Another deadline has come and passed between NASCAR and the teams that compete in the Cup Series as both sides continue to work towards an agreement that includes how to distribute broadcast revenue.
First reported by the Sports Business Journal but confirmed independently by Sportsnaut, the two sides are ‘nowhere close’ to an agreement and one might still be months away.
The exclusive negotiating window ran out at the end of December but both sides agreed to extend that through January. That deadline has again come and passed and the teams are free to explore options with other entities even if all involved expect a resolution to come before the end of this year.
What this means, is that the teams that compete in the Cup Series can legally shop its combined likenesses to another racing series or could even start one itself. If an agreement is not reached by December 31, NASCAR has the rights to seize ownership charters away from the teams, which is effectively the mechanism in which the sanctioning body shares revenue with its competitors.
The current agreement, and the charter system itself, has run from 2016 to 2024. While the two sides have been in discussions for two years, the process was held up by NASCAR finalizing a next-generation broadcast rights agreement, one that was completed in December.
That next generation broadcast rights agreement runs from 2025 to 2031, with races airing on FOX, NBC, The CW, Amazon and Warner Brothers Discovery, for a combined $7.7 billion.
It’s unclear what has caused the latest round of negotiations to fall apart but the two sides have simply not been able to come to an agreement on how much revenue teams will receive from the new broadcast rights.
Both sides have different accounting methods but the teams effectively want half of the broadcast revenue. The teams also want better access to NASCAR’s financial records as it pertains to the broadcast rights and the sanctioning body wants teams to continue slashing its operating costs.
Teams have argued there is no more to slash, especially now that it has reduced payroll and R&D costs, all the result of the third-year single-source supplied NextGen car.
The teams want NASCAR to make the charter system permanent and to reduce its reliance on sponsorship money, which has fallen drastically over the past decade. NASCAR has not been entirely opposed to continuing the charter format but its dependent on teams making certain concessions, including a potential spending cap.
It costs about $20 million dollars to fund a single Cup Series entry and teams rely on about 60-80 percent sponsorship money to field a car. Meanwhile, the value of a charter has continued to grow in recent years with the latest transaction costing a reported $40 million when Spire Motorsports purchased the ownership rights from Live Fast Motorsports.
Charters, which are basically NASCAR’s version of a franchise like the New York Yankees or Los Angeles Lakers, is what entitles teams to the revenue package. It also guarantees all 36 teams’ entry into every race with NASCAR also opening four other starting spots per race to teams who do not own a charter, but those teams are not privy to the revenue opportunities provided the charter teams.
Again, its expected that both sides will eventually reach agreement because they have a symbiotic relationship in that teams are reliant on the history and brand of NASCAR to maximize its potential while the sanctioning body needs recognizable teams and drivers to maximize its own business.
NASCAR had hoped to reach an agreement before the season, which begins this weekend with the non-points Busch Clash at the Los Angeles Memorial Coliseum, as this process will likely become a greater distraction to the on-track product.
Any endgame in which the two sides split would have disastrous effects on the entire industry but there is still a lot to sort out to get there.
Matt Weaver is a Motorsports Insider for Sportsnaut. Follow him on Twitter.