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Court Records show Ginn Racing paid $12.8 million to lease engines in 2007
http://www.scenedaily.com/news/articles/sprintcupseries/Ginn_Racing...
If you’re looking to lease engines from Hendrick Motorsports for a NASCAR operation, you’d better be prepared to open up your wallet.
A legal battle being played out in North Carolina courts is offering rare insight into the usually secretive world of the sport’s finances as the Hendrick operation seeks compensation from the Ginn Racing team that wound up as part of Dale Earnhardt Inc. in 2007.
According to a contract filed as part of the case, the Hendrick engine lease agreement with Ginn Racing called for Ginn to pay a base rent of $12.8 million in 2007 and $13.7 million in 2008 to lease engines for its three Sprint Cup teams and one team in what is now the Nationwide Series.
The fee covered Cup engines for 36 race events and up to nine tests or special events and Nationwide engines for 35 events, according to the contract filed as part of a lawsuit by HMS Holdings against Ginn Racing and Dale Earnhardt Inc. over the termination fees resulting from the Ginn-DEI merger in July 2007.
The contract was dated Nov. 29, 2006, and signed Dec. 19, 2006.
The lawsuit is still pending in North Carolina Superior Court in Charlotte. HMS is asking for a $1.5 million fee as part of the termination agreement.
Among the contract provisions:
• No engine could be used in competition or testing without an HMS-designated engine tuner, billed at a cost of $800 per day plus travel (including room and board). Ginn also had to pay for the annual NASCAR license and credential for each engine tuner.
• Ginn had to provide access to its allocation of Chevrolet engine parts received as part of its Chevrolet contract.
• Ginn would have to pay for any special labor requests and parts at the standard HMS rate and would have to pay for all spark plugs and oil purchased if HMS did not get those for free through its other contracts.
• Each engine would be returned to HMS after each race, and only HMS employees would be allowed to tear down the engine.
• Forty percent of the annual leasing fee was due Jan. 15, with another 30 percent due May 15, and the final 30 percent due Aug. 15. Ginn would receive a discount of $640,000 if it paid its full 2007 fee by Jan. 15, 2007, and a discount of $685,000 if it paid its full 2008 fee by Jan. 15, 2008.
• HMS did not guarantee the quality of the engines.
• If HMS opted to change manufacturers for the 2008 season by June 30, 2007, Ginn could elect to continue the agreement for HMS to provide Chevrolet engines at a 20 percent reduced rate, or Ginn could cancel the contract with no refunds of any payments that had been made.
• If Ginn opted to change manufacturers for 2008 by June 30, 2007, it could cancel the contract for $1.5 million
If you’re looking to lease engines from Hendrick Motorsports for a NASCAR operation, you’d better be prepared to open up your wallet.
A legal battle being played out in North Carolina courts is offering rare insight into the usually secretive world of the sport’s finances as the Hendrick operation seeks compensation from the Ginn Racing team that wound up as part of Dale Earnhardt Inc. in 2007.
According to a contract filed as part of the case, the Hendrick engine lease agreement with Ginn Racing called for Ginn to pay a base rent of $12.8 million in 2007 and $13.7 million in 2008 to lease engines for its three Sprint Cup teams and one team in what is now the Nationwide Series.
The fee covered Cup engines for 36 race events and up to nine tests or special events and Nationwide engines for 35 events, according to the contract filed as part of a lawsuit by HMS Holdings against Ginn Racing and Dale Earnhardt Inc. over the termination fees resulting from the Ginn-DEI merger in July 2007.
The contract was dated Nov. 29, 2006, and signed Dec. 19, 2006.
The lawsuit is still pending in North Carolina Superior Court in Charlotte. HMS is asking for a $1.5 million fee as part of the termination agreement.
Among the contract provisions:
• No engine could be used in competition or testing without an HMS-designated engine tuner, billed at a cost of $800 per day plus travel (including room and board). Ginn also had to pay for the annual NASCAR license and credential for each engine tuner.
• Ginn had to provide access to its allocation of Chevrolet engine parts received as part of its Chevrolet contract.
• Ginn would have to pay for any special labor requests and parts at the standard HMS rate and would have to pay for all spark plugs and oil purchased if HMS did not get those for free through its other contracts.
• Each engine would be returned to HMS after each race, and only HMS employees would be allowed to tear down the engine.
• Forty percent of the annual leasing fee was due Jan. 15, with another 30 percent due May 15, and the final 30 percent due Aug. 15. Ginn would receive a discount of $640,000 if it paid its full 2007 fee by Jan. 15, 2007, and a discount of $685,000 if it paid its full 2008 fee by Jan. 15, 2008.
• HMS did not guarantee the quality of the engines.
• If HMS opted to change manufacturers for the 2008 season by June 30, 2007, Ginn could elect to continue the agreement for HMS to provide Chevrolet engines at a 20 percent reduced rate, or Ginn could cancel the contract with no refunds of any payments that had been made.
• If Ginn opted to change manufacturers for 2008 by June 30, 2007, it could cancel the contract for $1.5 million
Views: 11
Replies to This Discussion
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Permalink Reply by Beagle7 on
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I just don't see how/why Hendrick is pursuing this
1. He is suing the company started by the father of a driver IN HIS STABLE ...LMAO
2. the above sane reasoning ignored...there is a little thing called privity of contract. Itis lacking here. The termination fee was a K term between Ginn and HMS....barring specific provisional language stating otherwise (which has not been presented), DEI does not assume said provision..
Kinda like how AT&T got screwed. The did not inherit the rights and promises under the contract by Cingular and Nascar...no Privity of K (though I was shocked there was no language in the grandfather clause negotiated by Cingular)
HMS only has a case against Ginn if he wants his money...whihc leads me to
3. $1.5 million is like fucking throw away money to HMS. His lawyer fees will be close to this pursuing this "white whale"
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Permalink Reply by Matt on
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Hendrick is doing this because of all the stupidity Theresa caused. Hendrick and Dale Jr wanted the #8, Theresa would only sell for a ridiculous amount of money. Then Hendrick wanted to use the same style font for the #88 that Earnhardt Sr. used on the #3 and that DEI used on the #8, and she threatened to take legal action.
Thats why Hendrick is persuing this. What comes around goes around...
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Permalink Reply by Turtle7 on
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There is an old saying the only people who make money on stupid suits is the lawyers. My guess is that this will be settled out of court.
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Permalink Reply by Lance on
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I wonder if Stewart Haas has a similar deal. I would also bet that 12.8 million is a drop in the bucket compared to what it takes to have your own engine program going on.
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Permalink Reply by Ryan Plowman on
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3 car team @ $12.8 million per year.
That equates to +/- $115,000 per race for each engine. Doesn't that seem like an awful lot?
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