Struggling teams turn to each other in this 'new era' (cont'd)

In the Earnhardt Ganassi deal, DEI will continue to exist as a business that represents Earnhardt's legacy, licensing and other ventures. Ganassi Racing will exist for its IndyCar Series and Grand Am teams. Earnhardt Ganassi Racing will be a third entity representing the NASCAR teams and will use facilities at both locations.

Neither of the operations have expressed an interest in selling their Charlotte-area shops, which leaves open the possibility that they could break into their own camps when the economy turns around. Neither side is talking publicly, but sources say Earnhardt Ganassi Racing's ability to compete on the track will dictate the team's future as a joint operation.

With so many teams restructuring, more than 500 workers have been laid off to cut costs; personnel is the single greatest expense for teams.

"None of this really comes as a surprise," said Jim Hunter, NASCAR's vice president of corporate communications and a veteran track promoter. "Most of these teams have been struggling for years. If your entire business model is built on sponsorship and then you don't have it, the business model will go through a correction."

NASCAR typically keeps its distance from team-related travails, insisting they are independent contractors. The sanctioning body did institute a ban on testing race cars at any track that holds NASCAR-sanctioned races as a way to reduce costs, and Hunter said NASCAR is considering a rule that would limit the number of crew members at the track on race day, another cost-cutting measure for teams.

Ultimately, though, "the people who complain are the same people spending anything to go faster," Hunter said. "When it comes to a team's finances and payrolls, it's not our place to get involved."

Granted, most of the teams scrambling to survive are fighting for scraps. Until something changes, only four teams truly matter from a competitive standpoint: Hendrick Motorsports, Roush Fenway Racing, Joe Gibbs Racing and Richard Childress Racing. All 12 of the drivers in the 2008 Chase came from those four operations.

They're also about the only teams that haven't experienced some level of upheaval because their cars are fully sponsored going into 2009. Each of those teams went through a modest round of layoffs, about 20 employees or fewer per team, but nothing like what the other teams experienced.

Two of those teams have investors that supercharged their operations. Jack Roush sold half of his team in 2007 to Henry, the Boston Red Sox owner, for $50 million. In 2003, Childress sold a minority share to Chartwell Investments, a private-equity firm that remains a partner.

Petty Enterprises tried to go in that direction this past June when it sold the race team and the Richard Petty Driving Experience to a private equity, Boston Ventures, for $40 to $50 million. But without enough sponsorship, Boston Ventures burned through cash to keep the team afloat until it sold the No. 43 and the Petty intellectual property to Gillett Evernham Motorsports.

"Boston Ventures came in at a very unfortunate time, just before the recession," said Bill Reid, a partner at Chartwell Investments. "Anyone looking to invest has to understand that timing is critical. Our confidence in the sport is not shaken, but I'm sure what's happened is going to scare people."

"We haven't seen nearly as many private equities exploring acquisitions as we did in the past," Newmark said.

One person who isn't scared is Mike Held, a 20-year veteran of the sport who has been a team co-owner in the past and currently runs Co-Pilott, a California-based motorsports marketing agency representing brands such as Menards and Sony.

He teamed with business partner Marty Gaunt to buy Bill Davis Racing, a single-car Toyota team, two days before Christmas, although they have not committed to run a car in 2009 until they secure sponsorship.

"Most of the people who know me say I'm crazy or I'm a genius, but they aren't sure which," Held said with a laugh.

He's certainly driving against rush-hour traffic at a time economically when many owners are looking to get out or reduce their role. But the way he sees it, the next generation of owners have to come from somewhere.

Hendrick is the youngest of the top four owners at 59, while Childress is 63, Roush 66 and Gibbs 68. None of them appear to be planning their exit, but as Held says: "These guys have to pass the baton, and who's going to be there to take it?"

Michael Smith is a reporter with SportsBusiness Journal.