Getty Images Jeff Gordon shares his thoughts on the NASCAR charter agreement.
NASCAR appears to be awash in money and no one seems to know exactly where it’s all going. But they are convinced they’re not getting their fair share.
For a sport that just signed a 7-year, $7.7 billion dollar media deal with Fox, NBC, Amazon, and TNT, the biggest problem NASCAR is facing may be in how to divvy up all that money.
The crux of the issue is a massive inflow of new money — from new sponsors, new streaming media, even gambling — but little transparency into exactly how much, combined with uncertainty over who deserves what.
Mo Money, Mo Problems
This week’s 66th running of the Daytona 500 was the richest ever, with a record purse of over $28 million. According to NASCAR, this was not just the richest purse in NASCAR history, but in all of motorsports history.
But as Heavy wrote just prior to the 500, “NASCAR no longer specifies how much of the purse goes to the winner.”
This may not be a problem for the drivers. They will ultimately know exactly how much they will take home following the race. But fans do want to know just how much the winner got, and just how much William Byron’s hit cost Brad Keselowski or Ryan Blaney or Joey Logano — all of whom got knocked out of the race.
Contrast this with golf, for example. PGA tournament purses continue to grow richer. But PGA publicizes the total purse and how much each golfer wins based on finishing position.
For drivers and teams, though, the bigger problem is there’s little transparency as to exactly how much money NASCAR is generating in total. As NASCAR legend Jeff Gordon, now vice chairman for Hendrick Motorsports, said “I don’t think Hendrick Motorsports has made a profit in 10 years.”
What Gordon says may be true, but it’s important to note what he says next. Hendrick may not be making a profit racing in NASCAR, technically, but it’s very likely they are more than making up for any theoretical losses thanks to sales they generate because they run a NASCAR team. NASCAR fans want to buy from Hendrick.
Note that Gordon added: “You say, ‘Well, why do you do it?’ Well, it’s because Rick Hendrick loves the sport. He loves cars and it’s been good branding, you know.” Good branding is key.
Hendrick Motorsport is almost certainly making a profit thanks to NASCAR — even if not directly from NASCAR. This part can be a sticky financial issue for some drivers. Drivers earn a salary from their team, sometimes in the millions of dollars. They claim (big) prize money for winning a race. And, they have sponsors.
William Byron won the 2024 Daytona 500, getting the biggest share of that historic purse. He races for Hendrick Motorsports, earning his pay. And he is no doubt doing better than most Americans. But knowing how much money, exactly, his win meant to Hendrick’s value, to all the additional sales of Hendrick products thanks to his victory, might get his attention. Is it possible he’s underpaid?
It’s a similar situation between the teams themselves and NASCAR — owned by the Bill France family. Even if they are all doing very well, should it be more?
NASCAR Teams Lawyer Up
Forbes got a look last year at NASCAR’s estimated financials. The numbers were quite good — and this was prior to the big media deal NASCAR recently signed. According to Forbes, “After 2008, NASCAR stopped reporting track attendance, and in 2019 the once-publicly available revenues were gone.”
Forbes added that NASCAR is estimated to bring in “$425.06 million with 25 new (sponsor) deals signed coming into the year. Of the 58 (total sponsor) deals only three are worth less than $1 million.”
Forbes numbers are estimates.
For the teams, not knowing exactly how much money NASCAR is making is just one issue impacting their value — and their insistence on a new and better deal.
Since at least last spring, several teams have been attempting to negotiate a better franchise deal with NASCAR. The existing revenue agreement is set to expire at the end of 2024. As the Associated Press noted, “the main sticking point between the teams and NASCAR remains the charter system, under which each of the 36 cars with a charter are guaranteed a spot in the Cup field each week and a slice of TV package revenue.”
NASCAR team charters, which are likened to a franchise — like someone owning a McDonald’s franchise — are worth millions of dollars. But that worth is highly dependent on NASCAR’s goodwill. Thus, the teams want the charters to be permanent, not temporary. NASCAR has so far refused this demand.
The issue is, if charters stay non-permanent, their value can be radically less than what the teams paid for them and the money they put into building up the team. Think of it as the difference between buying a McDonald’s franchise versus buying a McDonald’s franchise that the McDonald’s corporation can threaten to revoke at any time for any reason. Maybe they just want your land.
NASCAR is owned by the Bill France family. They can technically revoke a team’s charter, which would obviously devastate its value. The teams — the franchises — don’t want to pour money into NASCAR racing, which is not cheap, without both a guaranteed permanent charter in their possession. And a bigger slice of the money flowing into the sport.
With sponsors returning, plus streaming network money, plus the addition of online sports betting, teams are eager to get a deal finalized.
Not surprisingly, just before the Daytona 500, the teams hired Jeffrey Kessler, considered one of the country’s top sports lawyers, to advise them on negotiations. Kessler has been instrumental in getting equal pay for the US women’s soccer team, and for representing college football players seeking to get paid.
This could go into overtime.