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Michael Jordan predicts NASCAR might die. That is, if NASCAR doesn’t institute a permanent charter agreement with the teams.
In an exclusive interview with the New York Times, the NBA legend and co-owner of NASCAR’s 23XI Racing said, “NASCAR’s unwillingness to create permanent charters for Cup teams is ‘a big, big miss’ and that ‘if you don’t correct that, the sport’s going to die.’”
This echoes Denny Hamlin’s recent statement that NASCAR ownership refuses to address the “four key elements” needed for teams to be financially viable. These include making charters permanent, giving teams a bigger percentage of NASCAR television, merchandising, and gaming revenues, plus, a bigger role in race and track management. Hamlin is a co-owner of 23XI Racing with Jordan.
Michael Jordan’s Short-Lived Celebration
It was not quite two weeks ago, April 21, at the Geico 500 at the Talladega Superspeedway, where Michael Jordan was seen celebrating the team’s win. Tyler Reddick, in the No. 45, took the victory for 23XI. Jordan could even be seen celebrating with Reddick’s son.
Ten days later, on May 1, Jordan made his first public comments on the NASCAR charter agreement negotiations, which appear to be getting more acrimonious.
To date, it’s been Michael Jordan’s long-time business manager, Curtis Polk, who’s been taking the lead on criticizing NASCAR over its “broken” business model. At a press conference back in October 2022, Polk said “the economic model is really broken for teams.”
Adding, “the sustainability of the teams in this sport is not very long-term unless we have a fundamental change in the model.”
Polk, a minority owner in 23XI Racing.
NASCAR Is a Good Business, for Some
NASCAR does not publicly release audited statements, but neither do the many teams, and so it’s impossible to know how bad the teams are actually hurting. Or if statements like Jordan’s are just a play to get a bigger cut of the growing NASCAR media and gambling revenues.
As Heavy documented in March, NASCAR is aggressively going after legal sports betting opportunities. Plus, the privately held NASCAR recently signed a seven-year, $7.7 billion dollar media deal with FOX, NBC, TNT, and Amazon Prime. It’s biggest media and streaming deal ever.
We also know that for as much as the teams say they need for their charters to be made permanent, the value of NASCAR charters continues to skyrocket. One recent example, BJ McLeod sold his NASCAR charter in November 2023 to Spire Motorsports for a reported $40 million — after purchasing it for just $10 million in 2021.
That’s a significant return on investment. NASCAR has said they will extend the current charter agreement another 7 years — from 2025-2031.
There are no doubt significant risks in holding a charter that’s only temporary. As we wrote previously, “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.”
A bigger piece of the growing revenue pie, more say in racing issues, more say in track management, more influence on the overall experience–these sound like what every team in a major league sport wants. But NASCAR is not like that.
In the MLB, NBA, NHL, and NFL, the teams are all equal members of the league. And all share in the league’s revenues. Not so with NASCAR.
NASCAR is still run by the Bill France family. Many of the tracks are owned and operated by SMI. And these two entities get an outsized cut of the race revenues, at least according to the teams.
It’s no wonder that the teams are frustrated. It’s much better for them if NASCAR is run more like the NFL. But as long as the revenues are growing, the value of charters are increasing, and fans are showing up, there’s very little reason for the owner of NASCAR, the France family, or of SMI, for example, to cave in to the teams’ demands. And there’s little incentive for the teams to do something drastic, like not run their car, or exit the sport, hoping to force NASCAR to the bargaining table.
Jordan is used to winning as an NBA player, but NASCAR is run differently. NASCAR is not in any rush to share revenues equally, and it doesn’t seem as if the teams have the wherewithal to force them to change.
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