NASCAR’s New Car Creates Bidding Frenzy for Ownership Charters

When the ownership charter system was conceived prior to the 2016 season, this is surely a snapshot of what NASCAR officials wanted it to look like.

Justin Marks founded Trackhouse Racing to reflect a new way to think about what a Cup Series organization could eventually become. It was launched to emphasize STEM education, diversity and inclusion, while existing on the intersection of sports and entertainment.

He found a fitting partner in pop culture icon Armando Christian Perez, better know as Pitbull.

“I’m here, Trackhouse is here, Armando is here because NASCAR has this new car coming,” Marks said, “and the new car represents a new era in this sport because we’re breaking down barriers for new ownership and we’re providing opportunities for people to re-think the business model of what a race team is.”

Another new team owner with a famous pop culture icon as a co-owner is Denny Hamlin, who launched 23XI Racing with Michael Jordan, whose resume needs no introduction.

With a cheaper car looming over the horizon, there are more parties currently interested in Cup Series ownership than franchising opportunities available. In theory, that’s actually a positive development as that increases the value in holding one or potentially selling it.

It’s a matter of supply and demand.

The inherent value of the charter comes down to NASCAR providing teams more predictable revenue ranges once they have sold their sponsorships for a given season. Each charter provides its owner guaranteed entry into every Cup Series event with payment based on entering an event, historical performance over the past three seasons, the traditional championship funds and results.

“The model still requires you to put significant sponsor dollars on the car if you want to compete,” Hamlin said. “If you just want to ride around, then that’s a whole different business model.

“If you want to compete, it still requires you to get eight-figure-plus sponsorship money in order to compete with the guys that have businesses that can put their thumb on you at any time.”

Generally speaking, every charter owner now has a more precise formula for every possible agenda in the garage.

Under the previous business model, teams that went out of business had only pennies on the dollars’ worth of assets due to the evolving nature of cars and equipment. The only asset that held value was a race shop.

This new system is conceptually closer to the ones utilized by traditional stick and ball leagues. Just because an ownership group has enough money to field a team, that doesn’t mean they can. Of course, there are still four spots available to NASCAR Cup Series teams without a charter, but those open cars do not receive the protections and financial benefits of those who hold a franchise.

Tying all of this together is the Next-Gen Car.

Make no mistake, it’s a spec car or even a kit car. Teams will no longer be allowed to manufacturer parts and components. Every piece of the Next-Gen must come from one of the 26 approved vendors. There are competition related reasons to do this, but also financial ones.

In theory, a common component racing platform means more parity, but also less money spent on research and development.

As a result of this new frontier, there is no shortage of teams interested in joining the Cup Series grid next season and beyond.

NASCAR Xfinity Series organization Kaulig Racing revealed on Friday that it had acquired two charters from Spire Motorsports on Friday. That leaves Spire with one, but it’s the one currently leased out to Marks and Trackhouse, who were surprised to learn that it had been sold.

How is it that the current leaseholder didn’t know it had been sold?

“That’s a good question, actually,” Marks conceded. “I mean, look, they’re running a business. That’s the way they need to run it. We’re focused on Trackhouse.

“The charter journey has been that. It’s been a journey. It’s an interesting time in the history of the sport with the charter economy. We’re working very hard every day to secure our future, and I feel confident about our future.

“There’s nobody here that knows everything that’s happening all the time. And there’s a lot of things happening behind the scenes. We can’t know everything.”

The initial charter agreement ran from 2016-2020 and it was renewed to run from 2021-2024 — which coincides with the end of the current television agreement with FOX Sports and NBC Sports. A charter can be leased once per agreement period and NASCAR can revoke any charter that finishes in the bottom three in points three years in a row.

This is important because the Petty Ware Racing No. 51 has been in the bottom three in chartered points two years in a row. It entered the weekend at Nashville Superspeedway 34th in chartered points and needs to be 33rd by the end of the season to avoid three years in the bottom three.

The No. 51 is eight points behind the Rick Ware Racing No. 15, a teammate to the Petty Ware car, and 14 points behind the Live Fast Racing No. 78 owned by Joe Falk.

Rick Ware Racing could theoretically ensure the No. 15 finishes behind the No. 51 to avoid NASCAR pulling the franchise from Petty Ware.

Hamlin, who is seeking a second charter for 23XI Racing, would expect NASCAR to take the charter away if Petty Ware is unable meet the terms of the agreement.

“They enforce all of the other rules,” Hamlin said. “I wouldn’t see why they wouldn’t that (enforce this) one. As I see it, if you are in the bottom three for (three) consecutive years and you haven’t worked yourself out of it, there are new teams that want to come into the sport (and) maybe that one gets put up for auction.”

NASCAR would then place that charter on the open market, but Hamlin doesn’t know if that means it would be awarded to the bidder with the most cash or the best marketing strategy.

“I haven’t had those conversations to figure out how it works, but I certainly know there is a rule in place,” Hamlin said. “You would think they would enforce it, especially with the demand to come into the sport.

“It would seem like they would want that, especially if the competitive teams that want to come into the sport, teams that are going to bring something into the sport, and possibly bring new sponsors into the sport.

“It would seem like they would want that. I wouldn’t see why they wouldn’t enforce that.”

Rick Ware Racing is the subject of frequent criticism and scorn for its general lack of competitiveness since the charter system began. It holds four charters in the three Rick Ware Racing entries and the Petty Ware Racing entry.

When a driver buys a Rick Ware Racing seat, it isn’t with the intent of contending but providing exposure or activation for a sponsor. The team previously partnered with Stewart-Haas Racing to utilize its guaranteed starting spot to serve as fifth car for Cole Custer.

Since holding a charter can prove valuable to even the least competitive teams, Kaulig Racing president Chris Rice doesn’t see a scenario where any other franchises will be sold before next season.

“If people sell charters, I’m going to be awfully surprised,” Rice said. “I’ll be dead honest with you. It’s very hard, but if they do that’s good. There may be a one or two that’s left out there or maybe even three, but man, that’s going to be … let’s just say I don’t have much hair anyway.

“I’ll rub my head a lot. I don’t know who’s left that that would be willing to be able to let other owners come in.”

GMS Racing revealed over the weekend its intent to field a Next-Gen car next season. JR Motorsports, owned by Dale Earnhardt Jr. and Kelley Earnhardt-Miller, are also exploring every opportunity to expand to the Cup Series.

23XI and Trackhouse are also seeking a second charter to expand their operations.

The charter currently held by Trackhouse for the No. 99 driven by Daniel Suarez must be returned to Rick Ware Racing after this season — meaning that Marks would need to buy or sell a different charter or consider running the No. 99 as an open car.

Marks would field the No. 99 as an open car next year if he needed to because it would only cost him $2.5 million of television money plus the value of the charter — which is still less than the rumored $10 million it would cost to buy one this year.

“Two came off the board yesterday but there are still a lot out there,” Marks said. “So, I’m confident we’re going to get something done.”

Hamlin would consider running a second 23XI car as an open car too. The calculus from both Marks and Hamlin is that no more than 40 cars would show up for every race next year anyway due to the upfront cost of building a Next-Gen car.

To that point, Kyle Busch says his Truck Series team is not currently in a position to field a Next-Gen car, as attractive as the platform appears to be in the long-term.

“I think it’s going to be a bit expensive the first couple of years for sure, but it might then start to equal out and be okay in the long run,” Busch said. “I guess if this was back in 2012, 2013 and when I had the Monster (Energy sponsorship) then I would say, ‘hell yeah.’ It makes sense to do it because you’ve got the upfront money. The only way to do it right is to get a charter, get some of that guaranteed income and stuff like that.

“I’ve not even looked into it, so I don’t know if there is any kind of charter stuff available or what not, but where we are at and what we are doing now – we’re in a good spot with the truck stuff. We are leaders of the (Toyota Racing Development) driver development program and the beginning of that. I say the beginning – we are the beginning of Truck on up. It’s probably just not going to happen.”

And again, the charter system run through the 2024 season, at which point the model could change. It all depends on the value of the next NASCAR television rights agreement. NASCAR officials have also suggested that the addition a fourth manufacturer could also result in the sanctioning body expanding the number of charters.

Hamlin says all of that gives him hesitation to jump into the market for a second charter right now, unless it makes obvious sense.

“I think that we are weighing all the options and obviously the charter agreement goes to ’24, so we have to make sure we are making a sound investment for the next three years, because we cannot predict what happens beyond that,” Hamlin said. “Whether it gets renewed or (if) the model changes or if they shift money around from the middle to the bottom or the top, who knows?

“So, we have to weigh all of those options. I’ve spent a decent amount of time in this sport making a decent amount of money. I don’t want to piss it all away, right away.”

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