In a 90-minute meeting with a handful of NASCAR reporters Friday morning, the teams’ negotiating committee stressed the need for a better economic model that will allow for greater longevity and sustainability for team owners.
“We’ve gotten to this point where the teams realize we can’t keep going on — the sustainability of the teams in this sport is not very long-term unless we have a fundamental change in the model,” said Curtis Polk, an investor in 23XI Racing.
Polk is new to NASCAR as it’s his second year, just like it is for 23XI, but not the business of sporting leagues. He has a stake in the Charlotte Hornets and is the long-time financial advisor of Michael Jordan.
In the short time that Polk has been with 23XI Racing, he has dug into the financial side of the sport to understand the cost of operating a race car. That was based on work he did on his own and talking to others in the garage, like alliance partner Joe Gibbs Racing, because NASCAR, according to Polk, could not give him an answer.
“It became fundamentally clear to me that there is a total misalignment of interest, and as a result, the economic model is really broken for the teams,” Polk said.
The coming together of the race teams started at the beginning of the season. Polk, Jeff Gordon, vice chair of Hendrick Motorsports, Steve Newmark, president of RFK Racing, and Dave Alpern, president of Joe Gibbs Racing, on behalf of the 16 Cup Series owners who own the 36 charters, were the ones appointed to work with NASCAR.
Polk, Gordon, Newmark, and Alpern were all present to speak with the media.
The committee submitted a specific seven-point proposal to NASCAR leadership in June that went unanswered until a week ago. NASCAR’s proposal was very far apart from the teams.
“We received a proposal with a minimal increase in revenue, and the emphasis was on cutting costs dramatically,” said Polk.
Alpern said it should not be the teams always cutting costs, and the next thing in that direction would be massive layoffs. Gordon’s fear is that if teams are constantly being pushed to reduce costs, it will affect the on-track product.
It boils down to the size of the pie and the amount each side gets, and in NASCAR, most of the revenue is not shared. The discussion comes at a pivotal time in the sport because the television deal and charter agreement both expire in two years. It would be 2025 when the teams would want to see changes put in place.
The committee acknowledged it’s going to take time and effort to land where everyone is satisfied, which is why action is being taken now.
Polk shared they determined that 93% of the value of the sport resides with the France family and the racetracks. On the other side, 7% of the value of the sport resides with the owners of the charters.
“Most of these teams have a very difficult time breaking even,” Polk said. “All well-managed teams should be able to compete for a Cup championship and make a reasonable profit.”
A fair deal where the interests of everyone are aligned is what the committee — for the owners — is seeking. All expressed concerns over the future of the race teams and how they are going to be passed on when legacy owners like Rick Hendrick, Jack Roush, and Joe Gibbs are no longer around.
Newmark acknowledged one struggle from a team standpoint is the reliance on sponsorship to fund the operation. Alpern said race teams have become full-time fundraisers in order to survive.
“We have expressed a willingness to entertain cost caps and other measurements as long as it’s part of an overall structure that was a fair model and provided that stability and longevity for the teams,” said Newmark.
This is not a new discussion among team owners. However, it is one that hasn’t previously gone anywhere, which is what led to this new approach among the teams.
“I think the sport is a sleeping giant, but we all have to get the interest aligned because we need to grow it together,” Polk said. “We need to grow more revenue, and we need to create great sharing and an arrangement where every dollar that is created benefits the drivers, benefits the teams, benefits the tracks, benefits NASCAR. That’s not how it’s set up right now.”
NASCAR responded to the committee’s media briefing with the following statement:
“NASCAR acknowledges 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. Collectively, the goal is a strong, healthy sport, and we will accomplish that together.”