Dale Earnhardt Jr. welcomed legendary former NASCAR crew chief, Ray Evernham, to the Dale Jr. Download, and had some eye-opening information about charters. Earnhardt Jr. revealed that, in 2016, he could have bought BK Racing’s charters for $2 million, and since then, charter values have skyrocketed to at least 20x as much. Could Dale Earnahrdt Jr. have seriously considered being a team owner, and what does it say about modern NASCAR?
It’s hard to say whether or not Earnhardt Jr. was seriously considering starting a Cup Series team when BK Racing was selling its charter. This was happening at the end of the 2016 season, and Earnhardt Jr. was still racing at that time while dealing with concussion-like symptoms, which ended his season early. He still had JR Motorsports, and it’s not uncommon for drivers to form their own race teams late in their career, but it’s tough to say Earnhardt Jr. was doing the same at this time.
However, Earhardt Jr. has said multiple times that he is interested in entering the Cup Series as a team owner. In October of 2022 on his podcast the Dale Jr. Download, he expressed his interest in owning a Cup Series team, but the charter price tag kept him from doing so. JR Motorsports Co-Owner, Kelly Earnhardt Miller, also expressed interest in going Cup Series racing with the team in the fall of 2023 on Sirius XM NASCAR Radio, but, again, she called the cost of a charter the “Biggest Barrier”.
Live Fast Motorsports sold their charter to Spire Motorsports for a reported $40 million. That cost will almost certainly go up as time goes on. Charter values have gone from $2 million in 2016 to $40 million in just 7 years.
The interest is there, but this is a different world than it was in 2016. Imagine if Dale Earnhardt Jr. ended up buying a charter in 2016. It certainly seems like he may think that at times. However, perhaps the more relevant comments came from Ray Evernham regarding the business model of NASCAR.
Earnhardt Jr. mentioning that he “could have” bought a charter from BK Racing was within the context of talking about the rising value of charters. His question was essentially if teams claim the business model is “Broken”, then why are charters so incredibly valuable with value going up? Evernham had this response.
I look at it like I’ve got this nice condo in Florida. It’s got some equity in it now, and I’m like ‘Man I should sell it’. But if I sell it then I can’t buy another one. In the end, that charter really only has value if you’re going to borrow against it, or if you’re going to sell it. The business model of keeping your team in place so you’re not taking a couple of million bucks per year out of your pocket, I think that is something that’s gotta be looked at.
Ray Evernham
It’s interesting here to see Evernham’s thoughts on the value of charters. Not only are they a massive barrier to entry for someone like Dale Earnhardt Jr, but they also have no active cash flow value to a race team. The only time race teams see the money from their charter value is if they sell their charter or borrow against it. That’s why the charter values have little to do with team complaints about the business model.
However, the flip side of that is how it protects the investments of team owners. Team owners who invest in the sport have a charter that guarantees them a starting spot in every race, which makes it easier to sell sponsors. Team owners also get more revenue from prize money if they have a charter, so, there is a double-edged sword here.
While the high value of the charters does impact the barrier to entry and give teams little value in terms of active cash flow, they do protect investments. It’s a multi-faceted issue, and that’s part of what’s held back Earnhardt Jr. from actually starting a Cup Series team.
In the end, it’s tough to say whether or not Earnhardt Jr. was seriously considering starting a race team in 2016. However, comparing that moment in time to now does provide some interesting insight into how NASCAR has evolved in the charter era.
