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Could NASCAR Expand the Current Charter System?

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Joshua Lipowski

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NASCAR’s Charter system is one of the most controversial things in modern NASCAR. Since its’ implementation in 2016, it has provided some much-needed security to race teams, but it has also heightened the barrier of entry for both new car owners and current car owners looking to expand. Should NASCAR look at adding more charters to the current Cup Series field?

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The Situation

The situation that NASCAR and the race teams currently face is how high the barrier of entry is for a Cup Series race team. In addition to getting all of the assets together needed for a race team including cars, shop space, parts, employees, etc., teams need to buy a charter worth between $30-50 million depending on the report.

Now, why would they need to buy a charter, and why would they not just enter each race as an “open” entry? If you buy a charter you get a guaranteed starting spot in every race you enter, and you get significantly more prize money than if you were not a chartered team. If you enter as an open team, it’s the exact opposite.

In order to be a new race team with the goal of running competitively, a charter is a necessity. The problem is that there are only 36 charters available, and if no one is selling them, there is no way to buy a charter.

It is also an issue for existing teams. Teams like Trackhouse, RFK, and 23XI have been rumored to be looking for a third charter, but there have not been any charters readily available. So, one solution is to simply put more charters into the field, but, would that work?

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The Benefits of Adding Charters

If NASCAR were to add charters to the field, it would allow for more race teams to enter the field without the economic risk of either missing the race or the lack of prize money from being a non-chartered entry. This year in particular, seeing a non-chartered entry in a Cup Series race is becoming rarer and rarer. Only 10 out of 25 races have seen at least one “open” entry.

This would mean more race teams, which, in turn, means larger fields. Larger fields mean more people are able to get involved in the sport through the new race teams.

It also could decrease the barrier of entry via the charter system through simple supply and demand. The more charters available, the cheaper they become because they begin to meet demand, at least, in theory.

This solution sounds really simple and easy, but, it’s more complicated than just adding charters and more teams line up to come into NASCAR. What are some of the complications that adding charters adds?

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The Complications of Adding Charters

If you were to add charters to the Cup Series, the prize money that was once distributed over 36 chartered entries is now distributed over 38 or 40 chartered entries. It doesn’t take a mathematician to figure out that means less money for those teams that are currently chartered. Now, this could become mitigated during the next TV deal if NASCAR is able to distribute more money to the race teams, but this is far from the only complication.

While adding charters would cater to the supply and demand for the moment, NASCAR could end up back in the same situation in just a couple of years. What if there are 40 charters, but now there are 44 owners who want to participate in the Cup Series? NASCAR is right back in the same situation two years down the line as they are now.

It’s the old scenario of adding a lane to a highway. Adding the lane means more cars start taking that road and the traffic situation is just as bad if not worse than it was before.

There is also the question about who to give the new charters to. Do you just let everyone have at it and sell it to the highest bidder? Do you give them only to new team owners at first then you distribute them to existing teams? Do you base who you distribute them to off of owners’ points from the previous year?

Someone is going to be left unhappy at the end of the day if the charter system is expanded. Someone who wants a charter is not going to get one. That is not inherently a bad thing, as getting a Cup Series charter should be exclusively for car owners who want to make an honest effort to compete in the series, but it shows that you cannot please everyone.

Conclusion

The issue of the barrier of entry to NASCAR via the charter system is a complicated issue, and a simple solution will not rectify the issues with it. There is even an argument to be made that exclusivity is not necessarily that big of an issue. NASCAR can distribute more money to fewer teams which allows those teams they currently have to be more profitable.

More race teams mean those resources are spread too thin. However, how high should that barrier of entry be? That is the question that people can debate.

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Picture of Joshua Lipowski

Joshua Lipowski

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