Racers, Start Your Valuations
The 2024 NASCAR season has entered an intriguing phase involving valuation and identity assessment. The recent announcement regarding the sale of Stewart-Haas Racing (SHR) came as no surprise to industry insiders. Gene Haas has been increasingly focused on Formula One, while Tony Stewart has expressed dissatisfaction as a NASCAR owner.
SHR has been a charter member of NASCAR since 2016 and currently owns four full-time car charters. They have been actively shopping these charters around in the racing community.
Rising Charter Values
Charter values in NASCAR have been on the rise. For context, Furniture Row Racing sold their charter for $6 million in 2018. More recently, 23XI Racing purchased StarCom Racing's charter for $21 million in 2021, and Spire Motorsports acquired one for approximately $40 million.
It's anticipated that SHR's charters will be sold for slightly less than $40 million each, with interest from existing or expanding teams such as Front Row Motorsports and Trackhouse Racing.
Television Revenue and Upcoming Negotiations
NASCAR secured a new seven-year television deal worth $7.7 billion in November 2023. Currently, teams receive 25% of this revenue. However, the existing charter agreement is set to expire on January 1, 2025. Negotiations are underway for teams to secure a larger share of the TV revenue in the next agreement.
There is speculation that NASCAR could be put up for sale if these negotiations reach a standstill, underscoring the high stakes involved in these discussions.
Leadership and Policy Concerns
The France family continues to lead NASCAR, though opinions about Jim France's tenure and policy-making approach are divided among industry stakeholders. The deadline for new charter agreements is December 31, and NASCAR's COO, Steve O'Donnell, has indicated that they are "very close" to reaching a new agreement.
Voices from the Industry
Industry voices have weighed in on the current state of charters and negotiations:
- "Charter truth is going to be out there now. Feelings are going to get hurt. Because no one actually wants to hear what they’re really worth. Unless you’re Jeff Bezos, it’s never as much as you think."
- "Imagine if the owners of the Kansas City Chiefs or the Charlotte Hornets had to renegotiate with the NFL or the NBA every seven years. That’s crazy, right?”
- "We can only support you as long as we are being supported. Be careful what you wish for, because this is Bill Junior’s brother, after all."
- "None of us were happy with Brian in charge, and we used to say, what would it be like if Jim stepped in?”
Conclusion: The Future of NASCAR
The charter system was initially designed to help racers achieve financial stability. As negotiations continue, the entire NASCAR community is on edge, awaiting the outcome. The deal will determine the future landscape of the sport, influencing team operations and financial viability.
The months ahead are critical. Should a new agreement be reached, it may lead to increased profitability and sustainability for teams. However, any impasse could result in far-reaching implications, including the potential sale of NASCAR itself. It's a pivotal moment for the sport, as stakeholders hold their breath and prepare for what lies ahead.