Are NASCAR, MJ & Denny Hamlin-led Alliance, and SMI Battling a Three-Way Power Struggle for Revenue?

Last week, Denny Hamlin and Speedway Motorsports (SMI) CEO Denny Hamlin entered into a heated exchange on social media. While the argument involved SMI’s budget for repaving, the issue was much larger than that. It is likely that NASCAR, as a sport, is currently trapped in a three-way power struggle.

It is no secret how the governing body has struggled to bring the Cup Series teams to an agreeable state regarding the charter negotiations. While the battle for revenue sharing continues, neither party looks ready to back down. However, courtesy of Hamlin’s recent podcast, it is understandable why the teams have stood their ground.

Denny Hamlin advocates for more transparency from NASCAR

The battle for revenue has dragged on the charter negotiations for months now. Naturally, the Race Team Alliance (RTA), including Denny Hamlin and Michael Jordan, have expressed their dissatisfaction with the current split. As of now, teams have been offered 25% of the revenue share earned from TV rights.

Recently, on his podcast, Denny Hamlin expressed his frustration with the split. Speaking on Actions Detrimental, he said, “It’s frustrating because, we know that they’re [SMI] taking the bulk…whenever we go to an SMI track they’re taking the bulk of the money from the TV revenue.”

He further expressed his disappointment with how SMI has gone about their business despite earning far more than the Cup Series teams. Hamlin said, “I know personally how much that I’ve invested in 23XI. I would venture to guarantee you that 23XI has invested more in the sport than SMI has invested in the last ten years. And we have done it in four years.”

He added, “Just this one team has invested more in the sport. So there’s a problem there, especially when we get roughly half of what they get on any given weekend.” So what exactly is Hamlin trying to imply here? As per various reports, the revenue earned from TV rights gets split, with teams earning 25%, NASCAR earning 10%, and SMI earning 65%.

The main problem lies with the same money not properly being re-invested in the sport. About it, Hamlin said, “No, they do not reveal it [how much money they’re (NASCAR & SMI) investing into the sport]. Nope, it’s a secret. Again, this goes back to my frustration. But to be a little bit more transparent with you and everyone listening is that NASCAR asked us to open up our books once we were doing these contract negotiations with them.”

Further, Denny Hamlin stressed why Cup Series teams need to get a fair deal from the revenue share. He said, “We opened up our books and said, ‘Here’s what our costs are. This is what we need to survive. You need to give us back what it costs for us to do this.’ Like, that is a fair ask is for you to cover our costs to put on this show for you. And they [NASCAR] won’t do that.” Now that this is out in the open, a closer look at the financials helps in understanding Hamlin’s and other Cup Series teams’ pain.

Are NASCAR Cup Series teams right to demand more revenue share?

Currently, NASCAR is in its final year of the $8.5 billion TV rights deal. With that in mind, the 65% share that goes to the tracks turns out to be $5.525 billion over the course of 10 years. When considered annually and given that the season has 36 races, the track receives $15.3 million if split equally among the tracks.

Given the fact that SMI has 15 races to their name, their yearly earnings roughly come over $23 million per year. Interestingly, this results in $2.3 billion over the 10 years, let alone the revenue that comes from ticket sales, hospitality suites, parking, merchandise, and all the ad sales around the track.

Naturally, seeing this massive figure and the condition of the track at Sonoma was bound to trigger Denny Hamlin. After all, any passionate NASCAR fan would love for stakeholders to reinvest strongly in the sport. At the same time, via 23XI Racing, Hamlin and Michael Jordan have spent not only on charters but also on drivers, team members, new shops, and most recently, a new headquarters.

Surprisingly, when it comes to the Cup Series teams, a 25% split results in $22.5 million per year. Further breaking it down, considering teams, the equation goes to $5.9 million per car per season. It is important to note that the $5.9 million is achievable when split equally, which in reality never takes place because of how NASCAR’s algorithm to pay the teams takes place.

Regardless, when a team gets approximately $5.9 million against a track earning over $15 million, it is bound to create a ruckus. What makes it more annoying for the Cup Series teams is that, other than the 10% split NASCAR is getting, it also benefits from the 18 races that go to the International Speedway Corporation (ISC). In total, the sanctioning body benefits with revenue around the $270 million mark from the tracks and $85 million directly per year.

Now, with the revenue game very much out in the open, it makes it a tricky scenario for everyone. Without a doubt, SMI would fight strongly to keep its share of revenue intact. At the same time, NASCAR cannot afford to upset the Cup Series teams more than they already have. Having said that, the sanctioning body isn’t going to let go of its shares either. In this case, the most likely scenario is a compromise that is expected to come from both the teams and the SMI end.

Of course, it is easier said than done. With Denny Hamlin and Marcus Smith firing shots like they recently did, the battle for more revenue share remains far from over.

READ MORE: “He Has That Flaw” – Dale Earnhardt Jr Dissects the Role Denny Hamlin Played in His “Unfortunate” Spat With Marcus Smith