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Rare peek into race purses, payouts under charter system

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A new filing before a Thursday bankruptcy court hearing for BK Racing provided a window into the payouts of NASCAR’s charter structure.

The system, which went into effect two years ago, guaranteed revenues and race attendance for 36 cars. Funding was based on four categories: entering a race, historical performance over the past three seasons, the traditional points fund (with extra cash) and race results. It was partly intended to help teams by providing more predictable revenue guarantees for budget projections.

MORE: Court filing reveals expenses, revenue for each race

Prior to the 2016 season, each race had a purse that paid out for finishing position and contingency awards (which rewarded the most competitive teams). Under the new system, money paid for results was based solely on finishing position, and NASCAR abolished publishing purse totals and race winnings in box scores.

The BK Racing document, which was filed in U.S. Bankruptcy Court, Western District of North Carolina, sheds some light on those now shielded numbers. It lists the total purse for every race during the 2018 season and also lists BK Racing’s prize money for each of the first four races in the No. 23 Toyota with driver Gray Gaulding.

–Daytona 500 (total purse $15.466 million): The team earned $428,794 for finishing 20th.

–Atlanta Motor Speedway (total purse $2.477 million): The team earned $91,528 for 36th.

–Las Vegas Motor Speedway (total purse $2.647 million): The team earned $98,754 for 33rd.

–ISM Raceway near Phoenix (total purse: $1.459 million): The team earned $82,000 for 34th.

Though the formula was different for structuring the purse and race payouts, here were the total purses and payouts for those positions in 2015, the last year that earnings were publicly made available.

–Daytona 500: Total purse $19.8 million; $348,803 for 20th

–Atlanta: Total purse $6.3 million; $101,370 for 36th

–Las Vegas: Total purse $6.5 million; $118,724 for 33rd

–Phoenix: Total purse $5.1 million; $74,805 for 34th

A hearing on the BK Racing bankruptcy case will be held in Charlotte at 2 p.m. Thursday.

Click here to view the BK Racing filing.

Team Penske buys charter from Roush Fenway Racing for third Cup car

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Roush Fenway Racing has sold one of its charters to Team Penske, who will use it to field the No. 12 Ford driven by Ryan Blaney in 2018, NBC Sports has confirmed.

Sports Business Journal first reported the transaction.

The charter Roush sold had initially been used on the No. 16 Ford driven by Greg Biffle in 2016. The team scaled back to a two-car operation in 2017 with the No. 6 driven by Trevor Bayne and Ricky Stenhouse Jr.‘s No. 17.

The No. 16 charter was leased to JTG Daugherty Racing in 2017 for use on Chris Buescher‘s No. 37 Chevrolet.

There are 36 charters in the Cup Series that guarantee starting spots.

Penske will return to operating three full-time Cup cars in the Cup Series for the first time since 2010. That year Penkse fielded rides for Brad Keselowski, Sam Hornish Jr. and Kurt Busch.

Blaney’s No. 12 Ford will join Keselowski’s No. 2 and Joey Logano‘s No. 22.

Blaney joins Team Penske after driving the No. 21 Ford for Wood Brothers Racing full-time the last two seasons. He has driven for Team Penske in the Xfinity Series since 2012.

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Wheeling and dealing keeps Sprint Cup owners busy

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TALLADEGA, Ala. — Deep in the NASCAR Sprint Cup garage, well away from the championship contending teams, a race for survival takes place.

Owners seek partners. Others look to sell or buy a charter, the sport’s golden ticket that guarantees a revenue stream and a starting spot in every race.

The movement is taking place because of a performance clause with the charters.

If a chartered team finishes in the bottom three among the 36 chartered teams in the owner standings three consecutive years, NASCAR has the right to remove that charter. Although the first year with this system isn’t yet complete, teams aren’t waiting to act.

“Let’s face it, anybody in the bottom three is exploring all their options right now,’’ car owner Archie St. Hilaire told NBC Sports on Friday at Talladega Superspeedway.

St. Hilaire’s Go Fas Racing team ranks last in the standings among charter teams. He seeks a partnership. He is willing to lease his charter and partner with another chartered team if that will help his team grow.

That’s just among the many movements taking place. Leavine Family Racing is expected to purchase the charter from Tommy Baldwin Racing after this season. Leavine Family Racing has been partnered with Joe Falk’s Circle Sport Racing this year and used Falk’s charter.

Falk told NBC Sports that NASCAR viewed his action as leasing the charter. Owners can lease their charter only once in five years. That means Falk must keep his charter and partner with a team without one or sell the charter after this season.

“You’ve got too many sellers and not any buyers, so the price is dropping,’’ Falk said of the charters. “It’s dropped dramatically on what some people have been able to acquire one. Even if (a team has) an investor who is willing to put up the $3-5 million to buy one, it won’t work unless a sponsor comes along.’’

There’s even more movement that could take place. Premium Motorsports leased its charter to HScott Motorsports for the No. 46 team this year. That charter must be returned after this season. Furniture Row Racing is expected to secure a charter for next season for the No. 77 car that will have Erik Jones as a teammate to Martin Truex Jr. The Wood Brothers remain without a charter.

As all that swirls in the sport, St. Hilaire, who said his team has a $5 million budget, knows he must react.

“To really stay out the bottom three I think $10 million is a key number,’’ he said. “We’ve got to get that thing to $10 million to be competitive.’’

The team, which has had seven different drivers this year, has a best finish of 19th by Bobby Labonte at Talladega in May. Labonte is in the car this weekend.

St. Hilaire acknowledges his team is young. His joint venture with Fas Lane Racing began in 2014. Still, he wants better results.

“I need to peak that fun meter a little more,’’ St. Hilaire said. “Thank God I don’t live off this business. I do it for fun, and I’m not having a lot of fun right now,’’ he added with a chuckle.

Even so, St. Hilaire remains committed to the sport and hopeful his team’s performance can improve.

“It’s nothing money can’t fix,’’ he said. “Money buys speed in this business, no doubt about it. We just need an affiliation, which we’re shopping like hell for.’’

St. Hilaire said he hopes to have an idea in the next month what direction he’ll go.

“All options are on the table to make the team better,’’ he said. “We’re going to go racing. I just got to look at how and where.’’

That’s similar to what car owner Tommy Baldwin told NBC Sports this week, saying he was “exploring all my opportunities’’ for the team’s future.

“If you don’t have the money to keep up with the Joneses, you’re going to be left behind,’’ Baldwin said. “If you told me eight years ago when I first started this team I would be pretty much in the same spot as when I started, I would have told you that you were crazy. This sport has taken off so much here as far as how smart we’ve all gotten. It’s not that we don’t know how to do it, it’s just that we don’t have the money to apply the proper resources to do it.’’

Any deal likely will not be finalized until after the season and some might not get done until January, depending on how quickly teams move. Falk notes that he and Leavine decided to partner last December. NASCAR announced the charter system Feb. 9. Falk was granted a charter but Leavine’s team did not qualify. That made their pairing even better for this season.

So why doesn’t Falk sell his charter to Leavine? Falk admits he wants to have some hand in a team, while he said Leavine wants 100 percent control. Falk admits they still might be together next year if a sponsor can be found for a second car.

If not, Falk will be looking for a partner.

“Still something might pop up at (Richard Childress Racing) where they need another car,’’ said Falk, who has been aligned with Childress. “I’ve got a lot of things working. I’ve also got some things you wouldn’t expect. There’s a lot of stuff going on right now.’’

One thing he said he might consider is partnering with Curtis Key of The Motorsports Group, which does not have a charter for the No. 30 car.

“I truly don’t know what I’m going to do,’’ Falk said. “I wish I did. Curtis Key and I are from Chesapeake (Virginia). We’ve known each other our whole life. I don’t really have a problem going over there to help Curtis. We have to have sponsorship.

“At the end of the day, Curtis Key has everything sitting there, he’s got a very nice shop and his cars all come from Stewart-Haas. He’s got a relationship with Hendrick. I’ve got a relationship with Childress. It would be easy to make it work, but we cannot make it work without sponsorship.’’

Podcast: Behind the scenes of the Race Team Alliance and its negotiations with NASCAR

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Inside an airplane hangar that’s a shrine to the P51 Mustang fighter pilots who helped win World War II, NASCAR’s most powerful team owners gathered to plot seismic events.

Rick Hendrick, Roger Penske, Richard Childress and Jack Roush met at a conference table in Roush’s personal hangar at the Concord, N.C., airport more than two years ago, identifying the stiffest economic headwinds facing their Sprint Cup organizations.

That was the genesis of the Race Team Alliance, an initially controversial consortium that brokered the landmark charter deal with NASCAR this season, recalibrating the team business model with more dependable and predictable revenue streams.

“It was fascinating,” Roush Fenway Racing president Steve Newmark, who attended the meeting, said in the latest NASCAR on NBC podcast. “As the owners were discussing the challenges they had on sponsorship and some things they saw coming down the pike, they all had similar views of what was going on. These were very successful businessmen both in racing and outside of it.”

In the podcast, Newmark details the behind-the-scenes machinations and negotiations that led to the formation of the RTA and team charters.

The meeting in Roush’s hangar was preceded by a February team owner meeting called by NASCAR at its headquarters in Daytona Beach, Fla., during Speedweeks 2014. Childress then lobbied his peers to gather independently.

“It evolved from there that the owners got together,” Newmark said. “We tried to figure out how to achieve some more synergies in the sport.

“Part of the initial purpose was to talk about we’re all spending ridiculous amounts of money on hotels, rental cars. Is there a way we can leverage our purchasing power on some of these items to do a better job?

“That was one of the primary discussion topics. It wasn’t these meetings were intended to discuss ‘How can we overthrow NASCAR?’ That was some of the suspicions, and I understand that, but that wasn’t the origin or purpose.”

By June, the RTA (chaired by Rob Kauffman) was formed and announced on July 7, 2014, in the form of a news release.

Newmark said it was a much more complex process than it seemed.

“That was more work than anyone envisioned,” he said. “Even the simple act of selecting a name. I’ve still got an email with 50 names on it with everyone trying to create an acronym that made sense. Ultimately we settled on Race Team Alliance. We had to have attorneys guide us because we didn’t want to trip up on antitrust issues. We didn’t want to be anticompetitive, and there were lots of issues that we were told, ‘Hey, the teams together cannot talk about that.’ ”

Though the RTA had made NASCAR aware of its existence, it was met by a chilly reception from the sanctioning body, which initially indicated there would be no plans to recognize the group.

“We’d talked to NASCAR in advance, made sure they were aware, tried to alleviate concerns,” Newmark said. “But it was natural because it was such a sea change from how we operated in the past.

“I do think there was initial trepidation for certain folks in NASCAR. To be blunt, probably the concern was because you saw this whispered in the press. If I were in NASCAR, that would have been a legitimate concern. Is this what they are aiming to do? We had to have a learning process and build trust. There was a constant dialogue. After initial concern and pushback, it transformed very quickly.”

Within a year, the framework had been built for the charter system that would assign value to teams while allocating revenues through a new structure based partly on historical performance.

But while the numbers in the deal were worked out relatively easily, governance – or how much influence teams would have on the direction of NASCAR competition and rulemaking – was a sticking point that caused negotiations to last well into the offseason.

“One of the more contentious days, where I wondered if we’d be able to have a meeting of the minds, was Christmas Eve,” said Newmark, who was heavily involved with Kauffman in negotiations. “Rob and I, with some lawyers and some other team presidents, we were sending issues lists on Christmas (to NASCAR). We were able to bridge some of the gaps that came up then. That was a fairly constant process. It was fun doing it. It was grueling.”

Newmark recalled an all-night session at The Ballantyne Lodge in which talks with NASCAR went until 3 a.m. and resumed at 6 a.m. He took a nap at the hotel rather than make the 3-mile drive to his Charlotte home.

“Ask my kids, they’d get used to my phone lighting up with Rob Kauffman on it,” Newmark said. “It was very different than a lot of negotiations I was involved in with walkout moments. This had a more collaborative spirit. That doesn’t mean we didn’t have a difference of opinions, and we didn’t have some tough moments. But there really was an openness that I think was unprecedented in the sport.”

Other topics discussed by Newmark on the podcast:

–How the merger between Roush Racing and Fenway Sports Group transpired and how the entities still are working together;

–The evolution of team owner Jack Roush’s role from demanding leader to mentor;

–How NASCAR might be positioned to hook Millennials in the face of possibly declining car culture;

You can listen to the podcast by clicking below or download and subscribe to it on iTunes by clicking here.

The free subscription will provide automatic downloads of new episodes to your smartphone. It also is available on Stitcher by clicking here and also can be found on Google Play, Spotify and a host of other smartphone apps.

Report details concessions made by both sides in charter deal

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An article by the Sports Business Journal gives new details on what happened in order for NASCAR and race team executives to be able to announce the new Charter System last week.

The process of getting to the system that gives teams financial security and a guaranteed starting spot in a reduced field of 40 cars began in the summer of 2014 when the representatives from the newly formed Race Team Alliance met with lawyers from NASCAR.

A year and a half later, the system was introduced with 36 available charters.

The SBJ article explains some of the concessions each side had to make in order for it to happen.

Says the report:

A source said that the RTA pushed for teams to no longer be charged for certain administrative costs like credentials — which collectively cost teams around $8 million annually — but didn’t get that provision in the end. On the other hand, NASCAR, which traditionally has held a near iron-grip on all competition-related decisions, gave up some of its autonomy in order to grant teams a greater say in the sport’s governance.

The article also states that TV revenue distribution will not change with the new system, with racetracks being given 65 percent, 25 percent going to race teams and NASCAR taking the remaining 10 percent.

The entire report, including comments from RTA chairman Rob Kauffman and NASCAR executives, can be read at the Sports Business Journal.