Is NASCAR's business model broken?

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Is NASCAR's business model broken?

NASCAR

Is NASCAR's business model broken?

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Depending on who you ask, the business model in NASCAR is either broken, or it has never been better.

Bob Leavine has been one of the most outspoken about the former. When Leavine announced nearly a month ago that he’d sold his single-car team and would be leaving the sport at the end of the season, he did so with no small amount of bitterness. Among Leavine’s parting comments were an observation that it was difficult for him to say a charter was a great investment, and that the sport’s “bad business model” didn’t work for him.

In the days since, Leavine has continued to be just as open with comments on social media.

On the side, there have been two proponents for the direction NASCAR is going. One is the team that purchased the Leavine assets, Spire Motorsports.

Spire is happily expanding its program next season. The organization will have two charters, and plans to have one or two full-time drivers in the Cup Series.

“We believe in the ownership model that NASCAR has built, and where this sport is going now more than ever,” said team co-owner Jeff Dickerson last month.

Former driver and motorsports veteran Justin Marks has spoken enthusiastically about how attractive he believes the Next Gen car is going to be. Marks is in the process of acquiring a charter and launching a team in the next year or two.

“I’m a big believer in the philosophy that NASCAR and the structure that NASCAR is embarking on here in the future,” Marks told RACER earlier this year. “I think that this new car and the way that they’re remodeling the racing schedule and everything is the right thing for the business to do, and I think that there’s going to be a lot of opportunities around that.”

Asked about the divergent views on the sport’s business model earlier this week, NASCAR President Steve Phelps pointed to what he said had been a sustained effort to ensure viability for teams. “I think that if you look at where things are from a team model standpoint, they are clearly improving,” he said.

One unfortunate occurrence for all involved has been the delay of Next Gen, which was supposed to debut next season. The coronavirus pandemic and the variables the sport and its teams are facing pushed it until 2022.

“We’re sorry to see Bob leave,” said Phelps. “I’ve had many conversations with Bob, and I know that Jim France has as well. We are sad to see Bob leaving. I’m not going to get into names of who is interested in coming in, but we have a significant number of people who are interested in coming into this sport as owners, and they’re looking at the business model that will be in place. What’s in place today, what’s ’21 going to look like to try to continue to strip costs out and then what it’s going to look like in ’22 and beyond.

“I would suggest that the number of new owners trying to get into this sport has never been higher. It hasn’t. Certainly not when I’ve been around, and I’ve been around for 15 years. There’s just a ton of enthusiasm for the direction of what team ownership looks like.”

Backing up his belief that things are improving, Phelps pointed to the expense and what the goal is with pivoting to Next Gen.

“Are there revenue challenges particularly because of COVID, in some situations with some sponsors and some teams, I think that’s a fair point,” said Phelps. “But I would suggest that one-day shows probably will have helped the teams from an expense standpoint, and again, all of it’s a bridge to what this Next Gen car will bring, which is you need fewer of them, they’re most likely going to cost less, it will be, in my opinion, a big win for the teams. It’ll be a big win for the sport, frankly.

“The goal is to have healthy race teams. Healthy race teams put on better racing because they’re competing. And we want as many race cars to be competing for wins as we can. So, do I think (the business model is) improving? Yes, I think it’s improving.”

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