Q&A with Ralph Gilles on Dodge's decision to leave NASCAR
Tuesday, Aug. 07, 2012
Ralph Gilles, President & CEO, Street and Racing Technology Brand and Motorsports, took part in a teleconference on Tuesday regarding Dodge's decision to leave NASCAR at the conclusion of the 2012 season. The following is a transcript of his remarks:
"Clearly, this is an extremely difficult decision to have to share with you, our media partners, and also our employees, our fans and at-large, the NASCAR community. Anyone, in fact, who likes to see the Dodge presence in NASCAR.
"Following our thorough five month process of evaluating our future involvement in the sport, we have decided to withdraw from NASCAR competition at the end of the 2012 season.
"Following the announcement by Penske on March 1, we set up a detailed evaluation process to determine what prospective new partners, and specifically, what the future would hold for us on and off the racetrack.
"We were initially pleased to see the vast amount of interest from multiple teams and sponsors that came our way with a lot of interesting packages and ideas. We looked at this process as a multi piece puzzle. Capacity has shrunk dramatically over the years in the NASCAR world.
"We could not unfortunately put together a puzzle or a structure that made sense to continue our business and competitive objectives for next year. This decision was not based on budgets. Even though we have diversified in many sports this year, this was really NASCAR centric discussion.
"It was a case of the different pieces of the puzzle not fitting together to satisfy the structure we needed to fit our overall business and competitive objectives.
"Our team worked diligently to pull this together. In the end, we could not develop the right structure. We are committed to and focused on the 2012 season with Mr. (Roger) Penske and will do everything within our power to secure hopefully a Chase win and championship and also a championship, potentially, in the Nationwide Series."
COULD WE SEE, IF THINGS ALL ALIGN, THE STARS ALIGN, PERHAPS A RETURN OF DODGE IN THIS SERIES? "We are going to keep all options open. It would be imprudent to try to predict the future right now.
"We are talking about pulling out for 2013. We are just going to evaluate everything, and we have to look at the whole 360 approach to NASCAR."
AND WHERE MIGHT DODGE INCREASE ITS MOTORSPORTS PRESENCE, IF NOW YOU ARE WITHDRAWING FROM STOCK CAR RACING? "No, we are happy with our size right now. We actually, at the beginning of this year, invested in NASCAR even more heavily. We actually tripled our track side activation, our web content, our media support and also PR support of NASCAR.
"So really, we are about where we want it to be. We also have introduced RallyCross and ALMS (American Le Mans Series). But again, it's not a matter of taking NASCAR budget and re appropriating it. They were separate budgets to start with; so it's really a matter of going and racing at the level and quality that we are accustomed to, not necessarily budget management."
HOW MUCH OF THIS HAD TO DO WITH ROI (RETURN ON INVESTMENT) VERSUS HOW MUCH HAD TO DO WITH THE TEAMS WITH WHICH YOU HAD THE OPPORTUNITY TO ALIGN? "ROI, I wouldn't even put that on the table right now.
"Really this issue started many, many years ago as we consolidated down to one team. We had a very, I would say, an elegant situation with the Penske group, having a one stop shop, an engine, everything, a very high quality team to work with.
"When that changed, the equation changed dramatically. As you know, being in this sport over the last few years, just like anything in America, things have consolidated, right.
"So what's available in North Carolina now is not what was available five, 10 years ago. It's not as easy as you would think to configure a team at the level that we are accustomed to racing and at the level that we want to perform.
"And everything that we do business in, we like to do it as well as possible. So, not undermining the people that came to talk to us, at the end of the day, it's really a big machine to put together to do it right.
"ROI is something that we would have to look at. As I said, we are investing more than ever before in terms of track side. We have actually been measuring the data and been very pleased with the amount of leads that we get midway during the races. So that part of it was working well.
"Any motorsport, it's difficult to measure ROI. It's how do you extract the best from it as a PR exercise and market exercise. Again, more to do with structure."
YOU SAID THAT THE NASCAR BUDGET IS NOT BEING RE-APPROPIATED FOR ANYTHING ELSE BUT OBVIOUSLY YOUR FUNDING NEXT YEAR, THE QUESTION HAS TO BE RAISED: IS THERE ANOTHER PLACE TO ALLOCATE IT? ARE YOU LOOKING AT OTHER RACING VENUES LIKE ROLEX GRAND-AM OR ANYTHING LIKE THAT? "Not at this time. This decision was made only last Friday, so we really haven't really thought of it that way.
"Again, that was never the issue. We've been treating all of the different motorsports as individual. Usually it's a nameplate centric exercise; what sport matches a nameplate the best. In the case of RallyCross, again, a very different budget. It's actually coming from the Dart budget. So certain things are self contained, so that's the way we look at it.
"Right now the team is very tired after a long process, so we are not looking at anything in the immediate future."
DID THE WHOLE SWITCH TO THE CAR OF THE FUTURE AND THE HOMOGENIZATION OF NASCAR FACTORY INTO THIS AT ALL? "No, not really. I think NASCAR corrected that. I would say with the 2013 movement, and also what they did in Nationwide a couple of years ago. So that might have been and the fans also feel same way; that the Car of Tomorrow is a little generic for everybody involved. And that's been rectified.
"As you know you've seen the 2013 Dodge. We responded and took full advantage of that, probably more so than any competitor. So I think that would have been something to talk about two years ago, but no longer true."
SINCE THE SHEET METAL HAS BEEN APPROVED, IS THERE ANYTHING TO KEEP A PRIVATE TEAM FROM ENTERTAINING A DODGE NEXT YEAR? "That's a very good question. Matter of fact, we had an all-staff meeting this morning and discussed that very thing. We talked about the independents.
"There are a lot of very, very loyal fans and small teams that have been loyal to the fans for years and years and years. That's something that we are going to have to take internally and review. We'll probably talk about that shortly in the next couple of weeks.
"Yes, huge support there and it's obviously relatively doable. It's something that we are going to have to review and understand how we can make that work but for now, no decision on that."
SO IT'S POSSIBLE THERE COULD BE A DODGE NEXT YEAR, JUST WITHOUT ANY FACTORY SUPPORT? "That's up to NASCAR. We have to understand what that means, because we won't have a factory sign up, so to speak. So we'll have to see what that means.
"It's the first time we've been in that situation this way. We'll have to look at that."
HOW HIGH UP (IN THE COMPANY) WAS THIS DIFFICULT DECISION MADE? "This decision and thank you for recognizing how difficult this has been. You have no idea how much we feel the pain. My e mails and Twitter have been blowing up about this subject as people are really passionate and emotional about it. So we don't take these decisions lightly. Really, really, our concern about our fans, happiness factor so to speak.
"But the decision was made at the committee level, like all decisions are in the company. There's nobody with the authority, so to speak, to squash the committee. The committee has looked at this very carefully.
"And in all honesty, the whole thing was very complex, more complex than we thought at first to try to put something together again at the level that we would like to be at. It would not make sense to try to hurry a situation together. As you know, some of these things take months and months to put together.
"Back in March 1 when Mr. Penske signed up with Ford, that was an aggressive decision on Ford's behalf to really have critical mass. That's one thing that we have to look at in the sport - we have not had critical mass in a while. We have been doing disproportionately well with two cars; very well, in fact. If you look at our performance in the last few years, we have been a factor and a thorn in everybody else's side, so to speak. That's made us very proud in our corporation. And our management has looked upon that as a huge accomplishment.
"So there's been a lot of, like I said, we invested even more in racing, and I think there might have been, to be very honest with you, from late last year to the beginning of this year, there was a bit of a revaluation of NASCAR and a decision at the time was to invest in NASCAR.
"We had a chance at the end of last year to kind of scale back, but while we are in the look and see moment is when the decision was made to go with Ford. So, unfortunately that happened, caught us by surprise and we have not recovered since."
IS IT FAIR TO SAY YOU WON'T BE BACK UNLESS YOU CAN FIND AN ORGANIZATION THAT IS AT LEAST THE CALIBER OF ROGER PENSKE? "I don't know. Right now we are still in kind of the shock and awe moment. We are still trying to figure out what it means.
"Of course, we'll never say never. But it's really scarce right now. It's a really tough situation in North Carolina. If we did something like that, it would have to be quite a significant effort. So we'll have to look at that. We'll get back to you as our plans unfold but for now we are just talking about '13."
YOU MENTIONED IT'S A CASE OF THE PUZZLES NOT FITTING TOGETHER. CAN YOU BE MORE SPECIFIC ABOUT WHAT PIECES DIDN'T FIT? WAS IT THE ENGINE PROGRAM OR NOT GETTING A TOP-TIER TEAM? "It was all of the above. Everything from the driver selection, the teams, the shops, the engine, you name it. It's a very, very, very complex situation. So we'll just leave it at that."
IN TERMS OF YOUR RELATIONSHIP WITH NASCAR, DO YOU HAVE ANY SORT OF AGREEMENTS OR SPONSORSHIPS THAT WILL KEEP YOU INVOLVED IN THE SPORT BEYOND THIS YEAR? "No. But we are going to see through the end of this season and we plan to be even more intense as we put all of our efforts into this final series of races, for the Chase and the championship in both series.
THERE'S BEEN A LOT OF CHATTER LOOKING AT THE DEMOGRAPHICS OF THE SPORTS, THE MOTORSPORTS THAT DODGE HAS GOTTEN INVOLVED MORE HEAVILY OVER THE PAST YEAR WITH MOTOR CROSS AND WITH RALLYCROSS AND THE DEMOGRAPHICS OF THAT VERSUS NASCAR. WAS THERE ANYTHING THAT MADE NASCAR LESS ATTRACTIVE VERUS THOSE SPORTS OR WAS IT STILL AN ATTRACTIVE PROPERTY IN TERMS OF THE FAN BASE AND WHAT YOU WERE GETTING ON THE MARKETING SIDE? "Just like our portfolio has diversified, again with the new Dart, it is a segment we have not been relevant in for decades.
"So we had to look at an incremental customer with that particular vehicle and that's why we went into RallyCross. The Viper, same thing. We pulled out of ALMS racing 10 years ago. With the new car, if you remember back in '96, we launched the '96 GTS with a Le Mans effort, as well. So it's a bit of history repeating itself.
"So again, every nameplate has a motorsport that matches, so as the company is re emerging and diversifying, I think personally NASCAR has done a pretty good job; with their social media savniness now and all that stuff, it's as relevant as it's ever been. So it's really unrelated to that."
YOU GUYS INTRODUCED A NEW CAR MONTHS BACK AND THE DEVELOPMENT PROCEEDED ALONG WITH IT. HAS THAT CONTINUED UP UNTIL LAST WEEK OR DID YOU CLOSE THE DOOR ON THAT WEEKS AGO? "No. We were actually just a few days ago working on data acquisition and all kinds of stuff on that car. We have been developing that car for a few years now and the team is quite passionate about it. It will make a beautiful sculpture. A lot of effort went in that vehicle and a lot of good can come from that vehicle."
HOW CLOSE WERE YOU TO THINKING THAT YOU COULD PULL THIS OFF AND DID ROGER PENSKE SEE THIS COMING? OR DID YOU DEPEND SO HEAVILY ON ROGER THAT ONCE HE PULLED OUT YOU DIDN'T REALY HAVE AN OPPORTUNITY TO DO THIS? AND AS A FOLLOW-UP, WHAT WOULD YOU SAY TO FANS WHO ARE TEXTING AND TWEETING AND WHO LOVE NASCAR AND WHO ARE UPSET ABOUT THIS? "Well, first of all, to the fans that are hopefully listening or will hear of this later, we feel, we feel for you. We feel the same way. Many of our engineers, most, actually the entire motorsports team are fans, as well. And we think exactly like our fans do. We love motorsports and love everything about it.
"We are just as devastated as everyone else. And it's with a heavy, heavy heart that we hold this conference. It's with a heavy heart that we feel a little bit like we disappointed our fans who have been there for a long time through thick and thin. We get it.
"But at the same time, hopefully they understand that we don't want to show up just to go racing, we want to win.
"Yes, it's a difficult deal; I'll be very honest with you. To replace Roger, it's not easy. As you know, Roger, it took him several years to get to the level where he's at. These things take a lot of time to develop.
"And of course you have to start somewhere, and starting a third of the way through the season is not easy to do. So that's pretty much where things were at. I don't think anyone saw what happened. If you talked to Roger, he would be the first one to tell you this was not in his crystal ball, signing up with Ford at the beginning of last year. It kind of happened.
"Ford has been very aggressive again trying to get critical mass in the sport with some new launches coming up. That's their strategy. We are not in a position to do the same thing. There's really no one to do it with. It's really a game of musical chairs in NASCAR, is the real deal. They are really shrinking capacity in Carolina."
WAS THE 2013 CAR JUST THE STRAW THAT BROKE THE CAMEL'S BACK? "No. In fact, we were very happy about the 2013 car. The aero testing was positive. I personally thought it was the best looking NASCAR (car) ever. A lot of people, even our competitors were giving us some back slaps about how good the car looked.
"So in that way, I think, again, I have to applaud the teams that are listening to this and our fans that have been really excited to see the 2013 car run. By the way, the Challenger, which I think has done wonders for us in the last few years, looking at good as it has.
"A lot of things are looking very positive, and again, I don't want to put this on Roger. I think it's one of those things, it was a very, very long term deal that Ford put in front of them that you couldn't pass up We were in a bit of a review mode at the time.
"Actually our intent was to get the best out of NASCAR and really understand how we could get the whole company around it, really get more out of it. That's always been my goal since taking over motorsports, to really extract the most from these things, because every dollar nowadays has to really be justified.
"So the decision was made at the beginning of this season to put more, I don't know if you've seen our midway activation in the last few races, they have been dramatic. We went from activating six races to over 22 races, which means full displays, car lines; a lot of money was spent on having a bigger presence.
"So unfortunately, the house of cards kind of fell apart. We really apologize to our fans and love our fans. We hope they remain loyal to us as we really make some of the coolest cars on the planet."
WHEN YOU KNEW THAT PENSKE WASN'T COMING BACK, DID YOU THINK YOU WOULD BE ABLE TO GET THIS DONE AND ARE YOU SURPRISED THAT YOU WEREN'T? "Yeah, we're all a bit surprised. We worked night and day. I mean, literally, my staff is exhausted from meeting with teams, putting together teams and trying to find the right drivers and everything.
"And at the same time, trying to find new people, incremental people to come to the sport, because again, it's really tight nowadays. The sponsors are just not as flush as you would think as they used to be.
"So, yeah, we had our hopes up just like everyone else, and it was really hard to keep our lips sealed, because the last thing we wanted to do was build up expectation and have everything fall apart as it kind of has. We didn't want this day to come, but it has. And at the same time, we thought we would let our fans know as soon as possible. So we wouldn't prolong the mystery, so to speak.
"So again, it's with a heavy heart. I just want to take all of the Dodge fans and give them a big hug, and we can have a beer together, because we are not excited about this but it's the reality of where we're at right now."
WHEN DODGE FIRST GOT IN, THE DEALERS KIND OF SUPPORTED THE TWO EVERNHAM TEAM. DID YOU GO TO THEM AT ALL TO SEE IF THERE COULD BE THAT TYPE OF ARRANGEMENT OR IF YOU THOUGHT ABOUT KIND OF PRETTY MUCH BEING THE SPONSOR OF A TWO-CAR OPERATION JUST TO SEE IF YOU CAN GET THROUGH NEXT YEAR AND SEE IF THEY WERE MAKING MORE TEAMS INTERESTED? "Yeah, and when you say that, it sounds like you're talking about cash again. That was not the issue.
"In the past, we had dealers, literally, providing a portion of every car sale to the sponsorship of a team, and that was an experiment. Evernham Racing was there, many others actually, and so that was a pretty exotic set up. We did think about that and some dealers offered that up. But the issue wasn't that. It's really, how do you compress time and set up a team from scratch, basically, again, at the highest level of racing in less than seven months.
"So it's something that, you know, like I said, we are here to win, and just to be frank, that's what it was about."
SO DO YOU SEE ANYBODY REPLACING YOU AS A MANUFACTUER IN THE SPORT BECAUSE IF YOU COULDN'T DO IT WHO ELSE WOULD BE ABLE TO DO IT? "Well, if we knew the answer to that, we wouldn't be having this phone call.
"Give us time. Again, time changes everything. So we'll see. No commitments. I know the next questions will be, what about 2014. Right now we really have to take a deep breath and end the conversations to be fair to all of the people involved so they can move on with their lives and we have to assess everything.
"Again, my apologies to the fans, and really thank them for their support over the years, and hopefully until the end of the season."
THE IDEA OF GETTING EVERYTHING TURNED AROUND FROM WHERE YOU GOT THE NEWS WITH PENSKE WAS TO A LOT OF PEOPLE A LONG SHOT. SO I GUESS IN SOME SENSE THERE'S NO REAL SURPRISE THAT YOU COULDN'T PUT TOGETHER A GREAT TEAM THIS YEAR. YOU ALMOST INDICATED THAT YOU'RE GOING BACK AND HITTING THE RESET BUTTON. ARE YOU LEAVING SOME OF THE PROPOSALS ON THE TABLE AND TRYING TO PICK UP FROM THERE? DO YOU HAVE ANYTHING, HAVE ANY OFFERS COME IN OR WORKED UP INTERNALLY ANY PLANS THAT YOU CAN SAY YOU CAN HAVE ANYTHING, HAVE ANY OFFERS COME IN OR WORKED UP INTERNALLY ANY PLANS THAT YOU CAN SAY, WELL, THIS IS A GOOD STARTING POINT AND WE CAN AT LEAST GET A LITTLE BIT OF A LEG UP SEEING WHERE WE CAN GO IN THE FUTURE? "Wow, that's a big question. Very complicated situation.
"No. I don't think I would answer it that way and start building up hope again on various levels. There are a lot of things at play that we have to look at. Right now, it's more of a situation; we want to let the dust settle. Some of these teams that we are talking with were not exactly sure what they wanted to do themselves, whether they wanted to get in this late, even back in March, things were already late for 2013 in many cases.
"So I would say we are going to whiteboard everything all over again and reassess. It's just things change, sponsors come and go, and teams come and go, things happen. New drivers show up. Sometimes it's fun to start fresh but right now, we'll have to make the best of this time."
LET'S LOOK AT ANOTHER POINT, THE IDEA OF A PRIVATEER. IT IS VERY LATE BUT YOU DO HAVE A CAR THAT YOU'VE DONE, AS YOU'VE SAID, YOU CAN DEVELOP - SO IT'S NOT EXACTLY LIKE YOU WOULD BE STARTING FROM SCRATCH. TALK ABOUT THE POSSIBILITY THAT A PRIVATEER MIGHT COME IN, ESPECIALLY SINCE YOU ALSO MADE A COMMENT EVERYTHING FROM DRIVER SELECTION TO SHOPS TO THE ENGINE BEING STUFF THAT YOU HAVE TO DEAL WITH. IN ONE SENSE YOU SEEM TO BE SAYING THERE'S A POSSIBILITY OF A PRIVATEER BUT IN THE OTHER SENSE YOU'RE SAYING THERE'S A WHOLE BUNCH OF STUFF THAT MAY MAKE IT VERY DIFFICULT. "What I'm saying when I say privateer, I'm talking about the smaller teams that don't run a full season, that do it for the passion of it. And there's a lot more than two Dodges running on a given weekend. We sponsor two of them and those are entered through other means. And that's a different equation.
"That's something that we have a handful of engines lying around, we have a lot of things related to NASCAR that we have to assess and see if it makes sense to support some of these smaller teams, in kind services, not necessarily cash or big support. But in terms of a factory team, that's a totally different discussion.
"So we have to go back and reassess what that means to us. Again, do some due diligence in that. But again out of respect for the people that have been loyal to the brand, we owe it to them to look at what that means for the private teams, the smaller teams.
WHAT IS THE POTENTIAL IMPACT ON THE DODGE BRAND CONCEPTION AMONG CONSUMERS AND WHAT THIS MIGHT MEAN IN TERMS OF SALES? "We don't know. We have been in this sport since 2001. We'll have to look at that, we really will.
"I think our cars stand up. I've always said this: we make the kind of vehicles that NASCAR is kind of about in a way, rear drive, V 8 vehicles. We are one of the most authentic brands out there. Whether we race or not, our vehicles have credence. We have the Hemi, we have the rear-drive, and we have some of the things that the visceral car lovers love. We have a lot of people that drive Dodges and still cheer for Dale Earnhardt.
"There's a lot of cross pollenization already in that community. So of course it's something we think about. We know there will be a few fans out there that revolt and are upset about this decision and want to go with someone that they see racing. That's understandable.
"But, you know, we have to be focused on the business as we always will. We'll support our dealers and keep making the best cars we know how to make."
CONCERNING THE ANNOUNCEMENT, IS THAT LEAVING NASCAR COMPLETELY AND DOES THAT MEAN THAT THE DODGE SUPPORT THAT'S PRETTY EXTENSIVE IN THE NASCAR CANADIAN TIRE SERIES IS GONE AT THE END OF THE YEAR AS WELL? "No. This has no impact whatsoever on our Canadian deal. That's a very, very different deal. That's a contingency based plan. It's not even on the magnitude of NASCAR. It's a very, very different situation. Many, many, private, smaller teams there. That is untouched. Anything we do in ARCA is untouched. So, yeah, we'll leave it at that."
AS HARD AS IT MAY BE, YOU STILL HAVE THAT OPPORTUNITY NOW TO THROW EVERYTHING BEHIND BRAD KESELOWSKI AND PENSKE RACING'S CHASE CHANCES AND CHAMPIONSHIP GOAL. WILL YOU BE DOING THAT? AND IS THERE ANY SORT OF DIFFICULTY IN DOING THIS BECAUSE ROGER IS LEAVING TO GO TO FORD IN 2013? "No. I don't hold grudges in that way whatsoever. If anything, that is the only silver lining here, that our team was split between working on the future car as well as the current situation.
"So, of course, now all of our efforts are going to be behind Brad and Sam and doing everything in our power to support them. We are doing well. I mean, I'm really, really proud of what Brad has accomplished and his consistency in the first half of the season. It's getting really interesting. I think that (championship) would be wonderful. It would be almost a fairy tale story to leave on the highest note possible for now.
"So thank you, but our commitment to Penske Racing and Dodge brand is unwavering."