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| Photo Credit: AP. |
CHARLOTTE, N.C. (AP) — The most powerful teams in NASCAR warned Friday that the venerable stock car racing series has a “broken” economic model that is unfair and has little to no chance of long-term stability, a stunning announcement that added to a growing list of woes.
The Cup
Series is heading into the Charlotte Motor Speedway road course playoff
elimination race Sunday with three full-time drivers sidelined with injuries
suffered in NASCAR’s new car and no clear answer as to how to fix the safety
concerns.
With just
five races left in the championship chase, it got much worse as teams went
public with their year-long fight with NASCAR over equitable revenue
distribution.
“The
economic model is really broken for the teams,” said Curtis Polk, who as
Michael Jordan’s longtime business manager now holds an ownership stake in both
the Charlotte Hornets and the two-car 23XI Racing team Jordan and Denny Hamlin
field in NASCAR.
“We’ve
gotten to the point where teams realize the sustainability in the sport is not
very long term,” Polk said. “This is not a fair system.”
The Race
Team Alliance was formed in 2014 to give teams a unified voice in negotiations
with the sanctioning body. A four-member subcommittee outlined their concerns
at a Charlotte hotel, with Polk joined by Jeff Gordon, the four-time NASCAR
champion and vice chairman of Hendrick Motorsports, RFK Racing President Steve
Newmark, and Dave Alpern, the president of Joe Gibbs Racing.
Hendrick and
Gibbs have won six of last seven Cup Series championships dating to 2015, but
Gordon said the four-car Hendrick lineup, the most powerful in the industry,
has not had a profitable season in years. It will again lose money this season
despite NASCAR’s cost-cutting Next Gen car.
“I have a
lot of fears that sustainability is going to be a real challenge,” Gordon said.
NASCAR
issued a statement acknowledging “the challenges currently facing race teams.
“A key focus
moving forward is an extension to the charter agreement, one that will further
increase revenue and help lower team expenses,” NASCAR said. “Collectively, the
goal is a strong, healthy sport, and we will accomplish that together.”
Led by Polk,
whose role with the Hornets brings familiarity with the NBA’s franchise model,
the RTA in June presented NASCAR with a seven-point plan on a new revenue
sharing model. The proposal “sat there for months and we told NASCAR we’d like
a counteroffer,” Polk said.
He did not
disclose the seven points other than noting that team sustainability and
longevity were priorities. The committee said they are open to all ideas,
including a spending cap like that in Formula One.
“We are amenable to whatever gets us to a
conceptual new structure,” Newmark said.
NASCAR’s
counteroffer offered “a minimal increase in revenue and emphasis on
cost-cutting,” Polk said.
The team
alliance was unanimous in that the only place left to cut costs is layoffs.
“We’ve
already had substantial cuts. We are doing more with less than we ever have in
30 years,” Alpern said.
The battle
over costs has simmered for years. In 2016, NASCAR adopted a charter system for
36 cars that is as close to a franchise model as possible in a sport that was
founded by and independently owned by the France family. The charters at least
gave the teams something of value to hold — or sell — and protect their
investment in the sport.
The team
business model is still heavily dependant on sponsorship, which the teams must
individually secure. Newmark said sponsorship covers between 60% to 80% of the
budgets for all 16 chartered organizations.
Because
sponsorship is so vital, teams are desperate for financial relief elsewhere and
have asked NASCAR for “distribution from the league to cover our baseline
costs,” Newmark said.
The current
charter agreement expires at the end of the 2024 season, the same time that
NASCAR’s current television deals expire.
Although TV
money is split between NASCAR, teams and the tracks, the committee found that
the value of the teams is just 7% while the tracks and NASCAR have 93% of the
value. Polk noted that in Formula One, all revenue is split 50-50 between the
teams and series ownership.
NASCAR said
Friday that teams receive about 40% of industry-wide generated revenue.
The
financial split from the $8.2 billion media rights deal signed ahead of the
2015 season sends 65% to the tracks, 25% to the teams and 10% to NASCAR,
according to the series. There are two major track operators, NASCAR and
Speedway Motorsports; NASCAR owns 11 venues on the Cup Series schedule,
including the crown jewel Daytona International Speedway.
Mars Inc.,
which first entered NASCAR in 1990, late last year decided this season would be
its last and JGR spent the last nine months trying to find a new sponsor to
keep Kyle Busch, the only winner of multiple championships at the Cup level.
Busch has since signed with Richard Childress Racing and will leave JGR after
15 seasons as Toyota’s winningest NASCAR driver.
“We have
become full-time fundraisers,” Alpern said. “Instead of working on our
business, we’re raising money just to exist.”
Polk said
the teams will honor the charter agreements through 2024. But in negotiating a
new charter agreement, the teams are demanding more.
“NASCAR is a money-printing machine,” Polk
said. “But the teams and the drivers are the ones putting on the show.”
NASCAR is
now under fire from nearly every angle as drivers remain angry over some recent
penalties and the stiffness of the new Next Gen car blamed for causing
unprecedented injuries. What should have been routine crashes into the wall
have sidelined both Alex Bowman and Kurt Busch with concussions, and Cody Shane
Ware opted out of Sunday’s race because of a broken foot.
NASCAR has
tested potential adjustments for the car and will present the findings to
drivers Saturday morning ahead of practice at Charlotte.
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