On Tuesday (May 28), the Stewart-Haas Racing team dropped startling news on NASCAR aficionados, stating that the organization would shutter itself and become a closed chapter in the history books. For a four-car team to basically evaporate is confounding, surprising, and out of line with contemporary sports metrics.
This feels akin to McLaren suddenly ending its racing in Formula 1, or a professional team in any of the major sports deciding to stop playing and sell off the parts. One of the things that makes sports franchises coveted is how few of them exist and the built-in equity that accompanies them.
The charter system was meant to bring stability to NASCAR and with that stability, economic sturdiness. In some ways, it has, but the business of selling charters, especially for teams in the back half of the field, has become a game within a game. But teams in the top half have yet to liquidate, illustrating the promise of an organization that is solidly run. While SHR suffered through some sponsorship losses and has not been as dominant as it had been, it was still a sought-after seat in the garage and a team with name recognition.
Historically speaking, this demise is coming after the landscape has already been settled. Stick with me here. When the National League came into existence in 1876, a re-birth of the National Association of Professional Base Ball Players, it started the trend of legitimizing professional sports leagues. Eight teams played in the 1876 season, but over time, teams came and went, playing two or three seasons and then folding, with only two of the eight still existing today, Chicago and Boston (now Atlanta). By 1892, 17 teams had folded, illustrating the difficulties of running an organization in the early professional landscape.
The NFL fared no better. Formed in 1920, the NFL faced strong competition from the college game and struggled to grab the attention of the US public. Because of its uncertain existence in its early years, the league also saw teams come and go at a rate more alarming than in baseball. By 1952, 49 franchises had become defunct, five having won NFL championships and the last being the Dallas Texans after the 1952 season.
Both MLB and the NFL stabilized and grew value in their franchises. Since 1899, MLB has not seen a team go out of business, much like the NFL has not seen one since the Texans. What the leagues do instead is move teams into better opportunities, something seen with regularity as teams have bounced around the US developing new markets and enjoying lush stadium deals (while holding cities hostage).
In both sports, the governing bodies have, at times, pushed for owners to sell, even if discreetly. With the case of the Montreal Expos, the league was active in pushing for the change that led them to become the Washington Nationals. In the NFL, the push to have Leonard Tose, a known alcoholic and compulsive gambler, sell the Philadelphia Eagles was an important case of optics. (The fact that he sold the team to Norman Braman is of little comfort to Eagles fans.) Having Dan Snyder divest himself of the Washington Commanders has been the recent example of league-backed change in the NFL.
The reason for showcasing these stories is to note how weird it is for SHR to shutter. It is not like the team can be compared to other recent examples of high-profile teams losing their way. This was a championship-winning team.
Take, for instance, Red Bull Racing. Started in 2006 under the guidance of Jay Frye, the team enjoyed backing from the energy drink giant. But it never found its way as it had in F1, struggling with the structure of NASCAR being so different from its European-based counterpart. Working with newly entered Toyota and an ever-changing lineup of drivers, the team had all the resources in the world and the piddling results of a back marker, deciding to call it quits in 2011 with two wins to its credit. The selling off directly begat BK Racing, which raced from 2012-2018, and then begat Front Row Motorsports.
Similarly, Michael Waltrip Racing started in the series in 2002 but did not become a notable franchise until Toyota and Robert Kauffman joined in 2006 to field cars for the 2007 season. The MWR organization left a complicated history when it decided to shut down in 2015, but BK Racing benefitted by buying its equipment, while SHR bought two of its charters. In this respect, MWR gave life to two teams after being one that lived on life support for nearly two years after its controversy at Richmond in 2013.
These teams highlight how lackluster results — and in the case of MWR, controversy — bring about a team’s demise. Though winless in 2023, SHR notched three victories in 2022. Even dominant teams go through rough years, but to think that the powers-that-be would rather just walk away is amazing.
What is wilder is that no one is looking to buy the organization lock-stop-and-shop.
Let’s say that the Cleveland Browns finally decided to give up on their reboot experiment that started in 1999. No one is going to think they should be pulled apart and sold for spare parts. Instead, someone is going to show up with the GDP of Costa Rica and offer some way to turn things around. (Browns fans and Chargers fans could not be more elated if new ownership were to show up in this fashion).
With SHR, there is no investor, there is no one looking to keep things intact, an organization with a decent infrastructure and potential, seeking to make a statement. In the most implausible of ways, the SHR charters have become the thing most desired — not the team, the talent, the people, or the shop.
If anything, SHR’s folding is the least desirable outcome for NASCAR making a statement about teams. Rather than the team as a whole being made worth something, it is the individual charters, brokered like mini franchises, where the equity value lies. That seems like a broken system.
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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One of the major differences between NASCAR and the NFL/MLB, is that teams in the latter also have large cities/states as stake holders. The owners get new stadiums and tax breaks at tax payers’ expense. They also have built in fan bases with a built in revenue stream from those fans. That really makes it hard to make the comparison.
Both you and Ms. Ladner make valid points. We all knew that charters were going to drastically change the Nascar business model. The effects weren’t hard to predict, and here they are.
As a follower of NASCAR since the 90’s, I must say this was an excellent overview of the business side of NASCAR. Well researched and hits the nail on the head. The charter system did shift the value from teams to individual cars. I do not think that is all bad, but it does make more it difficult to buy a team lock stock and barrel due to total cost. Particularly a team the size of SHR. Just think four charters = 120k plus the cost of buying out the team itself?, who from outside the industry would take that risk? There are only so many Justin Marks out there willing to take the risk, and he knew the industry. That was only two charters when he bought out Ganassi.
Thank you Frontstretch and Ava Ladner for your reporting.
try $120M. still an obscene amount of money. i think the $120K would be a firesale price.
Keep in mind that 120M would only cover the taxes (assuming the state didn’t waive them) for some NFL/MLB teams.
Charters are meant to be a barrier to new teams entering the sport thus protecting the current owners from competition. That is their sole purpose.
If there weren’t charters, how much do you think they’d get?
I could list a bunch of reasons why I don’t like the charter system, but I’ll be damned if I can think of a better way.
I look at charters as a necessary evil (just like politicians…😉).
Before charters owners only walked away with chump change.
Seriously, does anyone have a better idea?
Could the problem be that there aren’t people out there that want to join a sport run by social justice warriors.