Written by Gabriel Tsui, Edited by Tarun Suresh
It certainly feels like every few months, NASCAR comes out with yet another huge controversy. This time, they are under fire for how they (mis)handled the charter negotiations.
For a brief background, a “charter” is essentially a pass for a team to enter a Cup Series race every race weekend while allowing them a piece of the revenue. Teams are allowed to buy/sell or loan their charters to other teams but have a hard cap of four charters per team.
In the charter agreement signed in 2016, the teams agreed to a hard cap of 36 charters while allowing up to 40 cars to participate in a race. This means that up to four of the cars can be operated on an open (non-charter) entry per race.
They also agreed that if a team finished bottom three in the championship for three consecutive years, NASCAR has the right to take away those charters if they want to. Remember this. We will get back to it.
The charter agreement is set to expire by the end of the 2024 season, but after two years of tenacious negotiating, NASCAR and the teams were still unable to come to an agreement by late August.
The teams had four requests for NASCAR. Those being a larger cut on the revenue, a seat at the table of the governing body, an NIL (Name, Image, Likeness) deal for whenever NASCAR uses the teams and the drivers’ likenesses and permanent charters.
The final request was immediately refused by the France family who own the NASCAR company. Permanent charters meant that the teams would actually own their charters, instead of a lease of a property from NASCAR that could be easily taken away.
In no way was the France family going to agree to that request, understandably, as this virtually meant giving up on assets worth well over nine figures. However, with the season nearly ending and teams still haven’t put pen to paper, NASCAR was in panic mode.
NASCAR put a final offer on the table while giving the teams a 48-hour deadline to sign the agreement, threatening to take away the charters if teams refused to sign. According to sources who spoke with AP News, the document was full of grammatical errors and was not a signable document.
As NASCAR returned a legally sound document to the teams, the deadline was looming and according to Front Row Motorsports owner Bob Jenkins, teams were uncomfortable. Still, they were compelled to sign the documents under the threat of losing their charters.
The outcome of the ultimatum turned out relatively well for NASCAR, with all but two teams to sign the new charter agreement. 23XI and Front Row Motorsport currently are still holding out, with 23XI exploring an antitrust lawsuit against NASCAR.
They felt NASCAR putting down an ultimatum took away the teams’ rights to negotiate terms and understand the deal entirely.
The final deal is thought to consist of an increased revenue share for the teams, while the other three demands were not within the deal, and further details of the deal are yet to be revealed. Teams who agreed to the deal also signed a non-disparagement clause, so most refused to comment on the situation.
Before we get to my routine words of criticism for NASCAR in every NASCAR opinion article, let’s break down each of the demands one by one. The demand for increased revenue share was met, but it is unknown if the figure met what the teams were seeking, but it was the sole demand the teams got out of the ultimatum.
The teams were foolish to ask the France family to give up control of the charters in the first place, admittedly, while asking for a larger cut of revenue. The ability to take away charter ownership at the company’s discretion was the trump card, the leverage that NASCAR holds over all the teams.
It was never going to happen, at least not without an astronomical sum of money, a lot of persuasion, and a lack of clarity of mind from Jim France.
Asking for a cut on business deals that utilizes the teams’ and drivers’ NIL isn’t really an outrageous demand, as NIL has been progressing in the American market, with the most notable progress being that a NIL rule was added to NCAA (College Sports) that allowed student-athletes to use their name, image and likeness to participate in sponsorship.
Finally, getting a seat at the governing table aligns themselves to a similar process to F1, where teams get to vote on rule changes, and rulings on serious incidents.
A lot of rulings on incidents and the rules implemented into the sport have been a point of debate, adding teams into the discussion circle could certainly help align the desires of the competition and the teams.
Here are my thoughts on the entire situation: Yep, just another day in the office for NASCAR.
At the end of the day, NASCAR is a billion-dollar company. A billion-dollar private company. They do not report to stockholders and are family-owned. They also have a 7.7 billion dollar T.V. deal spanning over seven years. By all means, they can definitely afford to pay the teams a cut on NIL for business deals.
I won’t dwell on this for way too long, but the point is that NASCAR has the money to pay the teams and drivers their fair share.
On the other side of things, for quite a while, NASCAR’s governing body has been inefficient and ineffective. I will refrain from criticising rulemaking, event planning and more, but must talk about one of their most important jobs, one they have been failing for quite a while.
In my previous articles, I have in two separate incidents expressed the fact that NASCAR did not hand out significant enough penalties to deter drivers from intentionally hooking other drivers.
The Bubba Wallace and Chase Elliott suspension most likely did not instil a thought of hesitation in the back of Dillon’s mind when he hooked both Joey Logano and Denny Hamlin in Richmond to take the win.
While being stripped of the ability to participate in the playoffs is still objectively a very heavy penalty, the lack of race suspension was met with heavy criticism. Dillon was able to participate in the rest of the races of the season without facing any suspension.
These are precise reasons as to why NASCAR needed to give each of the teams a seat on the governing committee. I could only speculate what Dillon’s punishment would be should teams be on the committee, but we could be sure that it would have been more severe.
In conclusion, the teams didn’t necessarily do themselves any favours by beginning the negotiations with outrageous demands, but ultimately, NASCAR negotiated the deal in bad faith.
They opted against striking a deal that would have come out as fair for both parties, instead choosing to dish out an ultimatum, threatening to take away teams’ charters if they refused to sign the deal.
Maybe I’m just naive, or perhaps NASCAR could’ve handled the situation better so that the outcome wouldn’t be two teams holding out. It remains to be seen if 23XI and FRM will cave in, or if NASCAR will present a better deal, but this is a situation that benefits no one, and a situation that needs to be resolved sooner rather than later.
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