Quoted: Peterson fucked over a few people back then. Ed Hertfelder, Nick Ienatsch and a few others.
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Actually, it was the group of investors that came in and bought the company from Mr. Petersen that was responsible for the downsizing. I still like "Pete" in that he likes to shoot and ride, though he's gotten too old to crash any more so he kind of gave up riding years ago. One of my friends still works for him in one of his many companies.
I really liked working with Nick; Hertfelder was a lot of fun when he came out west to visit. Ah, the good ol' days back when we were all at the corner of Sunset and La Cienega. Worked with a lot of fun, creative people in the '80s and early '90s before they moved the publishing operation to Wilshire. Then it started getting more corporate--no more mini bikes wheelying down the halls at Christmas parties.
ETA: On BravoCo's question about the AMA's letting bigger four-strokes into the 125 and 250cc classes--those rules were established many years ago, possibly in the late '70s. I know for sure they were in effect in the early '80s because one guy (Jim Turner?) rode a bored and stroked XR325R or something like that at the L.A. supercross in the 250cc class. Everyone kind of pitied the guy because it was at such a disadvantage. But the AMA wanted to have a fairly level playing field, and at the time, four-stroke technology hadn't advanced enough to give them that level playing field for like-sized two-stroke engines.
That, of course, began to change when Yamaha introduced the YZ400F in '98, and it really took off with the introduction of the YZ250F in '01 (IIRC). It wasn't until the mid-'90s that the manufacturers could see the EPA's writing on the wall and began to push four-stroke tech further. Now, of course, four-strokes are the rage. Ironically, most of the race thumpers are not "clean" enough in the EPA's eyes to get green sticker registration in CA, just like their two-stroke counterparts. Typically, only trail bikes (XRs, DR-Zs, KLXs, TT-Rs, KDXs) are deemed clean enough. The rest of them got red stickers (not to be operated on public lands during the summer months, basically), though I think that may have changed.