Driven to adapt

August 20, 2010 at 12:00a.m.

Roush crash shows teams must plan for catastrophe

Associated Press

BROOKLYN, Mich.

When Jack Roush returned to the racetrack after being released from the hospital, he went out of his way to praise his team for not missing a beat while he recovered after being seriously injured in a plane crash last month.

With layers of experienced management running the competition and business aspects of Roush Fenway Racing, the NASCAR team was well-equipped to handle nearly losing its leader — a scenario it had already faced in 2002, when another plane the owner was flying crashed into a pond in Alabama.

“Roush Fenway Racing will outlive me, and it will outlive anybody else that is with the company today,” Roush said last weekend at Michigan International Speedway. “We’ve got the plans in place for that. This was a little test case. How can you do without Jack? Well, it’s bigger than me. It’s bigger than anybody. The organization has been very strong.”

Roush’s team isn’t the only one in NASCAR that has shown strength in the face of catastrophe.

A Hendrick Motorsports plane crashed in 2004, killing 10 people — including the son, brother and two nieces of team owner Rick Hendrick, along with two team executives. The tragedy took a heavy emotional toll on the Hendrick family and its employees, but the team never faltered on the racetrack.

In the wake of those incidents, having a succession plan in place has become a bigger priority for NASCAR teams — which today function as midsize corporations instead of the grass-roots, weekend-warrior operations that built the sport.

“I would say it’s been more recent,” said Jay Frye, general manager of Red Bull Racing. “Obviously, these are big businesses now, and it’s changed over the last 10 years. There’s got to be a what-if plan in place.”

As remarkably as Roush and Hendrick handled their challenges, the fate of Dale Earnhardt Inc. provides a cautionary tale.

The team tried to stay competitive after Dale Earnhardt’s death in 2001, but its leaders — including Earnhardt’s widow, Teresa — eventually decided to merge with Chip Ganassi’s team.

Roush Fenway president Geoff Smith said having layers of experienced managers in place might be the main reason why Roush and Hendrick, which were bigger and more established than DEI, managed to avoid turmoil.

“In the case of Hendrick and us, we understood how corporate America works on succession, and attempted not to build our organization around one person or personality and [say], ‘Don’t worry about it, because nothing will ever happen,’” Smith said. “No matter how strong a single individual is, or powerful in marketing in the case of Dale Earnhardt, I’ll say this: If I was advising Mrs. Earnhardt, my advice would have been, ‘You are not the right type of successor for this kind of business, and you should not do this.’ But with Rick and with us, we’re layered with these managers.”

Smith said the team’s management learned lessons from nearly losing its leader the first time around, in 2002. They were capable of handling Roush’s absence on the competition side back then, but decided they needed to do more long-term planning to ensure the team’s financial future.

“The 2002 accident just highlighted for me that there had to be some more affirmative planning,” Smith said.

The team developed more senior managers, then made a big move to secure its long-term future in 2007, partnering with the Fenway Sports Group.

Smith said the move was necessary because NASCAR teams don’t have the same inherent value as franchises in sports such as the NFL and Major League Baseball, where the limit on the number of teams drives up their worth. In NASCAR, anyone, theoretically at least, can form a team and try to qualify for a race, so there’s far less incentive for a prospective NASCAR owner to buy an existing team.

“These businesses, whether they were designed on purpose this way by NASCAR or not, they’re set up to fail,” Smith said. “In the end, they’re set up to fail. The idea is to exhaust all the money that you have from sponsorship, and then all your personal wealth, and when that’s all gone, then you have to retire, right?”