CHARLOTTE, N.C. — It’s just a sheet of paper. But man, what a sheet of paper it is.
On Tuesday, NASCAR and its team owners rolled out its new, long-anticipated “charter” ownership system. For the first time in stock car racing’s nearly seven-decade history, those who hire the racers and field the racecars they drive will now own, well, something.
Beginning with this year’s Daytona 500, 36 chartered teams will be guaranteed a steady amount of revenue (nine years’ worth, the length of the current TV deal) and starting spots in NASCAR Sprint Cup Series races. But honestly, car counts, qualifying, recruiting new team owners, better direct communication between the sanctioning body and its competitors, all of the stuff that was touted on Tuesday, it’s secondary.
The most important aspect of the agreement is those 36 sheets of paper. They represent 36 insurance policies, a safety net, even if the thickness of that net has yet to be determined.
Those involved in the negotiations to hammer out the new agreement — the sanctioning body and the owners’ Race Team Alliance (RTA) — have been careful not to refer to it as franchising. But that’s what it is. And that’s what it needs to be.
Motorsports fans typically flinch whenever their beloved sport is compared to the stick-and-ball world. Motorsports governing bodies do the same. But where the other big league sports have always held a business advantage over NASCAR racing is that the owners of the teams have in those sports have long held a stake in the league itself.
More importantly, those owners have all had what is essentially a golden ticket locked in a safe somewhere, a deed to their team that they can sell if and when they decide to get out of the business. That’s why the group who sat before the media on Tuesday spent the last 18 months studying the franchising systems throughout all of those other sports, from the NFL to cricket, before finally inking the deal they were there to announce.
If Rick Hendrick or Joe Gibbs or Roger Penske decided to sell their teams tomorrow, would they get the $1.1 billion that the Ralph Wilson estate received for the Buffalo Bills in late 2014? Or the $2 billion that the Sterling family received for the L.A. Clippers earlier that same year? Or the $2 billion that the L.A. Dodgers sold for in 2012?
No. And they also likely wouldn’t even come close to the $40 million that was used in 2014 to purchase the Dayton Dragons, a Class A minor league baseball team in the nation’s 64th largest media market.
But now NASCAR owners will get something, anything, for their efforts. The market will determine exactly how much and the first price will be set soon … as in, any day now.
Rob Kauffman, an RTA principal, is now a minority stakeholder in Chip Ganassi Racing and will be selling the two charters leftover from now-defunct Michael Waltrip Racing very soon. On Tuesday he predicted that they would likely move for “single digit millions.”
Whatever it is, it is guaranteed to be more than NASCAR team owners made in the past when they’ve cashed out … or more accurately, crashed out.
The paper that a team’s charter is printed on will now be worth more than all of the racecars on the shop floor, the stickers on those cars, and the machines used to put those cars together. Yes, that sounds backwards. But it makes perfect sense to anyone who has ever had to watch a NASCAR owner as he auctioned off the remnants of a failing race team.
If you were around in the late 1990s, then you saw that a lot.
“I’m not going to lie to you, this hurts, and it doesn’t even make a whole lot of sense if you allow yourself to really think about it,” Ricky Rudd told me on Dec. 1, 1999.
The Rooster was just one of a huge group of racers who bought into the driver/owner fad during an era when one-car teams were the norm and sponsorship cash flow was ramping up into a river of revenue.
Still, Rudd — along with fellow future Hall of Famers Bill Elliott, Darrell Waltrip and Geoff Bodine — couldn’t make it work and all eventually were forced to go back to racing for other teams.
They all sold what they had. What they had wasn’t worth much.
“We won a lot of races over six years here and now we’re selling the cars that won those races for pennies on the dollar,” Rudd explained then as all of his equipment, right down to the file cabinets, was auctioned off. Only a deal with future employer Robert Yates to take over the empty shop kept Rudd from going totally into the red. “This business is always focused on the future. So everything you own is dated as soon as the season is over. It’s worth nothing to the people with the real money.”
Under the deal announced Tuesday, Rudd would have been able to shop his charter, one of only 36, in a 1999 market where it would have been highly coveted. That feels like a much more than fair reward for someone with a lifetime in the sport.
Conversations about franchising were taking place way back then, and even well before then, but that always dried up quickly. Bill France Sr. and and his son were never warm to the idea and the growth curve was moving so quickly that there was never a widespread sense of urgency. Now there is.
Brian France, heir to his grandfather’s and father’s chairmanship, became open to the idea after Kauffman led the formation of the RTA.
One of the oldest clichés in NASCAR goes “You know how to make a small fortune in racing? Start with a large one.”
That’s not going to change. Racing will still be super expensive. Year-to-year revenues will still be sponsor-reliant. And the reality is that few if any of the current team owners, certainly the longest-tenured, will ever even consider starting the process of selling their teams and leaving the sport. Nor will anyone squat on a charter, refusing to race until they’ve sold.
The performance-based “play or pay” leanings of the charter agreement won’t allow teams to do that. (That will hopefully eventually open the door for the one longtime team that was left out, Wood Brothers Racing, in business since NASCAR’s earliest days, but has just returned to a full-time schedule.)
And this won’t be the Wild West of team ownership transfers. The agreement, just as it is in other sports, has timetables and approval processes in place that every would-be seller and buyer have to adhere to.
But having a charter, having that sheet of paper in a drawer at the office, brings with it a sense of security that NASCAR team owners have never had. Merely talking about it on Tuesday brought visible relief on the faces of both Tommy Baldwin, a former crew chief who has clawed his way through the poor end of the Sprint Cup garage for a decade and a half, and Richard Petty, whose family has been involved in the sport since day one and has had to bring its race team back from the financial brink multiple times.
“I sit here next to Tommy Baldwin and I think about what a moment this is for him,” NASCAR executive VP Steve O’Donnell said from the stage, reaching out to touch Baldwin on the arm. He mentioned how hard Baldwin has worked to climb off the basement floor of the sport. And he mentioned that word again, “security.”
These owners deserve that kind of security. They deserve that sheet of paper. They’ve deserved it for a long time. Now they finally have it.
