Cup team owners skip quarterly meeting with NASCAR
Cup team owners skipped Wednesday’s quarterly meeting with NASCAR officials because of an impasse between the two sides on charters, according to The Associated Press.
NASCAR issued a statement Wednesday: “NASCAR is committed to open and productive dialogue on a regular basis with all industry stakeholders. We remain committed to continuing discussions in the spirit of collaboration and with the shared goal of growing our sport for the benefit of all stakeholders.”
The Associated Press reported Wednesday that the team owner council, fearing the meeting would be “hijacked” by conversation solely about charters, told NASCAR it felt talks should be postponed. The AP reported that NASCAR planned to hold the meeting, but the teams did not attend.
The Athletic reported that team owners want NASCAR’s charter system to continue but that Jim France is said to be “dead set” against making it permanent.
NASCAR’s charter agreement with Cup teams started in 2016 and goes through the 2024 season. The agreement sets up the revenue model and requires the 36 charter teams to compete in every event.
Teams receive money based on entering each race, their performance in each race, performance over the previous three seasons and the points fund. Even with this, teams rely on sponsorship to offset the difference to compete in the series.
Cup team executives said last October that they need additional revenue streams to fix a “broken” business model. Their comments came after NASCAR rejected a seven-point proposal from team executives on a new model.
“We’re very far apart,” Jeff Gordon, vice chairman of Hendrick Motorsports, said last October.
Gordon is one of four members of the negotiating committee for teams. The others are Curtis Polk, an investor in 23XI Racing and Michael Jordan’s longtime business manager, Joe Gibbs Racing President Dave Alpern and RFK Racing President Steve Newmark.
“The economic model is really broken for teams,” Polk said in October.
NASCAR responded last October by issuing a statement: “NASCAR acknowledges the challenges currently facing race teams. A key focus moving forward is an extension to the Charter agreement, one that will further increase revenue and help lower team expenses. Collectively, the goal is a strong, healthy sport, and we will accomplish that together.”
JGR’s Alpern said last October that additional cuts by teams would not be the best way for them to achieve financial stability.
“When it comes to cost-cutting, one of the things that’s kind of surprising in our sport is that when any of the other stakeholders spend money on something, an upgrade, signing someone from another league, it’s viewed as an investment within the sport,” he said.
“But when teams spend money, it’s we’re reckless and you need to cut. We’re investing in our business as well, whether it’s people, our facilities, we’re all trying to grow the sport and the answer to everything is not cut costs. I don’t know of another sports league or business, for that matter, who came to prosperity through cutting.”
NASCAR President Steve Phelps addressed how teams can be more financially viable last November ahead of the season finale at Phoenix.
“We fully believe that having profitable teams does lead to more competitive racing,” he said. “If you look at it, there are two areas to do it: increasing revenue, which we have every intention of doing with our race teams, and controlling expenses, right?
“The teams have asked us to control expenses. Where those come from, I don’t know. That will be up to the race teams to determine the best way to figure out how they would control those expenses.
“I’m not suggesting that we have a specific discussion around what that would be or the mechanisms that we put in place. The teams, the idea of having caps, floors, ceilings, luxury taxes. We’ll continue to have dialogue with our race teams.
“The charters go through the end of 2024. We will have meaningful dialogue with our teams next year, I’m sure. We’ll figure out what is going to be a fair opportunity for all stakeholders. Moving forward in 2025, what that looks like, I don’t know. It will absolutely have to be around both revenue increases as well as some type of expense restriction in some way.”
Polk said last October said that the sport is a “money-printing machine, but the teams put on the show. The teams are the content. The drivers, the team owners and the cars are what fans turn on for every week and what the media companies pay the big money.”
NASCAR, tracks and teams share TV revenue — a 10-year deal estimated at $8.2 billion will end after the 2024 season. For each race, 65% of the TV money goes to the tracks, 25% goes to teams and 10% goes to NASCAR.
With teams getting a smaller percentage of the TV money, they have to rely on sponsorship to cover costs.
Newmark said that sponsorship makes up about 60-80% of a team’s overall revenue. He noted how that is out of line with other sports.
The Fenway Sports Group, which is a co-owner of RFK Racing, also owns the Boston Red Sox in Major League Baseball, the Pittsburgh Penguins in the National Hockey League and Liverpool Football Club in the English Premier League.
RFK’s Newmark noted that in Major League Baseball, 8-12% of a team’s overall revenue comes from sponsorship. In the NHL, that figure is 17-18% and for the Premier League it is closer to 26-27%.
All those totals are significantly lower than the NASCAR model. The impact of sponsorship on teams was evident last year with Joe Gibbs Racing losing Kyle Busch after last season.
Longtime sponsor Mars, Inc. announced in December 2021 that it would not return to the team or sport after the 2022 season. That began a search by JGR for a company that could invest an estimated $20 million into the No. 18 team and Busch.
After a deal with another company fell through in the summer of 2022, Gibbs was left without a sponsor and unable to sign Busch to a new contract.
“There is no other pro sport where the signing of your top athlete is completely dependent on the decision of someone at a brand,” JGR’s Alpern said. “Imagine if Aaron Rodgers of the (Green Bay) Packers had a contract held up because the stadium sponsor hadn’t made their decision on what they’re doing.
“That’s what we’re faced with as race teams. And, if I’m honest, we’ve almost become full-time fundraisers. We spend the majority of our time raising money, not to make money (but) to survive.”