Getty Images Denny Hamlin, driver of the No. 11 and NASCAR team coo-owner
Stop me if you’ve heard this one before. NASCAR and the teams are close to a new charter agreement. Don’t believe it? NASCAR COO Steve O’Donnell insists “we’re very close” to a new agreement with the teams. While speaking at the CAA World Congress of Sports in Los Angeles on April 17, 2024, O’Donnell suggested the “sport’s potential” was enough to get the teams to accept NASCAR’s offer–extending the existing charter agreement seven more years. The teams, of course, are demanding a permanent slot on the track, not just until 2031.
For his part, Denny Hamlin, driver and part-owner of 23XI Racing, claims it’s all just “positive messaging” from NASCAR, nothing more, and that the two sides remain far apart. Brad Keselowski and Jimmie Johnson echo Hamlin’s view. NASCAR ownership and the teams remain far apart and no deal is likely to happen anytime soon.
Big Money in NASCAR Getting Bigger
Denny Hamlin has taken a lead role in the NASCAR charter discussions. At the least, he’s been most out front voicing the frustrations of team owners. Hamlin notes “four key elements” that he claims NASCAR ownership refuses to address. These four elements include making charters permanent, giving teams a bigger percentage of NASCAR television revenues, along with more revenues from other areas, such as licensing, digital media and gambling. Plus, a bigger role in race and track management.
A NASCAR charter is a right to run a car at every NASCAR Cup Series race. That right is worth a lot of money. As we documented recently, 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.” Expect that $40 million to go up. As we noted just last month, NASCAR charters have increased 11-fold in value since the charter system was started in 2016. “It’s a good bet that $40 million will soon seem a pittance.”
Great for charter holders but there are two obvious downsides. Even with a charter, the cost of running a car in a NASCAR Cup race is substantial. Many teams, like BJ McLeod’s, exit NASCAR Cup altogether, while other teams, like Stewart Haas, are looking to downsize. No surprise then, teams are seeking a bigger cut from NASCAR’s latest multi-billion dollar media deal. Plus, all the potential NASCAR gambling money.
The other big issue is that NASCAR is proposing charters run from 2025-2031. They expire. Maybe NASCAR extends the agreement in 2031 or offers something even better. Maybe, not. But after spending $40 million or more on a charter, teams are seeking a permanent stake, not a piece of paper that expires seven years from now. Planning for the future is a lot harder when someone can take it away.
NASCAR Is Not Like Other Sports
NASCAR is not like other big league sports in America. NASCAR is a privately-owned entity and still run by the Bill France family. Teams like 23XI Racing or Hendrick or Joe Gibbs Racing are not part-owners of NASCAR. They are “owners” in that they own their own team but they have no equity stake in NASCAR, the business. This is unlike the MLB, NHL, NBA, or NFL. In the NFL, for example, each team has an equal financial ownership stake in the league. It seems unlikely NASCAR’s actual ownership would suddenly agree to such a structure. And despite the “positive messaging,” they may be in no rush to get a deal done, even though the current charter agreement is set to expire at the end of this year.
According to Tony Florez of Sports Business Journal, NASCAR’s O’Donnell remarked at the recent CAA World Congress of Sport that “I think they (the teams) get it.” Likely, O’Donnell understands that the teams have far less leverage in these negotiations than they want to admit.