Opinion by Roy J. Akers- www.skyviewsports.net
NASCAR rolls into Kansas for the 11th of 26 pre-playoff races. Chevy’s have dominated with Toyota in shouting distance but the big news of the week is the lack of progress on permanent charters for Cup owners and teams.
Basically, this is a far apart scenario. NASCAR has only thrown crumbs at teams so far and one of the biggest athlete brands in the world Michael Jordan, co-owner of the 23XL team weighed in.
The following headline appeared on NBCsports.com
Michael Jordan: NASCAR not making permanent team charters would be a ‘big miss’
Jordan has stayed out of the fray publicly until the New York Times interview, but this comment said it all.
23XI Racing co-owner Michael Jordan told The New York Times that NASCAR’s unwillingness to create permanent charters for Cup teams is “a big, big miss” and that “if you don’t correct that, the sport’s going to die not because of the competition aspect, but because economically it doesn’t make sense for any business people.”
Jordan’s comments are his first publicly on the issue. Cup team owners seek to extend the charter agreement beyond this season and receive additional revenue from NASCAR.
For instance, NASCAR drivers make good money depending on the team. But let’s put this in perspective. If you told Patrick Mahomes “we will pay you $50,000,000” per season but only if you can raise the money for sponsorship and while you are at it, raise another $50,000,000 for engineering on a car, a staff, pit crew, transportation and a bunch of other things. Ok, you say. All Patrick Mahomes has to do all year long is to play a 17 game NFL season is play and train. This is how it is in all team sports. NFL teams raise money through ticket sales, TV revenue that is sold by the networks and paid with rights fees. Teams and players share some merchandising and licensing with the league. All NASCAR drivers want to do is drive and do a reasonable amount of sponsor/NASCAR promotions. Team owners need the revenue to keep afloat. (By the way, no driver makes 50 million per season). Not even close.
In my opinion, the economic model which gives NASCAR owners only a 20-40% share of TV and track revenue is not one that is sustainable. These teams have been beating down the door of every fortune 500 company for decades and the teams have all but run out of doors to knock on. The huge TV which was reported to be worth 7.7 billion over 7 years or 1.1 billion a year (according to Sports Business Journal) is not reaching teams to any great degree.
The France Family owns NASCAR. They have plenty of money built up since the 1940’s and are astute business people. Its a concept that serves them well. Not so much for teams. In addition, both teams, tracks, TV Networks and the France Family have built the sport. The France family draws money from sanctioning fees, track money, TV money and merchandise licensing deals. The teams have to go hat in hand to sponsors to make it every is week,
Michael Jordan sums it up this way. “In all partnerships, if you grow the pie, that means your business is going to continue to grow,” Jordan said in an interview. “And to grow the pie, you’ve got to make sure everybody’s healthy within the partnership. If our ownership in NASCAR is losing money and NASCAR’s the only one making money, that’s not a good partnership.”
Jordan’s co-partner Denny Hamlin said “teams are not making money and have not for awhile.”
The teams have laid out four big asks: more money to run their operations, making charters permanent, having a say in NASCAR decisions to avoid surprise costs, and getting a cut of the profits from new business ventures.
Even though NASCAR is set to rake in more cash from a new TV rights deal they nailed down last November, there’s a block over how long charters should last. Jim France has told the teams he’s on board for extending charters for the same duration as the TV deal—seven years. But the teams are pushing for more; they want these charters, which can go for up to $40 million a pop, to be a forever thing to avoid the risk of their investment tanking. This sounds fair to me. Why would you lease your team for seven years and have NASCAR tell you to go away? It takes time to run a business profitably.
But now, Denny Hamlin has had enough of the waiting game with NASCAR. On Dale Earnhardt Jr’s podcast, Hamlin let loose, sharing the gritty details with fans. He pointed out the uneven profit sharing among the sport’s big players—the tracks, the teams, and NASCAR itself. “To be quite honest, two of those stakeholders make nine-figure profits a year. And one stakeholder loses seven-figure profits per year.
Hamlin didn’t shy away from discussing the current standoff over the charter agreement either. “We’re willing to give extra rights up to get that. They’ve said no. And then just governance, it’s certain protections that the teams need in case of transfer of ownership.”
The bottom line for the drivers is they will have to sue to get out of deals and then where will they go? The France family knows that and that is where the rubber meets the road.
