USA Today 8/18/2005 12:53 AM
Agent steers NASCAR toward other sports' ways
By Chris Jenkins, USA TODAY
Cary Agajanian talks of a "purity" in auto racing that hasn't existed in sports for such a long time that it almost seems quaint: If you don't win, you can't cash in.
But as corporate sponsors continue to pour big money into NASCAR, fueling teams' demand for established drivers, perhaps it was inevitable that driver deals based purely on performance would one day be tossed on the scrap heap.
Representing a stable of drivers that includes champions Tony Stewart and Matt Kenseth, Agajanian is the driving force behind a recent series of high-profile deals that are reshaping NASCAR into something more closely resembling other pro sports. Negotiations are becoming more public and contentious. The end result: more guaranteed money for drivers.
Today's top NASCAR drivers make money from four main sources: Base salary, a percentage of prize money, a percentage of merchandise sales and personal endorsements. Total compensation can exceed $10 million; clients pay Agajanian a percentage.
Agajanian (pronounced Ag-uh-JANE-ian) won't discuss specific drivers' deals but says that in general, guaranteed base salaries recently have become the biggest source of income for top drivers.
Even as Agajanian decries guaranteed contracts in sports such as baseball — where, he sighs, "a guy bats .150 and he's still getting paid 10 million bucks" — he acknowledges it is his firm's job to replicate those deals for his clients.
"Yeah, that's our job," he says. "But I'm still talking about the purity of the sport. Before I'm a manager or anything else, I'm a student, or a lover of, a fan of, motor racing. And I think that's what makes motor racing more pure than other sports. Now, it's not as much, because we obviously would like our drivers to be paid a major salary."
More money creates more issues
Agajanian, 63, looks more like a friendly uncle than a slicked-back Jerry Maguire. He cringes at the word "agent"; he says it doesn't describe the full range of services his company, Motorsports Management International (MMI), provides for drivers.
With offices in Charlotte, Indianapolis and Los Angeles, MMI helps drivers set up investments and insurance and makes sure they pay their taxes. But it is the firm's contract negotiations that have made Agajanian a polarizing figure.
Stewart's 2003 extension with Joe Gibbs Racing, which guarantees Stewart at least $5 million a year in base salary, has become a benchmark for other drivers. MMI also negotiated controversial deals for emerging stars Kasey Kahne and Jamie McMurray to switch teams.
John Bickford, stepfather of NASCAR's Jeff Gordon, has been a friend of Agajanian's since the 1980s. Still, Bickford notes that with teams desperate to sign established drivers and so few top drivers available, "The agents become really greedy."
"I think the sport getting bigger is a plus, but it also brings other things along, which, to other major league sports, can be a minus," says Ford Racing spokesman Kevin Kennedy. His company lost Kahne to a Dodge team, Evernham Motorsports, in 2004. Last month, a federal judge dismissed Ford's breach-of-contract lawsuit against Kahne.
Only in the past decade have drivers gone from handshake agreements with team owners to written contracts. Today, most drivers have business advisers.
Says attorney Alan Miller, who represents Jimmie Johnson, Kyle Busch and Casey Mears: "The money's going up, the stakes are up, the professionalism's up. The days of doing stuff on a napkin are over."
Gordon got an early jump
Agajanian's father, J.C. Agajanian, was an event promoter at grass-roots tracks in California and a car owner in the Indianapolis 500. Agajanian was a pit crewmember when Parnelli Jones won Indy for his father's team in 1963.
Team owners paid drivers only a percentage of the prize money they won then. But in 1967, rival Indy car team owner Andy Granatelli signed Jones from Agajanian by offering a $100,000 salary — in cash, in a briefcase — and the prize money split. Agajanian says that was the first time he knew of a driver getting paid "just to sit in a car."
Agents find their niche
When he wasn't taking handoffs for the Oakland Raiders in the 1960s, Alan Miller spent his offseasons pursuing a law degree at Boston University. Trying to pack a school-year's worth of work into a few months wasn't easy, so he needed a pal to help him catch up.
"I would give him a few bucks," Miller says.
The running back's note-taking pal: William Cohen, secretary of defense during the Clinton years.
After retiring, Miller became general counsel for the NFL Players Association, then began representing Indy-style drivers. Today, he negotiates and reviews contracts for NASCAR drivers Jimmie Johnson, Kyle Busch and Casey Mears. He also represents a highly regarded female driver, Erin Crocker, who will race in the Busch Series next year.
Miller and Cary Agajanian are the top driver representatives in NASCAR but don't seem like rivals. Miller says he doesn't aggressively pursue clients and charges them an hourly fee rather than a percentage of each contract, as Agajanian does.
Says Agajanian: "Nobody competes with us because we've built a different kind of an organization."
Drivers often turn to John Bickford, Jeff Gordon's stepfather, for career advice, and he has steered clients to Miller and Agajanian. Bickford considers Miller a better choice for more established drivers, while a full-service firm such as Agajanian's might be better for a young driver.
— Chris Jenkins
By that time, Agajanian, who earned a law degree from the University of Southern California in 1966, had developed an interest in the business of racing. He worked with his father promoting races and consulted tracks on insurance and liability issues. That expertise earned him a reputation as the man who "ran" a young Gordon out of California.
At 15, Gordon was dominating the junior ranks and wanted to race more powerful cars. Agajanian wouldn't allow it at his tracks because of liability issues. But he helped Bickford and Gordon with the documents they needed to move to Indiana, where young drivers weren't as restricted.
When Gordon made the jump to NASCAR in the early 1990s, Agajanian reviewed Gordon's first two contracts. Gordon signed with team owner Bill Davis but left for a better offer from Rick Hendrick.
Agajanian didn't charge Gordon's family for his legal advice. But working with Gordon alerted him that guaranteed money was working its way from Indy cars, where Agajanian managed drivers, into NASCAR.
When "I saw what Mr. Hendrick was going to pay him, I went, 'Well, you know, this needs to be a formal business,' " he says.
Guaranteed money grew gradually through the '90s; the breakthrough came in 2003. MMI drew owners Joe Gibbs and Chip Ganassi into a bidding frenzy for Stewart, landing him an extension with Gibbs' team through 2009 that, according to a 2003 USA TODAY report, pays a guaranteed salary of at least $5 million a year.
(Unlike in other sports, where agents try to one-up each other as they compete for clients, the financial details of NASCAR contracts generally are not leaked to the media; Agajanian calls the reported figure "not outlandish.")
Other drivers use Stewart's deal as a benchmark in negotiations. "I think you're certainly starting to see several other drivers that are getting at that level or perhaps even surpassing it," says Rod Moskowitz, MMI's top client manager.
There is no salary cap in NASCAR, but Roush Racing president Geoff Smith says drivers' demands must remain in line with what sponsors are willing to pay. Otherwise, the team won't be able to afford top crewmembers and technical research.
"If the driver thinks that Roush Racing is exactly the same as four other deals in the garage, and 'I just need to go get the high bidder,' that's probably not the right driver for us," Smith says.
Agajanian knows his drivers won't be happy if they don't have cars capable of winning: "There's only so much money in the pie. We've never, ever felt like or ever tried to do anything that hurts the race team."
Deal-hopping causes rifts
Agajanian co-owns a team in NASCAR's second-tier Busch Series, a place to showcase drivers he believes are almost ready for the Cup series. His 30-person staff includes three talent scouts who go to small tracks across the USA to watch promising drivers. He wants to sign the next McMurray or Kahne before a team discovers him.
Agajanian says too many young drivers and their parents negotiate with teams without professional representation and end up signing one-sided "development" contracts of up to 10 years: "They read it, and they go, 'Yeah, that's OK, this is more money than we ever imagined.' ... They don't understand the protections that need to be there for the driver."
McMurray was a virtually unknown 26-year-old when Ganassi signed him to replace injured veteran Sterling Marlin in 2002. McMurray won his second race, attracting attention from other teams. McMurray wanted a better deal, but he was contractually bound to Ganassi through the end of 2006.
That's still true, but there's a twist: After signing with MMI, McMurray signed a contract to join Roush Racing in 2007.
The move leaves Ganassi two options: Spend the entire 2006 season investing the team's resources in a lame-duck driver or negotiate a buyout with MMI that will allow McMurray to leave at the end of this season. So far, Ganassi seems unwilling to consider a buyout.
Petty Enterprises driver/CEO Kyle Petty says both parties could lose. If McMurray pouts, it will hurt his reputation. But if Ganassi plays "too hard a ball," other drivers might be hesitant to sign with him. In the end, Petty says, "Jamie signed a contract, and he should live up to his contract."
McMurray's deal set a precedent that unexpectedly affected Roush last week, when reigning champion Kurt Busch announced a similar deal to leave Roush for Penske Racing South in 2007. Busch isn't an Agajanian client but informally consulted MMI before making the move.
There are no tampering rules to prevent drivers from negotiating with rivals while they're under contract. NASCAR spokesman Jim Hunter says because drivers are "independent contractors" who work for teams, officials won't try to regulate them: "We're not privy to their contract information, and they're not employees of ours."
It is common for a driver with a few months left on his contract to begin negotiating his next deal. But Miller says the idea of a driver signing with a rival team more than a full season before his existing contract expires, while legal, creates "an atmosphere that's totally different than used to exist in NASCAR."
Busch has spoken openly about his desire to be released from his Roush contract. To Miller, a former Oakland Raiders player and NFL Players Association executive, that isn't much different from a player in another sport demanding a trade.
Some in the garage area believe it is only a matter of time before a driver engages in the ultimate expression of agent-fueled greed: a contract holdout. "NASCAR is becoming more and more like a major sport," Kennedy says. "Could it happen? Sure."
Agajanian doesn't foresee drivers holding out: "We would never, ever recommend that our drivers break the contract or violate a contract."
But, adds Moskowitz, "Never say never."
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