Buying New Berlin dealership offers growth opportunity for Wisconsin Harley-Davidson

No timeline for completion of sale

Problems for Harley-Davidson include difficulty modeling future demand
Riders depart Harley-Davidson’s Milwaukee headquarters on the first leg of the MDA Ride for Life.

Last updated on June 18th, 2019 at 01:32 pm

Robert Moakley’s plans at the start of 2019 did not include buying Iron Town Harley-Davidson in New Berlin.

Moakley is co-owner of Wisconsin Harley-Davidson in Oconomowoc. At the start of the year, he was looking forward to a full year with his dealership’s on-site Riding Academy range and its potential to generate new customers.

But then the Iron Town dealership began running into challenges. In a lawsuit filed in late February, Harley-Davidson Credit Corp. alleged the owners of Iron Town owed more than $3.7 million to the company, including almost $1.5 million for motorcycles HDCC had not been paid for despite the dealership selling the bike.

The issues allegedly dated back to the fall and included Broadtracker Harley-Davidson in Janesville, which is owned by Eric and Sara Pomeroy, the owners of Iron Town. In total, Harley alleged the Pomeroys owed $6.3 million to the credit corporation.

Even before the lawsuit was filed, Eric Pomeroy had told Harley officials he would sell the New Berlin dealership to focus on Janesville and straighten things out with the company, according to court documents.

The New Berlin dealership is just 21 miles from Moakley’s Oconomowoc dealership and the businesses have a shared history. Kirk Topel, the longtime owner of Hal’s Harley-Davidson, the previous name of the Iron Town dealership in New Berlin, also owned the Oconomowoc dealership and was still owned the property when Moakley bought the dealership in 2012. Topel later sold the property to Moakley in 2017 and sold the New Berlin dealership to the Pomeroys in 2016.

So when the opportunity to buy Iron Town presented itself, Moakley jumped at the chance.

“The idea of having both of the dealerships in Waukesha County, it’s an opportunity for growth for our business,” he said.

He also acknowledged there is a defensive element to the move. The trend in the Harley dealer network has been toward consolidation. Chicago-based Windy City Motorcycle Co. has bought two other nearby dealerships – Milwaukee Harley-Davidson and West Bend Harley-Davidson – in recent years. Windy City has since merged with Fox Motorsports, creating a company with 19 dealerships in Illinois and Wisconsin.

“It’s not new investors coming in, it’s existing dealers buying up other points,” Moakley said of the dealer network.

While the outline of a deal for Moakley to buy Iron Town is in place, the sale still needs to be finalized. Moakley was reluctant to put an exact timeline on when the deal would close, pointing to contingencies like Harley-Davidson approval and bank financing, but said he hopes to have a draft purchase agreement completed this week.

Moakley and his team have already taken over management of the Iron Town dealership, enlisting Topel’s help as well. Moakley said he wanted to send the right message to the motorcycling community in the area and Topel still had a relationship with many of the employees.

“I think the fundamentals of the dealership are there,” Moakley said. “I think what went wrong was more back office type things.”

A federal judge for the U.S. District Court of Western Wisconsin issued a temporary restraining order on March 8 essentially requiring the entities that currently own the two dealerships to comply with the terms of their financing agreements with Harley.

The company last week alleged in court filings that both dealerships had continued to not pay for sold motorcycles and asked the court to block those entities from selling any collateral items it had financed. Harley alleged the Iron Town dealership had sold a motorcycle on March 18 and two more on March 22 without sending around $70,000 in proceeds to the company.

Moakley and his team took over management of the dealership on March 18. He said his understanding is those sales were agreed to prior to the management change and the payment issues were a result of confusion during the transition.

Alon Stein, an attorney for the Pomeroys, declined to comment on Harley’s filing citing the ongoing nature of the litigation. In emails included in court filings made this week, Stein accused Harley attorneys of mischaracterizing his clients’ actions and said the company was aware of the pending sales.

“This was during a time when there was a transition and change in a management, and it appears during the transition there was a two-day delay caused by an error,” Stein wrote.

Moakley said his understanding is the issues have been resolved. His focus is on operating the Iron Town dealership moving forward.

“The biggest struggle we have right now is the unknown,” he said. “Not from our point of view, because I’m committed to getting a deal done that works for everybody involved, but the market is sort of unsure on that dealership.”

He said he understands why customers might be concerned or skeptical, but added that his first step was to stock up service parts to prepare for the start of riding season. He said he will also be adding accessory inventory and looking to build out the staff.

“We’re there with an idea that this (deal) is going to close, we’re going all in when it’s done and we’re going to run the place back to how it should have been,” he said.

Moakley isn’t planning any major changes in the short-term, but plans to reevaluate once the sale process is complete. He is hopeful the culture and fundamentals of the dealership will not require significant changes.

“Once the deal gets done, I’ll have had some time to see how the staff functions, see how the events go, how the sales process works and what the sales team is like, then I’ll have a better idea on what it is we want to do,” he said.

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Arthur Thomas
Arthur covers manufacturing for BizTimes. He previously was managing editor at The Waukesha Freeman. He is a graduate of Carroll University and did graduate coursework at Marquette. A native of southeastern Wisconsin, he is also a nationally certified gymnastics judge and enjoys golf on the weekends.