A hundred million reasons to keep Dale Jr. at DEI

DEI has a hundred million reasons to keep Dale Earnhardt Jr. on the payroll, writes Marty Smith.

Updated: April 29, 2007, 1:22 AM ET
By Marty Smith | ESPN.com

What is Dale Earnhardt Inc. worth without Dale Earnhardt Jr.? Not much, according to multiple sources with intimate information about the company, who spoke to ESPN.com on condition of anonymity.

"If Junior leaves, it probably devalues DEI by $100 million," one source said Wednesday. "If you look at Roush [Racing], Evernham's potential [investor buy-in] deals -- DEI with Junior is a home run, maybe worth more than 100 [million dollars]. Without him, I don't think an investor would lay down that value."

Another source said, "Without Junior, I'd say once the contracts expire, [DEI] wouldn't be nearly the team that currently exists. Over a period of time you know who you can and can't work with, and sometimes [Teresa Earnhardt's] requests and demands are not realistic.

"And the time constraints on corporations on [trademark] approvals, you have to react in a prompt, efficient, timely manner.

"So, therefore, people that have worked [at DEI] have had to stick their necks out on the line and make decisions to be sure sponsors' needs and timely decisions are met on their behalf. That's created problems internally, made for a difficult situation for both parties."

Max Siegel, the chief negotiator at DEI, declined to comment.

One example offered by sources centers on the commemorative ring awarded the 2004 Daytona 500-winning No. 8 Chevrolet team. Teresa Earnhardt, sources said, had to approve the marks on the ring before they could be created and bestowed upon the team. It took two years.

The team grew so frustrated, sources said, that crew members made preparations to design, order and pay for their own Daytona 500 rings.

Such examples, sources agreed, are why Earnhardt Jr.'s camp imposed a late-May deadline for contract talks to conclude.

If Earnhardt Jr. doesn't re-sign with DEI by the end of May, the two sides likely will be hard-pressed to get a deal done, sources said. Why?

Die-cast cars and hats, partly.

"That's why there's a time frame," one source said. "If you want to have product at Daytona in February, you have to have that going to [the manufacturer in] Japan by Aug. 1 -- at the absolute latest. And probably even July. That's reason for the deadline.

"That's why this thing has to get done soon -- by the end of May. This could be a very complicated contract procedure. It could drag out. Once it's agreed in principle, that's when people get [upset] at each other over wording in a contract. If they don't have a deal done by May 31, it's going to be tough."

Sources said if Teresa Earnhardt sells majority ownership of DEI, all current sponsor contracts are voided, meaning the new ownership would either have to renegotiate them or they would simply end. Of course, if Junior were the purchaser that would be moot.

An Associated Press report Tuesday said DEI had offered Junior majority ownership of the company for more than $55 million.

Sources said the only way 51 percent of DEI would be worth that sum would be if, in context, that percentage included the real estate, the buildings, the engine department and the race teams.

Kelley Earnhardt Elledge, Earnhardt Jr.'s sister and business partner, told ESPN.com recently that securing majority ownership isn't just for her brother's benefit. It is also for Kelley and for their half-siblings, Kerry and Taylor Nicole.

"Other than loyalty of carrying on his father's vision, and the [Earnhardt] name, there is no rhyme nor reason for him to even want to do that deal," one source said. "He's got a race team, a shop.

"He could do the same thing his father did by owning his own team and driving for others, at no expense to himself. In fact it'd be a much more lucrative deal unless he can get the whole DEI [company] without investment."

Marty Smith is a contributor to ESPN's NASCAR coverage. He can be reached at ESPNsider@aol.com.

ALSO SEE