This past Saturday (Sept. 16), the juggernaut NASCAR Cup Series team known as Spire Motorsports announced it had purchased a charter from another venerable Cup team, Live Fast Motorsports, for $40 million.
This deal indicates a number of things that are becoming apparent regarding charters. First, the amount of changes regarding charters and the back of the Cup field is staggering. Even if someone drew up a chart or graph or thought bubble connection scheme, it would still look like bizarro-world thinking. Team charters seem to bounce around the back quarter of the field like cars off the walls on the final laps at Daytona. And sorting out the mess is just as baffling.
Obviously, such maneuvers would not occur if the money involved didn’t make sense, which is to say, that for those teams, the profit of buying, selling, and borrowing charters allows them to capitalize on either the results of the charter system, i.e. the winnings, or to profit from the selling of them. In essence, the charter system has become its own economy, and lesser teams are the ones finding a way to maximize this baffling system.
There is little reason to denigrate these teams, however. These teams lack the financial backing to run cars good enough to reach the playoffs or enjoy the spoils of finishing higher in the standings. The charter itself becomes the financial lynchpin to surviving, hence selling one if in possession yields more than what a sponsor might and allows the team to then run as an open team even if its future is less secure.
The pivot to this decision is to then lease a charter from another backmarker to ensure that the team will make the field each week, allowing both parties to profit.
For these teams, survival is the business strategy. Just being able to compete provides evidence of a success story compared to the wealthier teams on the track. The intent of the Race Team Alliance and the charter system may not have been to create this outcome, but unintended consequences are part of the development of any new endeavor.
The flipside to this story is how charters have risen in value over the past few years even as uncertainty surrounds their value. Let’s address the second part first. There is a reluctance by some to invest in charters at the moment because they fear that the next TV agreement will not give the return on investment that might be associated with what is presumably a high cost. Fair enough.
Healthy skepticism can be a fruitful mindset, especially when dealing with millions of dollars, but the thinking lacks vision. While the TV contracts may yet to have been signed, market trends indicate that live sports are still a commodity that rises in value. The ability to stream shows and films has negated timed exclusivity, meaning that one can enjoy these programs at their leisure, and there is little offset in the experience.
The difference with live sports is that they are synched with the world. It is nigh impossible to tape delay watching sports and enjoy the same experience because between social media, news alerts, and even word of mouth, the story and results circulate.
The viewer signs a social contract with live sports of placing themselves in the moment and networks find the value in it by selling the advertising slots at a premium. If anything, NASCAR, even with disappointing ratings after the Bristol night race (where Formula 1’s Singapore Grand Prix nearly beat its numbers the next morning), the sport is still in an enviable position of holding power as a valued TV asset.
To continue, if you think that the behemoths of the sport are going to give up money at the negotiating table, then you may as well forget that they’re all cutthroat businesspeople. In reality, the charters should bring in more money.
That leads to the current trends in charter valuation. Some pundits believed that the costs would go up, but followed with the notion that charters are a bear market until the TV deals are signed. Pshaw. Buy now.
A charter is like a mini franchise. One need only look at how franchises grow in value to see where things are going.
In 1989, Jerry Jones bought the Dallas Cowboys for a then-record $140 million. That would be equivalent to $346 million in today’s dollars, give or take. So the Cowboys are worth $346 million? Not even.
Current estimates put the Cowboys at a valuation of nearly $9 billion. In 1999, Dan Snyder bought the Washington Commanders for $800 million and just finished selling the team for $6 billion.
Yes, football is the most popular sport, but its growth is exponential and stunning. NASCAR, having gotten into the franchising game late, is now going through the stages of understanding value and importance of how it might work.
That leads to Spire buying a charter for $40 million. Consider that in 2018, it purchases a charter from Leavine Family Racing for $6 million. That money seemed steep at the time but has turned into an asset. The most recent charter sale prior to Spire’s came in November 2021, when 23XI Racing bought one from StarCom Racing for $13.5 million. The trend indicates that the value has jumped nearly threefold since 2018.
When Denny Hamlin or Dale Earnhardt Jr. talk about the cost of charters being the biggest barrier to field Cup teams, they are missing the point. The charter purchase is not the biggest barrier, but instead the biggest asset. It is the one with the biggest growth potential, and the one that provides the biggest sense of security. How is it that the backmarkers have such a keen awareness of this idea?
About the author
As a writer and editor, Ava anchors the Formula 1 coverage for the site, while working through many of its biggest columns. Ava earned a Masters in Sports Studies at UGA and a PhD in American Studies from UH-Mānoa. Her dissertation Chased Women, NASCAR Dads, and Southern Inhospitality: How NASCAR Exports The South is in the process of becoming a book.
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