Friday 5: Silly season, charter sales and track news

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Not since 2009 have two former Cup champions switched teams — but might that take place for next season?

With 12 races left this year, former champions and free agents Martin Truex Jr. and Kurt Busch have not stated where they will race in 2019.

Truex has won 20 percent of the Cup races since last season, finished in the top five 56.7 percent of the time and scored a top 10 in more than two-thirds of those races.

It would seem natural that the 38-year-old reigning Cup champion will stay with Furniture Row Racing, but everything changed when 5-hour Energy announced July 18 it would end its involvement in NASCAR after this season. 5-hour Energy became a co-primary sponsor for 30 Cup races this season on the No. 78 team with Bass Pro Shops/Tracker Boats.

Two weeks ago at Bristol, Truex couldn’t give a number when asked to estimate a percentage of remaining with the team after this season.

“Right now, we need sponsorship,” Truex said then. “That’s as simple as it gets.”

Busch, 40, signed a one-year extension with Stewart-Haas Racing in December, after Monster Energy decided to return as a team sponsor. Busch, the 2004 Cup champ, has said he’s talked to multiple teams about a ride for next year.

Busch won two weeks ago at Bristol to assure a playoff spot. He has four top-five finishes and 15 top-10 results this season — nearly bettering what he did last season for SHR.

The last time two drivers with Cup championships switched teams for the same season was 2009 when Tony Stewart and Bobby Labonte changed teams.

Stewart, a two-time champion at the time, went from Joe Gibbs Racing to Haas CNC Racing, which was renamed Stewart-Haas Racing. He won his third title in 2011 for that organization. Labonte, who won the 2000 crown, moved from Petty Enterprises to Hall of Fame Racing in 2009.

2. Boom or Bust?

When a bankruptcy judge approved the sale of BK Racing — and its charter — to Front Row Motorsports last week, it marked the ninth time that a charter has been sold since the system was created before the start of the 2016 season.

One charter has been sold twice in that period, meaning eight separate charters (22.2 percent) have been sold in less than three years. Many more have been leased. Teams can lease a charter once in five years.

The charter system debuted in February 2016 after about 18 months of discussions between NASCAR and team owners. NASCAR announced there would be 36 charters, guaranteeing each holder a starting spot in each race. The charter system also guarantees a set amount of income that isn’t solely based on a team’s finishing position in a race. Performance the past three years, a fixed amount per race and year-end point fund money also are factored.

The point was that teams could better budget what they would receive during the season and have a better idea of how much sponsorship they needed.

Also, the charter system was billed as a way to provide greater value to teams and led to the creation of a Team Owners Council, similar to what Cup drivers have. The Team Owners Council since has played a key role in the discussion of rule changes.

The money paid for charters has been kept quiet. Court documents from BK Racing’s bankruptcy case state that BK Racing sold a charter to Front Row Motorsports for $2 million in December 2016.

The bankruptcy court approved Front Row Motorsports’ purchase of BK Racing for $2.08 million. That included the charter, cars, equipment and other assets, meaning the charter sold for less than the one BK Racing sold in December 2016.

The bankruptcy court approved the bidding process for the BK Racing sale. A price of $1.8 million from Mike Beam, president of GMS Racing, was set as the minimum bid for the charter and certain assets. At the auction, Front Row Motorsports was the only bidder and topped Beam’s total.

Less than three years into the charter system, the movement of charters shows the difficulties with owning a team. The hope was that it would lead to a way for new investors to join the sport — and it could happen in the future.

But it takes more than a charter. There is all the equipment that must be purchased, personnel hired and the need for an alliance to have any hope of being competitive. Then there’s the sponsorship that a team needs to secure. That’s even a big jump for an Xfinity team to make if it wants to move to Cup.

With all that, it’s not surprising at this point that the charters have been passed among those that already own teams.

Here are the charters that have been sold since the charter system was created:

2016 season — Michael Waltrip Racing sold a charter to Stewart-Haas Racing for the No. 41 car.

2016 — Michael Waltrip Racing sold a charter to Joe Gibbs Racing for the No. 19 car.

2017 season — Premium Motorsports sold a charter to Furniture Row Racing for the No. 77 car.

2017 — BK Racing sold a charter to Front Row Motorsports for $2 million, according to court documents.

2017 — HScott Motorsports sold a charter to Premium Motorsports for the No. 15 car.

2017 — Tommy Baldwin Racing sold a charter to Leavine Family Racing for the No. 95 car.

2018 season — Furniture Row Racing sold the No. 77 car’s charter to JTG Daugherty for the No. 37 car.

2018 — Roush Fenway Racing sold a charter to Team Penske for the No. 12 car.

2018 — BK Racing charter sold in bankruptcy court to Front Row Motorsports for $2.08 million, including various assets.

3. Track News – Rockingham

The Richmond County Daily Journal reported that Rockingham Properties, LLC was expected to finalize paperwork Thursday on the purchase of Rockingham Speedway.

The paper did not list a price but stated that county tax administrator Vagas Jackson said the property was valued at $2,993,324. The paper reported that Dan Lovenheim, who owns restaurants and bars in and around Raleigh, North Carolina, is the majority owner of Rockingham Properties LLC.

Lovenheim did not provide the paper with plans for the track only to say they are “remarkably encompassing.”

4. Track News – Lucas Oil Raceway

The Indianapolis Star reported Thursday that Lucas Oil Raceway, which includes the drag strip that will host the upcoming U.S. Nationals, a road course and an oval track where the NASCAR Xfinity and Camping World Truck Series used to race, is in the midst of a multimillion-dollar renovation.

The first phase is focused on the drag strip.

Future plans call for improvements to the 0.686-mile oval so that it can host more stock car races.

“I think it’s no secret that we’d like to see other forms of stock car racing, be it different forms of NASCAR racing that come back out here,” Kasey Coler, the track’s general manager, told the newspaper. “That’s long term what we’d like to see.”

5. Did you know …

Darlington Raceway is Ryan Newman’s best track based on average finish. He has an average finish of 11.68 there. His next best track is Rockingham. He had an average finish of 12.4 there.

Since 2009, Newman and Denny Hamlin have the most top-10 finishes at Darlington Raceway with seven each. Next are Kevin Harvick, Kyle Busch, Matt Kenseth and Martin Truex Jr. with six each.

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Timothy Peters to drive for Spencer Gallagher this weekend

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GMS Racing announced Friday morning that Timothy Peters will replace Spencer Gallagher for this weekend’s Camping World Truck Series race at Canadian Tire Motorsports Park after Gallagher re-injured his shoulder Thursday.

Peters, a 10-time winner in the Truck Series, has competed in one race this season. He placed seventh at Martinsville. Peters was a full-time driver in the series from 2009-16, finishing as high as second in the points in 2012.

“From a preexisting shoulder injury, Spencer Gallagher will not be in the seat of the No. 25 this weekend at Canadian Tire Motorsports Park after re-injuring his shoulder during a Thursday workout session,” GMS Racing President Mike Beam said in a statement. “Going to such a technical course, a driver requires full mobility. Gallagher will return to Las Vegas to work with his personal physical therapist. Timothy Peters will climb behind the wheel this weekend in Canada with further information regarding the No. 25 Chevrolet being released at a later date.”

Said Peters: “I really appreciate Mike and everyone at GMS Racing giving me a call to fill-in for Spencer. I do hate the circumstances that he is not able to get behind the wheel this weekend, but I do appreciate the call. It’s nice to know that there are people out there that believe in my abilities and I have a shot to come over and drive top-of-the-line equipment this weekend for GMS.”

 

Bankruptcy judge approves sale of BK Racing to Front Row Motorsports

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CHARLOTTE, N.C. — A day after he put his team in Chapter 11 bankruptcy, BK Racing owner Ron Devine alternated between being combative and conciliatory as he spoke to reporters outside his hauler in the Daytona International Speedway garage.

Losses in the millions, a pile of debt and a bank eager to get more than $8 million back in loans and accrued interest led Devine to go to court to protect his team and its charter — the one item that gave his underfunded team its greatest value.

The paperwork was filed, according to court documents, about 30 minutes before a Feb. 15 hearing in Mecklenburg County Superior Court. That hearing was in regards to Union Bank & Trust’s request of a receiver to operate BK Racing and a preliminary injunction to prevent the team from selling or leasing its charter.

“We’ll get it resolved,” Devine said 48 hours before the Daytona 500. “I promise you, we will get it resolved. The bank wants it resolved, and I want it resolved. We will get it resolved. And I’ll see you in Homestead (for the season finale).

“We will be in Homestead.”

Devine was right six months ago. It got resolved.

But left him without a team.

Judge J. Craig Whitley approved the sale of BK Racing — a team Devine helped bring to Cup in 2012 — to Front Row Motorsports for $2.08 million on Thursday.

In announcing his decision, Whitley called the matter “just a bad situation and we’re doing the best we can with it. I don’t expect anybody to be delighted by it, but it is what it is.”

Devine and the team’s engine supplier objected to the sale Thursday. During an early recess, Devine spoke with the attorney for Union Bank & Trust. After the brief discussion, Devine shook his head, walked away and said: “Then that will do it. Jesus Christ.”

Devine and the team’s engine builder urged the judge to let the team continue through the rest of the season and be sold then. Devine stated that he would be an interested buyer then. Devine, it was noted in court, had made an unqualified bid to get the team back.

On the stand, Devine made a last-minute appeal to the judge not to sell the team: “This is wrong to occur during the season. There is the ability to run the team through the end of the season.”

Devine called it a “misconception that this team is on the brink of collapse.”

Trustee Matt Smith, appointed by the court to take over the team from Devine in late March, said Thursday morning on the stand that “cash continues to be very, very tight.”

Smith also said on the stand that “without sponsorship, I run about $30,000 to $50,000 in the hole” per race. Smith expressed concerns that he would be able to run the team through the end of the season.

The charter requires teams to compete each weekend. If the team missed races, it would allow NASCAR to take the charter back and leave BK Racing with little value. While Smith and many others expressed disappointment that the bidding didn’t generate any more money, Smith recommended the sale take place.

When Devine questioned Smith on cross examination about how long it took for him to provide info on the team’s financial status, Smith said: “The business records you had were atrocious.”

After the hearing, Devine said: “That trustee at the very least ought to be embarrassed. He should have stopped it with one bidder. I just think he was in over his head.”

The judge didn’t see it that way and awarded the charter and assets to Front Row Motorsports. The judge also approved the sale of equipment and 19 chassis (primarily in storage and in various stages of readiness) for $265,000 to Obaika Racing and a hauler to Rick Ware Racing for $35,000.

Front Row Motorsports gets BK Racing’s charter, which guarantees a starting spot in every race and a set amount of money per event, and some of its assets, including the cars it is running. Front Row Motorsports was expected to close on the sale as early as Thursday afternoon. All of BK Racing’s employees will be retained as part of the agreement.

Front Row Motorsports now owns both charters that went to BK Racing when the charter system was created before the 2016 season. BK Racing sold a charter to Front Row Motorsports in December 2016 for $2 million, a sale that did not include any other assets.

Front Row Motorsports, a Ford team will run the former BK Racing team, a Toyota team, as a separate entity through the end of the season.

Jerry Freeze, general manager of Front Row Motorsports who attended court Thursday, said the team will not change manufacturers after this season. He also said he did not know who the driver of the BK team will be for next weekend’s Southern 500 at Darlington Raceway. Or if the car number will change from No. 23 to No. 35, a number Front Row Motorsports has used for a third entry at times.

Freeze said the team wants to expand to three full-time cars but admits it will be challenging to find the sponsorship at this point to do so for next year. An option for the team would be to lease two of its charters to other teams — it already leases a charter to TriStar Motorsports and could continue that relationship. Charters can be leased once every five years.

“You’ve got to imagine we’ve been assessing the market for who would need to lease a charter next year and who might be interested in buying one of the other charters that we have,” Freeze said after the hearing. “So we think there’s a market out there for sure. It was worth taking the chance and opportunity to see if we could get this one.”

Front Row Motorsports’ bid topped a bid from Mike Beam, president of GMS Racing.

That a Cup team’s fate was settled in a U.S. Bankruptcy courtroom showed how far BK Racing had fallen. Six weeks after Devine filed Chapter 11 bankruptcy, he lost control of the team when Smith was assigned as trustee. Devine called the judge’s action then “a sad day for BK.’’

It wouldn’t have to come to that had the team been more fiscally responsible. Court documents show that team lost $29.5 million from 2014-16. Court documents show that the team “budgeted” for a loss of $1.358 million in 2017 in what was described as a “skeletal budget.”

Then, there was the millions owed Union Bank & Trust for the numerous loans (now up to more than $9 million). The IRS filed court documents on March 12 that stated it had a secured claim of $2.5 million and a priority claim of $328,792.47 owed. A former employee and current employee at the time testified in March about having paychecks bounce last year. A former employee said he had a paycheck bounce in September 2017, November 2017 and December 2017 before leaving the team.

In May, court documents listed secured claims against the team at $31.6 million. That included $15 million to the Virginia Racers Group, which included Devine and started the team. Court documents also listed unsecured claims at $773,569.17 and non-priority unsecured claims at more than $5 million.

Smith decided this summer that it was in the best interest to sell the team.

“One of the reasons, and I know that Mr. Devine is in the room and probably doesn’t want to hear this, but I think one of the reasons this team is in trouble is it had the wrong owner,” Smith said in court on July 26. “So I believe the right owner, transition of ownership, would be the best thing for this team.”

Smith stated that day that “the cash flow (for the team) is exceptionally tight” and questioned then about going beyond the end of the season.

With all the money spent, BK Racing rarely ran anywhere close to the front. The organization, which fielded up to four cars at times, had three top-10 finishes in its history.

Sunday, in its last race as BK Racing, Blake Jones finished 27th, 15 laps behind the leaders. Only three other cars that made it to the finish ran fewer laps than Jones.

“It’s a tough business,” Devine said in February at Daytona when asked why he didn’t align with another team to help defray costs. “I think it’s an expensive learning curve. I also think … you’ve got to decide where you are taking the company and I took it down a very independent route, which probably wasn’t the smartest (thing).”

But Devine was not deterred Thursday. As he stood outside the federal courthouse awaiting an Uber ride to the airport, he said he still wanted to be in NASCAR as an owner.

“I’ve got other options,” he said.

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BK Racing to be sold Aug. 20; Ron Devine plans to bid for team

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CHARLOTTE, N.C. — BK Racing owner Ron Devine said during a bankruptcy court hearing Thursday that he plans to make a bid to reclaim his NASCAR Cup team.

A bankruptcy judge approved a plan for BK Racing to be sold Aug. 20 (with bids due Aug. 13). A hearing is scheduled Aug. 21 so the court can approve the winning bidder.

There is a bid for $1.8 million for the team from Mike Beam, president of GMS Racing. Bids will start from there for BK Racing. Joining Beam in court Thursday as an observer was GMS Xfinity driver Spencer Gallagher.

Devine put BK Racing in Chapter 11 bankruptcy on Feb. 15. He said a day later that he made the move to prevent Union Bank and Trust, which claims it is owned more $9 million, from taking over the team and selling the charter. The IRS also claims it is owed money, along with several other groups and individuals.

A trustee was approved by the court to oversee the team, removing Devine from power, on March 28. The trustee has since determined that selling the team is the best route.

Trustee Matthew Smith defended his reasoning for selling the team on Tuesday by telling the court: “One of the reasons, and I know that Mr. Devine is in the room and probably doesn’t want to hear this, but I think one of the reasons this team is in trouble is it had the wrong owner. So I believe the right owner, transition of ownership, would be the best thing for this team.”

Smith provided testimony on Tuesday that “the cash flow (for the team) is exceptionally tight.”

He also said on the stand: “My current cash forecast … does show sufficient cash if I needed to go to the end of the season. I do not have the ability to run much past the end of the season.”

Smith said in court that since news of the plan to be sold, he has heard from 29 parties interested in BK Racing.

In court Thursday, Devine blamed the bank for the move to sell the team next month.

“It’s a fire drill …. driven by the bank,” Devine said.

BK Racing debuted in Cup in 2012. Among those who have driven for the team are Landon Cassill, Alex Bowman, Ryan Truex, Matt DiBenedetto, David Ragan, Corey LaJoie and Gray Gaulding.

The organization has three career top-10 finishes. The organization is running only the No. 23 car this season. That car ranks 34th among the 36 charter teams in owner points.

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