Race teams ask NASCAR for ‘meaningful’ talks as dispute skids toward summer

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Brickyard 400 - 2017

The fight between NASCAR and its teams over a new revenue model prompted the owners of 16 chartered organizations to send a letter to NASCAR’s board of directors earlier this month requesting “meaningful dialog” regarding the franchise model system.

The letter, a copy of which was obtained by The Associated Press, was sent to NASCAR via email on May 1, the same day NASCAR’s exclusive negotiating window expired with both Fox Sports and NBC Sports on a new television package.

The letter essentially represents the entire Cup Series field and acknowledges that conversations with NASCAR have been productive, noting a “tentative acceptance of the economic split of a new media deal.”

But the letter makes clear the main sticking point between the teams and NASCAR remains the charter system, under which each of the 36 cars with a charter are guaranteed a spot in the 40-car Cup Series field each week and a slice of TV package revenue.

The charters, which are worth millions, require renewal. The teams want to make the charters permanent but NASCAR has balked, which led to the team owners skipping a scheduled April 5 meeting with NASCAR because they were at a “significant impasse” over charters.

The teams wrote in the letter that acceptance of “the new media split” was dependent on permanent charters.

“We have seen the market for Charters rise since initially issued, but there is currently no real market due to the uncertainty surrounding the pending renewal process,” the letter states. “In order to continue to invest in our Teams and the sport as a whole, we need to build long term value in our Charter ownership that is stable, predictable, and permanent.”

NASCAR declined to comment on the letter other than noting it was received May 4.

The stock car series in late April began scheduling meetings with individual race teams with NASCAR CEO Jim France and President Steve Phelps. The first meeting was held May 2, a person with knowledge of the meetings told AP on condition of anonymity because of the sensitive nature of the talks.

However, the Race Team Alliance that consists of all 16 chartered teams has made it known that the four-member negotiating committee represents all organizations in negotiations.

The charter system was introduced in 2016 to create a franchise model that protected team owners’ investment in a racing series founded by and independently owned by the France family. The charters can be held, sold and leased to other teams, and they can also be revoked by NASCAR.

The current charters expire at the end of the 2024 season—the same time as NASCAR’s current television package—and the negotiating committee told AP last month that NASCAR was unwilling to even discuss making them permanent. The committee is comprised of Jeff Gordon representing Hendrick Motorsports; Joe Gibbs Racing president Dave Alpern; RFK Racing president Steve Newmark; and Curtis Polk, an owner in 23XI Racing and longtime business manager for Michael Jordan.

The four went public last October to reveal the teams found NASCAR’s current economic model unfair with little to no chance of long-term stability. NASCAR, which is run by the son and granddaughter of founder Bill France Sr., vowed to work on a solution.

The letter sent this month said “substantial progress has been made on a framework to address the economic issues.” But it asked NASCAR to explain its position on permanent charters.

“We would like to directly engage in conversations in order to understand (NASCAR’s) concerns. Items that have been mentioned are general concepts about transfer restrictions, protection from bad actors and dealing with material adverse economic changes over time,” the letter says. “We have reviewed these concerns with our outside counsel and others who are well versed in such issues from other leagues, and we are optimistic that by working together we can work through these or any other specific concerns, just as we did successfully at the creation of the charter system.”

The teams said their request is no different than NASCAR’s “desire to pass along ownership of a strong and robust property to the next generation of the France/Kennedy family”

“We seek to do the same thing with our families,” they wrote.

The letter was signed by representatives of 16 different teams, including Hall of Famers Rick Hendrick, Richard Childress, Joe Gibbs and Jack Roush.

NASCAR maintains that teams receive about 40% of industry-wide generated revenue, but the teams dispute the calculation.

An $8.2 billion media rights deal signed ahead of the 2015 season allots 65% to the tracks, 25% to the teams and 10% to NASCAR, according to the series. NASCAR owns the majority of the venues on the Cup Series schedule, including the crown jewel Daytona International Speedway, and the France family owns NASCAR.

The teams have said that sponsorship covers 60% to 80% of their budgets and they need financial relief from NASCAR because they’ve become “full-time fundraisers.”

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