NASCAR's upcoming economic model spurs interest in new teams
CHARLOTTE, NC (AP) - Justin Marks tried three times to purchase the NASCAR equivalent of a franchise license that guarantees a car a place in the race every week. He was outbid twice, he said, and a third deal fell apart.
Without this charter, Marks had almost no chance of getting his team on track in 2021. He eventually had to lease one from another organization to become the second new NASCAR owner to announce a team last month.
With NASCAR planning to launch the new NextGen car in 2022 to cut costs, the demand for charters has increased. At least three copies have been sold since August - NASCAR does not update ownership records for each charter until the beginning of a new year - and the tender process has been carried out very quickly.
"It was a lot harder for us than I expected," said Marks this week after the Trackhouse Racing announcement. "There are a lot of charter buyers out there and unfortunately there aren't many charter buyers trying to build championship-caliber racing teams."
The environment has changed dramatically in the three years since Furniture Row Racing put its team together and put its championship charters up for sale. Barney Visser tried to find even one bidder, and Spire Sports + Entertainment, with whom the Visser agency brokered a sale, played and bought him.
The charter system was introduced in 2016 to add tangible value to team owners who, in the previous independent contractor market, had only inventory, equipment, and possibly real estate for their NASCAR participation. When they went out of business, there was little recourse to regain any investment.
The 36 charter guarantees entry into every cup race and thus part of the wallet. The charter can be sold on the open market and also rented out to another team for a full season. The value of a charter is based on the vehicle's performance according to a formula in which the wallet is split so that a higher percentage is given to the top teams.
A charter buyer can guarantee that the purchase price will eventually be recovered through wallet withdrawals, reducing the risk for Spire when joining the team. Two years after buying Visser's stake in the sport, Spire Motorsports has acquired two more charters.
Spire bought its second charter from Leavine Family Racing in August and has since acquired a third for 2021, but the origins of which have not yet been revealed.
It was this third charter that Marks was able to lease from Spire to start his team next year.
Denny Hamlin has also entered team ownership and explored various charter opportunities before he and Michael Jordan bought Germain Racing last month. Hamlin, like Spire had done two years ago, examined the economics of NASCAR's proposed new car and decided that team ownership will be more affordable by 2022.
The NextGen car was slated to debut next season, but was delayed for a year by the pandemic.
"When the new car was announced and NASCAR really took initiatives to limit staff, restrict training, it really helps the racing teams," said Hamlin. "Ultimately, it's the teams that make a little more revenue and a little more revenue, which makes (property) more attractive."
NASCAR has been dominated by five organizations with aging owners and little interest in new entrants for the past two decades. Roger Penske is 83, Joe Gibbs is 79, Jack Roush is 78, Richard Childress is 75, and Rick Hendrick is 71.
Active drivers Kevin Harvick and Brad Keselowski both owned Truck Series teams, which they eventually merged, leaving Kyle Busch's truck team the last to stand under the current financial model.
However, the charter system for the Cup series and NASCAR's efforts to make racing more economical have successfully attracted young youngsters. Jeff Dickerson and T.J. Puchyr, co-owners of Spire, are in their forties; Former driver Marks is 39 years old and Hamlin, who is still active, will be 40 next month.
Everyone has played the economic reset with the NextGen to get their investments to the full.
Busch isn't convinced and can't figure out why Hamlin and Marks will be owned before the new car in 2021.
"I don't know how the model can be sustained as these new owners join in, especially new ones who are joining now for next year, knowing they'll have to buy old, useless inventory and then essentially scrap it," said Bush. "That makes absolutely no sense to me."
Dickerson said Busch was correct in his assessment but argues that this is the point - the model is broken, so Spire was the only interested buyer when Furniture Row sold its charter in 2018. Reducing the workload to get on the track.
"It's no coincidence that we were the only ones standing on (Furniture Row) in 2018, and now, with the NextGen car and model NASCAR is launching, there's a robust market for charter," said Dickerson.
“Non-sport groups trying to break into NASCAR are very interested. Perhaps the best proof is that teams like us, Denny and MJ or Trackhouse are ready to spend the gap year investing in our programs. somewhat dated gear soon just to be ready for 2022. "
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