Did BJ McLeod Sell His NASCAR Charter Too Soon?

Getty Images NASCAR fans at the AutoTrader EchoPark Automotive 400, April, 2024.

NASCAR and the teams that hold the 36 charters are close to a new charter agreement. It will come too late for BJ McLeod, who sold his NASCAR charter in November 2023 to Spire Motorsports for a reported $40 million — after purchasing it for just $10 million in 2021.

A hefty profit, no doubt, but much like California real estate, the long-term value of a NASCAR charter is almost certain to continue going up. The question is, did McLeod sell his charter much too soon?

It’s been estimated that NASCAR charters have increased 11-fold in value since the charter system was started in 2016. With NASCAR’s new media deal — valued at nearly $8 billion — plus the addition of new sponsors, social media content, new platforms to monetize NASCAR content, plus now gambling revenue, it’s a good bet that $40 million will soon seem a pittance.

Did McLeod sell for a quick profit? Sell because his company needed a cash infusion? On the “Dirty Mo Media” podcast on April 12, McLeod said he sold the charter because “we weren’t going to be able to grow as fast as the sport had grown.”

An odd take. Fact is, owning a charter guarantees the holder a spot in every NASCAR Cup Series race. The value of NASCAR — and sports, in general — is likely to continue its rocketship-like growth. Why sell your charter now?

A NASCAR Charter Is Not Exactly Guaranteed Money

There are 36 charters. Every holder of a NASCAR charter gets to run a car in every NASCAR Cup Series race.

That means possible race prize money at every race, of course, but also a premium position on network television, cable television, streaming television — plus, YouTube, TikTok, Facebook, and more. The kind of highly visible media presence that sponsors will pay big money for.

NASCAR maintains a list of current charter owners on its site. Do some digging and it’s clear the value of a NASCAR charter remains on its upward trajectory. From Heavy.com — in 2021: “The next charters sold will go for ‘at least $12 million.’ This price will mark a 100% increase from the charters that sold in 2020 for an estimated $6 million.”

Whoops! A month later, in December 2021, Heavy wrote: “23XI Racing agreed to pay $13.5 million (emphasis added) for the charter that previously belonged to StarCom Racing.”

At the time of the deal, Denny Hamlin, co-owner with Michael Jordan of 23XI Racing suggested charter prices had plateaued. Obviously, not.

The Huge Potential Downside of a NASCAR Charter

Think of a NASCAR charter like owning a home. There are mortgage costs, insurance costs, maintenance costs, taxes, upgrade costs, and more. But if the value of the home, the land — the neighborhood — are all going up, especially if you got a good price and locked in a good rate, there is a very high likelihood of a net gain on your investment.

Now imagine you did all those things, but did not own the land the house sits on. A NASCAR charter is kind of like that.

In the NFL, the teams — Steelers, Lions, Patriots, and so forth — own their respective teams plus are part owners of the league. It’s similar to the MLB, NHL, and NBA. Not so for NASCAR.

NASCAR is privately owned by the Bill France family. That includes the name, the brand, numerous tracks, the agreement with FOX Sports, NBC, and other television entities.

Trackhouse, for example, or Hendrick, don’t own a piece of NASCAR. They own their car, their team, that’s it. What if NASCAR kicks them out? Ends the charter system? Decides to add 20 additional charters?

The original NASCAR charter agreement ran from 2016-2024. NASCAR and the teams — the charter holders — are currently negotiating a new charter agreement. Negotiations have been acrimonious.

Nonetheless, according to a report in the Sports Business Journal on April 17, 2024, NASCAR COO Steve O’Donnell claims the racing body and the teams are “very close” to a new charter deal. Perhaps. The teams may not have as much leverage as they would like. That said, the value of a NASCAR charter has always gone up. And money flowing into NASCAR has never been greater.

Look at the value of the charters over the past ten years. Or the value of an NFL team, for example. Selling now, unless you really need the cash, may prove unwise.