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BK Racing to be sold to satisfy creditors

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CHARLOTTE, N.C. — BK Racing will be sold, the court-approved trustee operating the team said after a hearing Tuesday. Discussions are underway.

“We’re selling a race team, we’re not just selling a charter,’’ said Matt Smith, the trustee operating the team while it is in Chapter 11 bankruptcy. “So the charter is the largest asset in this case but it’s not the only asset. This is a viable race team and we’re trying to prove that each and every week. We’re meeting obligations of NASCAR by showing up and competing in good faith.

“This isn’t just a liquidation. What brings the best result to all creditors is the sale of a race team not just the sale of an asset.”

Smith would not reveal any potential suitors but said: “We’re looking at buyers that we would think do right by this team, that would be good for NASCAR, good for creditors and good for the employees. We’re looking for the right buyer that has the right offer for this team.”

Smith said that there have been conversations with “parties about their interest and trying to understand what their interest is and how they might be interested in putting an offer together.”

Any sale would have to be approved by the court and the trustee would have to show that he got the best price for the sale. Smith had no timetable for when the sale could be completed but said it would be “as soon as it is practical and works for the buyers and works for the requirement of the bankruptcy court.” Smith said that any buyer would get the team and not the liabilities the team faces.

“I think there needs to be a change in ownership in the team, and I think this process will do that,” Smith said. “I’m working really, really hard to make sure we get the right outcome for this team.”

Ron Devine was among those who started the team. BK Racing made its Cup debut in 2012. Devine had been a part of the ownership since. With mounting bills, including $9.25 million owed to Union Bank & Trust, BK Racing filed for Chapter 11 bankruptcy on Feb. 15, three days before the Daytona 500. Devine said he made the filing to keep the bank from taking control of the team’s charter and selling it to reclaim money from loans owned.

Smith was approved by the court on March 28 to take over as trustee and operate the team, relieving Devine of his duties.

Gray Gaulding has driven the team’s No. 23 car all season. Gaulding finished 31st Sunday at Michigan International Speedway. The team is 35th in the car owner standings and ranks ahead of only one other team that has a charter.

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Kevin Harvick says NASCAR should share any gambling revenue with teams

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Former Cup champion Kevin Harvick wants NASCAR to share any gambling revenue with teams and not keep the money itself.

The Supreme Court’s decision Monday to strike down a 1992 federal law that banned commercial sports betting has states seeking to allow such gaming as soon as possible and leagues looking to collect money off it.

“I want my team to be taken care of,” Harvick said Tuesday night on his SiriusXM NASCAR Radio show. “That’s really the main thing that kind of falls into line here is something of a share in revenue comes down the pipe and even if it is a 1 percent share of revenue, I don’t want it all to go to the league. I think it should be shared with the teams.’’

Harvick said on his show “Happy Hours” that any revenue would be good for teams and help make them — and their charters — more valuable.

“I want to see a business model that works for the current owners and takes these charters from being what they are today to being what something of an NBA franchise or an NFL franchise (is),’’ said Harvick, who closed his racing team after the 2011 season. “I’m not saying from a dollar standpoint but just from (the point that) somebody that can afford to come in and own a race team to say ‘I want to do that because it’s really not going to cost me that much money and down the road it might be worth ‘X’ as we go further down the line.’

“That’s the point we have to get to if you want to make it a real league and make it so that the charters are worth what they need to be. This would be another example of getting that revenue stream a little bit better than what it is today.’’

The NBA has stated it seeks an “integrity fee” of 1 percent of the amount wagered on any of its events. Other leagues also are expected to seek such payment.

Harvick, who has won a series-high five races this year, said NASCAR shouldn’t be left out.

“If we could do something like that, that would be great for everybody,’’ he said.

Harvick also wants to see other changes to the revenue stream for teams. He noted the TV money that comes into the sport. Currently, tracks collect 65 percent, teams receive 25 percent and NASCAR takes 10 percent of the TV money.

International Speedway Corp., citing leading industry sources, stated in its 2017 annual report that the sport’s TV package is valued $8.2 billion over 10 years. The deal goes through the 2024 season.

ISC stated in its 2017 annual report that it received approximately $337.4 million in fiscal year 2017 from TV broadcast and ancillary rights fees.

Speedway Motorsports Inc. stated in its 2017 annual report that it expects its broadcasting revenue to be about $217 million for 2018.

“I think that there should be a bigger piece of the pie that comes out of the TV money that goes to the teams because that’s really the root of Cup racing,” Harvick said. “If you don’t have the teams, and you don’t have those owners that are in there in the garage wanting to be there, then we all don’t have anything to race.’’

Michael Waltrip Racing folded after the 2015 season. Roush Fenway Racing downsized from four to three teams in 2013 and then cut back to two teams in 2017. Richard Childress Racing went from three to two teams for this season. Furniture Row Racing went from two teams to one for this year. BK Racing filed Chapter 11 bankruptcy in February and recently listed total liabilities as $37.7 million.

Team Penske grew from two to three Cup teams this year. StarCom Racing debuted with two races last year and is running the full season this year, leasing a charter from Richard Childress Racing.

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Friday 5: Passion on and off the track

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There’s been much to talk about this season but some of the conversation has centered more on what has happened off the track.

Maybe Kyle Busch can help return the talk to the track this weekend at Martinsville Speedway.

Admittedly, three of the first five races having a margin of victory of 2.6 seconds or more (last week Martin Truex Jr. won by 11.6 seconds) takes away some of the excitement for some even as Kevin Harvick won three races in a row.

Other than Harvick’s dominance, some of the buzzy topics this season has been Harvick talking about the need to build up grassroots racing, why Busch wasn’t interviewed on TV after last weekend’s race at Auto Club (and then his responses to Twitter trolls) and how Austin Dillon and members of his team got tattoos on their rear end after winning the Daytona 500.

All worthy topics to generate conversation, but the discussion on the racing hasn’t been as paramount to this point.

Martinsville comes just in time to change that. The series is back at the track for the first time since Denny Hamlin’s contact knocked Chase Elliott out of the lead late in the fall race and fans saw a level of emotion they hadn’t seen from Elliott. If you don’t recall, Busch went on to win that race.

Last spring had its excitement with Ricky Stenhouse Jr. bumping Busch out of the way to stay on the lead lap, opening the door for Elliott to win a stage. Later in that race, Brad Keselowski and Kyle Busch engaged in a spellbinding duel before Keselowski pulled away and went on to win. Busch finished second.

Right now, Busch is one of the main drivers who stirs the drink in a sport that has seen fan favorites Dale Earnhardt Jr., Jeff Gordon and Tony Stewart, among others, retire.

Even Earnhardt said as much on his podcast this week.

“The one thing that I’ve learned over the last several years … was the sport needs people like Kyle,’’ Earnhardt said on the Dale Jr. Download. “Even if you don’t like the guy, the sport needs all kinds of personalities, and we can’t have 40 heroes out there racing.

“We can’t have 40 Captain Americas out there competing against each other. You gotta have a Batman, you gotta have a Robin, you gotta have a Superman, you gotta have a Joker. You gotta have all of that to create storylines and create rivalries.”

The sport’s best rivalry is Keselowski and Busch. It’s one that simmers and then explodes, whether it is in their duel at Martinsville last year, their contact at Watkins Glen, Busch’s Twitter response to Keselowski after Keselowski’s comments about Toyota’s dominance entering the playoffs or Busch simply saying at the news conference before last year’s Miami championship race of Busch: “Sometimes you just don’t like a guy.’’

This weekend could be a chance for such feelings to bubble or maybe from somebody else. With an off weekend afterward, it would give fans something to talk about.

2. An impassioned defense

BK Racing car owner Ron Devine was combative at times, calling the procedure “nonsense” while on the stand for about 2 1/2 hours Thursday in federal bankruptcy court.

Devine, who turned to address the judge at times when answering questions from attorneys, was on the stand defending his right to run BK Racing despite millions of dollars in losses in recent years and unpaid bills.

Union Bank & Trust, which claims it is owed more than $8 million in loans from Devine, seeks to have a trustee put in charge of the team. Union Bank & Trust stated in documents filed in U.S. Bankruptcy court that BK Racing had lost about $30 million from 2014-16.

MORE: Court filing lists expenses, revenue for each race 

MORE: Rare peek into race purses, payouts

Devine said on the stand that the team had signed a sponsor agreement Wednesday with EarthWater for $3.6 million for the rest of the season. The amount is to be paid in cash, shares of stock and product. Devine said that if the judge ruled to have a bank-appointed trustee run the team, the sponsor would not remain, noting a line that in the agreement that the deal was null and void if Devine was not running the team.

Devine, who said his organization had “low teens” in terms of full-time employees, stated that those employees would quit if a trustee took over. Devine said the only reason the bank wanted a trustee was to sell the team’s charter. He accused the bank of soliciting bids for the charter.

Turning to the judge, Devine said of having a trustee run the team instead of him: “There’s no way he can operate the team. He has no knowledge and ability to operate my team.’’

Devine estimated he had spent half a million dollars of his own money since December to offset deficits at BK Racing. During the testimony, Devine confirmed that he sold one of the team’s charters before the 2017 season to Front Row Motorsports for $2 million.

“I can run this race team,’’ Devine said in court.

The matter has been continued until Wednesday.

3. West Coast review

While Kevin Harvick dominated the West Coast swing, winning two of the three races, Kyle Busch had the best average finish for the events at Las Vegas, Phoenix and Fontana.

Of course, Harvick’s 35th-place finish Sunday after contact with Kyle Larson ruined his average finish.

Here’s who had the best average finish for the three races:

2.3 — Kyle Busch

3.3 — Martin Truex Jr.

7.7 — Kyle Larson

8.0 — Erik Jones

8.3 — Brad Keselowski

Here’s who scored the most points in the three races:

147 — Martin Truex Jr.

146 — Kyle Busch

125 — Brad Keselowski

120 — Kyle Larson

115 — Kevin Harvick

Kevin Harvick, Kyle Busch and Martin Truex Jr. combined to lead 75.2 percent of the laps run on the West Coast swing. Harvick led 252 laps, Busch led 200 laps and Truex led 134 laps.

4. In case you missed it …

Only three drivers scored a top-10 finish in each of the three West Coast swing races: Kyle Busch, Martin Truex Jr. and Erik Jones.

5. Back in time

Jimmie Johnson has nine career Martinsville victories (in 32 starts for a winning percentage of 28.1 percent) but has two top-10 finishes — including a win in October 2016 — in the last seven starts there. He’s led only in two of those seven races. He once had a streak of 17 consecutive top-10 finishes there, including six wins.

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BK Racing court filing reveals expenses, revenue for each race

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Court documents filed Thursday show that BK Racing made a net income of $359,619 through the Phoenix Cup race.

The documents are part of BK Racing’s Chapter 11 bankruptcy case. The team filed Chapter bankruptcy Feb. 15.

COURT DOCUMENTS: Click here to view the BK Racing filing

MORE: Peek into race purses under charter system

A hearing Thursday afternoon in U.S. Bankruptcy Court, Western District of North Carolina, on a motion by Union Bank & Trust to have a trustee take over the team’s operations was continued until Wednesday. BK Racing car owner Ron Devine was on the stand for more than two hours.

The bank claims it is owned more than $8 million in loan payments and seeks to have a trustee oversee BK Racing’s finances “to an end to the Debtor’s years of mismanagement,’’ according to court documents from the bank.

In its motion to appoint a trustee, Union Bank filed documents stating that the team lost nearly $30 million from 2014-16.

The updated budget filed Thursday on behalf of BK Racing breaks down income and expense for each of the first four points races and anticipated income and expenses the rest of the season.

The document shows that BK Racing had $50,000 sponsorship for the Daytona 500, $10,000 sponsorship each for the Atlanta and Las Vegas races and $30,000 sponsorship for the Phoenix race.

BK Racing listed prize money as:

$29,946 for its qualifying race at Daytona

$428,794 for finishing 20th in the Daytona 500

$91,528 for finishing 36th at Atlanta

$98,754 for finishing 33rd at Las Vegas

$82,000 for finishing 34th at Phoenix

The high payout for the Daytona 500 has given BK Racing more than $350,000 in net income. For other races, though, the team’s net income has been small.

At Phoenix, the team listed a net income of $790.

The team had $120,250 in revenue for the Phoenix weekend. It was broken down this way:

$82,000 in prize money

$30,000 in sponsorship

$8,250 in other revenue

The team listed $119,460 in expenses that weekend. Among the team’s expenses for Phoenix:

$35,000 for its engine lease

$21,000 for salary and wages

$10,525 for airfare for team personnel

$9,000 for tires

$9,000 for contract payroll

Those expenses alone totaled $84,525, exceeding what the team made in prize money and showing how important sponsorship is in the sport.

BK Racing provided a budget for the remaining races. The team’s budgeted expense was more than $103,000 for every race. That included everything from engine lease and tire bills to hotels, meals, salary and wages, entry fees, insurance, payroll taxes and more.

The most expensive race is the Daytona 500 at $135,502, which included an engine lease of $50,000. Next listed was Auto Club Speedway at $125,606, which included $9,500 in airfare and $10,000 in tires.

BK Racing’s prize money estimates on remaining races is based on a 30th-place finish in each event.

BK Racing lists its sponsorship budget for future races as $50,000 per race, progressing to $100,000 and to $150,000 for the final 13 races. That would give the team a sponsorship budget of $3.505 million.

Court documents filed by Union Bank & Trust show that BK Racing collected $1.5 million in sponsorship in 2016 and $1.05 million in sponsorship in 2015.

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Rare peek into race purses, payouts under charter system

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A new filing before a Thursday bankruptcy court hearing for BK Racing provided a window into the payouts of NASCAR’s charter structure.

The system, which went into effect two years ago, guaranteed revenues and race attendance for 36 cars. Funding was based on four categories: entering a race, historical performance over the past three seasons, the traditional points fund (with extra cash) and race results. It was partly intended to help teams by providing more predictable revenue guarantees for budget projections.

MORE: Court filing reveals expenses, revenue for each race

Prior to the 2016 season, each race had a purse that paid out for finishing position and contingency awards (which rewarded the most competitive teams). Under the new system, money paid for results was based solely on finishing position, and NASCAR abolished publishing purse totals and race winnings in box scores.

The BK Racing document, which was filed in U.S. Bankruptcy Court, Western District of North Carolina, sheds some light on those now shielded numbers. It lists the total purse for every race during the 2018 season and also lists BK Racing’s prize money for each of the first four races in the No. 23 Toyota with driver Gray Gaulding.

–Daytona 500 (total purse $15.466 million): The team earned $428,794 for finishing 20th.

–Atlanta Motor Speedway (total purse $2.477 million): The team earned $91,528 for 36th.

–Las Vegas Motor Speedway (total purse $2.647 million): The team earned $98,754 for 33rd.

–ISM Raceway near Phoenix (total purse: $1.459 million): The team earned $82,000 for 34th.

Though the formula was different for structuring the purse and race payouts, here were the total purses and payouts for those positions in 2015, the last year that earnings were publicly made available.

–Daytona 500: Total purse $19.8 million; $348,803 for 20th

–Atlanta: Total purse $6.3 million; $101,370 for 36th

–Las Vegas: Total purse $6.5 million; $118,724 for 33rd

–Phoenix: Total purse $5.1 million; $74,805 for 34th

A hearing on the BK Racing bankruptcy case will be held in Charlotte at 2 p.m. Thursday.

Click here to view the BK Racing filing.