NASCAR’s radical shift to ‘charters’ to add stability for owners

NASCAR’s new “charter” system will provide its Sprint Cup teams financial stability, while also offering them a sense of security for the future.

It also will bring something equally as valuable to the sport, according to one of NASCAR’s biggest names.

“The owners, we don’t understand how NASCAR works, OK?” said Richard Petty, co-owner of Richard Petty Motorsports and the sport’s all-time victories leader. “[NASCAR] doesn’t know how the race teams work. So now we’re going to be in the same room, talking about the same problems and solving [them] together. It’s going to be one of the greatest things that have ever happened to NASCAR and Cup racing. This is the next generation of what we’re going to do to make racing that much bigger.”

The charter system, formally announced Tuesday at a news conference in Charlotte, essentially will transform 36 NASCAR Cup teams into franchises, like in most other sports leagues. Under the nine-year deal, each charter team will be guaranteed a certain amount of income each season, as well as a spot in each race’s 40-car field (reduced from 43). Four “open,” non-charter teams also will be allowed to qualify.

Texas Motor Speedway President Eddie Gossage praised the change, saying it provides “equity ownership in the team” and “value.”

“The cost to go racing is so expensive. ... It’s hard to keep up with the costs,” Gossage said in a statement. “All sports struggle with this, but our sport more than any has that dilemma and NASCAR is trying to fill that gap to ensure that we have good, solid, competitive teams that are able to get on the race track every week and perform to put on the kind of races we enjoy at Texas Motor Speedway.”

Charters can be bought and transferred before a season, with an initial value of probably up to $10 million, according to Chip Ganassi Racing co-owner Rob Kauffman, who played a key role in putting the deal together. There is no initial buy-in for the 36 charters who will take the track Sunday to qualify for the season-opening Daytona 500 on Feb. 21.

“Where we ended up is a very good place because we believe we made the team-owner model more reliable, more stable, more open, more open to new investors, with more capital to come into the sport,” NASCAR chairman Brian France said. “We’ve done that in a way that preserves a lot of the traditions that are important to NASCAR: the competition level … how we qualify for events, the fact that if you have the talent and the aspiration to join NASCAR, you can do that in the new model as you could in the old.”

The charter system, combined with a five-year agreement NASCAR reached with 23 tracks in 2015, gives the sport a sense of togetherness and purpose it seldom, if ever, has had.

“It allows the teams to invest in the future,” said Kauffman, who also is the chairman of the owners’ Race Team Alliance. “If you’re living year to year, you can’t really think about the long term. Here, you’re able to say, ‘OK, I’m going to take this risk on this young driver, see how they work out, develop this crew chief, this crew member, even some of the technical side and the basic business infrastructure.

“We focused on three key principles: participation, economics, governance. It’s a step in the right direction.”

It also will provide a more solid footing for smaller teams that have had to scratch and scrape together enough dollars each week.

“It’s just the stability,” owner Tommy Baldwin, whose one-car team will field the No. 7 Chevy driven by Regan Smith. “It allows us to look so far ahead and be able to build the business, the brand. That’s the key for us.”

NASCAR arrived at the number for 36 charters based on how many teams have attempted to qualify every week for the past three years. With 38 full-time teams announced for the upcoming season, that means some teams, notably Wood Brothers Racing, which is returning as a full-time team for the first time since 2008, will need to either buy a charter from an existing team or be among the four non-charter teams qualifying each week. One of HScott Motorsports’ cars also doesn’t have a charter.

Two cars on two of the sport’s big teams don’t have charters. But charters for Kurt Busch’s No. 41 at Stewart-Haas Racing and Carl Edwards’ No. 19 at Joe Gibbs Racing likely will be purchased from now-defunct Michael Waltrip Racing, according to Kauffman, MWR’s former co-owner.

The other two — Wood Brothers Racing and one of the two HScott Motorsports cars — either would need to purchase a charter from an existing team or be among the four at-large qualifiers each week. There have been 41 announced entries for the Daytona 500.

The charter system will allow teams to more closely work with NASCAR on business, marketing and competition issues.

This story was originally published February 9, 2016 at 8:47 PM with the headline "NASCAR’s radical shift to ‘charters’ to add stability for owners."