Petty deal may bring end to NASCAR's merger craze (cont'd)

"I'm more concerned with why the investment firms are doing it," Muhleman said. "An investment bank buys a company to resell it. These people aren't posing necessarily as investment bankers trying to make an acquisition they can resell. In fact, you would discount that as a reason to buy any of these teams, to resell them. So why are they buying it? Do they think the team can make a bottom-line profit? Well, if you don't have to repay the money they paid to buy it, if they're willing to disregard that, then the profits will probably start to flow fairly quickly. But most businesses charge off debt, as an expense in addition to all the other expenses. That would be the question to ask any of the people who buy these things -- what's your return in investment strategy? I think it's easier to understand the Pettys' or [Ray] Evernham's objective and benefit than sometimes it is the investor."

The primary goal of a Richard Petty or an Evernham, people who sold majority interest in their organizations to other entities, is clear -- to enhance competitiveness, to win more races and contend for championships. But there might be another reason as well. With no franchising in NASCAR, the only equity team owners have is their shop and equipment. Some team owners have faced sad endings, their few assets auctioned off for pennies on the dollar after decades of dedication and hard work. This recent wave of mergers might allow team owners to build something of a retirement nest egg, if the money paid by the incoming partner isn't committed directly to racing operations.

"With the Pettys or even the Roushes, one of the things they get out of this is they're cashing in their life's work in a way they couldn't otherwise," Muhleman said. "If you're trying to make a profit racing, and put away a big fat paycheck for a rainy day, that's a hard way to go. Because some season when you wreck 14 cars, you're not going to have any payday. But on this one, if [investors] are paying for what backers call blue sky -- the name and the stake -- this is their ante. They'll pay $20 million, or whatever the number. Is there any obligation for the Pettys to spend any of that money? Maybe not. So that $20 million goes into the bank. Never in Richard's lifetime or Kyle's are they going to put that kind of money away out of operating a winning stock car team."

That's not always the case; when he bought half of Waltrip's team last year, Kauffman stated specifically that his money would go directly toward racing operations. While these outside investors often speak of being race fans and wanting to win races -- as new Petty CEO David Zucker did Wednesday -- their companies exist to make money. And making money in NASCAR is difficult, even for winning teams. After all, how do you make $1 million in racing? As the old adage says, you start with $2 million.

These merger deals could include provisions that call for the new owners to commit additional money each year toward operating costs. They might included pieces of expensive new equipment like a seven-post shaker rig. The new owners might have a business plan that entails making back the money they spent to buy the team. All this in a sport beholden to corporate sponsorship, where race purses are small, driver salaries are high, and money doesn't come easy.

"If they're not doing well, those folks who are used to eating oysters up there in Boston are not going to be happy," Muhleman said. "It goes back to, what's the owner's strategy? Can they make money? Yes, they're going to have more fun, but how much fun can you have for $10 million a year? We'll just have to wait and see how it works out. It's more likely the investor is going to have buyer's remorse than the seller is going to have seller's remorse. Because they should have gotten a decent price. If they didn't get a decent price, then shame on them."