NASCAR might have its first publicly traded racing team as early as next season, as a group of three investors try to sell US$25 million worth of stock to start at least one Winston Cup team.
Fanz Enterprises Inc is trying to sell 2.5 million shares at US$10 each directly to investors before May 31. The company plans to list the shares over-the-counter, with the goal of moving to the New York Stock Exchange as Fanz's share price rises.
The company is trying to join the Boston Celtics and many European soccer clubs as publicly held sports teams, even though established NASCAR owners are struggling to raise enough money to continue racing.
"It's not like sponsorships are out there like low-lying fruit," said Hermie Sadler, a Winston Cup driver who owns his own team. He said it costs at least US$200,000 a race to compete in stock-car racing's top circuit.
Roe Hitchcock, chief executive of Fanz and manager with Stillwater Capital Advisors in Indianapolis, said the company has lined up 300 companies as prospective sponsors, and hired Fox Sports NASCAR analyst Larry McReynolds as a spokesman.
Hitchcock said several companies have already contacted Fanz regarding sponsorships.
"Having a stockholder base of owners will provide our sponsors an immediate loyal foundation of prospective customers," Hitchcock said.
He wouldn't say how many shares have been sold, although the company may extend its deadline beyond May 31. If it doesn't raise US$1 million, it will refund investors. Preferred stockholders, who paid US$400,000 for their shares, would be reimbursed first, according to the prospectus.
Hitchcock said he is the sole holder of preferred shares. If the minimum 1 million shares are sold, he will own 87 percent of the company, the prospectus said.
Michael Wurtsbaugh, the company's prospective chief financial officer, was granted an option to buy 500,000 shares at US$3 a share.
Fanz plans to pay Hitchcock and President Frederick McDonald US$50,000 annual salaries and Wurtsbaugh US$175,000.
Hitchcock isn't the first to try to start a publicly traded NASCAR team.
In 1993, Bob Gunst, a Charlotte tax lawyer, tried to sell US$1.5 million of shares to start a Winston Cup team called American Motor Racing. Neither that effort, nor his subsequent attempt in 1995 to raise US$1 million to start a minor-league NASCAR team, succeeded.
According to Fanz's prospectus, the company plans to lease a garage in Concord, North Carolina, hire a crew chief with at least five years experience in Winston Cup racing and have an initial annual budget of US$3.5 million for each team it owns. Of that, US$1 million is earmarked for 10 cars.
Instead of promising profits, Fanz said its shareholders will receive autographed pictures of drivers, be able to watch Internet Webcasts of pre-race preparations in the garage, and have a chance to qualify to be on pit road during a race.
Shareholders will also vote on which established Winston Cup drivers to recruit, Hitchcock said.
While Hitchcock said NASCAR executives "wished us the best of luck and welcomed Fanz Racing to the sport," NASCAR declined to comment on Fanz, and several executives in the sport said they don't support the effort.
"It's offensive," said Geoff Smith, president of Roush Racing. "They're trying to trade on the goodwill of NASCAR fans and offer a pipedream."
Travis Carter, a part-owner of the Haas-Carter Winston Cup team, which recently released its drivers after Kmart Corp ended its sponsorship, said it's unlikely Fanz will succeed.
"Sponsors aren't committing money even for established teams," said Carter, who was involved with the 1993 effort to start a publicly traded team before pulling out.
"The price tag to sponsor in Winston Cup has gone up and companies are more worried about layoffs and debt than advertising."
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