Published on November 29th, 2010 | by Michael J Smith3
Petty With Help Of Investors Takes Control Of RPM
After spending the last few weeks searching for investors to help him purchase majority interest in his racing team, Richard Petty has finally done just that. Petty and a group of investors including Andrew Murstein, of Medallion Financial Group and Douglas Bergeron, of DGB Investments, bought the racing assets of Richard Petty Motorsports today.
Earlier this season, Kasey Kahne signed a deal to drive for Hendrick Motorsports in 2012. Following nearly four months of speculation on Kahne’s plans for 2011 (Hendrick had the maximum number of teams (four) under contract in 2011, leaving Kahne without a ride); Red Bull Racing signed Kahne for one year.
Around that time, it was reported that RPM majority owner George Gillett Jr was in default on a $90 million loan. Gillett called the problem technical in nature, saying that RPM did not miss payments. But an anonymous source indicated that the issue was payment-related.
Two months after the Kahne-to-RBR deal was announced, Kahne was abruptly released from RPM, five races before the end of the season. Kahne was said to be frustrated with the team’s inability to finish races. At the Bank of America 500 at Charlotte Motor Speedway, Kahne wrecked his No. 9 Budweiser Ford after a brake failure.
The team repaired the car but Kahne, who was feeling ill, refused to get back in the car. After the race, he said:
I was told that I need to start doing my part. I can’t control the issues I’ve had this year. I don’t know how many parts I’ve broke, how many shifter handles, control arms, blowers, brakes. If I really thought about it, I could come up with all kinds of stuff. You can’t control that as a driver. I’m doing my part. I just need the car. I work as hard as anybody out there.
Kahne’s refusal to get in the car led many, including RPM, to question his commitment to the team. He was released the following week.
One day later, it was reported that RPM was in danger of going under. Team employees were told that they may not have jobs after the Tums Fast Relief 500 at Martinsville. Speedway. According to FoxSports.com, Roush Fenway Racing and Roush Yates engines, which supplied chassis and engines to RPM, respectively, stopped, and they repossessed equipment from the team.
There was speculation that the issue stemmed from a lawsuit over the sale of Liverpool Football Club of the Premier League. Gillett and his business partner, Tom Hicks, put the Liverpool Football Club up for sale because the team was in danger of going into bankruptcy.
RFR co-owner John W. Henry’s company, New England Sport Ventures, purchased the debt-ridden team for $477 million. But, Gillett attempted to block the sale because, he said, he had two higher bids for the team, despite the fact that the sale had been negotiated and agreed upon.
A Dallas judge issued a temporary restraining order against NESV and others. Meanwhile, Hicks filed a $1.6 billion lawsuit, which was later dropped, while he and Gillett worked frantically to recapture the team. The restraining order was dropped and the British High Court ordered Gillett and Hicks to drop their claim, clearing the way for NESV to purchase Liverpool.
The whole ordeal was described as heated, contentious, and bitter. It’s possible that hard feelings prevented Henry and Gillett from being able to continue to work together in NASCAR… at least initially.
Shortly after the report of RPM being in danger of being without cars and engines at the Amp Energy 500 at Talladega Superspeedway, it was reported that they did, in fact, have cars. And Jack Roush said that the team did not owe him any money, and that they were up-to-date on payments. Still, there was some uncertainty before the Kobalt Tools 500 at Phoenix International Raceway.
But, the sale of Liverpool was said to have jeopardized the finances of RPM. And, it was reported that lenders took majority interest away from Gillett and approved a plan for Petty to run the daily operations of the team.
Rumors also began to surface that the team owed Kahne money, and that was part of the reason he asked to be let go. However, Kahne denied that, saying that RPM met all its financial obligations to him.
After reports of the financial turmoil at RPM began to surface, Petty began looking for investors to help him take control of the race team that bore his name. Today, he did that officially.
Under the deal, Petty will serve as chairman, and will run the daily race operations. Petty said:
Today is a great day for me, my family, our fans and our wonderful sponsors. [They] have supported me through thick and thin and I thank them from the bottom of my heart.
We could not be happier to be able to acquire these assets together. … Ample working capital has been invested in the company to insure this great team and legend will not only continue to perform, but will thrive and be back in the winner’s circle.
Bergeron echoed Murstein’s sentiments, saying:
With Richard Petty’s unmatched name and reputation in the motorsports industry, I know this investment is well-timed to succeed. We are going to help put Richard Petty Motorsports back in Victory Lane.