounds change, then the value of being on the exact compound you're going to race on I think has some merit to it. We understand going into '06 that it's not a matter of flipping a switch on January 1 of '06 and do exactly everything we want to do. But over time, that pipeline, and we're not going to worry about trying to police that pipeline of inventory that's out there today. We're just going to worry about what happens from January 1 of '06 on, and that pipeline is going to take care of itself eventually.
BRIAN FRANCE: Well, we wouldn't do it if we thought in the future there was going to be a short of owners, or not now. There's a shortage of opportunity, but there's not a shortage of willing, capitalized individuals or people that want to get involved in NASCAR. But most of them tell me, you know, the old days of Alan Kulwicki just ten years ago, or more than ten years ago, where a single car team comes out, competes better that particular year, didn't have the biggest sponsorship agreement, had a great driver, had a great chemistry and wins the championship, those days are over. So if you can't come in and have success, you can't keep a sponsor. You can't even get a sponsor. So I'm not too concerned about that against the other side of doing nothing and hoping that down the road, that we end up in a better place; Mike and I and our whole team at NASCAR believe that's the case.
MIKE HELTON: Let me say this about that. Car counts are cyclical, and those of us that have been in the sport for a long time have seen car counts go and car counts go down. It has got nothing to do with the number of cars a team owner owns, and this decision has nothing to do with car counts in the garage and that relationship. We can go through a cycle in the future where car counts are low again, but we think, again, this move is a futuristic move as much as anything that hopes to encourage car owners to be a part of the sport. Whether or not that makes a car count 43 or 38 or 55, I don't think it has any difference on that.
BRIAN FRANCE: I don't believe that to be the case. I think if it's a quality team that we're talking about, the fifth team at some point, it doesn't happen by natural attrition, it's our hope, and I know it will be Jack's hope that that team gets new ownership, it's part of a new situation. And logic says that's probably the case. If at some point down the road, he's able to maintain five teams and everything is working properly, if we needed to transition that fifth team out, it's our expectation that a new owner would be glad to have that kind of infrastructure, and he does have five great teams and so no one would, in theory, lose their job. That would be our hope.
Q. They would lose their job at Roush, though.
BRIAN FRANCE: They would --
MIKE HELTON: Tom, wait a minute. You've got to go back to in the announcement yesterday, and we've said already today that we are going to minimize what Jack has to do to beat this cap, and we're looking at a reasonable time period. In that reasonable time period, people retire, people relocate, people go off and do other jobs, teams actually add employees. So if we do this right, and our intentions are to do this, is to sit down privately with Jack and bang out all of these details to where he understands what's coming and we work with him, and I think it actually minimizes the number of people that have to leave Roush Racing. It may fit into the scheme of things of adding new people and people retiring to before very few people actually have to leave Roush Racing.
BRIAN FRANCE: Well, the first question, again, Mike said it and I said it, it's not -- you're right. Five to four, maybe not a significant number at that point. And four right now, from a barrier to entry standpoint is what it is. It's really trying to look out for us. We see a day, and listen, the last thing Mike and I and Jim Hunter or anybody at NASCAR wants to be doing is sitting up here with tough policy that has to look out, that's conceptual. We'd like to be working on a lot of other things, but it's our job to look around the corner. And when you look around the corner, we see seven, eight, nine teams and that would be a substantial barrier to entry. Four is one thing; seven, eight or nine is another, so I would tell you that. But we didn't have any regard to the second question, we didn't have any regard to Toyota in that. They are going to have to field independent teams in terms of the manufacturer support that they give each team owner or however many team owners they are going to choose if they come in and they have not made that choice anyway to enter NASCAR at this point.
MIKE HELTON: And let me just say this, add to that, that this move by itself does not provide for the minimum barrier of entries going down the road. We've got to do rules and regulations like single rules -- single engine rules, gear rules, leasing tires. We've got to do the other rules and regulations and procedures that we've done, and I think we've got a history of doing and keep doing in order to help car owners stay in business, and entice enthusiasts and owners what wouldn't to be in the business to be in it. And so as we for several months debated over whether there even should be a cap decided yes, there should be; well, when do you put one in? I don't know. Why would you do it? Well, because the trends, as Brian mentioned in the 90s, it's been since 1995 that a single car owner has won a championship. That doesn't mean it's a bad thing, but if we allowed this current trend to keep going, we could be looking here one day and say, well, it was 2005 since the last two-car team within a championship. And we don't think that's good for the sport going deep into the future. So we choose to put a cap out. Then we had to choose what the number was, and we basically do that by taking a snapshot of the garage area as it is today, analyzing statistics from the past, analyzing what we think trends will do going forward, and talking with a lot of owners about what's reasonable today. You know, I guess back in the early 80s when Junior Johnson tried the first two-car team with Darryl and Neal, everybody was screaming bloody murder back then. Well, that didn't work out, everyone went back to single cars, Alan Kulwicki won a championship as an independent owner, and everybody thought the independent owner was dead and gone. So the world has changed. But sitting here trying to look at and protect it for the future, we chose this year that there should be a cap. We chose the number four as the logical, or the one that made the most sense based on the snapshot of the industry out there today. It gives teams that are -- that have momentum going, that have two or three teams to grow, and it allows for organizations to correctly manage themselves without expectations of having to be much bigger than they are, and maybe grow so large that they are not capable of managing themselves. And then that's what led us to this number and that's what led us to this date. Now it's a matter of going down the road and doing the right thing, but this by itself is not going to fix the barrier of entries. This is a component of it, but the rulings and regulations are -- probably the car tomorrow is as important to it as this move is. We work hand-in-hand with Goodyear, and they were not pushing us to go to minimum air pressure, policing. That's something we felt like we had to do based on not the direction Goodyear was going, but based on the geometry and the engineering direction that these teams were going and the loads that they were putting on these tires and the knowledge of the tire that they were acquiring; and basically not being practical about the aware of the tires as much about the performance of the tire. And so once we realized in the latter part of this season that the line had been crossed is when we chose to police the minimum air pressures. For years, we went along, Goodyear published minimum air pressures. Everybody said, okay, and went to work on it. But as the progression of the competition has gone in the direction it has, it's just like a lot of other elements, we've had to come in and say, no, you can't do that anymore. We used to let you do that, but you can't do that anymore. This is what this was. This was a moment where we said, no, you can't do that anymore.
BRIAN FRANCE: It's convenient to say that when you're in a certain situation but it's really apples to oranges. You talk about the infrastructure, or the cost, rather and the capital requirements necessary to operate a track today, very little public, private partnerships that most big arenas and the NBA are the NFL or any Major League sport enjoys, the majority of all of the upgrades are made with private capital. So concentration in that case matters a little bit more for the tracks to have some bulk. And I don't think that anyone, a fan, particularly care. It doesn't affect the competition, either, how many tracks somebody owns. That doesn't affect what happens on the racetrack. The multi-car situation or the cap, plus all, as Mike well put, it's not going to be just the cap that we're going to be zeroed in on in the coming years to fix this issue or reverse some trends. It's going to be a lot of other rule adjustments that we can make. So I'll leave it at that.
MIKE HELTON: And the only thing I'll say about that is the barrier of entry in racetracks is not who owns racetracks. The barrier of entry to racetracks is how many weekends you've got. That's what limits us is how much time you spend racing. It doesn't matter who owns the racetracks. You just don't have enough weekends to go around.
BRIAN FRANCE: Well, we said the process, the rest of the year, to try to get it down it a couple of the best options and we'd be negotiating with them and hopefully announcing something early next year and we're still on that timetable. We're still working on it, no one has been eliminated. Obviously as we have done the analysis and some option in one city or another has presented a little bit better case, we'll be getting at that here in the next -- probably in the next six weeks. Probably after the holidays we'll be negotiating trying to see if we can make some more progress and then announce something in the first quarter. We'll always look at the franchising situation of it, but there are plenty of other things we need to be worried about to lower the barrier to entries, as Mike said on the rules side of the business. But I will tell you in motorsports, because everybody can say they can point to a few things or a few situations where one team owner had to leave the sport and didn't come out as well as they wanted financially, the reality of it is, while we don't have a perfect system, it's the best system in the world in motorsports for team ownership. It's the most financially viable. It's the best return. More teams are profitable here. And that's a good thing for us. That's what we're concentrating on, than any other form of motorsports by a wide margin. So every time we want to look at franchising or giving somebody an asset or whatever the case is, we're mindful that our model has worked so well for so many people that we've got to be careful.
BRIAN FRANCE: Again, we are starting with the NEXTEL Cup series as we typically would do, and we'll look at our national divisions, the Busch and Truck Series, as we go on to see if -- we're already doing a lot of things on the rulings side but we don't have a cap, yet, on either one of those series. If that is something that we need to consider down the road, that's something we'll look at, because the idea is pretty simple. We're trying to lower that barrier to entry, trying to get more ownership energized about coming in, fielding competitive, great cars, letting drivers get some opportunities. So we'll look at it. Right now, we're comfortable that the benefits of a lot of the NEXTEL Cup team owners coming into Busch, you know, the benefits out way the liability at this stage, but we'll look at it.
Q. How do you assess it?
BRIAN FRANCE: Well, I think it's been tighter if you look at the points through the -- all first eight weeks, it's been generally tighter. Although Tony Stewart has gotten out to a lead, but it wasn't nearly the significant lead that Kurt Busch had or the spacing or the gap of points from first to seventh or eighth; much tighter this year. Anything can happen this weekend, and you know, for all we know, we'll have five or six guys with a real opportunity in Homestead-Miami next week. Jimmie Johnson is certainly close. Carl Everett has three that are very, very close right now that can do it on the merits where if they just outrun somebody in a significant way, being Tony Stewart, they can have a real opportunity. So I think for more than that, to get in, I think Tony would have to have -- probably have to have some struggles over the weekend. This is of course getting down to the finale next weekend. Our television ratings have been up every event and that's notable. You say, well, okay, they are not up a lot. They are up I think four or five percent for the year, or during the Chase. Now, remember that's without Earnhardt and Jeff Gordon, our two biggest stars. So most sports, when their two biggest stars are not in the playoffs, that's a significant drop; you look at what happened in the World Series. And we're up, I think cumulative for the last two years, 16 percent. In our business, those are big numbers. So we like the momentum and we also think the fan acceptance is super high, they understand that the drivers, it's more exciting, more guys had an opportunity, all of the things you've heard me say many times. So we love the concept and it's not a concept, we love the format and we love the great, tight racing. I hope we go down into the finale like we did last year and there's as much excitement and television interest and all of the rest, and that's what we're hoping for. But we like what's going on.
JIM HUNTER: We'll take a couple more and then wrap it up.
BRIAN FRANCE: Look, we have huge Fortune 500, Fortune 50 companies in the sport today, the biggest companies; Microsoft is a big company. Like we said many, many times today, we're going to work with Jack, we're going to try to make a transition that's as smooth for him as possible, but we have to get to a place that honors the policy we put out today.
MIKE HELTON: They can test, they just can't test with an '06 tire.
MIKE HELTON: You'd have to ask the crew guys. That's not the information we get, though. Part of the analysis of whether or not we wanted to go through the exercise of changing the tire relationships in the industry, we did spend a lot of time with owners, with Goodyear and trying to look at a model as to what difference it would make. And it's significant. It's several million dollars of difference that makes -- no, in total, in the industry. As we look at the models, now, we'll have to play it out and see for sure. But it's a significant, significant number, enough to make us do this.
BRIAN FRANCE: We think we are, we think we'll hopefully be announcing something as we said by the end of the year, maybe sooner, hopefully going as fast as we can to put the packages together and it's going along nicely. As soon as we get the final information, we'll share it with you.
JIM HUNTER: Thank you very much.
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