King Petty's new backer has big plans for both RPM and NASCAR
Last October, Richard Petty stood on the brink of NASCAR extinction. After his company's two mergers, multiple investors and changing manufacturers, a mountain of debt and poor performances signaled that, at 73, the King's reign of involvement in the sport was reaching a frustrating, financially disastrous end. The legend who had signed every autograph, took every picture for fans he came in contact with suddenly needed a hero of his own.
At the eleventh hour, that knight in shining armor arrived ... in a taxi. And now, the very future of not only the sport's most well-known name, but also its sense of direction could lie in how this rescuer handles his special passenger.
At first glance, NASCAR's newest power player doesn't seem like the type of man who'd step out and salvage the sport's cowboy-hat toting, country-loving, stereotypical Southern God. Long Island-born and raised around the streets of New York City, Andrew Murstein carries the accent well, a 46-year-old Yankees fan whose life revolves around boardrooms and baseball and men in suits talking money, not mechanics.
But dig a little deeper and you realize the man whose profile may define the next generation of NASCAR owners shares some striking similarities with the legend he saved. Both born into family businesses, their careers were outlined at an early age; they are two car nuts of a different color. While Petty drove the blue No. 43 to a record 200 race wins, Murstein was helping manage his company's flourishing taxi medallion business (think: permission to drive and own one) around New York City.
"My grandfather started by driving a cab back in 1937," Murstein explained. "We've always been in the industry. We own limousine companies, do a lot of financing, transportation."
It was a basic background on wheels, but for years that's all she wrote as Murstein focused on other aspects of a growing company. In 1994, he started the modern-day advertising on top of taxicabs you see in Manhattan today, which made him more relatable to the NASCAR marketing world than most. There was just one problem: the man in charge had no idea what he was missing, that his talents could be used in another world in which drivers also yell at each other, go around in circles and struggle with their sense of direction at times.
One passing comment changed all that.
"We were sold out on top of all the cabs that we had, so I went to the mayor of New York [Michael Bloomberg], and I said, "Mr. Mayor, we've sold all of the taxi tops, I want to bring additional revenue into the city and pay more taxes -- 'cause it's also good for us. If we're paying more taxes, we're making more money -- where else can I advertise on the taxi? Can I advertise on the hood, can I do the trunk, can I do it on the doors, and he shook his head and he said, 'Murstein, what do you think this is? NASCAR?'"
"It actually got me thinking: we're actually pretty good at bringing sponsorships to moving vehicles, and that, in a way [is] what part of NASCAR is -- selling advertising and sponsorships [on] cars."
So the idea clicked in his head, slowly cultivating as the fortune blossomed into a sum that Murstein could spend on a second love: sports. Invited by Petty to see a race in 2006, he and NASCAR legend had several flirtations toward a deal that proved two years in the making. By then, the taxi man had raised a reported $200 million-plus with a special interest acquisition company (SPAC) whose intended goal was entering the stick 'n' ball world. Baseball Hall of Famer Hank Aaron was among those listed on the board of directors. At the same time, Petty Enterprises' revenue was crumbling as longtime sponsor General Mills aligned with rival Richard Childress while Kyle Petty was nearing the end of his driving career. Desperate for money, Petty reached out to Murstein to finally close the deal.
He closed the door.
"I'd like to think of ourselves as buying low and selling high, realizing when values are at a frothy level," says Murstein. "In 2008 -- and time will show you that we were right -- the ad market was so robust, NASCAR was coming along and it was doing so well for so many years, and we took a step back and said, 'Are we buying at the top of the market?' And I thought the answer was 'yes,' so we took a step back and decided not to do it. In retrospect, obviously we were dead on."
There's likely some truth in that, as well as the reality of not accomplishing a lifetime goal: by the end of that '08 season, after flirtations with the NHL's Pittsburgh Penguins, a handful of NBA teams and even baseball's Chicago Cubs, Murstein came up empty-handed. The experience left him disappointed, but in looking back on the differences in each negotiation the NASCAR one stood out as perhaps the lone conversation that didn't end with that bitter taste of being fooled.
"If a pro owner is trying to sell his team, and it's an NHL team, say -- the NHL owner would tell you how wonderful his business is, how things are only going to get better and better in the sport and how the team is worth 10 times what he paid for it," he explained. "NASCAR was not like that. Richard and the Yates family basically said to me, this is a tough sport, you live sometimes hand-to-mouth. You lose a sponsor, and it sets you back years. And I appreciated that, that they were very honest people, and told you what they really felt and were not trying to sell us anything. Even though they were trying to sell us our companies, their reputations came first before their pocketbooks."
"That was a great thing to walk away from. There was always a connection with us, with NASCAR, and I was glad that opportunity came back."
The second chance surfaced in October 2010, when Petty seemed on the verge of losing his place in the sport. Former partner George Gillett, having sold his interest in the Liverpool soccer team, was still soaked in red ink, to the point chassis and engine provider Jack Roush was among several who hadn't been paid in months. Finally the Ford people had enough, a month's worth of public humiliation ensuing as Roush Fenway Racing would refuse to let Richard Petty Motorsports work on cars or let haulers leave until a day or two before races began, when either a small down payment or a promise for more would keep the lifeline open. But at the end of the season, the ultimatum was clear: pay up or pay the price.
It's unclear how much of the debt Murstein cleaned up to make the purchase, but it's certain the "buy low, sell high" mentality rang through in buying a company without much appreciable assets. All we know is the new company will cut from four cars to two while Petty gets directly involved for the first time in several years. It's a 50/50 working relationship, at least in public, as both parties emphasize commitment toward working together from the ground up.
"The last couple of years I've sort of been sitting on the sidelines without having much say-so in the business deal," says Petty. "And now they've put the pressure back on me. They've put me out front and I've got a little bit of say-so on what's going on -- I feel better about that."
This deal becomes the fourth investor/merger in as many years for Petty as Murstein and co-investor Douglas Bergeron, CEO of VeriFone, try to help the King begin again. That type of turnover would make any outsider nervous, but in this group everyone insists they'll be around to see this rebuilding process through.
"I met with Andy down in Florida and I can assure you that Andy is in it for the long haul," Ford Motorsports Director Jamie Allison said last month. "It's in the heart and there's a family approach to it."
"No Murstein man has ever been divorced," joked Murstein. "Once we commit to something, we stick with it. I don't know if we're good at marriage, or we're just OK with having our wives say the last two words of every argument, which is 'Yes, Dear.'"
But when it comes to the sport he's entered into, the man turns deadly serious about ideas and initiatives that aren't just wants but needs for the sport to enter the next chapter of its existence. The list of owners dwindling, and the ones left growing older (Rick Hendrick, Richard Childress, Roger Penske, Jack Roush and Joe Gibbs are all over 60), Murstein knows the key to the sport's future is getting others to recognize the value of NASCAR versus other sports, attracting investors as the price lowers to more reasonable levels during an economic and attendance decline.
"What I appreciate with the athletes in NASCAR is there's only one athlete per team," he explains, trying to justify the frugality versus, say, owning an NFL franchise. "It's hard to say this as a team owner, but I think they're underpaid. If you look at athletes in other sports -- take the NBA -- you have a 10th man on the bench, a guy who doesn't even see playing time, earning $5 million dollars a year. In NASCAR, only historic drivers are getting close to that amount, so you can be one of the top drivers in the world and your salary is only in that range. On the business side, that was one thing that attracted us most: the low payroll to go out and operate."
Of course, cheap drivers are only worth it if the fans pay to see them. To win them back, the owner believes in the "Have At It, Boys" philosophy established by NASCAR officials last year, taking the sport to a level of emotional bonding it once had.
"I think every sport needs to change," he said. "I think NASCAR needs some rivalries; boxing had Frazier/Ali; in the old days of NASCAR you had [David] Pearson and Petty. You don't have that today. So you can't create that; I think that's something that just will come, and I'm no expert by any means on NASCAR, but to me the reign of Jimmie Johnson -- he's a great guy, but I think that's all about to change in the next year or two. I think some new drivers are going to step up and win the Cup, take the title away from them."
Over time, Murstein hopes Cup titles will be earned by A.J. Allmendinger, the lone remnant of RPM's past, and Marcos Ambrose, Ford's brightest Australian hope. Can the two take that next step?
"Part of what's interesting about this sport and sports in general is you can go from the basement to the penthouse in the blink of an eye," Murstein said. "A.J.'s a star, I've seen his numbers get better and better every year. And Marcos, if he has some money behind him -- like he does now with us -- there's no telling how well he can do. My hope is that one of them makes the Chase this year, and that they're in the Winner's Circle at least once."
"Part of why we're going after a third or a fourth driver, though [in the future] is to stoke a friendly rivalry between them; subconsciously, I said that because I want the two of them to be on their toes and know we're not going to rest on our history at Petty, that we're going to go from two cars to four cars and get the best drivers that are out there."
Expansion is already on RPM's plate for 2012, Murstein looking towards growth to help boost a program whose No. 43 car hasn't won since Spring 1999 at Martinsville. Here's the catch: in a world full of 2012 free agents, where Carl Edwards, Brian Vickers, and Greg Biffle top the list of possibilities, this car owner is looking to break the mold by picking an unproven driver -- but not just any rookie.
"If there was one driver that was out there, I would go for something new and different," he says. "I think that's what the sport's lacking. There's no perfect answer for that, but a woman driver would be a terrific accomplishment for us. Whether it's someone like Danica [Patrick], or it's someone like Johanna Long. If there was an up-and-coming African-American driver, that would be my focal point. I want to make a game-changing decision in this sport to try to bring it to another level."
Perhaps that's where Murstein turns boldest, his business expertise leading him to believe it's possible to bring a track to New York City.
"It's beyond my control," he said. "And it's a bold statement, but I'd be able to deliver a track in the New York City area. I've had conversations with state officials, and they're going to be very open-minded about it because it's different today than it was years ago in Staten Island. They need more jobs, they need to hire people, get the tax rolls up, so there's plenty of sites."
"Like Aqueduct. There's a racetrack there that's not doing well. It's a lot of land, it's zoned for motor sports. That would be a good spot. Number two, next to Citi Field there's a whole area there where they have auto body shops, it's perfect for a NASCAR racetrack. The city's owned that land for many years, it's a blight in many people's lives in the neighborhood. It's right next to Citi Field, you could use the parking there, you could use the public transportation there, it's right near the airport. A terrific location -- that would work very well also. But it's not my decision."
For all his bravado, however, Murstein has yet to speak with NASCAR officials about his plans. CEO Brian France hasn't spoken to him since the purchase of the team, and president Mike Helton has engaged in just a "handful" of conversations with the new ownership group. But that doesn't bother a man whose biggest hope is that NASCAR doesn't meddle in the affairs of a rebuilding program.
"I look at it as you're always investing in the CEO of the company," he said of France. "It's them who takes you to another level. They'll take your investment from X dollars to Y dollars. So that's a big part of it here. There's no commissioner of the sport like there is in other sports, which is even better. Because commissioners of sports don't have any direct relationship to the bottom line; if a team does not do well, it doesn't really affect them. These commissioners make lots of money regardless of the profitability of the teams. NASCAR is different. NASCAR, for the most part, is family-owned, and therefore they make decisions for the sport that is best for the business of the sport and that is a good thing to know."
The entrance of Murstein alone can't automatically save Petty Enterprises. Between Bobby Ginn, J.D. Stacy or even Boston Ventures, the first of many suitors to try to save the King, millionaires with big dreams have entered the sport only to leave it with broken hearts, unpaid bills, and the stench of outright failure. The money, for now might be good, but the room at the top? It's smaller than ever in NASCAR these days, an elite group of four to five owners seemingly controlling everything within the sport.
"It is not like the Medallion Group came along and all those guys came in and we thought we were saved," claims A.J. Allmendinger, the lone remaining driver from 2010, who remains the realist of the group. "It is a steppingstone. You have to keep building... we aren't out of the woods. Everything isn't rainbows and blue skies."
Whether they'll get there? That now belongs in the hands of Murstein, the latest businessman trying to convince a world of Fortune 500 companies about the plus side of getting involved in the sport. It's NASCAR, in 2011, and the Southern stereotype now lands in the hands of Wall Street types like him, men in suits with big ideas who could ultimately determine NASCAR's upward mobility.