NASCAR Sprint Cup Moves to NFL-Style Franchise System
More than a year of effort and cajoling from a concerted group of NASCAR Sprint Cup team owners has resulted in a surprising outcome. The Daytona Beach-based stock car sanctioning body announced the introduction of charter agreements-the racing world's version of the franchise system used for teams in MLB, the NFL, and the NBA-which will give 19 Sprint Cup teams newfound value.
Under NASCAR's long-held ownership dynamic, team owners came and went, and despite participating in North America's most popular and lucrative form of motor sport, the only assets of value left behind were of the physical kind-cars, engines, buildings, tools, and the rest of the equipment needed to participate.
With the charter agreements, those 19 team owners are now guaranteed a total of 36 entries in each Sprint Cup race, making those guarantees-and the ownership of each charter-highly valuable. NASCAR's traditional grid of 43 cars for each race has been trimmed to 40, leaving only a handful of non-guaranteed starting positions open for non-charter teams to try and fill at each race.
Although NASCAR began using an archaic system of awarding entries to past champions (and under other provisos) years ago to ensure fans were able to see most of their favorites compete at every round, most positions on the grid were earned on merit.
Using the charter system as the only method to land 36 of the 40 starting positions, and to gain access to the tens of millions in prize money on offer has, in effect, made those 19 teams partners with NASCAR, and all but ensured significant revenue sharing through prize money payouts.
"Today represents a landmark change to the business model of team ownership in NASCAR," said NASCAR CEO Brian France. "The Charter agreements provide nine years of stability for NASCAR and the teams to focus on the growth initiatives together with our track partners, auto manufacturers, drivers and sponsors."
Of note going forward, it will be interesting to see how teams set the values of their respective businesses. Per NASCAR, charters can be sold, and with that abrupt change in philosophy towards its entrants, teams now hold 36 golden tickets to participate in Sprint Cup. How much will the first one sell for? It will be nothing like the $2 billion Steve Ballmer spent to buy the Los Angeles Clippers, but it won't be cheap. Stay tuned.
