Volume IX, Issue 6, Page 130

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All FAQ’ed Up

As you would expect DRO has been flooded with e-mailed letters about the sale and rearrangement of NHRA from our readers. The subject of the letters are evenly divided between those asking what is going to happen to the sport should the sale go through, those that are sure they know what will happen, those that continue to believe that the NHRA management knows best, and the conspiracy theorists who are positive the whole deal is just a scam that will allow those on the NHRA board of directors to line their pockets with the proceeds of the sale.

The fact is that the only people who really know the complete and actual details and facts of the deal are NHRA’s Tom Compton and his board of directors and HD Partners’ Eddie Hartenstein and his board -- and they aren’t talking because they can’t by law. So, with the disclaimer that I’ve not talked personally with either Mr. Compton or Mr. Hartenstein regarding the deal but have consulted some very well informed sources about the proposed deal, I’ll try to answer some of our readers FAQ’s.

Q: As a member of the NHRA for over 30 years, when will I get my share of the money?

This one is easy to answer. Get out your dictionary and compare the definitions of ownership and membership. NHRA members, no matter how long they’ve belonged to the organization, aren’t going to get any money. Sorry. Back in 1980 or ‘81 the members at that time signed away their rights to have a say in the NHRA and after that NHRA lawyers made sure members would never get the chance to have a say again.

Q: Do you think that the sale of the NHRA had anything to do with the Darrell Russell lawsuit? Did they sell the assets so that they wouldn’t have to pay should they lose the lawsuit?

Anything is possible, but that scenario is highly unlikely because (1) the Russell lawsuit went to court yesterday (June 11) and (2) the sale of the NHRA won’t be final for at least five to seven months so (3) the NHRA that Mrs. Russell is suing remains a company that by its own admission has liquid assets valued at over $120 million. If anything, the proposed sale of NHRA’s Pro assets may guarantee that the suit will be settled before the case goes to a jury. I wouldn’t be surprised if HDP has demanded that the lawsuit be settled before they conclude the sale.

Q: How will this proposed sale affect sportsman racing?

HDP had no interest in the NHRA sportsman program. In other words, they saw no real or potential value in acquiring the classes. So Wally Parks made sure the proposed agreement guaranteed that sportsman racing would be part of NHRA’s (NHRA Pro Racing) national event program for the next 25 years. And the NHRA will pay the HDP group $800,000 a year for that program. Once the sale is consummated and the NHRA is shed of debt and race tracks, they should be able to promote the sportsman series more aggressively than ever especially with $100 million in cash reserves.

Q: What is to prevent HDP from selling off the NHRA properties including IRP, the offices in Glendora, and the rest of the tracks once the deal is completed?

Nothing! They’ll own them and, unless there is some codicil in the contract preventing them from liquidating assets (which I seriously doubt) the HD Partners can and will do whatever is necessary to get their shareholders a return on their investment (ROI). That could include selling the properties and tracks to the highest bidder, although you might think that it’d make sense for them retain at least the U.S. Nationals facility.

Q: Will we be seeing live Pay per View of NHRA events on DirecTV soon?

Only Mr. Hartenstein and the DirecTV company know that answer, but Tom Compton negotiated a fairly significant extension of the NHRA contract with ESPN to broadcast the NHRA races. So, unless HD Partners were to buy ESPN out of that contract, an NHRA broadcast on PPV that would compete with a free broadcast on ESPN doesn’t seem likely.

Q: Have the NHRA pro assets actually been purchased?

Technically not yet. There are some legal hoops both parties have to jump through before the deal is legally done, but neither Tom Compton nor Eddie Hartenstein would have made this kind of public announcement if there were any doubt that it was a done deal. Those that own shares in HD Partners have to approve the sale, but you can bet that Mr. Hartenstein and his partners own a majority of the outstanding stock and approval is just a formality.

This leaves me with some questions I can’t answer at the present time, so I’m just wondering.

Just Wondering How can the media, the racers, track owners or corporate sponsors ever really trust anyone -- and I mean anyone -- on the NHRA board of directors regardless of which board they end up on? They’ve obviously been keeping the truth from all of us for years by stating repeatedly that no part of the NHRA was for sale. In a letter widely circulated on the Internet NHRA board member and Wally Parks confidant Dick Wells writes: “We said we're not for sale to those people who would destroy what has been built up for more than 50 years. We waited for the right offer, the $121 million ….” Not for sale??

Just Wondering … I’m sure it’s just a bookkeeping deal but will someone please explain to me the approximately $20 million discrepancy between the NHRA’s gross sales numbers on their 2004 and ‘05 tax returns and what they listed on the sale presentation? Under the heading “NHRA Pro Racing Financial Overview” gross revenues for the NHRA are listed at $82 million in 2004 and $87 million in 2005. The NHRA tax returns for both of those years list gross revenues for the NHRA at $101,845, 942 in 2004 and $107,109, 062 in 2005. I’m not accusing anyone of anything, I’m just confused.

Just Wondering … Billy Meyer coined the phrase back in ’85, “Take the NHRA to the next level.” Just exactly what is the mythical “next level”? Please tell me, I’ve got to know!

Just Wondering … What can Tom Compton’s management team do to increase NHRA drag racing’s popularity and profits exponentially that they couldn’t do before? Mr. Compton won’t have the autonomy he had as the CEO of a not-for-profit company as the CEO of a for profit, publicly held company with Wall Street investors and company shareholders.

Just Wondering … If being acquired by a publicly owned, for-profit company is part of the solution to take the NHRA to the next level, why hasn’t that worked for the IHRA which was acquired by the then public Clear Channel Communications Company a few years back?

Just Wondering … Are the HDP folks going to follow the example set by NASCAR by investing in the tracks they own and financing the purchase or building of new ones? They’re going to need a lot more investors to accomplish that.

Just Wondering … Will Mr. Hartenstein take an active roll in the management of his series or be content to let the NHRA team run the program?

Just Wondering….How the current teams and their sponsors feel about adding two or three more races to their schedule at a cost to them approaching $250,000. Who's going to pick up that bill?

Just Wondering… Does NHRA actually own the rights to market John Force, Ashley Force, Tony Schumacher, or Erica Enders likeness without them getting recompensed for the use? 


jeffburk@dragracingonline.com

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