EXPLAINED: NASCAR and Teams’ Extensively Complicated Charter Negotiations

The NASCAR charter system ensures that a team is guaranteed a slot on the Cup Series grid. Of course, acquiring a charter is very expensive and reportedly costs around $20 million for one charter. This was when the system was first introduced in 2016 as a way to save smaller teams from folding early. All of this hinged on the media rights contract that has been in place for a while.

Now, for the 2025 season, a new media rights deal has been struck and is worth $7.7 billion for seven years. Since the announcement of the deal last year, the Cup teams have been locked in fierce negotiations. This has to do with the charter system, which is dependent on the media rights deal. The more money that is available to the teams, the better the resources to develop the cars.

What seems to be the point of contention for NASCAR and the teams?

As it happens, the Cup teams want more money because they have certain business models in place. The revenue that they are currently earning is not enough to sustain those models. Especially since they have been heavily reliant on corporate sponsorship, which makes up 60-80% of most teams’ budget. Of course, NASCAR was sympathetic, but admitted that they were considering different measures, including a budget cap.

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When 2023 ended, the negotiating window on a new charter agreement expired. Nevertheless, it was universally agreed to have a one-month extension. Unfortunately, there has been a hiccup, as it is now February and teams unanimously agreed to not extend their talks any further. This is a clear indication that the teams were far from satisfied with the progress. Frankly, NASCAR does not need a majority or unanimous approval, but all teams stand in solidarity against it.

They even established a negotiating committee comprising key team personnel. This includes Joe Gibbs Racing’s Dave Alpern, RFK Racing’s Steve Newmark, 23XI Racing’s Curtis Polk and Hendrick Motorsports’ Jeff Gordon. The current charter is expected to expire in less than a year, giving teams freedom to explore other racing series.

What do the NASCAR teams want?

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Much of the teams’ demands are up in the air, but there are a few guesses. First and foremost, the Cup teams want permanent charters. And secondly, they want additional revenue. With the latter, there is a debate on the methodology of accounting. NASCAR is offering to increase payouts to 42% from a current 35% with one methodology. The second methodology is to pay teams 49%, both from 2025 onwards. Teams even got a chance to peruse the account books to gauge media income.

If the teams were willing to play ball, they would earn above 40% of income. For the 2024 season alone, projections suggest that teams could be earning up to $210 million in media rights income. Other forms of revenue come from track promoter fees and a contribution from NASCAR. However, the unhappy teams believe that they are not making a profit due to reduced sponsorship and high operating costs.

Currently, the lowest-ranked charter pays out around $5M annually, and teams want around $10M in the next deal. The payouts are proportionately related to the team’s on-track performance. NASCAR did not want to drag out the talks, but no consensus has been reached, so there is no choice.

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