Could NASCAR be close to losing an important piece of their races…the race teams themselves?
If you haven’t been keeping up, NASCAR and its race teams are currently locked in a heated negotiation over the future of the sport after the sanctioning body’s current charter agreement with the team is set to expire at the end of the season.
NASCAR first implemented its current charter system back in 2016, when it issued charters to teams that would guarantee the cars would be able to participate in every race, attempting to provide team owners looking to invest in the sport some stability and assurances for their investment.
But the charter rights were only given to teams through the end of NASCAR’s current broadcast deal, which expires at the end of the season. And now, the race teams are attempting to negotiate a better deal that gives them a bigger slice of the pie for their investment in the sport.
Under the current agreement, teams receive 25% of the revenue from the sport’s broadcast agreement. But that revenue, combined with the sponsorship dollars and other income that the teams bring in (including prize money from the races), isn’t enough to keep NASCAR teams from losing money and running their team at a net loss.
So naturally, teams want to change that.
A group of team owners have been trying to negotiate a better deal for the future of the sport, but so far NASCAR hasn’t brought anything to the table that they feel is sufficient to meet their needs. And with the clock ticking on their time to get a new agreement in place before the current deal expires, at least one NASCAR driver is openly discussing the possibility of teams skipping out on races.
Denny Hamlin has a unique perspective on the whole situation. Not only is he a driver, but he’s also a team owner with his 23XI Racing team, which he co-owns alongside NBA legend Michael Jordan.
23XI holds two charters right now and fields the #23 car for Bubba Wallace, along with the #45 for Tyler Reddick.
And he recently spoke about the list of demands that the teams have made of NASCAR, including making the charters permanent rather than expiring at the end of the sport’s next broadcast deal.
NASCAR recently signed a new $7.7 billion media deal with several different networks, and has offered teams a slightly larger chunk of the revenue from that deal. But not only do teams say that what NASCAR is offering is not enough, they also want assurances that their charters won’t expire at the end of this next deal – which would essentially make their investment in a charter worthless.
Right now, a NASCAR charter can go for as high as $40 million should a team choose to sell their charter as NASCAR allows them to do. But according to Denny, if there’s no charter agreement in place, teams would have no incentive to show up every week – and could even choose to skip races that it doesn’t see as beneficial.
Speaking with Dale Earnhardt Jr. about the issues at hand, Denny explained the dilemma for NASCAR and its race teams:
“Obviously a correct sharing of the revenue is one that is big. right now there’s three stakeholders in this sport: The tracks, the teams, and NASCAR. And to be quite honest, two of those stakeholders make 9 figure profits a year and one stakeholder loses 7 figure profits per year. So there’s clearly a disconnect, and I wish that the fans were more informed how offset this deal is and how unfair it is to the teams…
We’ve asked to have a sharing of any future revenue…Anything from this point forward, we’ve asked for a third of that and they’ve adamantly said no. And we’re willing to give extra rights up to get that and they’ve said no.”
It’s clear that Hamlin’s frustrated with the status of negotiations, even specifically calling out NASCAR CEO Jim France for refusing to negotiate in good faith:
“We’re dealing with one individual that won’t come out publicly and tell his story of why he won’t give these things to the teams that have invested heavily in putting the show on each week.”Â
And he warned what would happen if NASCAR doesn’t get a deal done:
“There would be no charters. It would be ignorant of fans to say, ‘Well that’s great, no charters.’
Well then we just wouldn’t show up when we don’t need to. The Clash, we won’t show up at that, the All-Star Race, we wouldn’t show up at that. Maybe there are some races that pay less, we just won’t show up to those, it’s just not financially good.”
Denny also acknowledged that there may be some owners who aren’t happy with him for speaking out about the issues publicly, but he’s clearly reached his boiling point with the negotiations and how NASCAR is handling one of their most important assets.
