23XI Racing co-owner Michael Jordan told The New York Times that NASCAR’s unwillingness to create permanent charters for Cup teams is “a big, big miss” and that “if you don’t correct that, the sport’s going to die not because of the competition aspect, but because economically it doesn’t make sense for any business people.”
Jordan’s comments are his first publicly on the issue. Cup team owners seek to extend the charter agreement beyond this season and receive additional revenue from NASCAR.
In October 2022, Cup team executives stated that the sport’s economic model was “broken.”
NASCAR’s charter system has been in place since 2016. There are 36 charters. Each team is required to compete in every event. In exchange, teams receive a payment based on being at each event, performance in the event, the season-ending points fund and performance from the past three seasons.
Even with that in place, Steve Newmark, president of RFK Racing, noted in 2022 that sponsorship comprised about 60-80% of a team’s overall revenue.
Jeff Gordon, vice chairman at Hendrick Motorsports, said in 2022 that it had been “awhile” since the organization had made a profit. More than half of the 19 Cup teams that were granted charters in 2016 no longer exist. In the place of those teams are 23XI Racing, Trackhouse Racing, Wood Brothers Racing, Kaulig Racing, Rick Ware Racing and Spire Motorsports.
“In all partnerships, if you grow the pie, that means your business is going to continue to grow,” Jordan told The New York Times. “And to grow the pie, you’ve got to make sure everybody’s healthy within the partnership. If our ownership in NASCAR is losing money and NASCAR’s the only one making money, that’s not a good partnership.”
Under the current media rights deal, which expires after this season, teams receive 25% of the total. Tracks receive 65% of the money from the media rights deal and NASCAR the other 10%.
NASCAR signed a new media rights deal in November that will go from 2025-31 with NBC, Fox, Amazon Prime Video and TNT Sports. Media reports have put the deal at $7.7 billion. Sports Business Journal reported it was a 40% increase over the previous NASCAR media rights deal.
Team owners seek to make the charter system permanent, receive an increased amount of the media rights deal and receive revenue from future streams.
The New York Times stated that NASCAR declined to make an executive available for the article. NASCAR President Steve Phelps spoke to NBC Sports in March and said then that he was optimistic of getting a deal done with team owners.
“They desire to get something done, too,” Phelps told NBC Sports in March. “It’s a negotiation. It probably depends on what lens you’re looking through. We’ve got some things to close the gap. The gap is not a chasm. It’s just a gap. I think there are some things that both sides would like to see as part what an extension would look like.
“What I do know is that it’s going to be a fair deal, and it’s going to put our teams in a better financial position, a path to profitability, for sure. I think it’ll increase their enterprise value. It’ll be more competitive on the racetrack, which is really the objectives they had talked about.
“Even the proposal on the table right now, I think, it does that. Maybe not to the degree that the teams would like. We’re in a good position.”
Curtis Polk, an investor in 23XI Racing and Jordan’s longtime business manager, noted that without permanent charters and increased revenues, it makes it more difficult to entice others to invest and be a part of the sport.
“Until we are all aligned and paddling the boat in the same direction, we’ll never be able to reach the full potential that NASCAR has,” Polk told The New York Times. “There’s just a ton of money on the sidelines that wants to invest in big-time sports, and NASCAR is a big-time sport. It’s not what it was in the early 2000s, but there’s no reason it can’t get back there again.”
Jeffrey Kessler, a leading antitrust lawyer who has represented the NFL Players Association, is working with the Cup teams. He told The New York Times that teams want to negotiate “but they won’t take an unacceptable deal. I was hired to help them think through their options.”
Jimmie Johnson, co-owner of Legacy Motor Club, said in April that team owners remained unified even with no official talks between NASCAR and the negotiating committee for teams.
“What’s ultimately been most impressive to me is just how the team ownership group has stuck together,” Johnson said at Texas Motor Speedway in April. “I think we’re a lot stronger as a unified group, hearing a consistent message. That’s something that’s been more difficult for owners in the past, but the ownership group has been very committed to that and I think that’s been very useful.”
