“The best thing to be is NASCAR, the second best a driver, and the last thing a team owner.” Jimmie Johnson’s words are reverberating acutely across the NASCAR Cup Series garage this year. 16 years of vaulting to Victory Lane 70 times and clinching the Championship trophy twice were not enough for Stewart-Haas Racing to be able to sustain itself. Tony Stewart had to announce his team’s demise due to the jittery economic situation of the sport – that Denny Hamlin also faces.

Currently harboring change in the sport in the courtroom, 23XI Racing and Front Row Motorsports face dire futures. However, they chose to take that risk as their prospects were not so bright to begin with. As Denny Hamlin claimed, NASCAR’s overdependence on sponsorships is driving even the winningest teams to misery.

Denny Hamlin sees common factor plaguing his team

When Michael Jordan and Denny Hamlin created 23XI Racing, they had high expectations. Jordan predicted in 2020 that NASCAR’s media revenue would see a spike. And it did when the sanctioning body signed a $7.7 Billion media rights deal. But that was hardly enough to reform the glaring economic disparity core to NASCAR. Since 1949, the sport has been based on independent contractors investing their own money for the privilege of racing cars. According to a 2022 report, sponsorship contributes between 60 to 80% of a race team’s overall revenue. This is a dwindling figure as compared to Major League Baseball (8 to 12%) and the National Hockey League (17 to 18%).

That is what makes the sport unsustainable, as Denny Hamlin claimed in an episode of ‘Actions Detrimental.’ He elaborated that only owners who have side businesses are secure. Rick Hendrick owns Hendrickcars.com and Roger Penske owns IndyCar. “I think that the only people that have sustained power in our sport forever are Penske and Hendrick. And its why they probably win the bulk of the races. Gibbs, you can definitely throw in there as well. But they’re the only ones that can sustain sponsorship because of the B2B that they leverage to get that.”

On the flip side of the coin, the fledgling teams are in a tight spot. Tony Stewart‘s team lost eight sponsors last year due to lagging performance, including Busch Light, Smithfield, Gearwrench, and Hunt Brothers Pizza. If the NASCAR lawsuit does not work out, 23XI Racing might shuttle towards a similar fate. Denny Hamlin continued: “It makes everyone else so fragile, which then makes it so hard to invest – which then makes it hard to perform. It’s just a snowball that happens in this business that makes it extremely difficult.” Hamlin continued that Stewart chose to exit this toxic financial climate. “Tony has obviously been looking at things from the outside. And he’s like, this is a good time for me to check out.”

Yet even the privileged teams of the sport have been vocal about NASCAR’s problems.

The issues crept inside long ago

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Well, the elitist revenue model that NASCAR was based on for 76 years is ultimately the reason. After a boom in sponsorship at the cusp of the 21st century, the sport saw a drastic downfall following the economic recession of 2008. A 2012 report claimed that sponsorships fell since 2007 as companies cut back on advertising budgets. High gas prices and a high unemployment rate robbed NASCAR’s grandstands of its life force – the fans. But on top of all this, the sport’s revenue model made things worse. Sometimes racing teams need to compete with NASCAR itself to procure sponsorships. So they were in a “constant state of financial vulnerability.”

When the Race Team Alliance’s negotiations picked up in 2022, even Hendrick Motorsports executives were vocal about the issues. Although Rick Hendrick has his own booming business and also signed the 2025 charter deal, he claimed his team could not turn a profit in several years. HMS vice chairman Jeff Gordon said, echoing Denny Hamlin’s current opinion: “Where we’re currently at is not sustainable.” Curtis Polk, 23XI co-owner and a vocal advocate for the NASCAR lawsuit, also dropped cautionary words two years ago. “The economic model is really broken for the teams. We’ve gotten to the point where teams realise the sustainability in the sport is not very long term. This is not a fair system.”

Sure enough, Polk’s warning turned to reality as SHR could not sustain itself. Unless 23XI or FRM win the lawsuit, other teams may be bound for a similar destination.