Friday, June 20, 2008

butterworth's side of the story

Regarding the Red Roses Racing controversy (for more on the on-going saga, click here, here, here, here, here, and here) I got an email today from Dave Butterworth outlining his version of the story. I've reproduced it here (see my response):

As you may know Red Rose, Inc. has suspended operations and Rich Ruoff resigned from the company. Rich has been a friend and great cycling enthusiast and it’s terribly unfortunate that his business and personal debts got out of control to where things could not continue. People have asked to hear my side of the story, well here it is.

There seems to be a lot of misinformation going around in the cycling community about what happened and although this letter will get a little long for some, it may be the only chance I get to try to set the record straight. Remarkably there are even a few people holding onto the idea of a conspiracy theory, believing that Pro-Am Cycling Events, Inc. (David Butterworth) engineered the demise of Red Rose Races and Rich Ruoff. Quite to the contrary. In September 2007 Pro-Am Cycling “sold” the majority of its events to Red Rose Races and intended to exit the road race promotion business. Pro-Am Cycling received little of any money in this transaction and most of that was invested into additional equipment to assist Red Rose Races.

Background. Our two companies have worked side-by-side in Lancaster since 2003 organizing bicycle and multi-sport events. Going back to late 2005, Rich wanted to expand his menu of events and actually licensed and produced Kirkwood, Mount Joy, Union Grove, Millport, Peiffer Hill, and Brownstown for Pro-Am Cycling in 2006. Problems arose when I noticed Rich was spending the pre-registration credit balances in the BikeReg account to pay debts incurred in the prior season rather than using the money for current expenses, which then nearly bankrupt the company. I took over as treasurer for the rest of the season and we did not license our events to Rich again. Nevertheless, Rich and I stayed on friendly terms and helped each other out when needed.

Last spring Rich was threatened with a suit by Adecco for unpaid traffic marshaling and by the Pequea Fire Company for $1,330 in delinquent services fees from July 22, 2006. Pro-Am Cycling loaned Rich $1,500 to pay the second bill, but nevertheless that was the end for Mt. Nebo. In June 2007, West Earl Township told Rich to “pedal his bicycle elsewhere” due to past problems dating to 2004 and that was the end for Farmersville. Pro-Am Cycling also paid Rich’s past due fire-police bill to West Earl Fire Company ($600) and Farmersville Fire Company ($900). All of these loans were eventually repaid. Unfortunately, there were other strained relationships in Fulton Township and Christiana that made continuation of these events tenuous, although the later was likely to go on with or without Rich Ruoff. And there were half-a-dozen other cycling and multi-sport events that failed and were discontinued along the way under Red Rose Races as well.

Although we had talked of combining our events on many occasions in the past, I was wary from my experiences working with him and unwilling to yield complete control to Rich as he had insisted. The events acquired in September 2007 by Red Rose Races from Pro-Am Cycling were Strasburg, Kirkwood, Mount Joy, Union Grove, Millport, Rapho, Bird-In-Hand, Peiffer Hill, Brownstown, Mount Penn, Deodate, Stony Run, and Wonderland, and in large measure what could have made Red Rose Races a successful business that was able to provide Rich with a reasonable income and long-term career.

Transaction. In August 2007, Rich wanted to purchase Pro-Am Cycling’s events and although I was skeptical I was willing to consider the idea because he had a co-signer for his loan and it looked like a serious proposition. This would let me recoup my cycling “investment” and get out of the road race promotion business without any worries; or so I thought. On September 28 we signed a Sale Agreement, but Rich’s loan was looking sketchy as his co-signer needed more time to negotiate with his bank or possibly he was just reconsidering whether to participate in the loan after giving things some further thought. Rich insisted he could make the deal happen and promised to get a loan elsewhere if necessary. He said he knew finances would be tight and he agreed to keep expenses and his salary to a minimum for the next two years as Red Rose Races absorbed the transaction and looked for a major sponsor to underwrite the Pennsylvania Super Series™. Pro-Am Cycling agreed to finance the sale on a short-term basis if Rich’s bank loan or investor financing fell through with no payments due until March 2008.

By year-end nothing had changed and Pro-Am Cycling was committed to working with Rich. At the outset, the cyclocross events were money-losers and Pro-Am Cycling contributed $1,250 towards the expenses for Stony Run and Wonderland. Things turned around and by March 2008 the season was off and running with strong, record-setting numbers for Strasburg and things continued incredibly well for Kirkwood and Mount Joy. The business should have been successful.

Recent developments. Other than being a major creditor of Red Rose Races, David Butterworth and Pro-Am Cycling had very little to do with the management of the company. I discussed external issues with Rich, like making a cat. 5 race into a cat. 4 & 5 race, and helped him with the course set-up and tear-down on race day (for which I was considered paid staff). During the middle of the day I worked as a USA Cycling official.

On May 28, three days before Millport, Red Rose Races defaulted on the loan it had with Pro-Am Cycling as had been anticipated by our recent conversations and then – only then – became a majority owner of the company. There was no hostility between Rich and me with this turn of events and we talked of getting things back on track to the point where I could make a second exit and leave him to run the business on his own again. I still believed in Rich and the grand ideas he had for the Super Series.

After the note default, I was elected as a director of the corporation and became Treasurer. On May 31, 2008, Rich told me to bring my (Pro-Am Cycling’s) check book because he has no money to pay bills for Millport and wants a $4,000 loan. I had recently heard rumors of riders and officials having been given post-dated checks for payment at the Tour de Ephrata™ and Union Grove and I was concerned. Apparently he was now using his personal checking account to pay bills, not the Red Rose Races corporate account, in the hope that even if all of the prior checks bounced maybe he could settle his bills for Millport. If in fact Rich had again spent all of the Super Series ($17,200) and pre-registration ($3,900) credit balances on the BikeReg account, I knew he was in serious trouble and things were far worse than in 2006.

On June 2, 2008, Rich, Dave Felpel (Christiana promoter and mutual friend), and I met for lunch and to give Rich a check for the loan he requested and to discuss Red Rose Races business and financial situation. I questioned Rich on where all the money had gone and presented him with a list of liabilities I could plainly see were accruing against Red Rose Races. The company was essentially bankrupt. Rich really had no answer, but insisted he just needed more time and would make things up. His “plan” was for me to write him a $20,000 loan to get caught up on his bills, continue business operations, and pay himself an even higher salary than he’d taken already. I was willing to advance Rich the money needed for Millport, but not $20,000. So I said no and Rich abruptly resigned.

Now at that point things changed and perhaps that's what people need to understand because it wasn't any longer just about Millport, but it was now a question of everyone owed money getting thrown together into the creditor pool. We were now in a bankruptcy situation. Riders who paid for the full season, anyone pre-registered for a future event, cycling officials, and other creditors were equally entitled to getting something, not just the folks from Millport. There was no chance of me running the series as envisioned, both from a time/labor standpoint and due to the fact that with more than 20% of the projected income already siphoned off by Rich from the BikeReg account, each event was guaranteed to lose money. That would only make the problems bigger and so I canceled the remainder of the Red Rose Races series. I am now getting some bills paid and hopefully I’ll be able to retrieve more equipment from Rich to sell and refund everyone’s money. Please support my efforts to sort things out with Red Rose Races.

Where do we go from here? There are a few events in Lancaster County like the Turkey Hill Country Classic and the Cargas Criterium unaffected by this situation and they will likely continue as always, but there are about seventeen cycling events that could very well disappear. Christiana will be held, but it’s going to be a smaller event. Rich and Red Rose Races aren’t coming back. I talked with Rich earlier this week thought maybe we could work something out, but Rich has decided he’s moving on with his life and so I wish him well. Although I have no interest in promoting seventeen events, if given the opportunity, I will again organize ten to twelve of them through Pro-Am Cycling, which is ambitious but manageable. We are also willing to license several of the remaining Red Rose Races proprietary events for others to produce and can provide services and equipment as needed. A local club has already expressed interest in holding the Lancaster County Triathlon™ in July 2009.

Hopefully some very outspoken critics in the local cycling community won’t continue to be short-sighted and vindictive for the perceived inequities against Rich. An attempt to boycott our events just makes everyone a loser; what does it accomplish? Where will you race this season, next year, and the year after that? Don’t let these guys ruin it for you.

And that brings me to the Brownstown Road Race™, which is scheduled for Saturday, June 28. I have organized this event for the past five years and it’s always been a favorite. The Men 1, 2 & 3 and Men 4 races are PCA BAR races. The flyer can be found at: All riders registered for the Pennsylvania Super Series™ and individual events under Red Rose Races will receive credit for an entry in the equivalent category; please email me to be re-registered. Be advised there is NO DAY-OF RACE REGISTRATION. PRE-REGISTRATION ONLY. You need to be registered by Thursday, June 26 at 8:00 PM. I hope you’ll come out to race. Thank you.


David S. Butterworth
Pro-Am Cycling Events, Inc.

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