Tuesday, July 29, 2014

Heavyweight Law Firm Belies RTA Goals

Law firm shows RTA head Kauffman is playing hardball
News last week that the Race Team Alliance (RTA) has retained the Jones Day law firm should eliminate any doubt that the RTA is more about making money than saving money.

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.    


  1. You may not think much of the formation of the RTA, but as a long time fan, I think it is about time that the owners joined together to do whatever they can to save the sport from the mismanagement which has been rampant since BZ France took over. yes, he is very good at making money for the France family but he is an abysmal failure at improvinig the sport. When Coca Cola screwed up with the introduction of New Coke and the consumers were really ticked off, they didn't say to them "you can like it or drink something else". Nope, Coca Cola said, we're listening and brought back the Coke Classic as an option and KEPT the people who liked their product.

    NASCAR/France & Helton and the rest of the minions, on the other hand, disregarded the fans who had helped bring the sport to the heights that it was and continues to pretend there is nothing wrong.

    I don't blame the team owners who have had to drop money on the continual changes to cars every year and a "new" but not improved championship format as often as other people chnage their socks. Someone needs to tell this guy Hey dude, it isn't working!

    I don't know if the RTA will actually do a darn thing for the racing other than make sure they get a bigger slice of the TV money, but since there is nothing the fans can do to affect NASCAR other than what many of us have already done - stop going to races, watching only a minimal amount of the tv coverage and not buying souvenirs, I am very interested in seeing someone with more clout - even if it takes a high dollar law firm - to make France and his family squirm.

  2. Thanks for your comment. I don't disagree with most of what you say. NASCAR has been poorly managed in recent years. But many of those decisions were aimed at satisfying the owners: cutting costs, limiting new teams, etc. I hope you're right, but my concern is that history tells us owner groups, CART and FOCA, did much harm than good.

  3. This could get real UGLY !! But I don't blame these owners one Bit , look at the long time teams who folded and were left with nothing but old equipment , Morgan - Mclure , Bill Davis , Cale Yarborough , ricky rudd to name a few , even the King was forced out ,RPM is a spin off of petty enterprises

  4. Seems that there is a lot of wishful thinking that the RTA will take the racing back to the good old days. IMHO that is far from being their intent. Nor is getting a better deal on insurance or even cost control. After all they were largely responsible, by chasing the latest shiny toy. So how much control are they after? After all the time to go after the TV money was before now. Interesting times.

    1. I'm trying not to indulge in wishful thinking of what the intentions of the RTA are since I doubt they are altruistic or necessarily interested in benefiting the fans. However, anyone who can potentially get the better of Brainless France is OK with me.

    2. I sincerely doubt that BZF has absolute control of the business. But as I said I doubt that the things that interest fans are what the RTA is about. However its early days and we shall see. Interesting stuff nevertheless.

  5. The sun will not shine on the old iron fist that ruled NASCAR. A new day. Monopoly? ISC and NASCAR? Half the tracks getting a large chunk of the TV money? It is a slam-dunk for that firm. Junior Partners, even the ones in the mail room, could clear that little spec up.
    The RTA will have no tracks, or few options, to race on if something happens. Burton Smith (until I see his original birth certificate, I don't believe that story about his Mother naming him that. It's a marketing thing.) might have been an option and eliminate the need for restrictor plates. There are some tracks out there but NASCAR and Speedway Motorsports controls the majority.
    The bottom line is when billionaires fight billionaires, the losers are the fans. We lose.
    I agree Brian France and the crew need the wings clipped and a dose of reality. Like I started, the Iron Fist will soon be out of the sun!