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As the offseason wears on, the lack of a charter agreement between NASCAR and the race teams becomes more of a concern. With the new TV deal in place, it seemed like only a matter of time before the charter deal was reached, but that has not yet happened. Could a Civil War be brewing in NASCAR shortly, or, will a charter agreement be reached?
The charter agreement is the biggest business link between NASCAR and the race team. It was first implemented in 2016, and this is a simplified overview of the agreement.
NASCAR allocates 36 charters for race teams to purchase. Those who buy the charters get a guaranteed starting spot in each race, provided they attempt to qualify for all races, and a larger split of the TV and purse revenue.
Adam Stern reported that the top-performing race teams currently earn $8-10 million per year under the current agreement with the lesser-performing teams earning around half that much. This is why purchasing a charter is so critical for a race team. Without a charter, they are at a woeful disadvantage regarding money distribution from NASCAR.
Charters are also a great safety net for race teams. They can tell their sponsors with a 100% guarantee that their brand will be on the race car during the race. There is no risk of missing the race if you are a chartered team.
Without the agreement, the charter system does not exist, and the race teams are incentivized to look elsewhere to take their assets. NASCAR needs the race teams to keep the big names and superstars in the sport. The race teams need NASCAR for financial stability and as an actual sanctioning body to hold events.
The charter negotiations have been going on in the background all throughout the 2023 season. However, the new TV deal starting in 2025 has accelerated speculation on the status of negotiations. These negotiations are between NASCAR and the “Teams Negotiation Committee” (or TNC for short). The TNC consists of Jeff Gordon (Hendrick Motorsports), Dave Alpern (Joe Gibbs Racing), Steve Newmark (RFK Racing), and Curtis Polk (23XI Racing).
Teams Make a Statement: Spring 2023
Throughout the spring of 2023, the race teams made one thing very clear publicly: they wanted the charter system to be permanent. Jenna Fryer of The Associated Press reported in April that the Race Team Alliance, which negotiates on behalf of the teams, skipped a planned meeting with NASCAR over fears that the meeting would be “hijacked” by charters. The AP later reported that NASCAR teams sent a letter to the sanctioning body asking for charters to be permanent. Despite this, talks eventually began between the race teams and NASCAR.
Denny Hamlin Speaks Out: Fall 2023
Denny Hamlin spoke to the media in late August, and he was asked about the negotiations. He said that talks were “Not well”, and that he has not heard a good reason for why the teams are not getting granted what they request.
Some Optimism: Fall 2023
Steve Phelps spoke to the media for the annual “State of the Sport” address at Phoenix during the Championship weekend. He offered some optimism in how negotiations were going between NASCAR and the race teams.
If you would ask the race teams do we think we’re making progress with NASCAR on where things stand in the extension of our charters, I think our race teams would say yes.
Steve Phelps
According to Phelps, progress was being made on the issue of charters, and Adam Stern also reported that at least some of the teams agreed. However, the media rights deal had to come first.
In late November, the media rights deal was finally complete. A 7-year, $7.7 million media rights deal to be exact. A roughly 40% increase per year from the original contract.
Stunts on the Track?: December 2023
Adam Stern joined The Money Lap with Landon Cassil and Parker Kligerman, and he admitted that a deal may not be done by Daytona. Stern admitted that, if that happened, race teams may look at showing their displeasure during a race.
So, it seems the character agreement is still a ways off from being complete. Negotiations may continue into next season. NASCAR and the teams have cut it close before.
In 2020, NASCAR and the teams announced an extension of the charter agreement the week of the Daytona 500. However, negotiations then were nearly as tense as they are now.
Early 2024: Charter Negotiations Extended, then Stopped with No Progress Made
In December of 2023, NASCAR and the teams both agreed to extend their negotiating window until the end of January. In the last week of January, when the negotiation window was running out, Denny Hamlin spoke out on the charter negotiations. He said that NASCAR and the teams were no closer to the deal.
That was followed up later in the week by an Adam Stern report that NASCAR and the teams did not agree to extend their negotiating window. Stern reported that industry sources claim that a deal is “Months away”. He also reported that NASCAR may revoke charters from the race teams if a new agreement is not reached along with.
So, what does the negotiation period ending mean exactly? Well, according to Stern, it means, amongst other things, that teams can technically negotiate with other racing series if they so choose. However, he did say that those in the industry expect a deal to get done, and Denny Hamlin also echoed that sentiment.
February 2024: Drama at Daytona
Speedweeks at Daytona saw mixed signals sent on the charter negotiations. Steve Phelps preached optimism in an interview with Chris Myers of Fox Sports. That same weekend, the race teams invited NASCAR to a meeting to discuss the charters, which NASCAR declined to attend.
This also came in the wake of outspoken comments from Denny Hamlin and Jeff Gordon. While both said they feel a deal will get done, both expressed frustration at the standstill in negotiations. Gordon spoke out about how much race teams are struggling, claiming that Hendrick Motorsports hasn’t had a profit in 10 years.
March 2024: Teams Hesitant to Introduce a Cost Cap
Charter negotiations were on the backburner for much of the first 6 weeks of the season, but, the conversation bubbled up in late March. Adam Stern reported that race teams are not convinced that a budget cap is necessary. A budget cap is what NASCAR has reportedly proposed to the race teams to help with the current costs.
April 2024: SMI Holding the Teams Up?
Jordan Bianchi of The Athletic gave some insight into the current charter negotiations in an episode of “The Teardown” following the Martinsville race. While he acknowledged that this is far from the only issue, he mentions that Speedway Motorsports Inc. (SMI) is rumored to be holding negotiations back by not being willing to offer more money.
Multiple people I’ve spoken to about this [say] there is a frustration with Speedway Motorsports that they maybe aren’t wanting to concede enough. Because they’re unwilling to want to back down and give more to the teams, what the teams want, this is holding up negotiations. Now, this isn’t THE hurdle. This isn’t like, ‘oh my goodness if they can clear this hurdle this deal is going to be done’, but this is certainly a hurdle. There is a belief that Speedway Motorsports is not willing to take a greater cut than they want to, and because of that, this is kind of holding things up to some degree.
Jorda Bianchi.
April 2024: NASCAR Says “We’re Very Close”, but Not Everyone Agrees
Adam Stern provided an update on the charter negotiations in mid-April as Steve O’Donnell spoke at the CAA World Congress of Sports. While O’Donnell claims that NASCAR and the teams are “Very close” to a deal, Stern spoke to 3 other sources who he says do not agree with O’Donnell’s claim.
If a deal is not reached, the results could be catastrophic. Could there be a split between NASCAR and the race teams similar to the CART/IRL split that still haunts IndyCar to this day? It’s certainly possible, and that would do nothing but harm to NASCAR if history serves as any guide.
When the CART/IRL split happened in 1996, fans and teams were divided, and TV ratings and attendance declined on all fronts. Eventually, with IRL getting the better of CART (now Champ Car), both entities reunited in 2008. Still, the damage had already been done, and IndyCar has never fully recovered.
With that story in history, the hope is that NASCAR and the teams refrain from unleashing an all-out Civil War of stock car racing by splitting up. However, anything is possible if the negotiations continue to break down, and those who fail to learn from history are doomed to repeat it.
The bottom line is that NASCAR needs the teams, but the teams also need NASCAR. Without the teams and the drivers, NASCAR does not have the stars that make it what it is. If the race teams do not have NASCAR, then who can sanction events and give the teams financial stability from TV revenue?
