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December 17, 2008
No Wonder Teams Go Broke and Close!
Prior to their merger with DEI, Ginn Racing had a contract with Hendrick Motorsports to lease engines in 2007 and 2008. It's that contract that forms the basis of a lawsuit in which HMS is suing DEI for a $1.5 million termination fee. The amount at which HMS charged Ginn to lease engines was $12.8 million in 2007 and had Ginn still been around in 2008 they would have been billed $13.7 million for engines for three Cup teams and one Nationwide team. If it costs that much to lease engines, the cost for teams to build their own engines have to be astronomical!
But that's not all. One provision in the contract said:
No engine could be used in competition or testing without an HMS-designated engine tuner, billed at a cost of $800 per day plus travel (including room and board). Ginn also had to pay for the annual NASCAR license and credential for each engine tuner.
Which means that Ginn would be paying thousands per day every single race weekend for at least one engine tuner and possibly more depending on where the Nationwide Series was racing and if the same engine tuner could attend to all the leased engines. In addition, HMS didn't guarantee the quality of the engines they were providing. That's understandable to a degree since even the best of organizations like HMS are going to suffer engine failures no matter how well-built the engines are. But I can't help but think when an organization is spending nearly $13 million on something they shouldn't have to worry about failures.
If this is the standard in terms of cost and provisions for engine leasing no wonder some teams are having trouble surviving.
Posted by silverdsl at December 17, 2008 04:40 PM