Cycle News - Archive Issues - 1990's

Continued from page 14 series, between CCS and AMA that would allow for people to get into Pro racing, and that's what NASB was going to be. It was never meant to be another AMA competitor. It was meant to be a minor league pro series or midground, whichever you want· to call it. And that was going to hopefully lead to more nationals and more entries and, of course, more income for me. So the potential was there to take this $1.2 million and go to maybe $1.6, $1.7 over five years. I wasn't happy with it; but I felt that it was a reasonable solution, and there was no sense in tearing up the contract. CCS, of course, would continue to be an exception. On the Friday before the Fourth of July weekend, my attorney got a fax from Tim Owens, their attorney, saying that unless Becky (Edmondson's daughter, who owns the Championship Cup Series) and I both signed a contract by close of business that day, the deal would be off, the deal tha t we had hammered out. And Becky was on her way to run a race in Grattan, Michigan, and I was off to run a race somewhere else and he couldn't reach us until Tuesday. So, basically, their attorney said, "No problem," and then seven weeks later they said, "Well, you missed a deadline." There'd been two sticking points. One, if I die, my family should be covered. And two, they wanted a seven-year non-compete; I wanted a five. So we both gave up on something. They gave me the death benefit, I gave them the seven years. So let's make the contract. Well, before we do tha t, we've got to wait until the AMA board meets in August. No problem, the negotia ting committee had the authority, they just had to ratify it. The board met, the end result was they said., "Fuck you, Roger." That's what the board said - we're not making the deal. Ed Youngblood wrote me a letter saying they'd decided not to extend the. offer one more time, standing on two things: standing on a deadline, which was bogus - the board never authorized it, even though it was in the letter that the board wrote me; ·and saying we need a counterproposal. And we made a counterproposal: We asked to change one word which affected my tax liability. It had no , effect on them. CiIFI Reynolds (AMA board of trustees member at the time), in his testimony at the trial, said that he voted against accepting my coun~ teroffer because he didn't know what my counteroffer was. I thought I had a special trust relationship with Carl. He was a Southeastern board member. I respected him as a Southern gentleman - not that I don't respect Northern gentlemen. We kind of communicated, I thought. I felt very much that he was in favor of seeing this deal go through. So when the letter came to me that the deal had not gone through, I called Carl and found out that he didn't know about the deadline. In his testimony in the trial, we found out that while he claimed he wanted to see the deal made, he voted against it, because he was told that we had made a counteroffer instead of agreeing to the deal, which was not true. The counteroffer being, "Delete this word, and everything's fine." Q ~ ..c ~ ... :::E 16 What was the one word?, ' A- "Further." It had to do with comrtpensation. Whether you called it further compensation or compel"\sation affected my tax liability. And during the trial, Carl found out for ,the first time about this four-hour deadline, he found out about this for the first time, and he found out about this counteroffer, which wasn't really a counteroffer. I think that may have something to with the board's loss of confidence in Ed. I'm surmising that. Anyhow, all of a sudden, Roger's out, AMA's got everything. Meantime, one of these contracts that I was expecting them to ratify called for me to turn everything over to them. Ultimately, I sent them mailing labels for the last race of the year with the promise that they wouldn't duplicate them, which they did. And they had everything. So they said, "Oh, yeah, we're not going to pay you." That was in August in of 1994. Through discovery, there was a conscious decision made by them that they could go iD and just take this thing, and I probably wouldn't be able to bring it to this point. was that Youngblood's decision, Q or the board's? A-No, I think that was a combination. rtl believed all along that Mueller and Owens and Youngblood had their own agenda, and that the board was being told. What we would put forth as a negotiating position and what would come back was like an answer to a question we hadn't asked. It was like a big disconnect, and I became convin,ced that because I had confronted Youngblood here at Daytona, embarrassed him in front of his board, when I told him how despicable the AMA was, I think that probably set him running. He had the red '!nist he wasn't going to go back. That was right after that explosion in February - "You're out, we're going to run it ourselves." I met with the board right after the Daytona 200 - the next day. The emperor had no clothes. "You people have no business being in the racing business and now everybody knows it - not just a few of you who kept a very good secret, but everybody knows it." So that put them on edge. So we announced the NASB series as we intended to and went down to the promoters meeting at Coral Gables, and we were going to present it to the promoters exactly as originally designed: a low-cost semi-pro - not a club race, but not a National - and see if any of them were interested having it. With a completely separate schedule? A completely separate schedule,. My feelings were that it would give let's just use an example, Road America - a chance to have two races where they could sell ·tickets, but one was highinvestment and one wasn't. As it turns ou't, the promoters were very disenchanted with the AMA's presentation of the marketing plans of Tom Mueller. They were very concerned abou t the breakup of the relationship. So they called me into the room. I was going to meet them in the evening. I got a phone call at 11 in the morning saying, "Can you come down to our conference room?" I said, "I thought it was the AMA's conference room." And in that meeting they asked me, if they would give me events, would I go ahead and run a full-bore program like the one I'd been running, except under AMA sanction, without AMA sanction? I said I would. In December I announced the schedule. It included Road America, Mid-Ohio, and the rest. That was the second part of this case. The first part of my case was theft of my business, which they did. The second part of my case had to do with' the fact that they'd squashed my interests. Because quite clearly, what would be clear, I was a competitor with the AMA. They squashed the new business in a variety of ways, one of which was having the Q A board members who control factory racing budgets. Q!Iow did they do that? A-That was easy. Camel's not going to rtbe at your event because the Honda team won't be there. I was getting all kinds of money from Camel. I was getting program ads from Camel. I was getting advertising from Camel. I'm not going to get that. Oh, and· Bridgestone won't be there because the Bridgestone team won't be there. The Erion guys aren't going to be there because Honda's not participating. Or the Suzuki dealer ride, we're not going to have that this year. It was so obvious, it was incredible, even though I can't prove it. So the AMA put pressure on the factories how? Through the board members. Who controls Honda's racing budget? (Honda's) Ray Blank. Which AMA board member said we can take this from you and you can't do anything about it? Ray Blank. Q A QAnd this all came-out at the trial? A~Pretty much so. We didn't try the rtantitrust claims because they were dismissed by the judge. That's another whole story but, briefly, we made 10 claims. We realized early on that I did not have the finances to go out to California and start deposing these big companies. Because they could have just covered us with paper and other problems. And there was no way I could . deal with' tha t. So we made a decision not to proceed with the antitrust claims. The judge, in the summary judgment, dismissed them, not because he felt there wasn't sufficient evidence that these things took place, but because I had not shown that the entire industry was on one side. We decided to leave them in. We were going to drop them, but we noticed that they were paying all theiJ: attention to the antitrust claims. They were ignoring all the other claims I made and going forward only on the things which affected those board members. And the result was, when the judge threw those two out and kept the other eight in, they were unprepared for trial. I'm telling you, this. million bucks or so that the AMA has spent, if they'll ever come clean with. the number, is the biggest waste of money in, the world. They got the worst advice and the worst lawyering you could imagine. The' court document said it was Q close to $400,000. A-That was our guys. Little guys in ..t"\..Asheville, North Carolina, charge $175 an hour, not $300. We had two la wyers and a paralegal on it, not two full-fledged high-ranking antitrust guys, plus who knows how many flunkies working On it. That's another whole story in the venue issue. Anyhow, the gist of it was that we had a program, pressure from the manufacturers made it clear that the promoters couldn't stand the financial pressures of it. (Paradama president Cary) Agajanian called Mid-Ohio and threatened them with a loss of their vintage-days event if they didn't go back to the AMA, and this resulted' in Mid-Ohio bailing out and she (Michelle Trueman-Gajoch ) was the leader of the promoter group that went with me. When she bailed out, everybody jumped. The insurance company that gives them the premiums for the whole year, for all activities, and recommends a certain amount of premium for each type of race, the AMA would then take the road racing portion, and reduce other people's portion, which, effectively, since I didn't participate in those other things, and since we shared the profit after the expenses were paid, then little old Roger was subsidizing short track. Okay, that's fraud. They had a fiduciary respo.nsibility as I was a part-. ner, straight financial partner, to share with me that information. They did not. The jury didn't buy that. As (AMA vice president of finance) Patty DiPietro said to them, we just pay whatever the insurance company says the premiums are. She didn't bother to tell them that the premium that came in on the policy was set by them, once they agreed to all the overall rate numbers. The other issue where there was fraud was the TV issue. They charged me $10,000 a race for the TV, when they were actually getting paid to do TV. They had a contract with the production company, which was then given video rights and so much a race for foreign rights. The deal was, we would put up the 10 grand and if there was any income, we'd split it. They just never bothered to tell me about anything. Did you find out how much profit Q there was? A-It came out to about $165,000rt175,000 total. Again, it was the principal. Here's a business partner that they didn't want to be a part of. There's all kinds of ramifications. The trial was 10 percent of it. You can't tell people everything. On the venue issue, for example, the AMA filed motions with the court trying to get the thing moved from North Carolina to Ohio, claiming that they didn't do business in North Carolina. Ed Youngblood and Patty j)iPietro both signed affidavits, "We do not do business in North Carolina." Which I simply showed the judge, right here • there's a sanctioned AMA event taking place this weekend. And by the way, in the back of the rule book there's two offices, and one of them is my office in North Carolina, and here's $700,000 worth of canceled checks that we wrote to the AMA What do you think? I think that they do business in. North Carolina. So we have all these claims and of course the suit was filed in September of '96 because it took me that long to find a law firm that (A) I felt had the grasp of it and (.B) that I didn't have to pay up front. These guys took a look at it - I'm talking about Martin - they took a look at the case, asked me some questions and said we will on take it on contingency, which, of course, is what I wanted to hear. They had the r~putation for being the trial lawyers in western North Carolina and it was a no-brainer. We filed in September of 1996 and the AMA, of course, denied everything, and things have been sort of warming until November of '97. November of '97 is when depositions started. They took my deposition for four or five days and then it started in late '97 and April '98 - they started taking the deposi tions of the AMA. The trial was origina'lIy scheduled for, hopefully, June, July or August. It kept being put off. It was finally done in December. This particu,lar· judge has been a' judge for 30 years, has an extremely low turnover. He . brooks no foolishness. The trial was at 9 0' clock in the morning to 6 o'clock every day. They were very proud of the fact that prior to our case they'd never had a case go over five days, a civil case; ours was six. It was eight days in total, six days of testimony. We ended up with, I think, the seventh-largest judgment in the state of North Carolina in 1998. So it was not an insignificant piece of litigating. The jury found for us on every issue except for the insurance. But that was one of those kinds of questions that has

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