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The Problem With The AMA/Clear Channel Relationship

This is merely my opinion, but it is based on my examination of the facts made available by both the AMA and Clear Channel through press releases in the past week or so. It is also based on my own personal experiences in business and negotiations. Nevertheless, I think I have a pretty good idea why the AMA and Clear Channel are planning to sever their AMA Supercross relationship. Clear Channel has too much bargaining leverage.

Why would Clear Channel’s bargaining leverage damage the relationship with the AMA? In a business relationship where one party has substantially more bargaining leverage than the other, it is typical that the stronger party slowly, but surely, takes value to itself and away from the other party.

Clear Channel is a large company with contracts and contacts at many of the major venues traditionally used by the AMA for supercross events (with one exception being Daytona). Clear Channel, apparently, claims that some of its relationships with these venues prohibit any other promoter from staging a motorsports event at the venue during a given year. In other words, Clear Channel may have an exclusive at one or more of the venues traditionally used for supercross events. If supercross is to occur at these venues, it must be promoted by Clear Channel.

In its relationship with the AMA, Clear Channel undoubtedly played this as hard as it dared to. Imagine an AMA supercross series without an event at Anaheim Stadium, Qualcom Stadium in San Diego, or several other important venues with tremendous supercross history associated with them. The AMA may or may not be able to get events into these venues in 2003 (after severing its relationship with Clear Channel — and promoting AMA supercross with Jam Productions, as is the plan at this point). We don’t know yet, but there is a good chance that the AMA will have difficulty getting into many of its traditional venues.

If Clear Channel virtually controls access to important, traditional supercross venues, this gives it tremendous bargaining leverage in its relationship with the AMA, including AMA Pro Racing. When you are the weaker party in a bargaining relationship (as the AMA apparently has been), you can build up resentment towards the stronger party. Furthermore, at some point, if the stronger party pushes too hard, you may feel you have no choice but to break away from that relationship, even if it means difficulty for you in the short term (in this instance, difficulty obtaining access to popular, traditional supercross venues). This is human nature, and this is common in business situations.

Of course, we may never know the truth about what happened in the negotiations between the AMA and Clear Channel. Did Clear Channel really push too hard and piss off the AMA? Did the AMA decide that, regardless of the consequences, it had to break away from Clear Channel? Was the AMA expecting too much from Clear Channel given its lack of bargaining power? We just won’t know the answer to these questions — although we may hear differing stories from both sides.

What we do know is that business relationships involving substantially disproportional bargaining leverage frequently fall apart. It leads to a situation where the stronger party might simply state, in effect, “We don’t care what you think, or what you want, you will do it our way, because you don’t have a choice.” Apparently, the AMA did have a choice, albeit a difficult one.

By the way, there appears to be a small crack in the door that would permit the AMA and Clear Channel to mend their relationship. In the meantime, Clear Channel announced its own, independent schedule of supercross events for the 2003 season, which includes (you guessed it) Anaheim, San Diego, and several other traditional supercross venues. Fifteen dates in all, fourteen of which are already “booked” dates at important venues, with one venue to be announced. The AMA, meanwhile, hasn’t told anyone we are aware of what its 2003 supercross season will look like, or where it will be held.

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