Race Weekend Central

Could There Be a NASCAR Ownership Strike? Negotiations Reach Inflection Point

Inflection Point (noun): a point at which a major or decisive change takes place. Example: The future of the NASCAR Cup Series reached an inflection point after owners failed to show for a preplanned negotiating session with the sport on April 5, and then made their boycott public.

That’s where NASCAR is right now, all sides figuring out where to go from here after a deliberate action designed to ratchet up tensions over money. Could ownership be on the verge of something more serious, like boycotting an actual race in order to prove their current dissatisfaction with executive leadership?

To answer that question, we need to take a step back and look into over a year’s worth of buildup.

The debut of the sport’s Next Gen chassis in 2022 was phenomenal for NASCAR, happening at the perfect time following years of sagging ratings and support. Television ratings stabilized, their highest since 2017, while a flurry of first-time winners, new Championship 4 participants and fresh ownership groups (23XI Racing, Trackhouse Racing Team) injected storylines galore.

The sport’s popularity reached a peak just before negotiating windows began this spring for the sport’s next television contract. The current 10-year NASCAR deal, which runs through 2024, will bring in a total of $8.2 billion in revenue over that time period for coverage of the sport’s Cup, Xfinity and Craftsman Truck series. It’s an important lifeline for NASCAR’s profitability and growth in an era where track seating’s been reduced amidst a deepening attendance crisis for all sports — even the NFL.

See also
Did You Notice?: It's All Ross Chastain's Fault?

But that $820 million per year from broadcast television isn’t distributed evenly across the board. 65% of that money goes to racetracks, 10% to NASCAR itself and just 25% is pocketed by the race teams who actually compete each weekend. Keep in mind roughly half of the 36 points-paying Cup races are run at tracks directly owned by NASCAR itself, giving them additional cashflow to be used at their discretion.

Compare that to Cup Series ownership. They’ve had to deal with rising costs during the Next Gen transition, rendering their own fleet of cars a worthless hunk of sheet metal while buying up a supply of centralized parts. A glutton of successful multi-car teams has made the cost of entry that much higher, along with ballooning charter prices since the formation of NASCAR’s franchise-based system in 2016.

The move to guarantee 36 spots on the grid through a charter also cut down on the number of owners attempting a Cup race. Around 27 different ownership groups attempted at least one event in 2015; by the end of 2022, that number was cut to 21, with just 16 owners holding at least one charter in hand. Only three of those organizations (the Wood Brothers, Live Fast Motorsports and JTG Daugherty Racing) remain single-car teams.

A smaller number of people with skin in the game allows the sport’s ownership arm, the Race Team Alliance, to be much more effective at holding a unified front. And their stance last fall, as negotiations first started to turn sour, was clear from the get go: what they’re getting from the current TV deal is simply not enough.

“The economic model is really broken for the teams,” was the comment by Curtis Polk, Michael Jordan’s longtime business manager, in an Associated Press article last October that sent shockwaves through the industry. “We’ve gotten to the point where teams realize the sustainability in the sport is not very long term… this is not a fair system.”

Among those quoted?

Hendrick Motorsports Vice Chairman Jeff Gordon, heir-in-waiting of one of the sport’s most successful organizations. With outside sponsorship reportedly footing the bill for 60 to 80% of a team’s yearly cost, the message was a charter was bare minimum to protect an organization over the long term. Any type of major sponsorship decision to pull back could lead to an entire organization falling apart financially.

We saw this dynamic play out last year at the highest level when M&M’s decided not to renew its longtime sponsorship with Joe Gibbs Racing. It left the team in a position where it was easier to sign a cheaper alternative, 20-year-old rookie Ty Gibbs, than tie up big money in two-time Cup champion Kyle Busch and cross their fingers additional high-dollar sponsorship would come through.

See also
Dropping the Hammer: Josh Berry's Moment

That’s brought us to where things are today, ownership skipping out on a meeting designed to discuss whether to make the current charter system permanent (that, too, expires with the sport’s TV deal after 2024). They’re making their point during a time of maximum leverage; just seven cars outside the charter system have made a qualifying attempt in 2023, with only two paired with ownership groups currently outside the RTA.

The message to NASCAR is crystal clear: we don’t show up, you don’t even have people to replace us and come to a racetrack. How are the drivers going to drive when no one’s going to provide them with a car to compete in?

This move comes in the midst of an awkward start to 2023 as it is. The last five races have seen Cup television audiences decline by double digits, including a whopping 41% drop moving the Richmond Raceway event over to FOX Sports 1 from big FOX. The sport has doled out some serious penalties to teams over Next Gen parts violations, leading to confusing appeals decisions like one that saw a 100-point penalty assessed to each of Hendrick Motorsports’ four cars get rescinded while a four-race crew chief suspension and a total of $400,000 in fines were allowed to stand.

“It should have never even come to that,” Gordon said of the incident Sunday as teams are getting increasingly vocal. “I don’t want to give too much information because I want to respect the process, but it’s also a little frustrating that nothing gets shared from what determines whether there’s points given back or whether there’s money not given back and crew chief suspensions.

“I just feel like there was enough there that it’s not clear-cut. It’s not just a black-and-white situation because there was enough communication to justify why we showed up to the racetrack in Phoenix the way we did.”

The criticism has trickled down to other incidents, as well, like Denny Hamlin’s 25-point deduction and $50,000 fine for comments he made on a podcast. And all of it is happening with the backdrop of building Formula 1 popularity, the premier open-wheel series in the world planning three U.S. Grands Prix this season with future North American expansion on the horizon.

That level of competition should have all facets of stock car racing working in tandem to fend off the challenge. The catastrophes of prior racing series cracking up over finances, like the CART-IRL split of 1996, gives fair warning to what happens when you choose divorce in motorsports.

But NASCAR hasn’t faced this level of dissension before in the sport’s modern era. Long gone are the days Bill France Sr. and his heavy-handed leadership could just bully participants into submission or just find someone else to play in his sandbox. Stock car racing is a modern, big corporate sport that can’t just get a bunch of independents to show up if the owners bolt and “show ’em who’s boss.”

In fact, it’s the owners who may have more leverage as this internal crisis within the sport deepens. President Steve Phelps is now faced with what could be the largest inflection point of his leadership tenure, more impactful than even the Bubba Wallace noose-that-wasn’t at Talladega Superspeedway back in 2020.

What happens now?

Follow @NASCARBowles

About the author

The author of Did You Notice? (Wednesdays) Tom spends his time overseeing Frontstretch’s 40+ staff members as its majority owner and Editor-in-Chief. Based outside Philadelphia, Bowles is a two-time Emmy winner in NASCAR television and has worked in racing production with FOX, TNT, and ESPN while appearing on-air for SIRIUS XM Radio and FOX Sports 1's former show, the Crowd Goes Wild. He most recently consulted with SRX Racing, helping manage cutting-edge technology and graphics that appeared on their CBS broadcasts during 2021 and 2022.

You can find Tom’s writing here, at CBSSports.com and Athlonsports.com, where he’s been an editorial consultant for the annual racing magazine for 15 years.

Sign up for the Frontstretch Newsletter

A daily email update (Monday through Friday) providing racing news, commentary, features, and information from Frontstretch.com
We hate spam. Your email address will not be sold or shared with anyone else.

6 Comments
Inline Feedbacks
View all comments
janice

these cup cars aren’t like xfinity cars, where some guy from local track can just show up and get in the car and run. then there’s the pit crew factor. if none of the current teams decided to boycott as a group, the end result would look like an old fashioned marx brothers movie. i can see the title now……nascar mayhem.

the fact that teams no longer have a season long sponsor, as they did in the 90’s and in early 2000’s speaks volumes about the amount of money it takes to field the team. i remember hearing last year that both gibbs and gordon said they don’t turn a profit. on dale jr’s download podcast this week they were talking about the penalty appeal. jr said that for some teams out there, even his in xfinity series, $400,000 is usually profit for a year. it will be interesting to see how sponsorship goes as economy weakens.

the fact that a charter costs $35 million is absurd. that’s just what they have to pay to play?

also the other elephant in the room…..kaulig penalty. guess they’re not the favored team. did they race with that part on?

BH

The message to NASCAR is crystal clear: we don’t show up, you don’t even have people to replace us and come to a racetrack. How are the drivers going to drive when no one’s going to provide them with a car to compete in?

Well, Tom, NASCAR adequately addressed that question in 1969. These bitchy owners can whine all they want, but in the end they have two choices: 25% of something or 100% of nothing. Both sides know this already so this is just noise.

Ted

It’s weird that it’s mostly the wealthier owners complaining. 🤔🤦‍♂️🤣

Dawg

NASCAR has always been pretty greedy. That’s why the France family are all billionaires.

The owners on the other hand, if they aren’t already Billionaires when they go in, most are just trying to keep their heads above water.

The worst possible outcome would be something like the Cart/IRL split. I’m sure it will never come to that, but If I were an owner I wouldn’t be happy with less than a 40% share.

Fifty % to the tracks, considering that they get advertising, sponsorship, naming rights, parking, & concessions as well as TV revenue sounds fair.

Yes the cost of building a new track can be staggering, but after the overbuilding of the 90’s no new tracks are being built & a 50% share should cover reconfigurations upgrades & repairs, considering their other sources of revenue. Most if not all tracks host concerts, & other events as well.

A track that might be most affected would be Pocono as it’s independently owned, & has already been cut back to one race a year, but that’s something that could be worked out separately, unless NASCAR is trying to squeeze it out so they could pick it up on the cheap. Stranger things have happened.

Bottom line, no one stands alone, they all need each other.

Last edited 1 year ago by Dawg
DoninAjax

Guy at a bar to the guy next to him” “I’m a millionaire.”
“That’s impressive.”
“I used to be a billionaire.”
“What happened?”
“I got involved in NASCAR!”

Chris A

Here in your article is what the owners are saying: 65% of that money goes to racetracks, 10% to NASCAR itself and just 25% is pocketed by the race teams who actually compete each weekend. Keep in mind roughly half of the 36 points-paying Cup races are run at tracks directly owned by NASCAR itself, giving them additional cashflow to be used at their discretion.

So according to the math the owners get 205 million split 36 ways = $5,694,500 dollars roughly each. It takes from what I hear 10 million a year for 1 car at the current prices of the next gen car. That leaves the owners looking for roughly $4,305,500 in sponsorship dollars to cover all their expenses. In today’s climate the owners are correct in saying the business model is broken for them whether they are billionaires or not. It’s a business and NO they are not being treated fairly according to the percentages of income in the grand scheme of things.

Share via