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 startling announcement that added to a growing list of woes .
The Cup Series heads into playoff qualifying at Charlotte Motor Speedway on Sunday, with three full-time drivers sidelined with injuries in NASCAR’s new car and with no clear answer on how to address the safety concerns.
Things got a lot worse when teams went public with their years-long battle with NASCAR over fair revenue sharing.
“The economic model is really broken for the teams,” said Curtis Polk, who, as Michael Jordan’s longtime managing director, now holds an interest in the Charlotte Hornets and the two-car 23XI racing team Jordan and Denny Hamlin in NASCAR.
“We’re getting to a point where teams are realizing that sustainability in esports isn’t very long-term,” Polk said. “It’s not a fair system.”
The Race Team Alliance was formed in 2014 to give teams a unified voice when negotiating with the sanctioning authority. A four-member subcommittee detailed its concerns at a Charlotte hotel, with Polk joined by Jeff Gordon, four-time NASCAR champion and vice chairman of Hendrick Motorsports, Steve Newmark, president of RFK Racing, and Dave Alpern, president of Joe Gibbs Racing became.
Hendrick and Gibbs have won six of the last seven Cup Series championships since 2015, but Gordon said Hendrick’s four-car lineup, the strongest in the industry, hasn’t had a profitable season in years. It’s set to lose money again this season despite NASCAR’s cost-cutting next-gen car.
“I have major concerns that sustainability is going to be a real challenge,” Gordon said.
Led by Polk, whose role with the Hornets introduces the NBA’s franchise model, the RTA presented NASCAR with a seven-point plan for a new revenue-sharing model in June. The proposal “lay there for months and we told NASCAR we’d like to have a counteroffer,” Polk said.
He didn’t disclose the seven points, except that the team’s sustainability and longevity were priorities. The committee said on Friday they were open to any ideas, including an F1-style spending cap.
“We’re open to anything that brings us to a conceptual new structure,” Newmark said.
NASCAR responded to the RTA last week with a counteroffer of “minimal increase in revenue and emphasis on cost reduction,” Polk said.
The team alliance agreed that the only place left to cut costs is layoffs.
“We have already had significant cuts. We’re doing more with less than we’ve ever done in 30 years,” said Alpern.
NASCAR did not immediately respond to a request for comment from The Associated Press.
The battle over the cost has been made public with five races remaining to crown the 2022 NASCAR champion.
The problem has been smoldering for years, and in 2016 NASCAR introduced a 36-car charter system that resembles a franchise model as closely as possible, in a sport founded and independently owned by the France family. The charters at least gave teams something of value to hold – or sell – and protect their investment in the sport.
The team business model is still heavily dependent on sponsorship, which teams have to secure individually. Newmark said the sponsorship covers between 60% and 80% of the budgets for all 16 chartered organizations.
Because sponsorship is so important, teams are desperate for financial relief elsewhere and have asked NASCAR for “a distribution from the league to cover our base costs,” Newmark said.
The current charter contract expires at the end of the 2024 season, coinciding with the expiration of NASCAR’s current television contracts.
Although the TV money is split between NASCAR, teams and the tracks, the committee found that the teams’ value is only 7%, while the tracks and NASCAR account for 93% of the value. Polk noted that in Formula 1, all revenue is split 50/50 between the teams and the series owners.
Mars Inc., which first got into NASCAR in 1990, decided late last year that this season would be its last, and JGR spent the last nine months finding a new sponsor to support Kyle Busch, the sole multi-championship winner , to keep at cup level. Busch has since signed with Richard Childress Racing and will leave JGR after 15 seasons as Toyota’s most successful NASCAR driver.
“We’ve become full-time fundraisers,” Alpern said. “Instead of working on our business, we raise money just to exist.”
Polk said the teams will honor the charters through 2024. But when negotiating a new charter contract, teams ask for more.
“NASCAR is a money-making machine,” Polk said. “But the teams and the drivers are the ones who put on the show.”
NASCAR is now under fire from almost every angle as drivers remain angered by some recent penalties and the stiffness of the new next-generation car, which are blamed for unprecedented injuries. What should have been routine falls against the wall has sidelined both Alex Bowman and Kurt Busch with concussions, and Cody Shane Ware pulled out of Sunday’s race with a broken foot.
NASCAR has been testing potential adjustments for the car and will present the results to drivers Saturday morning before practice in Charlotte.