Insurance and Government and Sports Business

Racing for the green: Rookie owner risks house and home to realize dream

April 24, 2006

"If somebody wipes one of them out, the associated residence goes with it," he says, only half jokingly.

Now in his 14th season in t h e m o t o r - sports industry, Crawford, 38, decided to hoist his own flag for the first time this year in the Indy Pro Series, open-wheel racing's highest minor league.

For the record, he's not a wealthy man. The second property is the only investment he and his wife, Myra, haven't liquidated in order for him to get into the racing game and start Michael Crawford Motorsports.

He sold everything else in his portfolio to come up with the $135,000 he needed to buy each car. He's now on the hook for more than $120,000 of his own money with obligations to vendors for another $300,000. He also owes his mom and dad a nice little coin.

"I'm all in," he says, referring to the poker phrase that means every chip you have is at risk.

For the time being, he's living off an income tax return and his wife's salary and hoping to bring in enough prize money and sponsors to keep his crew fed until next season.

If the worst scenario plays out, he'll have a fire sale, get rid of House and Condo-but he hopes not house and condo-and go back to managing somebody else's race team.

If his drivers climb a few fences and grab some checkered flags, he'll be able to buy a tractor-trailer like his big-budgeted peers, upgrade his cars, and take a vacation this off-season.

Crawford has agreed to let IBJ ride shotgun for his rookie campaign in order to provide a behind-the-pits look at the business of minor-league auto racing-a business that, although it takes place at 190 mph, isn't all that different from running a coffee shop.

Start your engines

Crawford calls motor racing "a great sport, but a stupid business."

But as self-deprecating as he can be-he refers to himself as "an ordinary guy from Wisconsin"-he's no gear head with ball bearings between his ears. Not only does he hold an MBA from the University of Wisconsin, he's also learned from the best what it takes to eke out a profit from making left-hand turns.

Most recently, he was general manager for another Indy Pro Series team-Sam Schmidt Motorsports-that won a Series championship under his watch in 2004. He also owned one car last year and ran it under Schmidt's flag to get his feet wet.

Both the business skills and real-life experience are essential to keeping House and Condo zipping around the oval.

Owners who are lucky enough to turn a reasonable profit of 5 percent to 10 percent typically spend it on upgrading their cars so they can go faster next season, he said. Profits get pumped into performance parts like strain gauges and laser alignment systems. Imagine turning a profit if the coffee shop required the latest designer European furniture every year.

"When you say make money, it's a big joke in racing," said Brian Stewart, who owns Brian Stewart Racing and runs three cars in the Pro Series. "If I wanted to make money, I wouldn't be in racing. For the amount of effort I put into it, I'd be rich if I was in any other industry."

Still, it looked like strain gauges were in Crawford's future when the green flag dropped at the first race.

At most levels of racing, drivers have to pay to get behind the wheel. Either they have sponsors willing to write checks, or they have deep pockets. Crawford was lucky enough to find one driver, Bobby Wilson, who had a sponsor willing to underwrite him for the entire season, roughly $500,000.

He also had MTV hot on the heels of another driver, Mishael Abbott. The network had filmed a pilot episode of a reality show about a bunch of female race-car drivers, including Abbott. If it got picked up for the season, MTV would pay for her to drive Crawford's second car the entire year.

ESPN2 had even signed a contract to air all 12 races this season, meaning it'd be easier to find additional sponsors because of the national exposure.

In the first race at Homestead-Miami Speedway on March 26, Wilson finished fifth. Abbott took home a disappointing 13th in the 16-car field but ran a clean race.

Then the yellow flags came out.

Two days later, at 4:53 p.m., with seven minutes remaining in a practice session, Rocco DeSimone, who was driving the car Abbott piloted in the first race, hit a wall-literally. The damage: $40,000.

So instead of having their first day off in a week, Crawford's team spent the next day fixing busted parts and getting the car ready for that weekend's double-header, April 1 and 2 in St. Petersburg, Fla.

Unfortunately, his drivers that weekend, Wilson and DeSimone, put the cars into the wall three more times, running the season's crash damage tab up to $71,000-a bill the drivers have to pay.

At that point, Crawford said it felt like "one of those basketball games where the other team goes on a 15-0 run."

Wilson managed to grind out eighth- and sixth-place finishes in the two races, but DeSimone limped in with two second-tolast finishes.

Worst of all, Crawford found out when the team returned to Indianapolis that Wilson was leaving for another team. The March 26 death of IRL driver Paul Dana had opened a seat at the major-league level that's since been filled by Jeff Simmons, the best driver in the Pro Series.

Kenn Hardley Racing then poached Wilson to take Simmons' place, a move Stewart calls "a stab in the back for Mike Crawford."

And the MTV series didn't get picked up, meaning Crawford is scrambling to find drivers with the talent and cash to drive his cars for the remaining nine races.

"The big goal of earning a championship ring is basically gone," he said.

Restart your engines

After Wilson left, Crawford didn't walk to a pub and order a cold one with a side of Jack. He sat down and worked up a balance sheet. Was it time for that fire sale? Did he have enough money to pay off his creditors if he had to turn out the lights?

No. And yes. Fortunately for Crawford, he had planned for these sorts of contingencies. He knows how volatile the bottom line can be in racing.

So do his colleagues.

"It's a very difficult business," said Jim Guthrie, owner of Guthrie Racing, who's raced "everything except airplanes."

Guthrie said owning a race car is like being a government contractor: It requires constantly looking for the next dollar. And Crawford's in the same position Guthrie was when he started out 30 years ago.

"The hardest part is the financial aspect," he said. "[Crawford's] having to build his team from the bootstraps up."

At the least, his colleagues are pulling for him. The starting grids at the first three races haven't been filled, and the Series needs as many cars as it can get. They also consider Crawford a "hell of a nice guy," Stewart said.

"I think the sun shines out of his ..." Stewart said, stopping himself before finishing the vulgarity. "Well, I guess you'll have to phrase that differently to get it in the paper."

Crawford thinks a few universal business strategies will help him survive.

"If you open a screen-printing business, the odds of someone coming through the front door and crashing into your biggest asset are minimal," Crawford said.

That's not the case with auto racing.

So instead of spending big bucks on new cars, he gave himself a little breathing room. He penned a conservative budget of $500,000 for each of his two cars. Most teams spend around $750,000.

The typical motorsports team has four sources of revenue, said Tim Frost, president of Chicago-based Frost Motorsports. Roughly 60 percent comes from sponsorships, 20 percent comes from prize winnings, 10 percent comes from merchandise and royalties, and the remaining 10 percent comes from things like selling spare equipment.

To keep his costs down, Crawford also bought used chassis that are just as good as new ones, but as much as 40 percent cheaper. He decided against $1,500 strain gauges and $6,000 laser systems that improve performance even though he knew most of the other cars on the track would have them.

"This is not a pure sport. It's unfair," Crawford said. "It's like horse racing."

And while some Pro Series teams haul their cars around with semis that cost in excess of $250,000, Crawford opted for a much more economical Dodge dually and 48-foot gooseneck trailer. Total cost: $50,000.

"I don't want to show up and look like the Beverly Hillbillies, but on the flip side, I don't need to spend a quarter of a million dollars to accomplish the same task," he said.

He also knew from experience that he could lose a driver at a moment's notice, so he planned ahead. Even when he thought he might have Wilson and Abbott for the entire year, he was talking to as many as six drivers a day, just so he'd have a backup plan. He thinks he can fill the cars for most of the nine remaining races.

But just like running that neighborhood coffee shop, Crawford said more than anything, success comes down to one thing: taking care of people. He flew his six-man crew home from Florida after the St. Petersburg races so they could be with their families that Sunday night.

Then he jumped behind the wheel of the Dodge by himself and drove the cars and spare tires home.

"I was delirious [from fatigue] by midnight," Crawford said, "but it's funny how having your entire net worth and certain obligations to others tucked away in the trailer behind you keeps you awake."

He also prints up itemized spreadsheets for drivers after they crash so they don't feel like he's taking advantage of them. Insurance is so expensive for race cars it's not worth having unless you have Evil Knievel behind the wheel.

Instead, drivers and their sponsors pay for crash damage.

"It's like a china shop," Crawford said. "You break it, you buy it."

But unlike most teams that mark up parts and charge for labor, Crawford charges his drivers only his retail price. He attaches copies of his bills for each part to the spreadsheets so they know he's not making money off their mistakes.

Crawford is confident his team will see the last checkered flag of the season on Sept. 9.

"We're not going out of business," Crawford said. "Not even close. There's too much momentum built up. Hopefully, this will be one of those perseverance-meetssuccess stories."

The next race is the Freedom 100 at the Indianapolis Motor Speedway, two days before the Indianapolis 500.
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