Former Denver Broncos quarterback John Elway decided to let his licensing agreement with AutoNation Inc. lapse so he could have a chance to launch his own new-car dealerships in the Denver market, he said Monday.
Fort Lauderdale, Fla.-based AutoNation said last week it was parting ways with Elway and would rename its John Elway AutoNation dealerships with the newly created brand Go.
At a news briefing Monday, Elway agreed with AutoNation’s characterization of the split as mutual. But he added that he had his own reasons for walking away.
“Economically, it was better for me not to license my name to AutoNation because it kept me out of the market,” said Elway, who was speaking at a media preview for the Arena Football League’s Colorado Crush, of which he is a co-owner. “If I wanted to get back into the market and own my own stores, I can do that with my name. If I did not do that, then I could have the stores, but I couldn’t use my own name.”
Elway did not specify how many dealerships he would open or when such a deal would occur.
“There are some opportunities out there. I don’t know if I’ll ever do them, but I wanted the opportunity to be able to do so,” he said.
Elway started in the auto business in 1989 while still quarterbacking for the Broncos. He sold his five dealerships to AutoNation in 1997 and then began licensing his name to the company for use on all of its Denver-area dealerships.
When Elway sold his dealerships to AutoNation, the mostly stock deal was valued at $82.5 million. On Monday, Elway said he no longer holds an interest in the company.
AutoNation will hold a rally for Denver-area employees to introduce them to the new name today, and the company expects to begin changing its signs by midmonth.
Neither Elway nor AutoNation would specify the terms of the licensing deal, but Elway said he is not bound by a non- compete agreement that would prevent him from operating dealerships under his own name.
AutoNation spokesman Marc Cannon said details of Elway’s contract were confidential but that the company wishes him the best in his business endeavors.
If Elway pursues his plans, he would be entering what has become a difficult playing field for auto dealers. Seasonally adjusted U.S. auto sales slipped to an annual rate of 16.04 million vehicles in November, compared with 16.06 million a year ago. And increasingly, educated customers are putting the squeeze on auto dealers by demanding lower prices quoted on the Internet, which is eating into margins.
The most likely scenario for Elway to re-enter the car-sales market would be for him to purchase an existing chain of dealerships rather than launch new ones, said Tim Jackson, president of the Colorado Automobile Dealers Association.
Although Colorado’s population has grown over the past two decades, the number of dealerships in the state has remained flat at roughly 260, Jackson said.
He attributed that to trends including rising operating costs, longer-lasting vehicles and longer financing periods.
Jackson said he doubts that the shift of the Elway name from AutoNation to a new chain of dealerships would confuse customers.
“I don’t anticipate that it would be problematic,” Jackson said. “I think the public is well- served now and will be well- served by the new John Elway dealerships if that is what he decides to do.”
Staff writer Kristi Arellano can be reached at 303-954-1902 or karellano@denverpost.com.
