NASCAR teams call revenue model ‘broken’, warn of layoffs
NASCAR’s most powerful teams warned Friday that the venerable stock car racing series has a “broken” business model that is unfair and has little to no chance of long-term stability, a stunning announcement that adds to a growing list of woes.
The Cup Series heads into the playoff race at Charlotte Motor Speedway on Sunday with three full-time drivers sidelined due to injuries sustained in NASCAR’s new car and no clear answer on how to fix security issues.
The situation escalated when the teams went public with their year-long fight with NASCAR for a fair revenue split.
“The business model is really broken for teams,” said Curtis Polk, who as longtime business manager for Michael Jordan now owns a stake in the Charlotte Hornets and two-car team 23XI Racing Jordan and Denny Hamlin in NASCAR.
“We’ve gotten to the point where the team realizes that sustainability in the sport 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 in negotiations with the sanctioning body. A four-member subcommittee raised their concerns at a Charlotte hotel, with Polk joined by Jeff Gordon, four-time NASCAR champion and vice president of Hendrick Motorsports, RFK Racing president Steve Newmark, and Dave Alpern , the president of Joe Gibbs Racing.
Hendrick and Gibbs have won six of the last seven Cup Series championships since 2015, but Gordon said Hendrick’s four-car line, the strongest in the industry, hasn’t had a profitable season in years. He will lose money again this season despite NASCAR’s Next Gen car cost cut.
“I have a lot of fears that sustainability is going to be a real challenge,” Gordon said.
Led by Polk, whose role with the Hornets brings familiarity with the NBA’s franchise model, the RTA presented NASCAR in June with a seven-point plan on a new revenue-sharing model. The proposal “has been sitting there for months and we have told NASCAR that we would like a counter offer,” Polk said.
He did not divulge the seven points, except that the team’s durability and longevity were priorities. The committee said on Friday it was open to all ideas, including a Formula 1-like spending cap.
“We’re open to anything that takes us to a new conceptual structure,” Newmark said.
NASCAR responded to the RTA last week with a counteroffer “of minimal revenue increase and a focus on cost reduction,” Polk said.
The team alliance was unanimous in that the only place left to cut costs is layoffs.
“We have already suffered substantial reductions. We are doing more with less than ever in 30 years,” Alpern said.
NASCAR did not immediately respond to a request for comment from The Associated Press.
The cost battle has gone public with five races remaining to crown the 2022 NASCAR champion.
The issue has been simmering for years, and in 2016 NASCAR adopted a 36-car charter system that comes as close as possible to a franchise model in a sport independently founded and owned by the France family. Charters have at least given teams something of value to own — or sell — and protect their investment in the sport.
The team’s business model is still heavily dependent on sponsorship, which teams must secure individually. Newmark said the sponsorship covers between 60% and 80% of the budgets of the 16 chartered organizations.
Because sponsorship is so vital, the teams are desperate for financial help elsewhere and have asked NASCAR for “a league distribution to cover our base costs,” Newmark said.
The current charter agreement expires at the end of the 2024 season, at the same time as NASCAR’s current television agreements expire.
Although television money is split between NASCAR, the teams and the tracks, Polk said that in terms of actual revenue generated by the sport, 93% goes to NASCAR and the teams only receive 7%. He noted that in Formula 1, all revenue is split 50-50 between teams and series ownership.
Mars Inc., which first entered NASCAR in 1990, decided late last year that this season would be its last and JGR has spent the past nine months trying to find a new sponsor to keep Kyle. Busch, the only winner of multiple championships at Cup level. Busch has since signed with Richard Childress Racing and will leave JGR after 15 seasons as Toyota’s winningest NASCAR driver.
“We became full-time fundraisers,” Alpern said. “Instead of working on our business, we raise money just to exist.”
Polk said teams will honor charter deals through 2024. But in negotiating a new charter deal, teams are demanding more.
“NASCAR is a money-printing machine,” Polk said. “But it’s the teams and the drivers who make the show.”
NASCAR is now under fire from almost every angle as drivers remain angry over some recent penalties and the rigidity of the new Next Gen car accused of having caused unprecedented injuries. What should have been routine crashes against the wall sidelined the two Alex Bowman and Kurt Busch suffered concussions, and Cody Shane Ware pulled out of Sunday’s race with a broken foot.
NASCAR has been testing potential tweaks for the car and will present the results to drivers Saturday morning before testing in Charlotte.