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Ginn Racing leased engines from Hendrick in 2007 at $12.8M base
By Bob Pockrass - Associate Editor
Wednesday, December 17, 2008
NASCAR engines don't come cheap.
Rusty Jarrett
Getty Images for NASCAR
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.
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Comments
13 responses to "Ginn Racing leased engines from Hendrick in 2007 at $12.8M base ". Post a Comment.
Andrew Briscoe said:
Dec 17, 2008 at 5:00 PMSo getting the best engines has a steep price. How is that surprising? Plus, I don't think the costs are all that high. 45 cup engines a year per team, at three teams that's 135 engines. Throw in the Nationwide engines, that's 170 engines. Plus, if I remember correctly Ginn at one point was running 4 teams (he had 4 at Daytona as well as a couple other races). So let's say 175 engines. That's just over $75,000 an engine. The fact Ginn signed the contract showed he didn't seem to think that was too steep of a price. Considering teams in 2007 were claiming that it costs $15-$25M to run a race team, I guess that this is part of the reason, people signing contracts that cost way too much.
Robert Wingert said:
Dec 17, 2008 at 7:35 PMThe Hendrick and Chevy hater's will have a field day with this article.
JJ Emory said:
Dec 17, 2008 at 10:26 PMToo much? Well when you have achieved greatness like the Hendrick organization, you too can name your own price. As they say money buys speed.
Karl Sajdera said:
Dec 18, 2008 at 9:18 AM1. You get what you pay for. The old saying "Speed costs money. How fast do you want to go?" applies here. 2. They didn't HAVE to sign a contract with Hendrick, they CHOSE to.
Jozef Colomy said:
Dec 18, 2008 at 11:56 AMLooking at those terms it seems like Ginn got themselves into a pretty raw deal...I mean, Hendrick is great, but I'm sure Earnhardt-Childress or, hell, anyone else would have been cheaper. That $12.8 mil was just the base, plus the costs of the engine tuner...yikes. Good for Hendrick though, to be able to command prices like that--they obviously have their act together, as we can see from Jimmie's past few years
Mike Peterson said:
Dec 18, 2008 at 1:52 PMIt's simple.If you want the best, you have to pay the highest price. With Hendrick on the engine you get the best speed, reliabality, and I'm sure Ginn got great service from HMS also.
Howard Englishman said:
Dec 18, 2008 at 5:06 PMWell #5, a typical Cup engine is around $50,000. dollars, and if you dont have a engine dept. you have to lease them and give them back after every race. Ginn knew the price and the price is close to other teams that lease motors.DEI gets there motors from RCR.
Werner Boehmert said:
Dec 18, 2008 at 5:54 PMdon't bet on getting the best engines...those stay in house...if Ginn agreed to the terms of the lease...pay up...
Wayne Powers said:
Dec 18, 2008 at 6:53 PMI agree with Werner, pay up and keep your mouth shut. He didn't say anything bad about Hendrick when he was using his engines, did he? If I'm not mistaken, Ginn has been down this road with someone else before Hendrick.PAY UP BOBBY AND BE HAPPY HE DOESN'T SUE YOU ANY WORSE THAN HE IS!!!!!!!!!!!
dave ginger said:
Dec 19, 2008 at 8:31 AMI wonder what those "higher" horsepower Toyota engines would have cost?
Callaway said:
Dec 19, 2008 at 9:18 AMIf Ginn thought he was getting tubed on this deal imagine what he would think if he fielded a IRL car where he would have no choice where he got engines. Just another example of a guy who is good at one thing and thinks that automatically translates into good at everything, stick to resorts Bobby leave the racing to professionals. Oh and pay the bill it's all on you I'm sure Hendrick didn't beg you to lease his engines.
Jim Bayliss said:
Dec 19, 2008 at 11:59 PMHe may have "signed" a contract for the engines, but DID he get any of those engines in 2008? Sounds like paying for a dead horse to me. And of course it is ALL overpriced, period. Get GM to pay for it out of their recent award from Pres Bush. Then they will be ready for the next "loan" that WE have to pay for. Notice FORD doesn't NEED it. Ha, ha. LOL. -- ###
Andrew Briscoe said:
Dec 22, 2008 at 3:18 AMJim, Ginn Racing was around until July. If he didn't get any of those engines, his cars sure did compete well for 5 months with nothing to power them.