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Discussion Starter · #1 ·
IMPORTANT: The RDG-CARS termination, the error of the CARS President and Board, and reform for CARS

To the shareholders in Canadian Rally:

I write to you as a competitor only and not representing any interest group.

The President of CARS (Terry Epp) and the Board of CARS (the elected representatives of the competitors in each of the five regions) committed a grave error at the end of last week that jeopardized rallying in Canada and from which it may not recover in the near future. The significance of this is enormous, it should not have happened, and it indicates to me, and I hope to you, that profound changes have to be made in the way rallying is run in Canada. I believe that it may cause me to lose my sponsors and not be able to continue racing.


BACKGROUND:

As you may know, the Rally Development Group (RDG) was formed early this year by Jud Buchanan and Keith Townsend to handle the business end of rallying in the country ? sponsor development, media relations, competitor relations, and so on. This had previously been the mandate of CARS through the Board of Directors and Terry Epp.

RDG came into being essentially because Subaru Canada, the most significant sponsor of the rally series in Canada, felt that its support had been taken for granted and that CARS was not doing its part to develop other co-sponsors of the series to take some of the burden. At the 2002 CARS Annual General Meeting (AGM) in Calgary they said that they would renew their sponsorship for one more year on the explicit condition that a cosponsor be found during 2003. When CARS did not do this, they gave the sponsorship money to RDG to be used as RDG saw fit in 2004. At the 2003 AGM in Montreal, Terry Epp and the Board arrived at the meeting with no sponsorship in place for 2004 and RDG arrived with Subaru?s mandate in hand.

The majority of the Board and President did not accept RDG and the arrangement with Subaru happily. They resisted the idea of a marketing group and thought that they could negotiate an independent deal with, first, Subaru, and then Yokohama.

By then end of the meeting only the intervention of the committee of event organizers broke the deadlock and a tense arrangement between CARS and RDG, with Subaru?s backing, was put in place for 2004.


THE CURRENT YEAR:

Throughout 2004 RDG did what I (and I believe all competitors) thought was an excellent job of marketing rally in Canada. We?ve seen newspaper coverage of an unprecedented scale, the TV shows have been excellent, and RDG was developing sponsors for 2005 and beyond. Tow funds have allowed more competitors to cross the country to make the series more national. The RDG webpage was very professional and I could send sponsors there to explain the series and follow its progress, which I could never say of the CARS page. In short, they were marketing rally in Canada better than it had ever been marketed before. They were running it as a business, but as a startup business in which they took a personal loss in the first year in order to build the business.

The RDG-CARS agreement that had been hammered out under the tense circumstances of the 2004 Montreal AGM contained a termination clause that would allow either party to terminate for non-performance of some substantial aspect of the agreement. The deadline for the termination provision was midnight on Nov. 12.


THE UNJUSTIFIED ACTION:

On Nov. 11, Terry got what he considered enough support from the board - and not everyone on the board participated in this process - to go to RDG and stipulate contract changes on the day before the termination clause deadline. The changes were significant and odd: a two-week termination notice provision (which is impracticable when working with sponsors who expect to be able to rely on RDG for at least the whole year), stipulated consultation with the CARS president (alone) for any sponsor negotiations (also highly burdensome), and a $2,500 licence fee per event to be paid by RDG to CARS. What any of these things was likely to achieve or how it addressed any perceived problems with RDG was not explained to anyone, including the certain board members who were not consulted.

As a lawyer who negotiates contracts every day I can tell you that these are highly onerous obligations to impose, for no apparent reason, at the last possible moment, and if I were a lawyer for RDG I would have advised them to consider, among other things, walking away.

RDG considered the obligations too onerous, and their unwillingness to capitulate led Terry, acting alone or with partial board support, to terminate the agreement with RDG at literally the 11th hour - half an hour before midnight of the termination deadline.


THE CONSEQUENCES:

Either Terry and the board members did not consider the consequences or they were monumentally blind to the significance of the termination.

In the first place, all goodwill with current sponsors and RDG itself is lost. Now, I don't think anyone saw RDG as a one-year startup - these relationships take time to build and all evidence indicated that RDG was doing as good a job as anyone could in similar circumstances. I see no negligence on their part.

Of course the most precious relationship has been with Subaru. We know from last January's AGM that Terry believes that CARS can convince Subaru to renew and that he can do it directly. But all evidence is to the contrary: Subaru appointed RDG as their agent for the sponsorship monies for a reason and that's how we (a) got here with RDG and (b) convinced Subaru that renewing was worthwhile even after the previous year which had been conditioned upon CARS getting co-sponsors of significance. That failed, so Subaru went to RDG. Now CARS has caused RDG to fail, and I will not be surprised if Subaru pulls out of title sponsorship.

I believe that Subaru has been very, very clear that it will not deal with CARS directly. If Terry and the board did not realize that (and, it appears, may still deny it) then we have to question the wisdom of those who do not see what was perfectly plain to everyone else at the last two AGMs: Subaru feels taken advantage of and will only deal with rally in Canada through more businesslike channels than they did previous to 2003. Further, they have lots of requests for their sponsorship dollars and must consider where to most effectively place them. If the placement is not effective or the relationship too difficult, then they can and will pull out.

If there is no title sponsor equivalent to Subaru, then there can be no television, and without that, the manufacturer rally teams (including Subaru?s own, and Suzuki?s) become less valuable and difficult to keep in the series. Without TV, I expect teams will pull out.

I and others at the front of the pack cannot make competing viable without TV and media for my sponsors, and at this crucial moment - while budgets are being done and decisions being made ? if I tell them that there is no TV I will have a harder time convincing them to support me. So I'm in a very bad position personally. Without a change, I won't be able to race.


WHAT HAPPENED?

So the way that I see it is this: essentially unilaterally, or perhaps with partial support of the Board, but for no apparent reason, Terry Epp has probably lost Subaru, lost whatever other sponsors RDG had been cultivating, and consequently removed a number of competitors from the field. Further, I understand that some of the Subaru money has traditionally been used by events to cover expenses ? without this, organizers will find it more difficult to make events viable, and entry fees may rise, affecting all competitors.

So corporate legitimacy and consequences aside, here's what really upsets me and what we must address: did anyone think of the competitors? Did Terry (and the partial board?) just not realize that his actions would take out not just individual competitors, but possibly entire teams? Early yesterday I emailed Terry to ask ?what I am supposed to do now?? but he has not responded.

Also, as a matter of corporate procedure and accountability, not involving the whole board in a meeting to discuss a very significant executive action is against the law of corporations. In a business it would normally lead to the removal of the director in question. Worse, it appears that Terry and at least some of the board are now participating in a reprehensible plot to solicit Subaru directly with the expectation of being turned down in order to shift blame away from themselves and onto Subaru and RDG, which is preposterous.

So I believe that something has to be done.


WHAT CAN WE DO?

First, I think that Terry Epp should resign or be removed as president for abusing his position as an officer elected by the Board that he did not properly consult.

Second, I think that the competitors in Canada should form a Competitors? Committee so that their interests can be articulated and protected at the national level. Technically, of course, the regional directors on the board are supposed to fill this role, but they have not done so on this occasion and I believe that a Competitors? Committee, mirroring the Organizers? Committee that currently exists, is an appropriate entity. Board members must be made accountable to their electorate.

Third, I think the by-laws of CARS should be revised to (a) increase the number of board members from five to seven, to include the President of the Organizers? Committee and the President of the Competitors? Committee, and (b) reform the process of electing a President to a more complete and democratic process that does not involve the outgoing president presenting himself to the Board at the end of the final Board meeting of the year, literally at the 11th hour on the night before the AGM, for reappointment.

Fourth, the tasks and paperwork associated with the CARS office in the Epp?s home should to the extent possible be contracted to a secretary or other entity. The Epps are paid an annual stipend for this. It has been suggested that the ASN itself might be an appropriate administrative office, and we can negotiate the fee. Otherwise there are others who I think might be willing to take this on.

All of the above is simple enough to achieve with respect to the bylaws and operating procedures of CARS ? it just requires the competitors and club presidents to use their voices.


IN CONCLUSION:

In summary, something has to change in CARS, from the parties who are running it, to the by-laws that require revision, to the lack of consultative process, to the unbusinesslike modus operandi. As a competitor and shareholder I feel absolutely cheated. If this were a corporation and I an investor, I would sue for management negligence, and CARS would become another Enron or Andersen with directors that misrepresented the business realities for their own interests.

What can we do right now about the departure of RDG and possibly Subaru? The first thing is to attempt to reform CARS along the lines above, or along lines that you might suggest. The second is to request in the most reasonable terms that RDG reconsider their position. The third is to tell Subaru that, unbelievably, CARS doesn't fairly represent the people who give the board its mandate, and that continuation is viable and wise.

Will this undo the very grim consequences of Terry?s actions on behalf of CARS last week? I sincerely hope so. I also hope also that we can move forward with a better organization and a stronger community. This is a terrific sport, and we need effective, businesslike people running it who both love it as a sport and know how to manage it.

As a competitor,
ACP

Please see related posting at http://www.specialstage.com/forum/cgi-bin/DCForumID4/680.html for announcement of a meeting at Tall Pines this weekend to found a Competitors? Committee.

See also the news item that has just been posted at www.insidetracknews.com - click on "Breaking News"
 

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RE: IMPORTANTCARS

This strikes me as a real-life !!! situation, one we need to handle the same way we'd drive thru a bad place on stage.

We need to slow down, keep our eyes open, and try to find out as much as we can so next time we run thru the same place, we can get back up to speed faster.

Rally of the Tall Pines just got a whole lot more interesting, as if it needed any additional drama!

Dave G
 

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The RDG-CARS termination

I remember standing around at a driver's meeting shortly after the CASC - ASN/FIA imbroglio and Terry asking for someone to take over the presidency because he wanted to get back to competing. Nobody did. I relate this not to make any point - just to help illustrate the state that existed at or near the birth of CARS. I have always considered CARS to be sort of 'competitor-run' and I would hate to think that a movement was afoot to make it 'owned' in anyway. I always considered it a good thing that we didn't have a national office full of well-groomed PR types who pissed everybody off.

Now I find, as a competitor, that there's big doings behind the scenes that I was unaware of (not that I tried to find out on my own). A power struggle. Who's in charge here?

The president apparently pulled the rug out from under RDG because of 'non-performance of some substantial aspect of the agreement' What are the details? We can't talk about CARS' inability to find a co-sponsor the previous year(for instance) w/o revealing the reason given for executing the escape clause. TV coverage, a nifty web site and tow money are good. But what were the expectations of the agreement?

It's CARS that holds the authority to negotiate with sponsors for the CRC correct? It's not a huge stretch for me to imagine CARS and/or the president characterizing the RDG maneuver at the annual meeting as an end-run. They weren't happy about it and I would guess that the 'proposed' agreement modifications were little more than tactics designed to lead to dissolution of the agreement - maybe tit-for-tat.

In the middle of it are all us mild-mannered very polite Canadian competitors (you know, the ones in the cars) who haven't lived in the Big Apple (sorry - being a smart-ass) and therefore are more likely to wait and see how this thing pans out, than we are to get up off the couch and do something. I say we take ACP's advice and form a group or committee or union or whatever and (speaking for myself) find out what the heck is going on here. Nobody does anything without all us competitor/suckers spending a lot of our own money - regardless of sponsorship.

Robin
 

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RE: The RDG-CARS termination

Andrew,

1) I don't disagree with the suggested reforms to CARS, because they are good

2) I do REALLY THINK that you need to talk to more people and gain a more complete view of the chain of events and how things have been conducted by all sides involved.

3) I do not agree with your inferences regarding the possible actions and/or motivation behind those actions of CARS and/or Terry Epp. You don't know really, do you.

4) But worse, honestly and with a bit less emotion, what is more jeapordizing to potential sponsors, a private negotiation or postings like this on the internet. Think about it. Really.

5) I can tell you FLAT OUT that there is a complete and very real aura of influence in southern ontario which does not extend beyond that area regarding what "should" happen with canadian rallying. Talk to the rest of the country and see how they see it.

6) who is being manipulated here ? Are you a pawn or what ? :)
 

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RE: The RDG-CARS termination

Andrew,

You have my support? and I know that the Rally in Canada lost (last year) many opportunities (new sponsors) because the stupid politics of B.O.D
Terry?s position is well overdue as well as position of many on the board and most likely is too late to see this sport having another chance for many new sponsors.

Pat,

With all respect to you and being your biggest fun I have to say?Wake up man?soon you are going to rally against yourself?:'(

Jerry
 

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RE: The RDG-CARS termination

Jerry,

I stand by what I say, the reforms are good, but I know that negative comments abour third hand heresay is not representative nor constructive.

-Pat
 

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RE: The RDG-CARS termination

Regardless of what went on, we should have been, and should be informed. Prior to the action. I have been giving potential sponsors incorrect information! I am going to have to eat a lot of crow if I have to go back to them without an alternate to RDG. Not good for the old credibility... There is an alternate...is there not? If not there best be one soon or that will be the final nail in my rally coffin....
www.joebattrick.com
 

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Discussion Starter · #10 ·
RE: The RDG-CARS termination

Dammit Joe - in four lines you expressed what took me 2000 words.

Competitors need to know what's going on, and need to know now.

ACP
Flirting with the laws of physics.
 

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RE: The RDG-CARS termination

I don't know who arranged for it but huge tow funds, transportation assistance, and free PR sure don't suck.

See y'all in a couple...
 

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Panic in the Great White North

>Competitors need to know what's going on, and need to know now.

CARS could hire Kurt Spitzner, the self-proclaimed "sticker nazi", "marketing guy", "benevolent dictator", and his PRB. They will promise you national sponsorship each and every year. Everyone down here thought that was great... until SCCA dumped them.

On the other hand....

You could suck it up, dump the TV stuff, buy a cheap car, and get back to real rallying rather than "he with the most money wins forest sprint racing" mentality that has permeated rally of late.
 

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RE: Panic in the Great White North

Jens, Rally Racing up here is changing. There is now a professional side of the sport that needs to be treated as such. For me (I know this is going to offend some but here goes anyway) it was never about the fun factor... It's a stepping stone to a full time career in racing. And low and behold it's working out. My limited success in the rally car has opened other doors in motorsports. For that I am gratefull. I do enjoy rally racing, the camraderie, the challenges, etc., and want to stay in the sport. I would like to be around long enough that I gain the experience to challenge guys like ACP, Pat, Tom, Frank etc..those to me are real rally racers, and that is real rallying. Please don't take offence it's an "in the eye of the beholder" thing. I have often said that some day when I have accomplished my goals. I will build up a nice Group D car and go out just for the fun of it...
Joe Battrick Motorsports
www.joebattrick.com
 

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RE: The RDG-CARS termination

>Check out Mark's article that ACP posted the link to. Its
>rather informative. But yes, we'll have to see what
>develops.

Actually, it is a opinion piece NOT an article. It is tagged as, and reads as, a commentary ... which has different standards of accuracy and ballance. Clearly Mark was fed a slough of facts from the RDG side, and basically stonewalled from the CARS side ... not his fault, but the piece is one sided for sure.

Are there problems ... yup. Are there solutions ... yup.
 

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RE: IMPORTANT: The RDG-CARS termination, the

Wow, awesome exposure you allow us to have now... An article on insidetrack and alot of assomptions... Does anybody know exacly what happen nor how it happen ?

I dont, but I would make sure I do get both sides of the story before blaming Terry and go public about it...

That s only my humble opinion but hey guys, we just announced our TV contract and new sponsors for the 2 wheel drive cup here in Quebec, why dont you come and play with a bunch of talented young spirited drivers ?

Julien Pilon
 

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RE: IMPORTANT: The RDG-CARS termination, the

Simply to add a little balance: I don't think their is anyone that has a greater interest in Canadian Rally than Terry Epp.! It's his baby and he knows full well, sink or swim is in his hands. I don't think that the relationship between CARS and RDG as contentious as it was could have yielded the results that are possible and everyone is hoping for. However, that?s not to say for what reason the relationship was contentious ? We can only hope that like another recent adversity on the NA rally scene this one works out for the better.
 

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RE: IMPORTANT: The RDG-CARS termination, the

Hopefully this will be brief. As someone who doesn't have all the facts, I can only say that:

A./ I trust Terry to have the best interests of "the sport" in mind while exercising his duties and responsibilities as President of CARS

B./ Equally, I trust the CARS B.O.D. to safeguard those same interests and to hold the President accountable for his actions, while being held accountable by their own regional consituents.

C./ I know what motiviates ($) sponsors and for-profit marketing groups. While their motivation may not be the same as that of the CARS president and executive, their desire is no doubt the same: to see rallying grow and flourish in Canada in a sustainable fashion (read: kept economically viable)

D./ Blathering one's opinions, heresay and partial facts on the internet is fraught with peril.

These are complex issues being handled by individuals (people like you and me) with strong personalities, differing motivators and differing opinions on how to achieve the shared desire: a healthy series with a good field of competitors that get good media coverage and who all play safe while having fun.

Let am also add, that I don't think there is anything wrong if someone makes money off of rallying in Canada -- this is not some altruistic pass time of the priviledged few. However, keeping corporate interests separate from legislative governors (sanctioning bodies) should be the first rule of motorsports democracy.

My $0.02

Bill Westhead
PS Since I now have a no-good Snell SA95 helmet and an FIA-certified suit that as expired in some jurisdictions, perhaps this is a good time to step off this crazy bus...<sigh>
 

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RE: IMPORTANT: The RDG-CARS termination, the

>Throughout 2004 RDG did what I (and I believe all
>competitors) thought was an excellent job of marketing rally
>in Canada. We?ve seen newspaper coverage of an unprecedented
>scale, the TV shows have been excellent, and RDG was
>developing sponsors for 2005 and beyond.

> In short, they were marketing rally in Canada better
>than it had ever been marketed before.

1) They LOST Yokohama's sponsorship for us (when Terry had a deal with them all set up)
2) There has been NO (NONE, NADA, ZIP) newspaper coverage outside of Ontario
3) They've come up with the same number of new sponsors as you are complaining about how Terry did (again, NONE, NADA, ZIP)
4) The TV shows have been done by the same people as last year, so the TV coverage was the same, EXCEPT that, instead of 3 weeks after the event, they are now appearing 3 MONTHS after the event.
5) Competitors out here in the west didn't know about the tow funds until the last minute, same for the eastbound train, and we don't know if there is going to be a train for 2005.

This is marketing rallying in Canada better than it had ever been marketed before? Sorry ACP, but RDG has done a CRAP job of marketing rallying. They've had an entire year now, and there is nothing forthcoming about next year. As you've mentioned, we competitors need to know stuff well in advance and so far RDG is stonewalling us about 2005.

>THE UNJUSTIFIED ACTION:
>On Nov. 11, Terry got what he considered enough support from
>the board - and not everyone on the board participated in
>this process - to go to RDG and stipulate contract changes
>on the day before the termination clause deadline. The
>changes were significant and odd: a two-week termination
>notice provision (which is impracticable when working with
>sponsors who expect to be able to rely on RDG for at least
>the whole year), stipulated consultation with the CARS
>president (alone) for any sponsor negotiations (also highly
>burdensome), and a $2,500 licence fee per event to be paid
>by RDG to CARS. What any of these things was likely to
>achieve or how it addressed any perceived problems with RDG
>was not explained to anyone, including the certain board
>members who were not consulted.


Terry Epp is a highly disciplined, highly diplomatic, highly introspective person who does not do anything half-cocked or in an unjustified manner. I suggest you find out both sides of the story before you go claiming things about which you really don't have the inside knowledge of. There is far more to this story than you know or are reporting here.

And the only time I've ever seen certain board members not consulted about issues occurrred when the board member was showing themself to be in a conflict of interest position (ie, communicating private information to the other party in the negotiations). Not that I'm suggesting anyone is doing anything here in this case, you understand, I'm just saying.......
 

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Discussion Starter · #20 ·
RE: IMPORTANT: The RDG-CARS termination, the

My initial letter was strong but what I hoped would happen has now happened: we're talking about it. I don't think RDG are angels either - I think they have a responsibility to continue with the project. As with every business, their business can be improved. I'm glad for your suggestions on that, Dave. Were they to go forward, I'm sure they would be too.

Part of my motiviation in writing was to get RDG, and CARS, back to the table. It's both the process and the consequences that are stunning and need explanation. I'm asking for an explanation, and suggesting that maybe RDG could negotiate with a reformed CARS.

But I can tell you that my research was careful and triangulated. I talked with stakeholders on all sides. The only reason I didn't have Terry's side is that he didn't respond to me. I did try.

I want an explanation, and I want competitors to get more respect and a real voice. CARS, and RDG for that matter, has to be accountable and representative. Surely you can't object to that?

Andrew
 
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