Cycle News - Archive Issues - 1990's

RR: I believe the appeal the logiA caldecision, following theisthe lower step for us following court rejection of our motion for a new trial. The next step for us to protect our interests, we believe, is to pursue the appeal. It's also my understanding that anywhere in the course of this process, if an amenable settlement can be made between the AMA and Roger, then the door is open to do that. I'm advised by my board that we continue to explore settlement opportunities. GH: It's important to remember that when the AMA decided to termina te Roger's contract as our race director, settlements went back and forth for a period of time and there were a number of settlement offers. We offered, he countered. What broke that off was when he broke away from us and formed NASB, and went to run his own event using a Superbike class as well as any of the other support classes at a number of traditional locations that the AMA had already been to. At that point, honestly, the negotiations weren't going to be negotiated anymore. It was going to end up in court one way or the other. A What he believes is that NASB was actually created as a minor league series which would be run with AMA sanction, a level below the AMA Superbike class. It was originally conceived as that, not as a competing class. And he went to the promoters meeting in Coral Gables and that's where he met those people. GH: It's my understanding that he was running head to head with the AMA, running Superbike classes· and everything else. I don't know that officially. That's my understanding. Q A And the issue that he didn't pursue was the antitrust. Those issues were dismissed early on. RR: I understand that was the court's decision. Q A Right, and that decision was, basically, he believed that the OEMs ha decided they would go with the traditional AMA facilities and basically put him out of business by doing that. That was something he decided not to litigate because of, basically, the cost of going out and trying to depose all the' OEMs. One of the issues he brought up is that he believes that there's an incestuous relationship between the board, which is all the OEMs, and pro racing. How do you resolve that? GH: The board isn't all the OEMs, for one thing. And, again, the board is elected from a group of corporate members. Traditionally, have there been major players from the OEMs on our board? Absorutely, absolutely. Currently there are, too. There's also people like Lamar Williams (of the American Motorcycle Institute). I'm trying to think who else is currently on the board. Mike Buckley (Dunlop) is on the board. Paul Dean has been on the board in the past. He's been chairman of the board. A That doesn't affect how the AMA pursues pro racing, that their eClsions wOl,lld be weighted? Basically, the OEMs don't have a choice except to stay with the AMA. GH: [ think the OEMs can do whatever they want. They can run at any events that they want to run at. I don't see the connection between them being on the board and them having to run AMA races. A Q Because they're on the board, they could put the pressure on the AMA races to be held at these tracks. If they decided not come to Mid-Ohio, for instance, if Honda said we're not coming to Mid-Ohio, basically Mid-Ohio doesn't have the race anymore. GH: I guess you'd have to ask the OEMs that. They serve voluntarily on our board. You could look at otller series where some of the manufacturers - some of the drag-racing series, for instance, which the Kawasaki runs in. And we have our own drag-racing series, for example. I have a hard time understanding what the connection is. A Edmondson had races at MidOhio, Brainerd and Elkhart Lake. He said he had commitments from them. And Michelle Trueman Gajoch was the head of the promoters group. Basically, what he believes is .that she was pressured to have the AMA races there. GH: I honestly don't know. That's the truth. Q A IS there any way to avoid this in Q the future? ' A-RR: I think we'd all like to avoid it 1""\.in the future. I'd like to think there's ways to avoid it. Whether it has to do with a clear understanding of contractual relationships or whether it has to do with some other mea ure that the AMA implements. Or it remains as a board decision, AMA proracing board decision. Nobody relishes the prospect of expensive litigation. WOUld the AMA consider entering into a joint venture with another contractor? GH: I think that's an answer that the pro board would have to make. Q A And the board 'approved when Roger came on. A-GH: It depends on when 1""\.Paradama came on line. I don't . know when it was, honestly. Roger came in '89, but the joint-venture agreement started in '93 or '94. GH: I don't know, and that's a bone of contention, whether it's a contractual relationship or a joint venture. That's a part of the original litigation. Q A One of the documents which Roger showed me was an interna memorandum from the board, I think it was exhibit 120, in October of '93. It was from Ed to the board and it said Roger had done a great deal of good for pro racing. GH: I think we can all agree, you guys have been around it long enough to have seen Roger was a very good promoter. He did very well with amateur road racing. He came to the AMA racing and we to him, early on, and formed AMA/CCS, and it was beneficial. He. runs a good program. There's no question about that. But we helped him grow as he helped our amateur program grow as well. I don't think there's any question about that. When the problem arose is when the AMA decided they wanted to go in a different direction for a number of reasons. That's when the negotiations started, and they ended when he formed NASB. A The AMA wanted to keep the package ~hat he brought into the races, which is one of the real important points of the lawsuit. He had brought Supersport and Harley and endurance, which he created, basically. GH: Which are classes that are run all over the world. Q A But he brought them to the AMA road race program free and clear, not at the expense of any other AMA classes. Which meant that he provided new revenue. These are classes that didn't exist before. GH: Unless you want to' go back and say Class C racing originated as production-based racing. I'm not arguing the point. I understand what you're saying. Q A You can't really say that only because you can go to the races an point hi how many entries there were, basically, and how it grew. So his contention is' that the AMA decided that they now wanted all the revenue, from basically the whole thing. GH: Roger b.rought elements to the table, the AMA brought elements to the table. The AMA had 70 years of history. They had professional racing that's gone on that long. They had the structure, and Roger brought something to. the table. That's why, from the get-go, at the termination of this, there's been attempts to settle it. That's really the honest bottom line. I would just add, and J think it's important, you guys have seen what's been on the Internet. There's been a real intere t from this whole thing being tried on the Internet. We aren't going to try it on the Internet. The AMA's going to try it in the a ppeals court, and we're going to report on what happens in the appeals court. And that's really the best we can do, the best we can say. A What about the question of TV revenue? That Roger was denied revenue? GH: I don't know this issue, and I don't think you (Rasor) do either. If you want, we can check that for you. A He makes the poin t th.a t the AMA was getting TV revenue, an that he didn't find out about it un til he go t to court. GH: A Jot of things came out in court. Roger didn't tell anybody he was in bankruptcy and hadn't paid taxes. And all that came out as well. A Part of the bankruptcy was caused by forming NASH, having to run the series and spending all his money. GH: Isn't it your understanding that in the midst of operating as a manager of our pro-racing series, when things were going well together, and then just making a great deal of income year after year, well before NASB was being formed, he wasn't paying taxes? Q A What he had said was, one of the main issues, was depreciation of his motorhome. RR: It's my understanding that one. of the principal creditors, the principal creditor in the bankruptcy credit, is the IRS. The IRS becomes a creditor when you don't pay taxes. It's our understanding that in tlte course of the relationship wi.th the AMA, when we paid him, as I understand it, in excess of $3 million, there was no taxes paid on this money, and that's why he's in bankruptcy. GH: Or there weren't enough , taxes. RR: The information that I have suggests he's in bankruptcy because of something he did, not because of something we did. Q A A A g What he said was that he grew too big too fast and that he was jus paying out more money than he had. And he said he ended up with more debt than he could actually handle. GR: I think we had a successful relationship. I mean, remember, not Long ago there were, what, 1100 entries down here at Daytona, AMA/CCS. It's beneficial. I don't know what his numbers were this past weekend, but we had a relationship. We don't have it anymore. A Is there any possibility you could ever have the same relationship wi Roger? GH: Again, I think that's a pro board decision. A He said that the AMA needs CCS, imd it's hard to dispute tha . The AMA doesn't have any amateur series. GR: Did he say CCS needs the AMA? A Qwell,yes. A~ GH: Well, again, I think it really is 1""\.a board decision. Has there been a lot of member reaction to this? GH: Well, yeah. I mean we're trying to respond to the individual members that are contacting us. And we're trying our best to tell our side of it, but, again, if there's a number of specific questions they want to know, a lot of it is tied ~p in our appeal process. Our lawyer tells us not to say anything. By talking to you guys and by posting stuff on our web site and in the magazine, we're responding the best we can. Q A QHave you lost any members yet? A-RR: I think it's probably too early .tlto make a substantive response to that. We get a membership report once a month, and we do a tally. This has really been in play, just short of what? Right about two month. It's probably too early to say that we have. Whether we will in the long term or not, it remains to be seen. We hope we don't. When all the facts are on the table, we ·hope our members will understand how we came to this decision, how we defended what we believe was our position. The same way that we defend their interests. We have obligations to defend the association's interests. When members say, "This isn't how we want our membership o ars spent"? GH: We were asked about that earlier. The court decision isn't insured. It's programmed into the budget. We placed a certain amount, I guess it's the full amount, which we think is going to be overturned in the appeals court. RR: Your question's legitimate. And as I understood your question, basically, what' our members reaction to how this money's being spent? I don't think any organization, whether it's a private corporation or a membership association, wants their resources spent on defending litigation, litigation that we don't believe was warranted in the first place, and we had to spend a good deal of money to defend our position. We'll continue to defend that position because we think that the decision of the lower court .was incorrect and we believe that, when they reach the appellate court, the decision will be overturned, and we're confident that if it's not overturned that, perhaps, in the process it might be settled for a substantially less amount of money. To follow up what Greg was saying, we're A A Continued on page 43

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