They just don't call it a 'stock' ticker for nothing

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NASCAR teams drawing interest from major corporations is nothing new; in fact, it's been the norm since STP came on board with Richard Petty back in the early 1970s. It's the recent addition of banking and financial firms that has everyone's eyebrows lifting.

It seems every week that a new investment banking firm is indicating interest in purchasing a share of a NASCAR team, and that is something that can be good for the sport in general, or it could be a Gordian knot of epic proportions.

News that Robert Yates turned down an offer to buy a portion of Robert Yates Racing from one such company was interesting in at least one regard: the company's reported interest in purchasing the stake was to leverage the share for later sale.

In other words, the company buys into a team for X number of millions of dollars, then takes the team public through an initial public offering of stock in said team. It's a classic investment strategy designed to take advantage of NASCAR's popularity, cashing in on the series' success by potentially doubling the initial investment.

Sounds good on the face, doesn't it? But in the end, it could be interesting to see what actually happens.

NASCAR teams are individual companies, operated by individuals in the main, and that offers a substantial amount of control over the day-to-day operations. With the addition of investors, such as Jack Roush's deal with Fenway Group and the impending sale of a stake in Evernham Motorsports to Montreal businessman George Gillett Jr., it becomes a bunch more complicated.

If the teams took on one of the investment firms as a partner, and the firm ended up selling its stake in the team to the public, you would have a linear corporate structure on one side and an investor-owned coalition on the other, and depending on the split, a rather confusing organizational chart.

There is much in NASCAR these days that interests investment firms. The sport's popularity is high despite recent plateaus in attendance and television ratings. It is remarkably stable on the management side; the France family controls NASCAR, no one else, and a stable marketplace is prized by investors for its income potential.

Plus, there are revenue streams that, while connected to NASCAR through licensing and other contracts, go unshared with the sanctioning body, like apparel, die-cast and other merchandise.

That's a pretty big pond to play in if you have money to invest, and that's what's drawing the attention of investment banking firms.

On the flip side, it's costing more and more to field a top-notch racing organization. The days of the single big sponsor are just about over, unless that sponsor is a Fortune 100 company that can cast lines into all the revenue streams without undue effort and supports its investment on a number of different levels.

The average primary sponsorship these days is in the $14 million-$20 million range for the season. That's a large chunk of cash, to say the least. Several teams have gone to the main primary/major associate plan, where the primary colors run the majority of the races and the major associates buy certain races in almost an a la carte fashion.

Plus, these folks with the money expect to make money on their investment -- remember, Return on Investment (ROI) is the Holy Grail these days. Individual team fortunes are notoriously fickle on the competition side, and while it's not as volatile as the stock market is on a day-to-day basis, it can be that way on a season-to-season basis. Just look at Evernham and Yates, for example.

The other negative about investment banking firms becoming involved with NASCAR is that the majority of them know next to nothing about NASCAR, other than the financials. Running a racing team is nothing like running NASCAR, and while the industry as a whole is fairly robust, the numbers can be deceiving.

Team owners that have been approached by investment banking firms have commented on this, and have rebuffed their advances for that very reason: the numbers didn't make sense from the team side.

Sure, $50 million is $50 million, and who couldn't use $50 million, right? Well, the cost of accepting the money is that you relinquish some modicum of control. If you're giving up that control to someone, and that someone doesn't know your business, then that's a recipe for disaster.

Sooner or later, a team will take an offer and the changing face of the business side of NASCAR will start to evolve even faster. Fenway Sports Group is in the business of sports, and so is Gillett; the other firms are not, and that makes all the difference in the world.

Welcome to the jungle.