DEI: Negotiations in the Fast Lane
Nascar is big business and its biggest star is undoubtedly Dale Earnhardt, Jr. Dale Jr.'s contract is set to expire at the end of the 2007 season and he is now requesting a majority ownership in his father's namesake company, DEI. DEI is run by his step-mother Teresa Earnhardt. Dale, Sr. may have left her in charge but Dale, Jr. appears to be holding the cards.
But can you imagine this happening in any other sport? (Yes, I do consider Nascar a sport).
- Do you think Peyton Manning will request majority ownership of the Colts?
- Did Michael Jordan demand majority ownership of the Bulls?
- Did Babe Ruth get majority ownership of the Yankees?
What about Nascar itself?
- Are Gordon and Stewart entitled to majority ownership of their race teams? (Gordon does have some ownership). And what about Jimmie Johnson then, isn't he left out in the cold with Gordon owning a piece of his car. (Cup Champions all, something Dale, Jr. has not accomplished).
- Even imagine if Dale, Jr. were driving for Childress right now? Could he reasonably demand majority ownership?
In the business world does the owner give up majority ownership to the star salesperson just because they threaten to go somewhere else? And this is business after all.
So after all these examples you might imagine I would advocate that Teresa should send Dale, Jr. packing, right?
Wrong.
Sure his father built DEI. But Dale, Jr. is DEI now. And 49 percent of a substantial sum of money is a whole lot better than 100 percent of a much smaller amount. (Of course, keep in mind Dale, Sr.'s licensing rights still bring in millions). But there is no replacement for Dale Earnhardt, Jr. After all, hasn't she seen the number of beer cans that have been thrown at Talladega over the last couple of years when he hasn't won?
As Tony Stewart said, "DEI without Dale Earnhardt, Jr. is a museum."
I say give him the keys to the garage. He has earned it.
Read what others are saying. Here, here and here.
Hey Rush:
NASCAR is so unique, and so is this situation It's the "One Man Brand" concept to the fullest. Dale Jr. has the money, power, and influence now to start a race team that could dwarf DEI within a few years. His step mom knows that most certainly. Jeff Gordon could possibly do the same and leave Hendrick...but at this stage of the game and the accelerating cost of NASCAR, he'd be distracted from racing for sure. I'm sure you saw the Rousch just sold 50% of its organization to "remain competitive". I haven't heard the figures on that but get out your pen and add many zeros. Every one of these drivers will become owners in the future and they'll be competing head to head against a DEI with JR. at the helm. That would cause me sleepless nights.