Racers, Start Your Valuations
The 2024 NASCAR season has entered a compelling phase involving valuation and identity assessment. The news of Stewart-Haas Racing (SHR) being up for sale wasn’t entirely unexpected. Gene Haas has shifted his focus towards Formula One, and co-owner Tony Stewart has expressed dissatisfaction with his role as a NASCAR team owner.
SHR has been a charter member of NASCAR since 2016 and owns four full-time car charters. Now, they are actively exploring potential buyers for these assets.
The Current Market for Charters
The value of NASCAR car charters has seen a significant rise in recent years. For example, Furniture Row Racing sold their charter for $6 million back in 2018. In 2021, 23XI Racing purchased StarCom Racing's charter for $21 million. Most recently, Spire Motorsports made a buy at approximately $40 million.
Given these precedents, SHR’s charters are expected to fetch a value below the $40 million mark. Interest has already been shown by existing teams, notably Front Row Motorsports and Trackhouse Racing, which are either looking to expand or establish their presence further in the sport.
Television Revenue and Upcoming Negotiations
A significant revenue stream for NASCAR teams comes from television deals, and a new seven-year TV contract worth $7.7 billion was announced in November 2023. Currently, teams receive 25% of this television revenue.
The present charter agreement is due to expire on January 1, 2025. As a result, negotiations are ongoing, with teams pushing for a larger share of the TV revenue. This impending contract expiration has even sparked speculation around a potential sale of NASCAR itself if an agreeable settlement isn’t reached.
Leadership and Policy Concerns
The leadership of NASCAR remains under the France family, with Jim France currently at the helm. Opinions about his tenure and policy-making approach are divided within the community. The upcoming deadline for charter agreements is December 31, and NASCAR COO Steve O'Donnell has indicated they are “very close” to reaching new agreements.
Voices from the Industry
The potential shake-up in NASCAR has brought various opinions to the forefront:
“Charter truth is going to be out there now. Feelings are going to get hurt. Because no one actually wants to hear what they’re really worth. Unless you’re Jeff Bezos, it’s never as much as you think,” said one industry insider.
Another commented, “Imagine if the owners of the Kansas City Chiefs or the Charlotte Hornets had to renegotiate with the NFL or the NBA every seven years. That’s crazy, right?”
Opinions on the France family’s leadership were also voiced: “We can only support you as long as we are being supported. Be careful what you wish for, because this is Bill Junior’s brother, after all.”
Reflecting on past leadership changes, one individual stated, “None of us were happy with Brian in charge, and we used to say, what would it be like if Jim stepped in?”
Conclusion: The Future of NASCAR
The charter system was initiated to offer financial stability to NASCAR teams. As the negotiations for new agreements approach their deadline, the entire NASCAR community is keenly awaiting the outcomes. The results of these discussions will significantly impact the financial and competitive landscapes of the sport, determining whether the current system continues to serve its intended purpose.
With several existing teams expressing interest in SHR’s charters and with potential structural changes on the horizon, the 2024 NASCAR season sets the stage for critical developments. The hopes are that any new agreements will foster an environment where the sport can thrive financially and competitively for years to come.