|Law firm shows RTA head Kauffman is playing hardball|
The day before I left on a vacation to parts of the world where Formula One is apparently the only known form of motorsports, the RTA announced its formation. Three weeks later, it remains the big news in American motorsports. I didn’t think much of the idea of an alliance of the nine largest NASCAR team owners at the time, and after catching up on my reading, I think even less of it now.
As I noted before departing, the initial reaction from NASCAR towards the RTA was anything but encouraging. That seemed to be tempered when Mike Helton extended an olive branch, saying, "I want to dispel the perception of any animosity. They play an important role in the sport and they deserve to be able to put forward their views. I think they've made clear their intentions are to grow the sport, to make the sport stronger and their ownerships stronger. We have respect for what they do and for their business models."
But Brian France quickly grabbed that olive branch, broke it in two, and tossed it back into the fire.
“Probably the worst thing that we could ever do is to listen to one voice, even if it were a consensus,” France said. Then things really took a turn. NASCAR told the RTA any future discussions would have to go through the legal department. Your lawyers can talk to our lawyers. Ditto for the International Speedway Corp.
No big deal, RTA Chairman and Michael Waltrip Racing co-owner Rob Kaufman seemed to indicate. We’re got a law firm too. Jones Day.
Except that’s a very big deal. Jones Day is one the most successful, most powerful law firms in the world. “The heaviest of heavyweights” one legal firm partner told me. With 41 offices and an army of 2,400 lawyers around the globe, it is ranked No. 1 when it comes to “Mergers and Acquisitions,” a position it has held for 13 straight years. Not even Jimmie Johnson can match that. The firm also lists “Antitrust & Competition Law” as an area of expertise, has a feared litigation practice, and represents nearly half the companies listed on Fortune Magazine’s Global 500 companies.
You get the picture. These guys play hardball. You don’t call them to help negotiate hotel room rates. You call them when you want to buy Marriott and Hilton and merge them together.
Law firms like Jones Day don’t come cheap. If the RTA thinks hotel rooms are expensive, wait until they get a look at the hourly rates the firm charges. Partners bill at more than $1,000 an hour. Even junior members bill at more than $500 an hour. When the firm was hired to work on the City of Detroit bankruptcy last year, it burned through its $3.35 million six month budget in half that time and tried to bill the broke city for the overage. They’re not usually retained by someone looking to save money.
But then Kauffman knows that all too well. As the former billionaire founder of the Fortress Investment Group, he worked with the firm many times.
So what’s the RTA doing with one of the world's legal powerhouses? Kauffman was coy when asked if getting a bigger piece of NASCAR’s new $8.2 billion television contracts wasn’t the real goal of the RTA.
"That's a big obvious issue that's out there that the teams really have no influence or control over," Kauffman said. "We're going to focus on stuff we can do."
"If someone wants to discuss any big-picture issues, we're happy to discuss and engage in a constructive way."
“We’re very careful with how we do things.”
It’s NASCAR that should be very careful. The RTA is not messing around.
Speaking of hotel rates. I was amused while reading that Stewart-Haas Racing opened up to the Sports Business Journal about the team’s costs during its trip to Kentucky. I’ve got news for Gene Haas. If he thinks Kentucky is expensive, wait until he takes his Formula One team to Monte Carlo.