While some AMA supporters are proclaiming a significant legal victory for the AMA, and while a recent website headline proclaimed “Court Favors AMA Over Edmondson In Suit,” a February 2 Appeals Court ruling requiring a retrial on the amount of damages the AMA owes to Roger Edmondson presents the AMA with a very difficult legal problem and the possibility of even greater damages being awarded to Edmondson.

The AMA’s problem is that the Court of Appeals has ruled that the association’s guilt has already been established and all that is at issue is the amount of money the AMA has to pay Edmondson over and above the $240,000 already affirmed. What that means, legal experts say, is that while Edmondson’s lawyers get to present their case again in front of a new jury, the AMA lawyers will not be able to present rebuttal witnesses or claim that the AMA is not guilty as charged.

The issues to be decided by the new jury include the value of the tangible and intangible assets of Edmondson’s business, including cash flow projections and good will, as well as the amount of punitive damages the AMA will be ordered to pay Edmondson. There is nothing to prevent a new jury from finding that the AMA should pay Edmondson even more money than the first jury ordered.

Edmondson also enters the retrial with a significant advantage in terms of proving the value of the disputed joint venture. At the time of the trial in December of 1998, Edmondson’s legal team had to estimate and project the cash flow the joint venture could generate. At the retrial, Edmondson’s legal team will not have to rely on estimates, because the exact revenues generated by AMA Pro Racing in 1995, 1996, 1997, 1998, 1999 and 2000 will be known and available and can be used to put a value on what was the joint venture and is now run soley by the AMA. Furthermore, since CCS was purchased by SFX Motor Sports in 2000, there is now an accepted method on record used to establish the value of a motorcycle racing business. The combination of those three new pieces of information–the revenue generated by AMA Pro Racing across a six-year post-Edmondson span, the method of determining the actual value of a motorcycle racing business, and the actual sales price of CCS–gives Edmondson’s legal team a strong base to value the business as being worth significantly more than the first jury heard.

Edmondson’s personal income during the years the joint venture operated can also be compared with his personal income in the years after the AMA took over the joint venture entirely, and sources close to the case say that income dropped dramatically from (approximately) between $700,000 and $1,000,000 per year.

It is worth noting that in its statement issued February 3, the AMA characterized the joint venture dispute as a non-renewal-of-contract dispute, while the courts have ruled it was indeed the joint venture that Edmondson has claimed it was all along.

And because the Court Of Appeals ruled that trebling of damages under North Carolina law applies to the case, Edmondson’s legal fees will have to be paid by the AMA, again the only issue being how much the AMA will have to pay. Because significant legal costs are likely to be incurred in preparation for and during the retrial itself, the Court of Appeals vacated the order for the AMA to pay Edmondson’s legal fees incurred thus far and ordered that the judge in the retrial determine the amount the AMA owes Edmondson after all the litigation in the case is completed.

The bottom line is that the Court of Appeals ruling is not a vindication for the AMA, and that the AMA’s potential exposure in the case is as high or higher than it was prior to the ruling.

The purse for the Formula USA Unlimited Superbike class is now half of what it was in 2000, now paying $5000 for an overall win instead of $10,000.

The purse payout schedule included in Formula USA’s 2001 licensing kits shows that the purse for the class is now $20,000 per Unlimited Superbike race weekend instead of $40,000. The purses for the Sport Bike, Aprilia Cup Challenge and Buell Lightning classes are unchanged, and new purses are listed for the 200-Mile Team Challenge and Unlimited GP, Sportsman, and 600cc Supersport Amateur classes.

The payout in Unlimited Superbike is now as follows:
Race 1 Race 2 Total
1. $1250 $3750 $5000
2. $ 925 $2775 $3700
3. $ 675 $2025 $2700
4. $ 450 $1350 $1800
5. $ 325 $ 975 $1300
6. $ 250 $ 750 $1000
7. $ 225 $ 675 $ 900
8. $ 200 $ 600 $ 800
9. $ 175 $ 525 $ 700
10. $ 150 $ 450 $ 600
11. $ 125 $ 375 $ 500
12. $ 100 $ 300 $ 400
13. $ 75 $ 225 $ 300
14. $ 50 $ 150 $ 200
15. $ 25 $ 75 $ 100

AFM 600cc Production Champion Stuart Stratton was the big winner in CCS Sunday action at the Streets Of Willow course, in the absence of Saturday’s stars, Anthony Gobert, Aaron Gobert and Tommy Hayden. The Goberts and Hayden tested at the track Friday and Saturday but did not race on Sunday.

Riding a Yamaha YZF-R6 on Metzeler tires, Stratton won the Middleweight Supersport, Middleweight Superbike and $1000 Unlimited GP Shootout races. The Shootout race was red-flagged three times.

Although details have not yet been announced, Formula USA has brought back the Team Owner Program and points fund in effect prior to the 2000 season run by SFX Motor Sports. In 2000 the F-USA Unlimited Superbike Points Fund was paid out to individual riders, with Champion Grant Lopez being paid $50,000 and second-in-points John Hopkins being paid $25,000. Under the terms of the 2001 Team Owner Program, points fund awards will be paid to the registered owner of each team, and individual riders can own their own teams.

According to SFX Motor Sports’ Bill Syfan, the amount of money in the points fund and the payout schedule to participants in the Team Owner Program will be announced as soon as they are finalized.

Team Owner Program registration packets will be available from Nancy Selleck at SFX Motor Sports, (817) 332-4822, extension 102.

Reliable sources involved in Grand Prix World Championship Racing say that 400cc four-strokes may invade the 250cc class as early as 2003.

Four-strokes with up to 990cc are already slated to compete against 500cc two-strokes in Grand Prix racing’s premier class starting in 2002, and word that putting 400cc prototype four-strokes up against 250cc two-strokes is being discussed puts the future of two-stroke racebikes firmly in doubt.

The future of the 125cc class is also unknown.

Yoshimura Suzuki’s two days of testing with Mat Mladin at Spring Mountain Motorsports Park in Pahrump, Nevada on Thursday and Friday were a success. According to sources who were trackside during the sessions, Mladin’s best time was a 1:36 and his team was happy with what they accomplished during the track time.

For the first time in the Edmondson v. AMA case, the AMA has publicly admitted that errors were made and has outlined a plan to avoid similar problems in the future. A statement posted on the AMA website www.amadirectlink.com February 3 and headlined “Court Rules In AMA Appeal”, reads: “The Fourth Circuit Court of Appeals in Richmond, Virginia, has issued a decision in the American Motorcyclist Association’s appeal of a 1998 circuit-court ruling stemming from a lawsuit filed by the Association’s former road-racing manager, Roger Edmondson, the AMA reports. “The Court of Appeals reversed the lower-court ruling on two of the 10 points raised in the AMA’s appeal, and ordered the lower court to correct mistakes in four other areas. That had the effect of upholding less than 10 percent of the damages awarded to Edmondson, reducing the judgment from $3.2 million to $240,000, with some elements of the case still to be determined. “The lawsuit arose from the non-renewal in 1994 of contracts under which Edmondson functioned as manager for the AMA’s national championship road-racing series and administrator for several classes included in that series. At the time of his departure from those positions, the AMA entered into negotiations with Edmondson and made a financial offer to terminate the relationship. “Those negotiations were unsuccessful, and Edmondson ultimately formed the North American Sport Bike series, signing contracts with several racetracks that had previously hosted AMA road races. Subsequently, most of those racetracks terminated those contracts and returned to the AMA schedule. “Edmondson then sued the AMA, alleging that the Association had interfered with his racing program. In 1998, he received a $930,000 award from a jury, and a ruling by the lower court that the AMA should pay triple damages, resulting in a $2.8 million judgment. To that was added some $400,000 in legal fees for a total of $3.2 million. “‘We felt, and several internal and external legal advisors agreed, that the facts of this case did not justify the damages assessed in the lower court, so we proceeded with the appeal,’ said Rick Gray, Chairman of the AMA Board of Trustees. ‘We are pleased that the Court of Appeals listened to our arguments and substantially reduced the damages in this case. “‘In 1990, the AMA entered into a joint venture agreement with Edmondson that bound us together contractually,’ Gray noted. ‘By 1993, we realized that we had irreconcilable differences regarding the future of the AMA’s road-racing program, and we sought to find an amicable end to that joint venture agreement. “‘The AMA never set out to take anything from Mr. Edmondson without compensation,’ Gray said. ‘Indeed, Mr. Edmondson was repeatedly offered a fair value for his consulting services after the end of his business relationship with the AMA, a value that far exceeded the amount of damages affirmed by the appeals court. However, the AMA could not reach agreement with Mr. Edmondson and, when he repeatedly refused those offers, the AMA had to go forward and continue to run its racing series as it had for the previous 70 years.’ “The ruling by the appeals court says that after the negotiations failed, the AMA moved to appropriate the property that was part of the joint venture. It specifically says that the AMA took control of a mailing list owned by Edmondson and interfered with contracts he signed with three racetracks. The total value of those assets is placed at $80,000, and the court has, pursuant to North Carolina law, ordered the AMA to pay Edmondson triple that value as compensation, for a total of $240,000. “Still at issue is the value of Edmondson’s share of other tangible assets of the joint venture agreement, including such items as computer and racing equipment. The appeals court ruled that the lower-court judge had made a serious error in the way he instructed the jury to tabulate that value. That part of the lawsuit was responsible for $2.25 million of the $2.8 million total award. The appeals court also completely rejected the lower court’s finding that the AMA owed Edmondson a portion of television revenues. “‘Hopefully, this decision moves us much closer to the conclusion of a case that is based on business dealings which took place many years ago,’ Gray said. ‘It is apparent that errors were made by the trustees and staff in the way agreements were structured with Roger Edmondson, in the attempts to negotiate with him and during the litigation. Those actions were misconstrued and played a role in the lower court’s original verdict.’ “The lower-court judgment has been budgeted by the Association and set aside since the original ruling was handed down. In the meantime, the AMA Board has reviewed policies and instituted a number of changes in the way the Association enters into contracts with those providing services. “‘One of the results of this litigation is a resolve on the part of the trustees and staff to never let this happen again,’ said Gray. ‘In today’s commercial climate, we cannot avoid lawsuits. However, since the time of the turmoil that led to this verdict, the Association has taken steps to protect against a recurrence. “‘Contracts with significant vendors and other business relationships are now subject to an intense business and legal review prior to execution. In today’s business world, relationships must be defined at the outset, and those definitions must be in writing. If that had been done with Mr. Edmondson, both he and the AMA would have known exactly what the ending of their business relationship would mean to them.’ “While the case has dragged on, the AMA has moved forward with its competition program, creating a professional racing subsidiary under the direction of a separate board. In road racing, Supercross, motocross, flat-track and hillclimb competition, the Association has been able to bring in new sponsors, increase payouts to riders, expand the fan base and substantially upgrade the level of television coverage for professional motorcycle racing. “‘The creation of this new subsidiary has allowed the AMA, under the leadership of its President, Robert Rasor, to focus on its primary role of protecting motorcyclists’ right to ride, while AMA Pro Racing continues to expand opportunities for the racers, teams, promoters and fans involved in motorcycle competition,’ Gray concluded.”

Reader (and GLRRA racer) Ron Henning of Kalamazoo, Michigan sent this e-mail to Roadracing World in response to our item quoting Erik Buell explaining his take on the recent AMA Pro Thunder rules-change controversy (see roadracingworld.com, Breaking News, January 26): “‘One of the tough things you have to do is grow up and be more mature’ says Erik Buell. “Is it immature for a rider to voice complaints about a rule change that threatens a class and will cost the rider several thousand dollars? Or is Erik Buell saying that the AMA cares about input from the manufacturers (who have sponsorship money) but not from the sniveling, ‘immature’ riders trying to race on a shoestring? Let’s face it, we all know who the AMA is willing to listen to. But let’s not blame the rider’s ‘immaturity’ when their poverty is really the reason they were shunted out of this decision. “First, let me say that I don’t race Pro-thunder or even AMA. I don’t have an axe to grind and have never personally had any problem with AMA rules or officials. But Erik Buell’s ‘defense’ of the Pro Thunder rule changes is laughable.” “‘They notified us before they made the changes (to the Pro Thunder rules),’ said Buell in a telephone interview with Roadracing World. ‘I make it a point to talk to them (AMA officials) and just check on things. They didn’t call me on the phone.'” “By his own admission, he wasn’t notified of the rule changes until he called and asked. So is the average rider supposed to be comforted by the fact that Erik Buell had good enough connections within the AMA to receive advance notification (if he asks the right questions)? Does Buell really think that Joe Racer is going to get the same cooperation he does? And does AMA really expect every race team to call several times a season (and in the off season) just to ask if anything might be changed ‘someday’?” “‘(The communication problems between the riders and the AMA) is probably more the riders’ fault than anyone else. These guys need to be professional and call up and ask. Could it be better? Probably. But they have a group that is willing to listen. I tell young racers, ‘Man, it used to be worse. You better believe it.’ There was no way that you were gonna get heard in the old days. I think the AMA’s a much better organization than it was. I think they are trying to be very straight and honest.'” “In the ‘old days’ Erik Buell wasn’t the owner of a major manufacturer, just another one of us ‘unprofessional’ racers. Whether the AMA has improved from Erik’s ‘bad old days’ is a point of debate, but to blame a lack of communication on the riders because they didn’t ask is incredulous. ‘If they don’t ask, we don’t tell’ is a stupid policy that only a bureaucratic organization like the military (or the AMA) could devise.”

Lockhart-Phillips USA President Wendell Phillips interrupted his vacation in Hawaii to call Roadracing World headquarters and talk about his company’s new sponsorship of the AMA Formula Xtreme class, saying, “We enjoyed sponsoring the 750 (Supersport) class. I think we sponsored that class for five years. When the Formula Xtreme class became available, the AMA called to tell us. We were happy to move up to Formula Xtreme because we see it as a stepping stone to the Superbike class. Plus, the 750 class had turned into a one-make class with the Suzuki 750. In Formula Xtreme, there are many different brands of bikes with Suzuki’s new GSX-R1000, the Honda CBR929RR, and the others. It helps highlight the fact that Lockhart-Phillips USA makes parts and accessories for many different brands of bikes. We also like the fact that the Formula Xtreme class has its own show on Speedvision. The 750 class used to, but it went away around 1996. I’m excited about the Formula Xtreme class. We also sponsor the Unlimited Superbike class in Formula USA. We think the two classes go together hand-in-hand.” When asked about his feelings about the Formula Xtreme class not running at Daytona, Phillips said, “I haven’t talked to them (AMA) about that. I don’t know their reasoning for Formula Xtreme not running at Daytona, but let’s just say that General Motors isn’t gonna make the Camaro faster than the Corvette although they could.”