Motorcycle Forum / General / Racing / September 2008

http://roadracingworld.com/news/article/?article=34316

Heh, actually there was!

FIRST PERSON/OPINION

By John Ulrich

The idea of an alternative series in racing is nothing new.

If recent history is any guide, the issues are always control and/or
money, and when it's over there’s always a big tab somebody has to pay.

In the mid-1990s, it was AMA versus Roger Edmondson, Part 1. Edmondson
had brought his Supersport classes to the AMA, and ran AMA Pro road
racing as a joint venture with the AMA. During his tenure, the program
made money for the first time, and the net was split 50/50 between
Edmondson and the AMA. According to sworn testimony in a subsequent
lawsuit, at one point when the net was $600,000 and the 50/50 split was
$300,000 each, Patti DiPietro pointed out that AMA could keep all the
money if Edmondson was cut out of the deal.

Again, according to sworn testimony at trial, American Honda’s Ray
Blank (then a sitting member of the AMA Board of Directors), told
Edmondson, “We can take this from you and there’s nothing you can do
about it.”

Edmondson was shown the door. He then started the NASB and signed up
most of the same tracks that had been running AMA Nationals. In
response the AMA, a non-profit membership organization, established a
for-profit subsidiary known as “Paradama Inc.” (its new Board of
Directors included Ray Blank) and scheduled races conflicting with
already announced NASB races.

(Despite being a “for profit” subsidiary and Blank’s stated hope that
profits from Paradama’s AMA Pro Racing would support the AMA’s
legislative and other programs, what Paradama actually did was waste
AMA money that could have been put to better use. In the first nine
years of Paradama’s existence, the AMA burned about $6.2 million of
members’ money propping up Paradama itself and mopping up its
misadventures.)

To quote from the decision rendered by the Fourth Circuit Court of
Appeal in the case, “After Edmondson had secured commitments from these
three (Mid-Ohio, Road America and Brainerd) track owners and several
lesser tracks to run his new series, Paradama’s Chairman of the Board,
Cary Agajanian, directly contacted the marketing manager for Mid-Ohio
Race Track (sic), John Szymanski, and threatened to cancel other
important contracts between the defendants and the track if the track
honored its commitment to Edmondson. The Mid-Ohio track canceled its
contract with Edmondson in response to the threat. The Mid-Ohio Track’s
(sic) cancellation in turn caused cancellations by the Road America
Race Track (sic) and Brainerd Race Track (sic). As a result of these
events, Edmondson’s new business never got off the ground.”

The Circuit Court decision also stated, “Somewhere along the way, the
AMA decided it wanted to assume control of Edmondson’s interest in the
1994 joint venture without compensating him…Tom Mueller, a vice
president of the AMA, directed Roy Janson, the then head of the AMA’s
racing department, to prepare a memorandum (Exhibit 223) regarding how
the AMA could effect a secret takeover of Edmondson’s interest in the
1994 joint venture…In early April 1994, the AMA implemented the secret
takeover plan outlined in Janson’s memorandum with a few revisions.”

Among other things done in the battle to motivate tracks to break their
contracts with Edmondson and NASB, Paradama scheduled conflicting
events (albeit at second-string tracks) on the same dates as the NASB
Nationals scheduled at the involved tracks.

The end result? The litigation mentioned earlier. AMA finally settled
with Edmondson by paying him $3 million--after spending a few more
million of members’ money on defense.

Almost 10 years later, it was AMA vs. Clear Channel, with an outfit
known as Jam Sports used for leverage.

This time, the Board of Directors of Paradama--including, as fate would
have it, American Honda’s Ray Blank--decided it would be a good idea to
cut Clear Channel (which had locked up virtually every suitable venue
with multi-year contracts) out of AMA Supercross and replace it with
Jam Sports, a concert promoter with no motorsports experience and a
list of proposed second-string venues.

AMA Pro Racing, the dba of Paradama, went so far as to announce that
the deal was done, despite the fact that to many observers it made no
sense and, according to an analysis done by Roadracingworld.com at the
time, would mean giving up an estimated $19.5 million in revenue over
the term of the agreement, comparing the Jam Sports deal with the
proposed Clear Channel renewal. In response, Clear Channel did a deal
with the World Supercross rights holder Dorna and sanctioned its series
with the FIM (instead of the AMA) and declared it the Supercross World
Championship. At the 11th hour, when the deal cut by the Paradama Board
went to the Board of Directors of the AMA (aka, The Mother Ship) for
final approval, Blank switched sides and supported renewing the
Supercross contract with Clear Channel. (Which is why the Supercross
Championship is now sanctioned by both FIM and AMA, and includes a
couple of rounds in Canada.)

It later turned out that Mel Harris, another member of the AMA Board of
Directors and a Vice President of American Suzuki Motor Corp., had been
working behind the scenes to keep the AMA and Clear Channel deal alive
despite a signed Letter of Intent with Jam Sports that granted an
exclusive negotiating period. What that means is, nobody from the AMA
could be talking to Clear Channel during the time period in which Jam
Sports was granted exclusive negotiating rights. Davey Coombs, another
AMA Director and the man behind Racer X and Road Racer X magazines, was
doing the same thing. My personal belief is that Ray Blank was also
talking to Clear Channel, but the two AMA Directors who did their
dealing in a way which could be discovered and documented were Harris
and Coombs, and they were both forced to resign from the AMA Board of
Directors. (In all honestly, who can blame them for what they did?
Neither of them was on the Paradama Board, and neither wanted a
CART/IRL type split in AMA Supercross. Davey told me he did what he did
out of concern for the good of the sport, and I believe him. I just
wish Ray Blank and his fellow Paradama Directors had figured that out
in the first place.) The bottom line? The AMA Board rejected the
Paradama/Jam Sports deal and Jam Sports sued. A jury later awarded Jam
Sports a $90 million judgement against Clear Channel (later reduced to
around $7 million) while AMA had to pay another $283,000 or so of the
members’ money to Jam Sports, plus plenty more in legal fees.

Fast forward to present day. The Motorcycle Industry Council, under the
guidance of a Board of Directors that includes Ray Blank, has announced
that it has launched its own for-profit subsidiary and will run its own
road racing series, USSB. Maybe the MIC Board figures the new
subsidiary will make money the MIC can use for its Discover Today’s
Motorcycling (DTM) PR programs run by Ty van Hooydonk, also known as
the new USSB Managing Director.

Maybe it’s just leverage, a way to negotiate for control by prying away
racetracks that have signed on with Roger Edmondson and the new version
of AMA Pro Racing presented by Daytona Motorsports Group (DMG) after
its purchase of Paradama assets from the AMA earlier this year.

That would kind of suck for anybody involved in the charade who thinks
they’re working on something real vs. something that can, in the words
of MIC President Tim Buche, be put “on the shelf if we get some
resolution,” i.e., control. On the other hand, when the Supercross
battle was all over, Jam Sports did OK on the financial end.

What would be funny if it was not tragic, is the apparent
willingingness of seasoned motorcycle industry executives who opposed
(and ultimately prevented) splitting Supercross into a CART/IRL battle
a handful of years ago, to support just that scenario in AMA Pro road
racing now.

All that’s really left is settling who will pay, when they will pay,
and how much they will pay.