All I want to do is drink beer and train like an animal.
- Rod Dixon

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News: Red Rose Racing Out Of Buisness?

I pulled this directly from RedRoseRaces.com on Monday, 06/09/08. This is the company I offhandedly mentioned going out of business. I hope this can get worked out somehow.


__________

Wow! What happened? In the space of three days Red Rose Races.com, Inc. went from being the largest promoter of bicycle races in the U.S.A., enjoying explosive growth at all of the races, to being shut down, just like that. If you want the story, read on.

Brief History: Red Rose Races.com was formed by myself Richard Ruoff, in 2003 to promote endurance athletic events, (Mostly bike races) in Lancaster County. I am a former amateur bike racer and have always loved the sport. Even as I stopped racing in my twenties and started my first career, I kept my hand in the sport. After starting the Chameleon Club, (A little juke joint here in Lancaster that has had a band or two on it’s stage.) I sponsored and directed the Chameleon Club Cycling Team. I also created and promoted the Tour of Mt. Nebo during this period.

After 17 years of running Chameleon and getting married and having our first child, I sold the club. I decided to combine my experience of promoting music concerts with my love of cycling. Every year, while organizing the Tour of Mt. Nebo, I always thought it could be done better. When you do an event with volunteers and only once a year, it was hard to get everyone up to speed on what is expected at an event. Things like smooth registration, good pace and follow drivers, competent officials and results, safe marshalling were all hit-and-miss year-to-year. This was typical in most amateur cycling events. I figured if I put together a series, we could smooth out these wrinkles and everyone would be a winner.

Coincidentally, at the same time, another middle-aged former cyclist had a similar idea.
What are the chances that two guys, who didn’t know each other, would start the same type of business in a small market with a small sport at the exact same time? The other guy’s name is David Butterworth.

Early on, I was worried he might ruin the scene by putting on bad races. I didn’t know him and wanted to make sure he was going to do it right. I offered my services for a fee to help run his events on race day. He agreed. We both fumbled around in the beginning, learning what worked and what didn’t, tweaking each of our events as we learned. We definitely had different styles on running this type of business. I am service oriented, trying to create a rider friendly environment. This is from my background in food & beverage and running Chameleon. I know if you treat people right, they will come back. This is also something I had ingrained in me from an early age by my father, the best businessman I’ve known. I was willing to risk losing money from time-to-time, focusing on the long-term viability of these events and not panicking when not-quite-enough riders showed up for a category to justify the prize list. Just pay em’ and learn.

David Butterworth is more of a bottom line type of operator, perhaps due to his experience as a banker.

After awhile, we tried an arrangement where I leased his events and ran them myself.
The races were good and growing but I realized I was just building his asset.
We couldn’t agree on how to proceed, so in 2007 we parted company. I ran my events and also was doing some work for the Pro Cycling Tour, including working as Event Director at the Lancaster and Reading Pro Races and a bit of work at the Philadelphia International Championships. I also did preliminary course design work for the upcoming Tour of Pennsylvania.

While working big budget Pro Races is exciting, I missed the interaction of working with developing riders. Also, while I have huge respect for PCT’s David Chauner and Jerry Casale and the great events that they have built, I wouldn’t want to work under that model. It is all Marketing Partnership oriented. All is well and good until a Title Sponsor decides to switch 5% of their marketing budget to billboards and there goes your million-dollar event. My little events give me heartburn, no thanks for the stress on the pro only level.

I knew if I combined David Butterworth’s events with Red Rose Races.com I would have a huge series that would draw attention and more participants, especially if I reactivated the Pennsylvania Super Series. Attendances at David’s events in 2007 were steadily dwindling. I figured he would be ready to dump them.

David and I negotiated and came to a price. I was hoping to find a partner to finance the purchase of his series but no luck. He offered to finance the deal. I agreed. We combined all of our races and my equipment under the new entity Red Rose Races.com, Inc. I started monthly payments in 2008.

Some people have wondered, “Why bother to purchase someone else’s events, when you can just start your own?” I’ll tell you. It is a lot of work to arrange a new course, including developing a relationship with the township(s), property owner’s, etc. There is a learning curve for unknown factors around a new course. Something seemingly small like a milk truck making a pick up at a farm on the course can cause stress until everyone is aware of the race and the best way to deal with it. The first time I send out a resident notice for a new course, I receive a lot of calls with questions. By the 3 or 4th year, nobody gives it a second thought. Residents either ignore the race or set up lawn chairs and cheer the riders on.

And every year you hold a race, more riders are aware of it and tell their friends and they come the next year. An established race always has better turnouts than a new race.

Let me tell you, organizing permits with 30 different municipalities, arranging Penn Dot permits, USAC permits, parking, restrooms, medical and traffic control for 25 days worth of events is a huge undertaking. I have been working my ass off since this deal went down. We went full throttle into the first race of the year at Strasburg. We were blessed with record turnouts, particularly amazing in this recession year.

Fortunately we planned ahead and ordered enough port-o-johns for the crowds and had enough registration help so riders didn’t have to wait more than 5 or10 minutes in a line.
New for this year was our neutral wheel support, which saved riders from having to bring their spare wheels to a follow vehicle with the hope of getting it back after the race.
We also had a mechanic at every race. Details like this make for a better race experience.

The spring was so busy, I hired in extra help to run the office during the week and on event days to make sure all bases were covered. Each event is now profitable, something that couldn’t be said in the early years.

But the monthly nut of paying off David Butterworth was high. By late May I asked him if he was willing to extend the note from two to four years to lower the monthly payment.
He said no. He also reminded me our agreement wouldn’t allow me to raise capital by selling shares. At least not until I finished buying him out.

- While attendance was huge, sponsorship was off due to the economy. Back in the winter when sponsorships are secured, most potential marketing partners were playing it close to the hip. Now the season was going and the marketing value of associating with us was obvious to anyone paying attention (Our website received over 750,000 hits in April alone!). Unfortunately we were too busy to pursue marketing partners and even if we weren't, most have committed their budgets for the year. -

Butterworth then suggested he would be happy to be my partner. As a friend he would help run the company and even act as treasurer. He could see we were slamming and I was very busy. He told me several times that “I was knocking the cover off the ball,” in regards to attendance and revenues at the events. There was a mechanism in the original contract that allowed us to slide into just such an arrangement if I defaulted on the note.
It put him into 60% ownership position and myself at 40%.

Now I know the smarter among you reading this have warning bells going off in your head. “DON’T DO IT RICH!” you’re yelling to yourself. Well, this is my “Crossroads” moment in life.

The 60/40 thing wasn’t as outrageous as it sounds. I brought along some debt with my events. In developing the series I absorbed losses on events from time to time and needed to infuse cash occasionally to pay bills. This is not unusual in a new business or even an established one. The point is, I was always willing to do that. I have always taken the long view for this business. I was actually enjoying it so much, that I wanted to take it to retirement. I knew if I kept doing rights things, the money would follow.

The debt is small compared to the spectacular growth we were experiencing this year and the projected growth, especially in light of some new revenue streams I was developing for the future. This is nothing compared to what I carried while growing Chameleon Club. BTW, I started Chameleon with $5000 in 1985 when I was 23 and grew it to a $1,000,000 a year business at it height. I know how to grow a business.

Additionally, David Butterworth told me he purchased the Vandedrome, a 170-meter portable cycling track, (If you can call something that needs multiple tractor trailers to be transported portable.) This track has a bit of famous history and was designed by Olympian John Vande Velde, father of Christian Vande Velde, who just wore the “Maglia Rosa” leaders jersey in May’s Giro D’ Italia. The first American to do so since Andy Hampsten won the Giro in 88’. To me, the good part of this was I would continue to develop the road scene in this market while David would develop the track. It would have been the perfect marriage to develop these two disciplines of this great sport.
It would help solidify our position as the hottest cycling market in the country.

A funny side to this track story is David asked me not to tell his wife he purchased the track. Jeesh, I tell my wife when I buy socks! I guess that is another difference between us.

Back to the story: We were just entering in to the busiest stretch in Red Rose Races.com’s history. We had a race scheduled every weekend from, May 17th to August 10th, including two stage races. I was concentrating on running these events and David was offering to help when I needed it most. He even said he would sell me back his share of the business slowly so I could take it into retirement. Around noon, in my dining room, on Friday May 27th, 2008 I signed the deal.

Kick self now…

I had invited David to come into the Red Rose Races office with his laptop and we would start working on getting up to date on the books. I was going to set him up at desk and I figured over a couple of weeks he would have a handle on this business so he could really start to contribute to our growth. We couldn’t do it on Friday, because I was setting up for the Millport Road Race the next day. It takes me almost a full day to download registration data, organize and print start sheets and assign numbers, as well as download and print athlete release forms as well as take care of last minute rider calls and emails,
Pick out course signs, load trailer, buy food and drink for race personnel, etc.

Within two hours of signing the paperwork David Butterworth had gone to the bank to open a new account under his signature then to his home, where he scanned into the computer the document making him controlling partner, emailed to Steve Roszko at Bike Reg. com, (Bike Reg. is our online registration service. They take registration for upcoming races then forward the balance of the proceeds the Monday after the race to our account.) and asking Bike Reg. to now forward all money to David’s new account. Steve, being the cool guy he is, emails me right away to determine if this David Butterworth is legit to take Red Rose Races.com, Inc. money.

I’m a little shocked. I thought this is something we could have handled the next week together. Maybe go to a bank together to get both of our signatures on the new checking account and then I would contact Bike Reg. to introduce the new Treasurer.

I call David and tell him I was contacted about the new arrangement, he sounds nervous on the phone, which makes me nervous. He said he was going to tell me the next day.
I tell him I don’t have enough money in the account to handle all the checks I will have to write the next day for prizes and to officials, etc. I was expecting the Bike Reg. money to come straight to me as it always has for the previous 5 years. He says no problem, we’ll meet at noon, Monday and he’ll give me all the Bike Reg. money coming- about $4000 to cover the checks I will be writing. I say fine. I went to the bank and cashed a check from my joint account with my wife to get some cash to fill the prize envelopes. I use this account because there is more money in it than the existing Red Rose Races.com account. If the weather is nice on Saturday, the walkup registration cash will make up difference and I will be able to fill the rest of the prize envelopes. Then I can just write checks to the officials, drivers and USA Cycling, post date them for the following Wednesday and it will be sure to be covered by then.

Unfortunately, for the first time this season, we had a huge thunderstorm (Complete with tornado warning.) come through at the Millport Road Race. We even stopped racing for over an hour. This scares away a lot of walkup registration. So more checks are written.
Funny side story- the rain causes the start/finish line trailer to sink into the mud in the field. When I go to leave, I get stuck. I leave the trailer and come back in the morning, but the fields are still too wet and it doesn't budge. Third time is a charm, later that afternoon.

I’m not big on symbolism but between the tornado warning and getting stuck you know something is up. Read on…

David Butterworth and I met for lunch on Monday June 2 as planned. David Felpel, all around cool guy and avid supporter and volunteer at the races joins us for lunch at David’s suggestion. The conversation starts off cordial and then things go south, fast!

By the end of the meeting David had informed me, 1. He is not going to pay me for running the business as President. 2. He also stated he refuses to make payments towards the debt accumulated while growing the business. 3. Then he informs me he will not be paying me any money from Bike Reg. to cover all the checks I wrote two days before for the Millport race.

I inform Mr. Butterworth I can’t work for free. I have been working 50-60 hours per week since the beginning of the year. In fact I have been working full time on Red Rose Races for five-plus years. It is my only job and I have a wife and three children with a mortgage to pay. I inform him Red Rose Races.com is also obligated to pay it’s debts and I tell him he also needs to pay me the most recent Bike Reg. money to cover the checks I had written for the Millport Road Race. I remind him I used our personal account. To all of this he is unfazed and doesn’t care. It is not his problem he says.

Now, I’m really stuck. I tell him I have to quit and go find a job immediately. I can’t work for free. Last I heard, indentured servitude was against the law.
I tell him he needs to figure this out and I left the lunch.

Needless to say, this was not one of my better lunches.

I go back to the office and shortly thereafter I notice David Butterworth has closed on-line registration for the next three races. By Tuesday morning June 3rd, he has posted a notice on Bike Reg. that the next three races are canceled.
I then send him an email, insisting as a 40% shareholder in Red Rose Races.com that he run all the races on the schedule and if he can’t he needs to hire someone to run them and if he wasn’t willing to do that he needed to pay me to run them or better yet, let me buy him out and I would take over the races again. I offered him $1,500 per month for five years. $90,000 all in. He wouldn’t have to do anything, just sit back and rake in the dough.

His reply to that was we were done! No more Red Rose Races.com. He then sends out an email that is reported in the local paper that I had quit as President. (I suppose technically that is true, but if you refuse to pay your employee, isn’t that more like a firing?) He also states in a phone call to the reporter, “past and current expenses has snowballed out of control, until we were unable to cover expenses”.

Now here is where it gets interesting. David Butterworth has never, ever seen the books at Red Rose Races.com, Inc. He has never seen check stubs, banks statements, balance sheets, save for a few incomplete event spreadsheets. He has never bothered to research where the company money is spent or to analyze the revenue streams.

All of this has been available to him at our office, but since he was only majority owner and Treasurer for one full business day before he decided to let me go and dismantle the company, he hadn’t yet taken the time to do so. I don’t know how any responsible officer or owner of a company can make any decision that will have catastrophic consequences concerning the future of that company without doing their due diligence.

I sent David one more email encouraging him to save the business and let me run it. He didn’t respond for two days. Then he called for a meeting. I was hopeful he had seen the light and wanted to strike a deal. We met Friday June 6 at 9:15 a.m. All he wanted was to liquidate the few hard assets of the company. He was disappointed to learn the start/finish trailer, our most expensive piece of equipment we used, belonged to the bank and not us. We do have some rusty fencing, moldy tents and old signs, but after that the hard asset list drops off pretty quick.

Our main asset was the races. All of which have been profitable this year. And he canceled the rest of those.

If this story seems crazy to you, don’t worry. It does to me too.

There has been much speculation in the cycling community as to why he has committed this atrocity. Selfishness, greed, jealousy, petty vindictiveness, OCD, short sightedness, out and out stupidity or just pure evilness have all been mentioned as possible reasons. I don't know. I’m not a psychologist.

What strikes me is the self-destructive nature of his decision. What ever he saw that spooked him, I don’t see it. Now I have more experience and more success than he has had at running businesses. When you’re experiencing a red-hot year like Red Rose Races.com, Inc. was this year, this is when you jump on the opportunity. This is why I took him up on his offer to work together. I knew for sure we could double the revenues by 2010 with everything we had in place. This is the kind of year where you push forward and not turn and run with your tail between your legs. Deep down, I don’t think this was a decision based on business concerns. I think other factors are in play. Factors that are unknown to me.

The Damage: Considerable. What David Butterworth has done to my family is just awful. My wife, Claudia, bless her heart, co-signed a note (A second mortgage on our home) that was the principal source of equity for financing the start up of this company.
She has been and continues to be my biggest supporter. When the reality of what has just happened set in, at her insistence, we decided to roll up our sleeves and solve our sudden financial crisis. With no income and debt payments due, action has to be taken.
Bankruptcy is not an option in Lancaster County. (You might as well wear a sign that says, LEPROSY). We are now actively house shopping. We are going to downsize from our modest suburban home. We like our home of eight years but you got to do what you got to do.

Our oldest boy who is seven, figured out what was up and discreetly asked his mother if we were going to be homeless? Nice.
Our five-year-old middle son knows I’m out of job and thinks I should become an auto mechanic. Doubtful. Maybe I’ll try being a bike mechanic again.

We’re holding a huge garage sale on June 21st. Come on by.
Other creditors include family members, and old friend and a friend of cycling. They are all watching this saga with keen interest.

This fiasco affects all of the staff that have helped build this venture from Mike Doupe, (Mike is good friend and the biggest cycling nut I know), Kay Hower, (Thank you for your help. Keep riding.) All the registration volunteers, drivers, Roadie Rob, (You’ve helped at every race since 1993), Brad Kurtz on announcing,
The Miller family on results and all of the USAC officials and Moto Marshals. Additionally all of the fine folks who work traffic control at our events.

Of course the scene of cycling has been decimated in Central PA because of this.
Thousands of cyclists who have targeted our schedule for this summer are out of luck.

USA Deaf Cycling was going to fly in all their best riders from around the country to target our Dutch Country Stage Race. This was to be their selection race for the Deaflympic team going to Taiwan in 2009.

This mess also forced the cancellation of the best Junior riders from Australia, Fifteen of whom were scheduled to compete at two of our events this summer.
While all categories are suffering, Junior racing is taking a particularly hard blow.
We were the largest promoter of Lance Armstrong Junior Olympic Races in the country.

And Lancaster County itself takes a significant hit. Our events drew from the whole mid-Atlantic region. Of the 10,000 athletes who were coming this year, most were from outside of Lancaster and the state. Many brought along friends and relatives. The local positive economic impact from this series was approaching two million dollars for 2008 alone.

The negative effects of gutting this series are substantial. And the most frustrating part of it is, it was so unnecessary.

My approach to business is I have always tried to create win-win-win situations.
Everyone from the customer (In this case the riders), the employees, the sponsors, the County and the business all have something to gain from a successful event. The sum becomes larger than the parts. Ideally the participants have a satisfying, fun and healthy event and can’t wait to come back. The race staff and volunteers get to be involved with a great event that is psychically rewarding, the sponsors not only get large number of eyes on logos but a tremendous feel good connection with their business or product.

This ultimately makes a series like Red Rose Races.com, become a part of the community fabric. It is bigger than the owners. It is a community asset that needs to be nurtured and supported. I’m not sure David Butterworth understood he was part of something that was bigger than him or me. It is a richly rewarding experience to build something like this and ultimately worth more than all the money in the world.

I have been fortunate to experience this once before when I developed and ran the Chameleon Club. I’ve been long gone and yet with responsible stewardship it continues to be an asset to the community. I had hoped to do that again with Red Rose Races.

Where do we go from here?:
There are riders and vendors owed money from recent races. Either prizes that weren’t paid or checks that are uncashable. Also riders who pre-registered for specific events that were not held and of course the 50 riders who took a chance and pre-registered for the whole season. (I feel the worst for you since I created the concept for this season and you were the ones who plunged in.)

As noted previously in this article I no longer own controlling interest in Red Rose Races.com, Inc. and I no longer have a job. Therefore I am not in a position to pay any of these bills. David Butterworth wants to liquidate the company of it hard assets to pay off the debts, but as I also noted there is probably only pennies on the dollar left of a limited number of assets so the chances of you seeing any money from this are slim to none. Twice last week David told me he won’t put any money into the series such as I have done over the years to make it viable. So I wouldn’t hold my breath for your money.

I’m a going to take one more crack at saving this series:

I am asking anyone who knows David Butterworth and would like to see this series continue to ask him to do the right thing and take his foot off its neck. I will take responsibility for all debt including recent prize and registration issues. I will work to salvage what I can for this season, but the last week was a missed critical deadline for many of the events on the calendar so it will be tough to hold more than a few of the events for this year. It might take me awhile to pay everyone, but over time I will make it right.
All David has to do his relinquish his shares of the series to me. It is obvious we can never work together again.

Several law firms and attorneys have contacted me about handling the civil aspects of this case offering pro bono representation for a healthy contingency fee, of course, (They smell blood). I’m not a lawsuit kind of guy and my preference is to solve this thing in a way that allows me to make a living do what I enjoy, brings back the scene for the cycling community and Lancaster County and end this nightmare.

So please if you know anyone who is friends with David or his wife (I’m not sure she knows what a mess he has caused or how much liability he has exposed his family to. My wife and I have enjoyed dinner with the Butterworth’s and we find it hard to believe Mrs. Butterworth would want to see our family or her family hurt the way David’s actions are hurting ours). Please try to open a line of communication and maybe we can save this thing.
The Butterworth’s attend Westminster Presbyterian Church in Lancaster on Oregon Pike. Sometimes they attend Calvary Church on Landis Valley Rd. and they also are active at Lancaster Christian School off Lampeter Rd. in Lancaster.
Perhaps if you or your children go to any of these houses of worship you can start a friendly conversation about this issue.

Thank you:
I have received hundreds of emails, phone calls and visits from people expressing their moral support and pledging to attend future races I may promote. Your words of encouragement are most appreciated at this trying time. We really appreciate it.

Apologies:

To Everyone effected by this.
I’m truly sorry for all of this mess. If I could, I would correct it right away.
When I took on a partner I knew there was a possibility of problems, but I always thought partner problems were related to disagreements on the best way to move forward.
This one has confounded me since one partner just wants to go backwards!
Please have some patience with me and if I can, I will make things right.


I know there are good responsible people working on bringing back some races to Lancaster this year yet. If any come to my attention, I will post them here.

I still own the Red Rose Races.com domain name.
If the series is revived you will learn about it here first.
I may still be reached at info@redroseraces.com.

David Butterworth can be reached at 717-468-8080 or emailed at david@majorleaguecycling.com


Finally,
Anybody need help? I’m looking for a job!
Thanks for reading this long strange trip.
Rich Ruoff

1 comment:

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