Drifting is perhaps the most exciting new auto-racing variant of the times. Propelled to stardom by the “Fast and Furious” movie series, drift fans can’t get enough of the sideways-sliding, rubber-burning spectacle.
The problem has been finding appropriate venues for the sport. The first, and likely best, purpose-built drifting venue in the U.S. is Villains Sportsland in Walla Walla, WA. Villains was conceived in 2015 and finally completed in 2018. Its design is a mirror image of the Meihan Sportsland “C Course” in Nara Prefecture, Japan.
The holy grail, however, has always been the Ebisu Circuit in Fukushima Prefecture, Japan. Boasting seven individual tracks and two skid-pad-type circuits, and has been the venue for the drifting benchmark D1 Grand Prix, as well as motorcycle races, karting and open-wheel-car races. Unfortunately, the Ebisu Circuit was destroyed in a March 2021 earthquake. It has now been converted to a gravel track in an apparent last-ditch effort to keep it alive.
Let’s do it here
Joe Ascoli learned to drift while living in Japan. Back in Richmond, VA, Ascoli founded the Spirit.jp Drifting Series, and built a modest drifting track. But Ascoli had much grander designs.
In early 2020, Ascoli started offering memberships in a new six-course drifting complex, with all the bells and whistles to go with them, that was patterned after Ebisu Circuit. Ascoli offered drifters the opportunity to get in early, with a modest $2,000-per-year membership fee.
Steve DaSilva did a great job of investigative journalism for his Jalopnik article on how this effort turned into a debacle. Quoting from the piece (jalopnik.com/he-raked-in-thousands-to-build-a-drift-heaven-members-1848246573):
The Spirit Circuit, however, would go beyond what’s offered at Ebisu. On-site lodging and café, instructional events, rally and go-karts and gun ranges…
The circuit was to be located in Goochland, VA, on a 35-acre property that Ascoli… was in talks to purchase. 38 Spirit members signed up for memberships, by Ascoli’s count, and costs between $1,000 and $10,000 have been claimed on social media. Then the land deal came crashing down.
After Ascoli had started collecting membership fees, talks fell through on the 35-acre Virginia property. To hear Ascoli tell it… Spirit was “scammed” out of over $100,000 on the property. Despite tiptoeing around implied ongoing legal proceedings, he seemed hopeful the sum could be recovered. This left Spirit without a home, and Ascoli without his American Ebisu. So, the search began for a replacement.
Around December of 2020, Ascoli entered talks with Bob Starer, CEO of Panthera Training, about bringing Spirit to the facility’s three automotive training courses. Panthera, a tactical training facility in West Virginia used by various military and paramilitary groups, primarily works in combat training. In order to cover topics like evasive driving and PIT maneuvers, Panthera has three areas dedicated to vehicle training; a skidpan, a dirt “rally” course, and a 1.6-mile road course.
Starer… described the talks with Ascoli as being “on and off” for “the better part of a year,” which Ascoli confirmed. Despite the months of discussion, Spirit and Panthera didn’t come to a formal agreement until November of 2021. Days later, on November 19, Spirit announced its move to Panthera on Instagram alongside its new name: Spirit Motorsports Academy. Reactions were positive to the new track, but moods began to sour as details came out.
The Spirit Motorsports Academy website now announces its new home at Panthera but makes no mention of memberships.
Dirt should be cheaper
One would think that it would be easier to make a buck with a dirt track, since you don’t have to spend a lot of money on pavement. But that is apparently not the case.
Paducah International Raceway, a 3/8-mile, clay oval track located in Paducah, KY, has an impressive history. It opened in 1972 and went through several ownership changes until it was purchased by NASCAR drivers Dale Earnhardt Jr. and Kenny Schrader, along with promoter Bob Sargent, in 2005. NASCAR driver Tony Stewart became an owner in 2006. The current ownership is Sargent, Schrader and Stewart.
The track went dormant in 2016. It reopened in April 2018, after being leased to Phil Colwell, who also leased and operated the nearby Tennessee National Raceway. Both tracks closed abruptly in March and May 2018 after Colwell ran only a handful of events at each venue.
But shortly before shutting them down, Colwell had raised money by selling suites, parking and sponsorship packages for the full year at Paducah. Some of the buyers were pretty angry.
“I am in the process of getting others involved so we can go to district court,” Abby Elizabeth Miller told RacingNews.com.
“We paid $500 for a banner for the year just before it shut down,” Dustin Brown commented on Facebook.
Colwell told television station WPSD Local 6, “Currently at this time, we have decided that it was in the best interest of everybody to put the racing on hold until the landlords meet their obligations.” He did not specify those obligations, because “his attorney is involved.” When asked how people could get their money back, he replied, “It’s going to a lawsuit, and when it is solved, the courts will render a decision. If I lose, I have to pay. If Bob [Sargent] loses, Bob has to pay.”
Paducah was recently purchased by Adam and Brittany Elliott, who plan to reopen the facility in 2022. Tennessee National Raceway reopened under the new management of Brad Pinkerton and his wife, Sarah Dubrava. After making a number of improvements to the track and its facilities, it again shut down after Pinkerton died of a stroke at age 44. Dubrava tried but couldn’t make a go of it without Pinkerton’s contributions. The track, owned by Dubrava’s father, is now listed for sale at $495,000.
How do you get paid?
If you purchased a Spirit membership or a Paducah suite or sponsorship package, what are your chances of getting your money back? In both of these cases, if your loss is $2,000 or less, you can’t very well pay a lawyer $300 to $500 per hour (or more) to “sue the bastards.” Even if you were to win in small-claims court, how would you collect your money?
In Paducah, Miller obviously knew this when she was quoted as trying to get people to band together to go to court, which would raise the total amount of the claim. But even if she does get that group together, it’s probably going to be tough to recover anything. The press reports don’t go this deep, but odds are Phil Colwell did not get into the racing business in his own name. Most likely, he formed a corporation or limited-liability company to operate the business. So even though it’s a pretty clear claim of breach of contract, that liability is likely limited to the bankrupt legal entity that operated the track, and Colwell has no personal liability.
The exception to that would be if fraud on Colwell’s part could be proven. But to do that, the plaintiffs would have to prove two things. First, that Colwell knew for certain that the business was not going to be able to deliver on its promises when the money was paid. And second, that Colwell either personally participated in the sale or directed whomever did. Obviously, Colwell is going to swear up and down that he had the best intentions and utmost confidence at all times. Plus, the answer to those questions may be different for individual plaintiffs.
Better to be a member
Spirit is a similar legal situation to Paducah. Assuming that Ascoli formed a business entity to offer the memberships, the analysis and results would be exactly the same as Paducah. However, there is one major difference here.
By offering memberships in a nonexistent drifting club, Ascoli may have violated the securities laws. Of course, Ascoli did not sell shares or any typical forms of securities, but the securities laws are much broader than that in their definition of a security. Decades ago, the definition evolved to include situations where the “investors” provide the risk capital needed for a start-up business, even where they don’t actually become investors or owners. That looks like what may have happened here.
The advantages of a securities claim are that it creates personal liability on Ascoli’s part and, equally important, enables the plaintiffs to recover their attorney fees from him. Now they have a case that a lawyer might take on. ♦
John Draneas is an attorney in Oregon and has been SCM’s “Legal Files” columnist since 2003. His recently published book The Best of Legal Files can be purchased on our website. John can be contacted at john@draneaslaw.com. His comments are general in nature and are not intended to substitute for consultation with an attorney.