Jeff Gordon was a guest on the Dale Jr Download this week leading into the Daytona 500 and offered an update on the impasse between NASCAR and the teams over a new revenue sharing agreement.
Gordon is part of the committee representing teams directly negotiating with NASCAR alongside Joe Gibbs Racing President Dave Alpern, RFK Racing President Steve Newmark and 23XI Racing investor Curtis Polk.
The deadline to reach a new agreement, which includes the charter agreement, expired at the end of the year but was extended to the end of January. A deal didn’t come together then either and now the hardest possible deadline is the start of next season.
If a new deal isn’t reached, teams could choose to go race under a different sanctioning body, and NASCAR could conduct Cup Series races with a different set of teams and cars as well. The status quo is well known around the industry and is becoming a bit of a distraction leading into the start of the season.
“The last things any of us want is for this to be a topic or hot topic leading into our biggest event, the Daytona 500 and kicking off the season,” Gordon told Earnhardt. “I think it’s why there was a negotiating committee formed two years ago and started these conversations with NASCAR and the group they put together.
“There’s been a lot of healthy dialogue but nothing has really moved things forward.
“A lot of it was we were waiting to see what the new TV deal was going to be. Because that was delayed, a lot of the discussions and negotiations were also delayed. That’s put us here in this moment at this time.”
Gordon said on multiple occasion that he is personally frustrated and so are the teams collectively, even if he also understands and appreciates the platform the sanctioning body has created for everyone that exists within it.
“I’ll start off by saying … what NASCAR’s built over 75 years is incredible and I’ve been able to benefit from it tremendously as well,” Gordon said. “So has Rick Hendrick, Hendrick Motorsports and their branding. But at the same time, how do we make the sport move forward and everyone from NASCAR, tracks, the teams, find a way to be sustainable and build the sport back up.”
Gordon and Earnhardt spoke about how they both experienced success at the height of the sport in the 2000s. The television ratings were second to only the NFL and Cup drivers were superstars on par to anyone else in sports in entertainment.
That’s not the case now so the teams want a financial package that will allow them to invest in things beyond the on-track product so they can work towards big picture growth measurables.
“You came in and were a huge rock star and were able to experience what it was like to have packed grandstands full, had opportunities at endorsements and commercials, and clearly that has changed,” Gordon told Earnhardt. “I just feel personally, and the teams, in our discussions with NASCAR, how do … we need to make a change to get this thing going in the right direction.”
NASCAR now has a $7.7 billion TV deal but Gordon says the negotiations go beyond that and also include licensing agreements and anything that provides long-term sustainability.
“I think the new TV contract is a good one,” Gordon said. “Did it live up to, if you look at other leagues, what we thought the potential was, that’s debatable. It’s done and it’s very solid. These discussions are not just about splitting revenue, right?
“It’s about, how do we look at the value of a race team and build enterprise value, be more collaborative with NASCAR in how we build value, grow the sport and bring new fans.”
“We’re still heavy on relying on sponsor income. I think that’s why things have not moved forward. I think there’s 3-4 key things the teams have been very consistent on in talking to NASCAR about — not only to make the teams profitable, we don’t make money, right?
“I don’t think Hendrick Motorsports has made a profit in 10 years. So, you say ‘why do you do it’ and I say Rick Hendrick loves the sport, cars and it’s been good branding. But if we didn’t have all the B2B and we’re one of the few teams out there very fortunate to have the B2B to tie Hendrick Automotive Group and Hendrick Motorsports together, I don’t know where that would put us.”
Gordon says the negotiating committee is aligned entirely on their asks, and it includes the perspectives of not just the winning teams, but every team owner in the garage. And that does track with reality. NASCAR doesn’t need all the teams to reach a new agreement but it currently doesn’t have any of them bought in.
“NASCAR is aware of it and we’ve shared our books and all the details we possibly can and they, listen, they have to run the sport and they have criteria they have to meet too,” Gordon said. “There’s been good dialogue but it’s just frustrating we haven’t been able to make progress, and it’s why we are where we’re at. We’ll see where that takes us moving forward.”
Earnhardt asked Gordon what specifics he could share about what the impasses are over. It’s over how much of a percentage of TV money the teams get, how that percentage is calculated and if the charter system will be made permanent.
“I think it certainly starts with revenue and just trying to figure out what the proper splits are for the old charter versus the new one.” Gordon said. “You hear about evergreen; we don’t say permanent, but evergreen charters.
“I just look at other leagues, and that’s who we are competing with, right? Working with other major sports as well as look at what F1 has done and the way its structured and the impact it has made and their popularity, turned the corner with its popularity, especially here in America. They’re truly sharing in the revenue, ideas and philosophies, looking at how we grow together.”
Gordon said Drive to Survive was major needle mover for F1 and that NASCAR Full Speed has been successful too but that teams are so focused on just trying to get by and be competitive, that they need more resources to invest into its marketing operations.
“The teams are so focused on what can we do for our sponsors,” Gordon said. “As you know, you and Kelley are way into that on the Xfinity side, but we’re trying to educate everyone listening.
“That’s where the team focus is because that’s where the revenue is focused. I think what we need to do is get to a place where we’re focused on not only taking care of our sponsors and winning races but how do we collectively grow the sport and have a broader reach. Go more international, have more Netflix type shows.
“Right now, I just don’t think the way the business model is put together, I don’t think it is conducive of us putting that kind of energy into those other things as much as it is go win races.”
How the NASCAR charter system works
So how far can this impasse go and what is the leverage teams believe they have? In a way, NASCAR can’t exist without the teams and vice versa. So how much longer can everyone go without a new deal?
“That’s what we’re going to find out over the next several months,” Gordon said. “If you go back to when the charter was created. Why was the charter created? It was to have a little more consistency in knowing what you were going to get. If you showed up to the track, it was kind of a base amount from the TB revenue, and you race for the rest. Over the last 10 years, sponsors have kind of declined as far as revenue, cost as gone up, inflation, all those things.
“What are the good things about the charter?
“If you have a charter, you have to show up for every race, you have to compete at a high level. The charter has served a good purpose but it’s also put us in a place where we have a seat at the table about where we go race, and the rules and things like that but I think there’s so much more we can be doing.
“If we want to have the sport stay like it is, and stay on the path that it’s on, then all the teams can get together and say ‘okay, NASCAR, lets sign the deal that’s on the table. I believe, and I think other teams believe this, that the investment the teams are making into the sport right now, and not just to go fast, but to build our business into a sustainable one, that something has to change. And I think if something doesn’t change, that I don’t think we’ll see the sport get back to what it once was.
“So what is the leverage? The leverage is right now, we don’t have a charter agreement that guarantees that teams have to show up at the race track. And, I think, right now, we’re going to get a deal done, the dialogue and conversations have been good but what are we going to have to do to get there?”
Matt Weaver is a Motorsports Insider for Sportsnaut. Follow him on Twitter.Â