NASCAR made a terrific deal when they announced their media agreement last December. With the arrangement helping the governing body receive $1.1 billion annually, positivity reeked all around. However, it hasn’t simplified the ongoing charter negotiations or the revenue-sharing debates. Now, it leaves the question of whether the new media deal would be a boon or a blessing for the team’s financials.

It is no secret that the Next-Gen cars have brought more parity on the track since its introduction. At the same time, the costs involved in the sport have only gone up with this change. In a sport already proving to be financially challenging, the Gen-7 cars only made it more tricky to sustain.

The future of NASCAR heavily relies on the charter negotiation

Stewart-Haas Racing shutting its operation from next year came as a shocker to many. While it was surprising, it proved how challenging it is to survive in the world of NASCAR. If a team with over two decades of experience in the Cup Series failed to sustain, it isn’t a promising signing for others interested in the sport. That said, the governing body could make life easier for the teams, especially with the multi-billion dollar media deal.

The new media deal is worth $1.1. billion per year is approximately a 40% increase to what NASCAR earns through its existing expiring package. Currently, the tracks receive 65% of the TV revenue, 10% goes to NASCAR, and the remaining 25% is distributed among the teams. Unfortunately, this arrangement doesn’t suffice the teams’ requirements, which is why they have been asking for a greater share of the broadcast revenue.

Unlike other teams in the North American sports league, Cup Series teams almost entirely rely on sponsorships for revenue. As reported by heavy.com, the current broadcast revenue sharing sees teams earn $8-10 million per car. However, with the new deal, teams have been demanding this future to be increased to $16-18 million.

The sole purpose of this demand is to get rid of the dependency on sponsors. Currently, teams generate 65-80% of their earnings through sponsorship. While it is a huge figure, it just goes to show how reliant teams are on sponsors. It is an equation no team would fancy. In fact, this is the very reason why Kyle Busch couldn’t return to Joe Gibbs Racing in 2023.

Even Jeff Gordon, the vice chairman of Hendrick Motorsports raised this issue back in 2022. Speaking to NBC Sports, he said, “Where we’re currently at is not sustainable.” This comes after HMS won two consecutive championships. Imagine a Cup Series giant stating this. Not long ago, even RFK Racing President Steve Newmark spoke on similar lines. He said, “They [Cup Series teams] continue to lose money in this economic model.”

Clearly, with the rising costs on the track, solely relying on sponsorships isn’t going to be enough. Looking at it, the new media deal certainly looks like a beneficial prospect from the teams’ perspective. Having said that, it all comes down to how NASCAR goes about the revenue sharing in the ongoing charter negotiations.

Should there be no change in the revenue sharing, Cup Series teams will struggle to survive in the near future. While we hope it doesn’t come to that, NASCAR will have to be smart with the negotiations. Surely, they wouldn’t want to decide how they are planning with their landmark decision on sovereign wealth funds in the sport.

NASCAR could make the charter negotiations more tricky with its alleged new plan

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The charter negotiations have been stretched too long for anyone’s liking. While NASCAR and the teams remain stuck in a stalemate, a new report came to light involving private equity investments in the sport. Adam Stern of Sports Business Journal came up with the news that NASCAR is planning to add a new provision to the ongoing charter negotiations.

This includes rules for private equity investors and possibly a ban on sovereign wealth funds. Stern wrote, “NASCAR is negotiating a new charter agreement with teams and — showing how active the private equity sector is — drafts include rules for such investments. The guidelines could include a ban on sovereign wealth funds in NASCAR, a maximum percentage that a fund can acquire, and language pertaining to who the main governing partner — or control person — can be.”

While NASCAR has declined to comment on this report, the actual scenario remains unknown. It is worth noting that the sport already has multiple private equity investors with teams like Joe Gibbs Racing, Trackhouse Racing, and RFK Racing involved. At the same time, given the less investment a Cup Series team demands as compared to other sports, it stays a lucrative prospect for many outsiders.

Having reported this, Stern clarified that the negotiations are always changing. It is likely that these provisions are already done away with. However, it only shows how complicated these charter negotiations have been and are to conclude. For the betterment of the sport, it is in the best interest of everyone to have this agreement concluded soon. Hopefully, it involves teams getting a better revenue share from the media deal.