Getty Nascar announcement
Charters have been front and center in the discourse surrounding the NASCAR Cup Series as of late, with Stewart-Haas Racing set to shutter its doors at the end of the 2024 season. SHR’s four charters are now up for grabs, but the process has been complicated by NASCAR’s ongoing charter agreement negotiations with NASCAR teams.
NASCAR delivered their most recent proposal to teams two weeks ago, but according to Denny Hamlin, who co-owns 23XI Racing, the proposal is far from finished.
“I think there’s still a ton of work to do. Not a little bit of work. Quite a bit. So that’s going to be the priority over the next few months to get this thing a little closer,” Denny Hamlin said after the teams reviewed the proposal, per the Associated Press.
GettyDenny Hamlin, 23XI Racing
NASCAR’s Charters & The France Family
Currently, the Cup Series sports 36 charters held by 15 teams, which are set to expire at the end of this season. The NASCAR Xfinity Series and Craftsman Truck Series do not have charters.
NASCAR’s business model has been built around independent contractors investing in the sanctioning body of NASCAR to participate in the sport since the racing series’ creation in 1948. At the center of NASCAR is the France family, who have owned and operated NASCAR Holdings from its inception.
This means that charter negotiations aren’t just between the teams and the NASCAR governing body; it’s with the France family, too.
When it comes to the outcome of the negotiations, the teams are seeking to make the charters permanent, to hold greater governance power within NASCAR, and to increase their shares of new revenue and traditional media revenue, among other concerns.
For NASCAR, their latest offer was to guarantee charters for seven years with a potential seven-year extension following the charter expiration, a cost cap, and, most crucially, a provision that would allow private equity firms to purchase charters. That provision would allow the France family (a private company) to buy charters, a stark contrast to the current charter agreement, which prevents anyone from the France family who holds an active role in NASCAR from owning a stake in a charter.
The potential for the France family to own stakes in charters isn’t completely out of the question. Roger Penske has owned and operated the IndyCar series since 2019 and also fields three cars under the Team Penske banner. And, NASCAR owns the IMSA sports car series, with Jim France, the NASCAR CEO, owning an IMSA team.
But, those aren’t perfect comparisons, since charters don’t exist within the IMSA sports car series, and Penske had owned and operated IndyCar teams for decades before they acquired the series. This means that although other sports car series have seen series owners successfully operate teams with minimal conflict of interest, NASCAR itself doesn’t have any precedent for the same.
Charters exist for a very important financial reason; they allow independent investors to have the ability to ‘cash out’ from NASCAR. For example, rather than leaving the series with sunk costs, Stewart-Haas Racing can sell off their charters for a potential profit. Before the charters, the financial value of a team upon its closure was only in their equipment (technically outdated at the end of the season, and thus difficult to sell off) and real estate.
In 1999, Ricky Rudd lived that very same reality of selling off Rudd Performance Motorsports’ capital upon the teams’ exit from NASCAR.
“I’m not going to lie to you, this hurts, and it doesn’t even make a whole lot of sense if you allow yourself to really think about it. This business is always focused on the future. So, everything you own is dated as soon as the season is over. It’s worth nothing to the people with the real money,” Rudd told Ryan McGee of ESPN on Dec. 1, 1999, during the process.
GettyStewart Haas Racing press conference
Charters For Sale For The 2025 Season
With no fixed price for charters, in the past six years, the financial value of them has skyrocketed. In 2018, Spire Motorsports purchased Furniture Row Racing’s charter for $6 million. In 2021, 23XI Racing bought StarCom Racing’s charter for $21 million. Last year, Spire Motorsports bought Live Fast Motorsports charter for an estimated $35-40 million.
While Front Row Motorsports has acquired an additional charter and announced its expansion for 2025 shortly after Stewart-Haas Racing announced its impending closure, it has yet to be confirmed that FRM bought their charter from Stewart-Haas Racing. Even if they had, there would still be three SHR charters for sale, with a grid full of potential buyers, but without a charter deal in place with NASCAR, teams could be reluctant to take the plunge on purchasing a new charter.
“23XI is interested in getting a charter deal done. On Jan. 1, 2025, we don’t even have a charter. You can’t buy or sell something that doesn’t exist, in our eyes. So, we have two charters ’til the end of this year and until we get a charter agreement done that’s all we have. … I’m not going to put myself in a position to where I’m having to shell out millions and millions of dollars every year to just keep this thing going … so, it has to make financial sense, and the charter agreement needs to be better than what it is certainly before I invest any more money in it,” Hamlin said on his “Actions Detrimental” podcast.
“It will be interesting to see how it all comes together, but I can speak for my group just saying we’d like to get a deal done sooner than later because certainly it’s hard to plan for the future when we don’t have a charter agreement and right now, we don’t,” Hamlin said on “Actions Detrimental”.