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An old joke goes that the best way to make a small fortune in hospitality is to start with a big fortune. Chip Ganassi is enduring the NASCAR version of this a year and a half after leaving the sport.
The Cup Series owners are currently locked in negotiations with NASCAR to claim a bigger share of the sport’s televised revenue, and the demise of Chip Ganassi Racing is proof 1 of why this is so crucial to its continued existence.
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Chip Ganassi Racing’s second win in the Cup Series didn’t last
Chip Ganassi didn’t earn his induction into the Motorsports Hall of Fame of America by being a one-trick pony. Ganassi has run teams in a variety of racing series for more than three decades, and its drivers have won the Daytona 500, Indianapolis 500, Rolex 24 at Daytona and the 24 Hours of Le Mans.
The final six seasons of his first attempt at the NASCAR Cup Series ended in just one win in 2008, and the subsequent joint venture (in name only, since Teresa Earnhardt was not actively involved) with DEI yielded little.
Ganassi dropped the Earnhardt name in 2014 and the CGR team soon took hold as Kyle Larson and Jamie McMurray consistently finished in the top 10. McMurray made way for Kurt Busch in 2019, and Larson’s firing after a NASCAR suspension in 2020 led to the hiring of Ross Chastain. In short, there should have been enough momentum to weather Larson’s departure and the arrival of COVID-19.
The insurmountable obstacle that got CGR packing turned out to be DC Solar.
Chip Ganassi Racing closed in November 2021
Sponsorship money is everything to NASCAR organizations. The pool of Fox and NBC television funds shared between NASCAR and its teams is only about $800 million a year, a paltry wage compared to NFL, NBA, and MLB funds. As such, every outfit from Hendrick Motorsports to the Wood Brothers’ single car business depends on sponsors to make up the difference.
When Kyle Larson won four races in 2017 and DC Solar agreed to sponsor half of the No. 42 Chevy’s 2018 season, Chip Ganassi Racing seemed to be in great shape. DC Solar’s commitment to operating the CGR Cup and Xfinity Series from 2016-2018 reportedly totaled $20.5 million.
DC Solar was founded in 2008 and the solar power company received backing from Warren Buffet’s Berkshire Hathaway. His operations turned out to be mostly mirages; The FBI raided its headquarters and the homes of high-ranking officials in December 2018, building a criminal case that proved it was all a Ponzi-like scheme.
In December 2021, a federal judge sentenced Jeffrey Carpoff to 30 years in prison. Seven months later, the judge sentenced Carpoff’s wife, Paulette, to 11 years. By this time, bankruptcy proceedings were in full swing as authorities pursued hundreds of millions of dollars in questionable accounting entries and missing funds.
Suddenly, one of Chip Ganassi Racing’s most lucrative sponsorship deals was dead.
Former NASCAR team owner may have to repay $1.375 million
After evaluating DC Solar’s mess and other aspects of the business, Cup Series team owner Chip Ganassi decided to shut down its NASCAR operations. On June 30, 2021, he sold the team’s assets to Trackhouse Racing owners Justin Marks and Pitbull.
That wasn’t the end of his DC Solar nightmare, however. appearing on the Download Dale Jr Podcast on March 29, Ganassi said the process is ongoing. This weekend, Fox Sports’ Bob Pockrass reported that a hearing is scheduled for next month that will likely ask Ganassi to return $1.375 million that DC Solar paid to CGR just before it filed for bankruptcy.
There are no allegations of wrongdoing by Chip Ganassi Racing. Rather, it is typical for authorities to try to recover money spent just prior to filing for bankruptcy, assuming that company officials likely knew the financial situation was dire.
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