So much of the business of the NASCAR Cup Series hinges on what the next broadcast rights agreement looks like.
The current $8.2 billion deal with FOX and NBC expires after next season, but the completion of its successor is holding up NASCAR reaching a new agreement with Cup Series team owners over its franchise agreement.
Charters are effectively NASCAR’s version of a franchise. It’s not an apples-to-apples comparison, but the Hendrick Motorsports No. 24 and Team Penske No. 2 are motorsport equivalents to the New York Yankees and Texas Rangers.
In the same way that leagues and teams enter into revenue-sharing agreements across multiple sports, NASCAR and Cup Series teams have a similar deal in the charter system. There are 36 charters and each one permits automatic entry into every Cup Series race and provides anywhere from $5-10 million per season depending on performance.
Cup races start up to 40 cars per race, but the unchartered cars that make the show receive considerably less revenue compared to those that are franchised.
The agreement between NASCAR and the Cup Series teams, collectively represented by an entity called the Race Team Alliance, ends alongside the current television agreement. The RTA wants NASCAR to make the charter agreement permanent, but NASCAR has yet to agree to terms on what form that would take.
Since its introduction in 2016, the value of a charter has increased from a million or two to a reported $40 million when Spire Motorsports purchased the charter currently held by Live Fast Motorsports for its No. 78 car.
The charter system provides tangible value for teams and that is something NASCAR president Steve Phelps acknowledged during the annual state of the sport press conference on Friday at Phoenix Raceway.
“Race teams, what do they want,” Phelps said, rhetorically. “They want to be competitive on the racetrack, they want to make sure they are break-even or profitable.
“As it relates to the charter specifically, they want to increase their enterprise value. I won’t get into numbers where we stand from an enterprise value standpoint, but when the charters change hands at the end of the year, we know at least one will, there will be a significant multiple that race teams will have from a charter enterprise value standpoint.”
As of a month ago, the RTA was getting increasingly frustrated with NASCAR over both the lack of a finalized television rights agreement and over negotiations over what percentage of that would go toward the teams.
Right now, 65 percent of the TV money goes to the tracks, 25 percent goes to the teams and 10 percent goes to NASCAR itself.
Within the past month, NASCAR again met with the team owner council, with Phelps providing greater clarity on what it intends to offer the teams that compete in the Cup Series, with mixed to positive results coming out of those discussions.
The negotiating committee representing the teams is comprised of RFK Racing president Steve Newmark, Joe Gibbs Racing president Dave Alpern, 23XI Racing investor Curtis Polk and Hendrick Motorsports vice chairman Jeff Gordon.
Phelps characterized the most recent meeting in a positive light and acknowledged the positive benefits of increased charter values.
“We had a meeting last Wednesday with a team owner council where the entirety of the meeting was about charters, charter extensions,” Phelps said.
“We’ve acknowledged that we want to change the paradigm for our race teams and we need to make sure our race teams are profitable, competing on the racetracks. We are interested in having their enterprise value climb, as I said earlier.
“No timeline, but we are as we’re finalizing our media rights talking about other portions of what our charters would look like that are not financial.”
From a TV standpoint, Cup Series ratings were down as much as 15 percent in March but has leveled off into the low single digits the second half of the season, with Phelps citing weather as part of that dynamic.
Having Chase Elliott miss seven weeks over the spring due to a snowboarding incident and one-race suspension didn’t help.
Truck Series television ratings were down but Xfinity Series races were up. NASCAR just inked a unique Xfinity Series broadcast deal with the CW Network that will begin in 2025 worth $800 million over seven years.
Phelps doesn’t have a timeline for the Cup and Truck Series components but did verify that digital streaming would factor into the package in some form. NASCAR had fielded interest from streaming services over a potential summer stretch of races.
“The amount of interest in attaining our media rights for ’25 and beyond exceeded our expectations,” Phelps said. “It is our expectation that not only having a great result with the CW with our Xfinity Series, and what’s going to be an incredible 33-race schedule on broadcast television that we’re going to have a very strong result with media partners that will look at a combination of broadcast, cable and streaming to some degree.
“What that looks like, I don’t know. Are we getting toward the end of this process? We are. Did I think we would have a result earlier? I did. But we haven’t. It’s an incredibly competitive marketplace. But with that said, I want to assure all our race fans, anyone who is listening, and certainly the media corps here, we have had tremendous interest in our sport from a media rights standpoint.”
Until that is completed, the negotiations between NASCAR and its teams will be somewhat secondary.
Matt Weaver is a Motorsports Insider for Sportsnaut. Follow him on Twitter.