In a 90-minute meeting with a handful of NASCAR reporters Friday morning, the teams’ bargaining committee emphasized the need for a better economic model that allows for greater longevity and sustainability for team owners.
“We get to this point where teams realize we can’t move on; the sustainability of 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 in his second year, as he is to 23XI, but not to the sports league business. He has a stake in the Charlotte Hornets and is Michael Jordan’s longtime financial adviser.
In the short time Polk has been with 23XI Racing, he has delved into the financial side of the sport to understand the cost of operating a race car. That was based on work he did alone and talking to others in the garage, such as alliance partner Joe Gibbs Racing, because NASCAR, according to Polk, couldn’t give him an answer.
“It was fundamentally clear to me that there is a complete misalignment of interests and as a result, the economic model really is broken for teams,” Polk said.
The meeting of the race teams began at the beginning of the season. Polk, Hendrick Motorsports Vice President Jeff Gordon, RFK Racing President Steve Newmark and Joe Gibbs Racing President Dave Alpern, representing the 16 Cup Series owners who own all 36 charters, were appointed to work with NASCAR.
Polk, Gordon, Newmark and Alpern were on hand to speak to the media.
The committee submitted a specific seven-point proposal to NASCAR leadership in June that did not receive a response until a week ago. NASCAR’s proposal was far removed from the teams.
“We received a proposal with a minimal increase in revenue and the emphasis was on drastically reducing costs,” Polk said.
Alpern said it shouldn’t always be the teams that cut costs, and that the next step in that direction would be mass layoffs. Gordon’s fear is that if teams are constantly being pressured to cut costs, it will affect the product on the track.
It all comes down to the size of the pie and how much each party receives, and in NASCAR, most of the revenue is not shared. The discussion comes at a crucial time in the sport because the television deal and charter deal expire in two years. It would be 2025 when teams would want to see changes implemented.
The committee recognized that it will take time and effort to get to a place where everyone is satisfied, which is why action is being taken now.
Polk shared that they determined that 93% of the value of the sport resides in the France family and the racetracks. On the other hand, 7% of the value of the sport resides with the owners of the charters.
“Most of these teams have a hard time breaking even,” Polk said. “All well-run teams should be able to compete for a Cup championship and make a reasonable profit.”
A fair deal where everyone’s interests are aligned is what the committee is looking for, for the owners. All raised concerns about the future of race teams and how they will be passed on when legacy owners like Rick Hendrick, Jack Roush and Joe Gibbs are no longer around.
Newmark acknowledged that one difficulty from the team’s standpoint is the reliance on sponsorship to finance the operation. Alpern said racing teams have turned to full-time fundraisers in order to survive.
“We have expressed our willingness to consider cost caps and other measures as long as it is part of an overall structure that is a fair model and provides stability and longevity to teams,” Newmark said.
This is not a new discussion among team owners. However, it’s one that hasn’t gone anywhere before, which is what led to this new focus between the teams.
“I think the sport is a sleeping giant, but we all have to align interest because we need to grow it together,” Polk said. “We need to increase revenue more, and we need to create a great exchange and deal 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 press conference with the following statement:
“NASCAR recognizes the challenges racing teams face today. A key focus going forward is an extension of the Charter deal, which will further increase revenue and help reduce team expenses. Collectively, the goal is a strong and healthy sport, and we will achieve it together.”