NASCAR says it is close to a new revenue sharing agreement with the teams that compete in the Cup Series but a report states that narrative isn’t shared by a handful of those familiar with the negotiating process.
“We are very close,” said NASCAR chief operating officer Steve O’Donnell on Wednesday while representing the league at the CAA World Congress of Sports in Los Angeles.
The two sides continue to work through an agreement over how to split, amongst other things, broadcast rights revenue generated by the new seven-year, $7.7 billion partnership with FOX, NBC, Amazon Prime and Turner Sports.
Other issues include sports betting revenue, production facility usage and competition related challenges like practice and the short track racing product. The teams want the charter system that serves as a franchise model to be made permanent.
A deal must be reached before the 2025 season can begin.
O’Donnell said they feel progress has been made.
“Ultimately, when our owners look at where the sports potential is in terms of all the new media partners, the balance that we do have with linear and now being able to go with the Amazons, [TNT Sports], all the opportunities we have with content, I think they get it,” O’Donnell sad. “Everyone wants to sit down and argue over who’s going to split the money the right way, but ultimately we’ll get to a good place.”
The short version of the negotiations are that the teams currently receive around 35-to-39 percent of broadcast revenue when combining the guaranteed 25 percent plus purse monies issued over the course of the season.
Teams are seeking closer to half the broadcast revenue, where NASCAR was last reportedly offering somewhere around 42 percent. The phrase somewhere around is an intentional distinction because one of the sticking points in the negotiations is that the two sides use different accounting means and are not even agreeing on what the current payout percentage is.
NASCAR secured a $7.7 billion broadcast rights agreement over the winter with FOX, NBC, Amazon, Turner Sports and The CW.
There are some other negotiating hurdles to overcome too in terms of gambling revenue, a waterfall that is about to burst across the entire sports industry, and how much time teams pay to spend to use the new NASCAR productions facility in North Carolina.
The latter is complicated because teams started building their own in-house production facilities once the shops were no longer used to build entire cars with the introduction of kit cars constructed using single source supplied components.
Competition matters bleed over into these conversations, ranging from the continued safety improvements of the current generation car, to how money will be spent over how to improve how it races on short tracks and road courses.
The amount of practice is a line item that will need to be addressed. Teams want the charter system, which is at its core a franchise model, to be made permanent. The teams have its own media arm, Racing America, which overlaps with NASCAR.com.
Sportsnaut story from Wednesday
O’Donnell concedes that a deal won’t entirely please everyone but that’s also what compromise entails.
“The great news on our end too is you look at, I’ve been at NASCAR a long time, and ownership in NASCAR was always that traditional, grew up through the sport, had been an owner for 30 years,” O’Donnell said. “That is completely changing and you’re seeing interest from all over to come into NASCAR. So it’s a big opportunity for us. We’ve got to get that right.
“There’s some things that’ll challenge us a little bit and push us, but … ownership that is maybe not traditional to the sport is good for us. We’re going to have new personalities, new businesses that’ll come into the sport. So I think at the end of the day, we’ve talked about everybody will be a little ticked off once we get to the deal, but that’ll mean it’s the right way to go.”
The Sports Business Journal reported on Wednesday, speaking to three sources familiar with the discussions, disagreed with the assessment of a deal as articulated by O’Donnell — with several issues to be resolved during meetings scheduled in the weeks ahead.
Matt Weaver is a Motorsports Insider for Sportsnaut. Follow him on Twitter.