Investors

In any endeavor you are involved in, it’s important to surround yourself with value creators, opinionated people and those skilled in their area of expertise. You want to make sure you don’t make the common mistake of building a team full of “Yes Men,” people with the same skill set as you, or those who bring the team down with their negativity.” John Wooden

Over the years, numerous athletes, entertainers, business leaders, politicians and other successful investors have invested in new car dealerships, some have made millions, while others have lost.

Dealerships are complicated animals. They are comprised of several businesses under one roof. Aside from selling new vehicles, dealerships run used car lots, parts stores, aftermarket stores, finance companies, mechanic shops, body shops, quick lube centers, insurance companies and more.

I have had the privilege of working with several  celebrities and persons of wealth from all fields who have invested in the car business, such as politicians (Barry Harris, Deputy Director of the FAA under George H.W. Bush), Philanthropist (John Payton, whose family owned the NY Mets), Race Car Drivers and Race Team Owners (Jimmy Vasser), and Football Players (John Elway),  to name a few . 

While there have been numerous others with whom I have not been involved with: movie stars (Paul Newman) golfers (Arnold Palmer), Boxers (Evander Holyfield), Basketball payers (Michael Jordan), Boxers (Evander Holyfield), and Baseball players (Alex Rodriguez).

Several stars, such as Johnny Lujack, Heisman Trophy winner and Chicago Bear Pro-Bower, and John Elway, NFL Hall of Famer and Superbowl MVP, have made millions, but so have many lost millions. Celebrities such as Mel Farr and Deuce McAllister are amongst the victims.

The lure of the car business is not unlike the Sirens calling to Odysseus, as he sailed by their island. It has drawn many to destruction. 

In 2025, a single new car dealership averaged over $76 million in retail sales and there were 16,990 new car dealerships in the United States. For the year, total franchised light-vehicle dealership sales exceeded $1.3 Trillion. Source: NADA 2025 Annual Financial Profile of America’s Franchised New Car Dealerships

Agents and managers should not get lulled into a false sense of security about giving advice about car dealerships. Buying and selling dealerships is not a simple or easy task and, if anyone suggests otherwise, then run away from them because they do not know what they are talking about.

Every successful person knows that a winning team requires more than intelligence. It requires more than preparation and execution.

It requires a coach that has the knowledge and experience to bring it all together. A winner has to earn the medal or the trophy. Investors who do not understand that fail.

It may take a year, or it may take five or six years, but, eventually, the store will go under.

Forget how successful an athlete, celebrity, sports manager or sports agent may be their respective fields or professions, the retail automobile business is an entirely different animal and, over the years, I have noticed several mistakes.

First Mistake – The Factory Offered You a New Point — for FREE!

Athletes and celebrities often think they are getting a deal when the factory offers them a “new point”. Opening a New Point is not all it is cracked-up to be.

Generally, regardless of the fact that the factory (or distributor) “gives” the celebrity an open-point, be prepared to pay blue sky in the form of early losses and non-equity investment costs.

When buying a dealership that is operating, the day one takes possession there are vehicles lined-up in front of the service department, the parts department has a strong retail and wholesale business, the technicians are busy, the store’s phone number is on the Internet and, in general, the public knows the store is there and the investor begins with a core of customers.

When opening a new point, the investor must fully capitalize the store for both sales and service volumes that will not exist for at least nine to twelve months. A new point might get some “new car” traffic the first few weeks, but trust me, there will not be a line in front of its parts and service departments.

People are creatures of habit and, although the demographics may warrant a new point, and even though you may be a “superstar” athlete or celebrity, wooing other dealer’s existing customers to his or her store will prove a long-term challenge.

In many instances it is the second owner of a “new point” that makes the money because the first owner went broke building and developing it. On the other hand, the factory/distributor won because it got someone to build the building and develop a new outlet to market its shareholders’ goods, while at the same time, having it is the celebrity who assumes 100% of the risk involved in the financing of the project.

What if the athlete or celebrity already has experienced people advising him or her?

To be successful in the car business, outside investors should consult with  a neutral party, knowledgeable in the retail side of the industry for advice when buying and selling a dealership.

Mistake # 2 —- Factory People and Lenders ALONE Do Not Count, because:

(1) they are on the wholesale, versus retail, side of the business; and

(2) no matter how congenial, sincere and helpful they may be, they each have their own agenda and are bound by corporate laws that may not necessarily coincide with an investor’s.

It is up to the investor’s advisors  to recommend a conflict-free, knowledgeable and experienced expert that will protect their client’s interests.

Mistake #3 —- Employees at the Dealership Don’t Count because like the factory and credit company people, employees have their own agenda.

And there are many more.

So, where does one go for advice about buying or selling a store?

General Managers? Remember, “general managers buy and sell vehicles for a living, not dealerships.”

Dealers? The average dealer buys or sells less than 10 dealerships in a lifetime.

Our people have completed over 1,000 automotive transactions, purchases, sales, workouts, liquidations, re-financing, valuing, etc.

We have worked through bankruptcy courts, as consultant to debtor, Federal Courts, as mediator, State Courts also as mediator, automotive expert, consultant to Court Appointed Receiver, interim general manager, fraud investigators, and more.

If we learned but one thing new on each transaction, we would have acquired over 1,000 more bits of information than the average 50 year dealer that bought and/or sold ten stores. That is why we could make the difference for you.

If the automotive advisor is “independent” of the dealership, is “knowledgeable” in the “retail” end of the business and has been successful in “structuring,” (not just buying and selling)  hundreds of new car dealership purchases and sales of both successful and insolvents dealerships and has loyalties only to you, then he or she is on the right path.

If your advisors are lacking any or all of one those qualities, then it would be a good idea to get someone on the acquisition and advisory team that has the credentials.

BEFORE YOU GO, CONSIDER THIS

Football great Mel Farr was the poster child for Ford Motor Company and Ford Motor Credit for years. 

“MEL FARR IS A CLASSIC AMERICAN SUCCESS STORY.” That was the headline and opening sentence in Dealer Magazine’s September /October 1999 Cover Story, by Michael Roscoe. Two years after retiring from professional football, Mr. Farr began his automotive career.

By 1996, his Automotive Group number 45 among the top U.S. dealership groups. Two years later, with revenues approaching $600 million, Black Enterprise name his group as the largest black owned company in the nation. In that year, according to the Automotive News Data Center, Mel Farr had 11 dealerships and 13 franchises that sold 29,861 vehicles (new, used and fleet). He had dealerships in Michigan, Ohio, Maryland and Texas.

When Jesse Jackson, publicly attacked Ford’s treatment of minority dealers as racist, Ford intensified its recruitment of black dealers and Farr became the point man, brokering meetings with senior executives and acting as a conduit between the company and Jackson.

But the more Farr got out of Ford, the more Ford got out of him. Farr mediated disputes between the automaker and individual dealers, and he promoted Ford tirelessly in public appearances. 

Farr also enjoyed special status in the executive suite. He had a close relationship at Ford. He offered inner-circle advice on the Lions to Bill Ford and his son, Bill Jr.. “He had some friends in high places,” said John Clissold, a retired Ford Credit executive. “Edsel was a very strong supporter.”

As I was watching Farr’s rocketing performance, I was wondering “Who’s advising this guy?” and I was reminded once again of one of my dad’s expressions: “If you stand on you toes and reach high enough, a small breeze will knock you over.”

And then it came. Bill Clinton had Mel to a White House dinner honoring the top 100 black business owners in the United States. Several months later, Ford Motor Credit pulled the plug and Mel went down the drain – all the pull and friendships meant nothing.

Business is business and, by May 15, 2000, Ford auction off the fixtures and equipment at his last two Ford stores.

No one ever had more factory and more political connections behind them than Mel Farr. He was everybody’s poster-child and was touted as the darling of the industry. But, when trouble came, it didn’t matter. Business is business. ”. . .  one [Ford] executive familiar with the situation summed up the prevailing feeling at corporate headquarters: ‘Mel was headed for a cliff and we weren’t going over with him.’” Quote from the Detroit News. Emphasis added. 

I have been with and represented and rode the ride with dealers that began with one factory store they bought-out and ended up the 17th largest auto group in the nation (Hank Torian); and I have also been called in and represented a dealer that was 51st largest in the nation that went under (Osborn Automotive Group).

That’s what makes us uniquely qualified to be the ones to “make the difference for you!“