Feature Story


Jeff And Dale Race To The Bank



(July 21)- - If you attend a Winston Cup race, you're likely to see fans of Jeff Gordon and fans of Dale Earnhardt verbally sparring in the grandstands. Most fans of 'The Intimidator' would probably like nothing more than to see Gordon perform poorly on any given Sunday afternoon and vice versa. Unlike their fans, the two drivers have a healthy respect for one another and have teamed up in a number of business ventures in order to capitalize on the perceived rivalry between the two. Earnhardt and Gordon are on track competitors, but there are plenty of opportunities for the two to work together in off track business ventures.

Little In Common

Friendly Rivals
On track rivals have teamed up for off track success.
At one end of the spectrum is Jeff Gordon. A winner of multiple championships in a sport where drivers toil for years without nary a win. At 26, he is the billboard image of NASCAR into the 21st Century. Away from the track, he spends his time jet skiing and playing video games. Dale Earnhardt is the complete opposite. Earnhardt, the son of a racer, proved himself on dirt tracks throughout the southeast. In the 1980's, his front bumper was the most feared item in motorsports. "Gordon likes those video toys and I like to hunt and fish," he said. About the only thing the two have in common is their passion to win races. And a passion to make money.

Healthy Respect

When Gordon burst upon the scene, Earnhardt, somewhat mockingly, dubbed him "Wonderboy." The name stuck for a few years though Gordon has worked to change the "Wonderboy" image. After Earnhardt won the second annual Brickyard 400 in 1995, he said that he was thrilled to be "the first man to win that race." An obvious slight on the 1994 winner Jeff Gordon. When Earnhardt won the 1998 Daytona 500 after twenty years of trying, Gordon said "He deserves it and he earned it. Everybody is really happy for him. This (Daytona 500) was probably the last one on his list. He (Earnhardt) did an awesome job." Then he added, "Maybe he will retire now." After all, the perceived on track rivalry is what keeps the fans coming back. As the popularity of NASCAR racing exploded in the mid-1990's, the two on-track rivals developed a "healthy respect for each other." They know they can race each other hard without the fear of one taking the other out of a race.

Dale Earnhardt Inc.

On Track Battle
Jeff and Dale race close together at Daytona.
Earnhardt is a business unto himself. With his wife Teresa, he owns three race teams, one each in the Winston Cup, Busch and the Craftsman Truck series. The Business Journal of Charlotte reports that his 400-acre Mooresville farm includes 30,000 chickens and 200 head of cattle. Add on his rental properties, car dealerships, along with an active stock portfolio and you can see the full range of his "empire." Did I forget to mention his earnings from race tracks along with souvenirs? Ah yes, souvenirs. The items that pay the bills for all the Winston Cup drivers regardless of where they finish in a race. Last year, Earnhardt won $3.6 million on the track. Yet, his annual income was over $40 million when souvenir sales, endorsements, and the like are factored in. Not too bad for someone who quit school after the ninth grade. The guru behind the man in Don Hawk. In terms of licensing, nobody beats Earnhardt. And Hawk makes sure of that.

JG Inc.

Jeff Gordon is not in Earnhardt's class... yet. A few years ago, he probably couldn't care what was in his portfolio. But, times have changed... big time. The formation of JG Inc is proof of that. Headed by Bob Brannan, the group is in charge of the licensing of the hottest driver on the Winston Cup circuit. In 1995, Gordon beat Earnhardt for the Winston Cup title. But Earnhardt killed all of his competitors in licensing. Since teaming up, the two have made more money together than they would have made individually.

Plan of Action

The Business Journal of Charlotte reported that Gordon, along with Earnhardt, bought majority stock in Action Performance Companies, Inc. Action makes the souvenir die cast collectible cars and other NASCAR memorabilia. They've signed exclusive contracts with Action and have reaped the benefits. The two combine for more than half of Action's sales and receive royalties from the products sold. Stock in Action Performance sells at about $35 per share. Sales in 1997 were $182 million. Sales projections for 1998 are in the $250 million. Much of the growth is due to Earnhardt. Up until 1996, Sports Image, an Earnhardt-owned company licensed and sold Earnhardt merchandise. Capitalizing on the diecast craze, Earnhardt negotiated the $30 million sale of Sports Image to Action Performance. Action has shown no signs of slowing down after recently signing Gordon to an extension through 2005.

Expanding The Portfolio

In addition to Action Performance, The Business Journal of Charlotte reports that the two drivers are partners in a number of other business ventures. Along with businessman Ken Barbee, they own Performance Park Partners Inc., a real estate holding company. They bought an undeveloped 123-acre tract next to Charlotte Motor Speedway in 1997. In May 1998, a 110,000-square-foot warehouse for Action Performance opened on the site. It doesn't end there. Office space, a hotel, and a restaurant are also planned for the site. In addition, along with Rusty Wallace and Bobby Labonte, Earnhardt and Gordon own Chase Racewear Inc., a casual clothing line. Chase Racewear features drivers likeness on t-shirts and sponsor names on "mildly" upscale clothing. The company doesn't release annual revenue numbers, but NASCAR merchandise sales have grown substantially during this decade; I doubt they're losing money on it.

What Keeps Jeff Busy?

His television commercial for Pepsi, run during the 1998 Super Bowl, brought Gordon to the non-racing national audience. His first car dealership, Jeff Gordon Chevrolet, recently opened. Another new venture is a motorsports operation with his crew chief, Ray Evernham. The two have formed Gordon-Evernham Motorsports and will begin a Busch series team in 1999. Endorsement contracts are held with ray-ban sunglasses, milk, and Edy's Ice Cream.

Soft Drinks

Pepsi
Earnhardt is one of a select group of drivers that lists Coca Cola as an associate sponsor. Gordon does not; preferring the smaller Pepsi. His reasoning for choosing Pepsi was simple; more visibility. Gordon had been sponsored by Coke but jumped at the opportunity to pick up Pepsi sponsorship. Though Coke is a larger company than Pepsi, Coke decided to market Gordon only in the southeast. Regional advertising didn't sit well with him and the result was a move to the Somers, New York based Pepsi in January 1997. The national advertising campaign is in full swing. Pepsi airs a series of "Jeff Gordon Moments" highlighting a memorable moment in his career.

Race Weekends

Earnhardt and Gordon battle on racetracks across the country every racing weekend. Once the window net goes up and they fire the engines, the off track business goes out the window; but not out of mind. On a typical race weekend, it has been reported that Gordon and Earnhardt combine for $500,000 in souvenir sales alone. There are 33 races. The money they make in race winnings looks like spare change compared to that.

Focus

With the increasing amount of business ventures available, it might be easy for a driver to lose focus on what got them to the point they're at; driving a race car. Earlier this season, crew chief Larry McReynolds questioned Earnhardt's focus as it pertained to the race team. Earnhardt responded that next to God and family, the most important thing in his life is the #3 car. Though, with his increasing business interests and widely varied portfolio, it's easy to see why McReynolds made those comments.

The Future

Dale Earnhardt's time of winning Winston Cup titles appears to be over. However, his plan for the future is well underway. He recently signed his son, Dale Earnhardt Jr., to an exclusive contract to drive cars owned by Dale Earnhardt Inc. His partnership with Gordon has proven to be sound. Even after retiring, Earnhardt will continue to earn based on sales of Gordon merchandise through Action Performance and other holdings. For Jeff Gordon, the partnership with Earnhardt has elevated his financial status greatly. With Chase Authentics, Action Performance, and numerous other business dealings, Gordon is on his way to carving out an empire in NASCAR racing similar to what Earnhardt has done. By teaming up off the track, the two on track rivals have cashed in and will continue to cash in down the road. Despite the lucrative businesses, their main focus is on the race cars. They haven't forgot about racing. Let the fans in the grandstands cultivate a rivalry; both drivers will make money regardless.


Supplemented by The Business Journal of Charlotte.



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