Getty NASCAR team owners forced the cancellation of a meeting with NASCAR.
NASCAR team owners had a quarterly meeting scheduled with the sanctioning body on Wednesday, April 5. However, the owners collectively agreed to not show up, which forced the cancellation of the meeting.
According to a report by the AP’s Jenna Fryer, the charters are a reason for this sudden change. Joe Gibbs Racing President Dave Alpern told Fryer that “if we got the whole group together,” they would only want to discuss whether the charter system becomes permanent.
The charter system is NASCAR’s version of the franchise model. It guarantees entrance into every race on the schedule for 36 teams, and it provides the 16 owners with something far more valuable than the equipment in the shop. They can earn more money based on performance, and they can sell the charter for millions of dollars more than they purchased it.
“The Athletic” noted that NASCAR and the team owners’ council meet roughly every other month to discuss initiatives surrounding the sport. They don’t necessarily focus on revenue distribution. This would have changed if the meeting had taken place as planned.
“NASCAR is committed to open and productive dialogue on a regular basis with all industry stakeholders.” the sanctioning body said in a statement. “We remain committed to continuing discussions in the spirit of collaboration and with the shared goal of growing our sport for the benefit of all stakeholders.”
The Charter System Has Become a Sticking Point
GettyNASCAR chairman Jim France attends the Garage 56 announcement press conference.
The canceled meeting takes place as NASCAR and its owners continue negotiations over the next revenue-sharing agreement. Under the current $8.2 billion media rights deal with FOX and NBC, 65 percent of the revenue goes to the racetracks primarily owned by NASCAR and Speedway Motorsports. The race teams get 25 percent while NASCAR gets 10 percent.
The current deal expires after the 2024 Cup Series season. This coincides with the expiration of the current charter system, which was originally set to end after the 2020 season. However, the two sides extended the charter system in February 2020.
Making the charters permanent has become very important for the team owners. They have seen the prices of charters increase exponentially, which adds significant value for the teams and the team owners.
This is not a priority for both sides of the negotiations, per the report by The Athletic. An unnamed team executive told the outlet that NASCAR chairman Jim France is “dead set” against making the charter system permanent.
The Team Owners Previously Went Public With Other Frustrations
The canceled meeting is the latest example of the disconnect between teams and NASCAR. Back in October, the teams met with a group of media members in Charlotte to voice their concerns about the ongoing negotiations of the next media rights deal.
23XI Racing investor Curtis Polk, Joe Gibbs Racing President Dave Alpern, RFK Racing President Steve Newmark, and Hendrick Motorsports Vice Chairman Jeff Gordon made comments about the current business model and how it is “broken.”
The team representatives told media members at a Charlotte hotel that they aren’t trying to double or triple their profits. They are trying to break even or make a small profit. Gordon, in particular, said that even Hendrick Motorsports is losing money each season.
Per The Athletic, sponsorship makes up 60-80 percent of each team’s revenue. This is significantly different than other leagues where sponsorship is under 20 percent of the revenue.
The team representatives told media members at the time that they had presented a seven-point proposal to NASCAR in June 2022. They did not hear back until October when they received a counteroffer that included a small increase in revenue and proposed “a dramatic cost-cutting” to save money, which team representatives said would require “massive layoffs.”
Fast-forward to April 5, and Alpern told the AP that significant progress has been made in the negotiations between NASCAR and the teams. Though the state of the charter model remains the biggest sticking point.