NASCAR team owners boycotted a quarterly meeting with the sanctioning body on Wednesday as a show of frustration over what they feel are slow negotiations on a new business model for team ownership and a lack of good faith. The boycott was first reported by Jenna Fryer of the Associated Press and confirmed by multiple other outlets.
Over the past several months as the sport prepares to negotiate a new media rights deal for 2025 and beyond, NASCAR and its race teams have been in dispute over revenue splits and other changes to stock car racing's economic model, most notably last October when several race team officials went public in expressing that they had not made progress in negotiations. According to a report by The Athletic, the major issue leading to the cancellation of Wednesday's meeting was a disagreement over the future of NASCAR's charter system.
The charter system first introduced in 2016, a de facto franchising model that gives teams a guaranteed spot in each race and an asset with tangible value, is presently set to expire at the end of the 2024 season, which is also the end point for the sport's current media rights deal. The introduction of the system marked a major departure from the traditional "independent contractor" model of team ownership, which required full-time teams to have to qualify for each race (With some protections through points provisionals, etc.) and left them with little assets of value outside of equipment if they were forced to shut down.
While team owners have pushed to make the charter system permanent -- NASCAR currently holds a "minimum performance standard" for charter holders, and the expiry of the charter system would make current charters virtually worthless -- NASCAR CEO Jim France is reportedly "dead set" against that idea.
Team owners reportedly wish for France as well as Lesa France Kennedy, the executive vice chair of NASCAR, to have greater participation in meetings moving forward. It was noted by The Athletic, though, that the two sides have "reached a point of relative satisfaction" on a new revenue sharing model that would see teams receive a greater share.
In a statement, NASCAR said that the sanctioning body is "committed to open and productive dialogue on a regular basis with all industry stakeholders. We remain committed to continuing discussions in the spirit of collaboration and with the shared goal of growing our sport for the benefit of all stakeholders."
.@NASCAR: "NASCAR is committed to open and productive dialogue on a regular basis with all industry stakeholders. We remain committed to continuing discussions in the spirit of collaboration and with the shared goal of growing our sport for the benefit of all stakeholders." pic.twitter.com/KJbVYF8pCO
— Adam Stern (@A_S12) April 5, 2023
As it stands, NASCAR race teams only receive 25% of the revenue from the sport's current media rights deal, compared to 65% that goes to race tracks and 10% that goes to NASCAR itself. The vast majority of a race team's revenue comes through sponsorship, a model that has become much more difficult to sustain.
While many race teams used to carry season-long sponsors in the 1990s and 2000s, The Great Recession, greater options for companies in the sports sponsorship space, and advertising changes prompted by social media have resulted in less sponsorship to go around. According to earlier reports, Teams now contend that they have exhausted their means of cutting costs, with the only other option being to lay off their workers, which they believe would stifle innovation and have a negative effect on competition.
Speaking about negotiations on his "Actions Detrimental" podcast in mid-February, 23XI Racing co-owner Denny Hamlin explained that race teams have asked for double the amount of revenue they currently receive, while also stumping for the charter system to be made permanent from an economic standpoint, despite fan criticism of the system on the grounds that it hinders teams from expanding.
"Why would anyone spend any money on a franchise knowing that franchise can be taken away," Hamlin asked. "There is no value in a franchise if it can just be pulled at any moment that they say, 'No, sorry, we don't want to renew the charter deal.' That makes our franchise values worth s--t. Nothing. So we have to make the charters permanent.
"... We want it to cost money to enter the sport. We do because that builds our franchise value. If you look at NBA teams, their values have just kept going up and up and up. And so we have to make the charters permanent to give us some sort of security that our investment in the sport is going to be long-term."
While NASCAR's current media rights deal began in 2015, and the charter system was implemented the year afterwards, the sport has undergone significant changes in leadership since. Although NASCAR is still owned by the France family that founded it, Jim France took over for nephew Brian France in 2018.