DALE EARNHARDT INC./GINN RACING PRESS CONFERENCE Thursday, July 26, 2007, Brickyard Crossing Golf Course, Indianapolis Motor Speedway Guests: Max Siegel, Bobby Ginn, John Story, Jay Frye, Mark Martin, Paul Menard JEFF CHEW: Thank you, Ed. That...
DALE EARNHARDT INC./GINN RACING PRESS CONFERENCE
Thursday, July 26, 2007, Brickyard Crossing Golf Course, Indianapolis Motor Speedway
Guests: Max Siegel, Bobby Ginn, John Story, Jay Frye, Mark Martin, Paul Menard
JEFF CHEW: Thank you, Ed. That was great. At this point in time, I'd like to invite up one of our very important partners in the Chevrolet camp in our NASCAR series, I would like to invite Max Siegel, along with Bobby Ginn, John Story, Jay Frye, Mark Martin and Paul Menard. They would like to take a few minutes and spend some time with you to talk about some interesting changes that are going on in that organization.
MAX SIEGEL: Good afternoon, everybody. Thanks to Ed and Terry and Brent and Alba and Pat and all of our friends at Chevrolet. We really appreciate you accommodating us on such short notice to share some exciting news with you guys today. We appreciate your interest in what we're about to talk about, and the only thing I want to say before we start talking about the exciting news is that we will not get into the business details of our merger that we had today.
I'm here, and I'm very pleased to announce to you guys that after long, arduous negotiations, we have merged with Ginn Racing, and we're happy to have Bobby Ginn here and Jay Frye and Mark Martin as part of our family. We sent out an announcement, and we want to open up the floor for questions you might have to fill in the details for that particular transaction.
With that, I would just like to open it up for you guys. We haven't had much going on at DEI this year, so we thought we would create a transaction to give you guys something to talk about.
Q: When did the negotiations actually begin and what was it that actually (inaudible) to get it started?
SIEGEL: I'll take a quick stab and pass it on. The question is when did negotiations begin and what was the catalyst to get it started. I think that Bobby will attest to this that we really started serious negotiations last Tuesday. Teresa and I met with Bobby in New York City. I've been familiar with Jay Frye and the organization for years; DEI has been in negotiations with MB2 over the years. It's been a stated goal of ours all along to get to a four-car program. We want to be a world-class organization; we want to get more efficiency involved. We wanted to have a facility where we could run a state-of-the-art race shop. When the opportunity presented itself last week we became hot and heavy in negotiations. I think all of us up on the stage have been living together 24 hours a day ever since.
Q: What about (inaudible).
GINN: From our side, the catalyst was we were looking to continue to expand our operations. We had done well performance-wise early in the year, and we wanted to become a four-car team. So Max and I met with Teresa and John and Jay and were able to sit down and really compare what we had and what DEI had and what our goals and objectives were to build the very best we could build in a race team. It was a perfect fit. So from our side it was, you know, we saw an opportunity to elevate what we had worked all year to get to, to a higher level.
Q: For Mark Martin, Dale Jr. told me yesterday he was thrilled to be able to be kind of working with you, and you'll certainly be able to teach the young drivers. Can you talk about your role in all of this and how you feel about it?
MARK MARTIN: I'm really excited and certainly you guys wouldn't have a chance to go golfing today if I shared everything with you what I was feeling. But, you know, I'd like to start by saying when you open the doors to DEI and you step inside, if you're old-school like me, you realize the legacy and what it means. It means more to me more than to someone who didn't -- my character and myself as a driver has been, you know, was shaped by competing with Dale Earnhardt. And I have enormous respect and appreciation for everyone, for Teresa and everyone at DEI for their tireless efforts in continuing that legacy.
Obviously, Dale Jr. is real special in that, and the opportunity for me to continue to do what Bobby and I had a long-range plan, a five-year plan, and I'd have to say that we've taken a huge step to becoming a superpower. The way we got there was a little bit of a winding road and some unexpected, but certainly the opportunity to work with young drivers is still very important to me, and I have tremendous opportunity now to do that. With this merger it means that we can, you know, get stronger and I can do more of what I hoped I could do.
So that's just the tip of the iceberg. I'm very excited. There's a lot of opportunity for me here. It's a privilege for me, and I will, you know, I'll take that privilege and I'll take it very seriously that I'm, you know, a small part of representing Dale Earnhardt Incorporated. Because when we say DEI, you know, we say that quick, and you don't think about it. I've thought about it Monday when I stepped inside the door. It was my first time in that building. When I saw the pictures on the wall, it put me back to competing with him in the '80s and '90s, and it made me realize, you know, what was about to take place. So I'm excited about it.
Q: Mark, can you describe the rumors that you will be the driver of the No. 8 car at DEI next year? (Laughter)
MARTIN: Wow. I don't know how to answer that. You need to talk to these guys about that. I expect to be in the 01, guys. We haven't talked seriously. I'm pretty certain I'll be in the 01 car but, you know, I learned two years ago to not say, never say never. But it is my expectation to drive the 01 car and work with the team that I love so much. Ryan Pemberton and all those guys on that team are just fantastic. I started what, Jay, four months ago working on Jay real hard, I really want to drive for this team again next year, because our original plan didn't really call for that.
So I started, after I realized the value and came to love those guys so much, about the time the checkered flag flew at Daytona in February, I worked hard to try to assure myself to drive for those guys again in '08.
Q: Bobby, when you first took over the team there wasn't a lot of talk, "I'm buying a team, and I hope to merge with another team." What has happened to your business model for this sport from the time you bought MB2 to now?
GINN: Well, obviously our goal was to build a four-car team. It was pretty evident to us right from the beginning that if you were going to compete with the major race teams that are out there, a four-car team was pretty much something you had to have to be able to have the seat time, to have the racing time, to share the information that people had and the economics of it. I wasn't sure how we would get there, but I was pretty much committed -- not pretty much, I was committed to the concept that we had to be a four-car team. You couldn't keep in today's world of racing and particularly with what's happening with the COT and other things without being able to do that.
I look at this as a merger; I look at it as a way I can stay in racing, I look at it as a way our team can go to a much higher elevation than we would have been able to do in getting through this year. It's obvious that our team was not sponsored through a lot of the races on the two cars that we had. We had great sponsors in the Army and Waste Management, Certainteed and Principal, but we had unsold inventory. This merger, if you think about it, it makes all the sense in the world. We had teams, we actually had too many, if you put the two teams together, we had too many teams in the points, so we had to drop a team. That was a commitment that Max and myself and Teresa and John came to the conclusion on and Jay came to the conclusion on if we were going to do this, we were going to do it the way it should be done under NASCAR rules without bending the rules. And do it in a way that the team can go forward and elevate itself. It's unfair to the drivers to give them less than the best, and we felt like in the program that we were on, the five-year program we were on, that this was the best way that you could use our resources. I've committed to racing, I'm certainly -- certainly the Dale Earnhardt organization and Teresa and Max, they're certainly committed to racing. So put the two together, and I look at it that it's the rising tide floats all boats. Everybody comes out the better for it. And so I think our plan has not changed, it's been altered as circumstances arose. Then I said I think that's doing business -- in any business.
Q: This is for Max and Jay. You guys are obviously, Ginn and DEI were both scrambling trying to get to four cars by '08 or '09. When NASCAR introduced the four-car cap a couple years ago, the stated intent was to allow for opportunities for Bobby Ginn's to come into the sport and stop the proliferation of multi-car teams. It seems like it's having the opposite effect. It seems like four cars have become the benchmark now for teams in the Cup. Could you address that? Why is it so necessary now to have four cars and is this sort of the way the sport is going right now?
JAY FRYE: I think obviously to us, basically our team has graduated. It's really a complement to the Ginn organization to merge with a great organization like DEI. So the part about NASCAR, I think, it's very important to partner with the right situations and to go forward to survive and become a strong organization. So this is really what this has done for our organization. It is a huge compliment to be able to put something like this together as rapidly as it was done, basically in a week. So there's a great opportunity for us to go forward. With what other teams are doing, you know, I think there might be more of this going on in the sport. I think it's going to become apparent, like what Bobby said, you're going to have to be a four-car team. There's efficiencies in four cars. There's technology, all that type of thing, it increases, the better people you have, obviously the better ideas you have.
This is basically 400 great people getting together to create a great organization. So it's very exciting for us.
Q: Max, why four cars for DEI?
SIEGEL: I think everyone acknowledged that it's incredibly expensive undertaking to fund a single car. With the technology changes and the way the sport is changing, you can only lean on our corporate sponsor for so much. I know that my owners always had an eye toward diversification of the business. It's been my focus since being a part of DEI to invest our resources back into motorsports. I think having a multi-car team gives you economies of scale, it gives you opportunities from a technology standpoint to collect more information and data, and it helps you run a very efficient organization both from the manufacturing side to the competition side.
So for us it's always been in our growth plan to become a four-car team. We've been open to that opportunity all along. We were prepared when this opportunity presented itself to move very quickly and it made sense from a facility standpoint, from a personnel standpoint and from an economic standpoint to prepare DEI for 25 more years of success.
Q: This is for Mark. Mark, when Dale Jr. said he was going to leave the company, there was a lot of talk whether DEI would survive, where it would go. Now you're talking about maybe it being a power in the future. Kind of talk about where you see all what's happened now has elevated this team. Also, what do you think Dale Earnhardt would think of you driving for him?
MARTIN: Well, I think Dale would be pleased. You know, I regret that Dale Jr. will be moving on. At the same time, I look forward to learning from the current master, which is Martin Truex Jr., the way they're running right now. I'm sure he's going to be able to teach me some things. And working with Paul Menard, such a tremendous raw talent. You know, this is something that is exciting for me. I think Dale would be as pleased about it as I am. This is not something that I ever dreamed of happening. I couldn't have scripted it like this. I would have been -- I would have felt that would have been too optimistic. It is a tremendous opportunity for me.
The long-term plan that we had goes on and is very exciting. As far as what, you know, I think that was a knee-jerk reaction what you're saying about if someone was saying that, you know, that DEI was going to falter, that it was, you know, all built around Dale Jr. This is one major step that the company is doing to show that they're wrong and that they will emerge from this, everyone a winner, Dale Jr., DEI will move to the next chapter in their careers. You know, it's evident that they were wrong and jump to conclusions if they made that statement.
Q: This is for John and for Jay. The transition part, the transition, how hard is that? What has been done and how long do you think that process will take?
JOHN STORY: The transition has begun, at least the planning of it. Very quickly take you through it, I can tell you what our plans are on a high level. The 15 team will move into the building with the 01 car fairly quickly. Obviously that team is running very well. The 01 team is running very well; the 15 team is also running well. Put those two teams together, leaving the 1 and the 8 at DEI's facilities so that we don't disrupt anything they've got going on, both cars inside the Chase. We want to make sure we don't do anything that would perhaps take them out of the Chase. They'll stay there for the remainder of the year, in all likelihood. Move probably the week of Homestead to the new facility. We'll move all of our fabrication facilities, our fabrication departments will eventually move department by department over to the new facility. And then the existing DEI facility will be used for what we're hoping will be a two-car Busch program next year, a two-car Busch East program, and we're also looking now at getting back into the NASCAR Craftsman Truck Series, something one of our new drivers is pushing pretty hard. I would like to see some of the young guys. Mark talked a lot about some of the younger drivers, and Mark is exactly right: If we were to start a truck program, it gives a lot of our younger drivers a lot more opportunity. And it's something we've talked a lot about in the last week for those guys.
So I would say the transition is going to be very -- it's going to take a lot of work; it's not going to be very hard, I don't believe. Jay may address it as well. But the facility over at Bobby's building is incredible if you've ever seen it. It allows us something -- the big benefit to us is we have 240,000 square feet where we are at DEI and there's about 180,000 square feet in the new facility, but it's one large room which allows our four Cup teams to be on the same floor and it will just open up communication. And they're at most 10 minutes apart. They're very, very close together. So it will be nothing to go back and forth.
Q: Bobby, one big part of this was the inability to fund the 13 and the 14. How much harder is this business than you anticipated it would be one year ago today?
GINN: I don't think the business is harder. It clearly, the issues of sponsorship is getting more and more competitive. What I've seen in the last year is that the bigger teams are getting the bigger sponsors, and the teams that are trying to build themselves up have got to find sponsors, then match multiple sponsors together to get teams put together. We were reluctant to take one-off sponsors. We felt like it was important that in the long-term we got sponsors that would be with us that were major sponsors. The business itself was pretty simple.
We had great people over at the shop that we built, and I want to thank everyone for the hard work they did. There's a lot of people that went into making today possible to be in the position, as Jay said and Mark said, to be invited to merge with someone. There were a lot of teams out there that were discussing it, but to be able to move into a merger with DEI was the perfect fit for, I think, both teams because the shops and all the other things.
But it also goes to the sponsors. We're in the hospitality business, the marketing business. One thing that Teresa and I started talking about almost from the time we sat down together was how we were going to use the facilities and the B to B that my company has got, to help do what we started out to do in Ginn Racing. It wasn't important for us to have Ginn on the cars; it was important for us to take care of sponsors in our resorts and be able to use our B to B and building a relationship with sponsors that could really host golf tournaments and various other things that we bring to the table collectively now, you know, a united team that's got the best of shops, the best of drivers, the best of facilities, and two people, three people that really understand how to market. And I got a lesson in sponsorship, and I'm going to use that in the future to hopefully help Max and Teresa and John and all of them build it stronger.
Q: Just for Paul. As impactful as this announcement is, how is the complexion of your season immediately impacted by the decision for these two teams to merge?
PAUL MENARD: I mean first off, we can go race now. We're locked in. The start of the year we were obviously outside top 35, and it was a huge struggle to get in. We had to focus so much on qualifying; it obviously hurt our race performance. But I felt like when we got into the race, barring any problems on the car or whatever, we ran good. We had a bunch of top-20 finishes in the races we made.
I told Mark the other night I was going to pick his brain. He's a living legend, and I'm going to use him to the best I can. Like I said, we're going to go race now, and we can hopefully move up in points. We're 30th as it sits now. I think a top 20 would be pretty reasonable.
CHEW: Well, thank you, gentlemen. It's my understanding they will stay here available for some one-on-ones as soon as I'm done with some quick housekeeping responsibilities here. So thank you for sharing your time with us.