As NASCAR negotiates with current partners Fox and NBC on a new media rights contract, they are also negotiating with teams about how that revenue will be split among teams, the tracks, and NASCAR itself.
Denny Hamlin has been vocal about what the teams need in order to survive. The 23XI Racing co-owner and Joe Gibbs Racing driver opened up on what NASCAR Cup Series teams are facing, and what they’re seeking from the sanctioning body.
Hamlin revealed on his podcast, Actions Detrimental with Denny Hamlin, that teams asked for “roughly double” the percentage of what they’re getting now. Currently, teams get 25 percent of TV revenue, tracks get 65 percent, and NASCAR gets 10 percent. The reason why teams want the increase is because they have already cut everything they could and the sponsorship model has changed so much over the past decade or so that the sport needs to evolve to better suit those changes.
“The biggest part of what we spend is on labor,” Hamlin said. “I mentioned on Twitter the other day that we pay probably better over time than any of the other teams that are out there. So we do our employees right. We do what’s fair, we feel like, for them. But ever since COVID, things have really changed in the, it’s tough for some of these people that really have been flocking to NASCAR for so many years to want to flock to NASCAR to be part of the sport because they can make probably just as much being home half the time. And when you look at the schedule in which we put these guys through, it’s very hard for, they’re gonna have to love racing to wanna be part of it. Given the pay and the time that it takes on someone’s family.”
“So we can’t pay our people any more, and we’ve been paying them about the same for a very long time, and then the schedule. I mean, we are not a manufacturing facility at 23XI. We have to get most of our parts and pieces through Joe Gibbs Racing, and for those you who don’t know, we can’t just buy everything off the shelf. There’s over 300 parts that JGR manufactures that is on that race car that is not off the shelf, which is why it costs. The car initially supposed to cost about $250,000. Add in all those parts that we have to get manufactured from JGR to put on our cars, over 300 parts, and over $300,000 easily. Easily.”
“So cars cost what they cost. The travel is what it is. We can’t negotiate our hotel rooms. The labor is what it is. The tires cost what they cost. There’s nowhere else for the teams to cut, okay? And so, what the difference is, and while we have said that the teams need more share of the revenue is because sponsorship over the last decade or so has gone down.”
Hamlin pointed out that the late 2000s recession helped kickstart this shift. But when you include added sponsorship opportunities in other sports, and the ability for a company to target their audience via information gathered from various tech sources, it has allowed companies to spend more effectively. And their marketing strategy may or may not include NASCAR.
It’s not that NASCAR isn’t worth sponsoring. The access and experiences that NASCAR can provide a company when they sponsor a race car is unlike anything in sports. But even if these unique experiences provide a return on investment, it doesn’t change the fact that sponsorship revenue is down across the board.
While things seem dire, Hamlin revealed he is optimistic that a deal will be made. It will likely take a compromise between both sides, but things have improved, even over the past two weeks.
“Obviously, the teams went public at the end of last year about how displeased they were with kind of what NASCAR’s offer was to them,” Hamlin said. “I will say though, and the latest developments that I’ve learned, I believe that we will get a deal done. I believe that NASCAR and the teams are in a better spot now than they were two weeks ago… We know what it costs to go race a competitive car. We just need more revenue share to do that. And I believe, and I’m very optimistic, that the teams in NASCAR we’ll get a deal done.”
…“I think it’s going to have to take some compromise on both sides, I really do. But I think the teams and NASCAR were miles apart, and I think that they both have made legitimate arguments. I think that, again, I’ve said it many times, the leadership of [NASCAR president] Steve Phelps is very valuable in our sport. And he has a story to tell to the France family of why investing in the teams is the right play. And I think he’s doing a good job of sending the message that we have explained to him of why that investing in us is the right thing to do. And I think that we are in a better place now than we’ve been in a very long time.”
One thing that might help facilitate a deal between NASCAR and the teams is Hamlin’s reasoning that a deal will need to be made first before working out a deal with any TV partners.
“No, I think NASCAR has to make a deal with us first,” Hamlin said. “I don’t see how you go out and get the most money from a TV partner if you don’t have your house in order. That’s kind of a weird way to say it, but certainly that’s going to play a factor. No TV partner wants any interruption in service whatsoever. Describe that for the definition however you will, but they don’t want any interruption in service. And with the teams publicly saying that they weren’t happy with the deal, that could throw up red flags for TV. And so I think NASCAR is more inclined to get a deal done with the teams that way they’re happy, here’s what assets they can bring to the table. How can we maximize this deal?”
Hamlin does a great job explaining the situation in a way fans can understand, and even makes an argument why the tracks feel they should keep their 65 percent revenue figure. Hamlin even makes a case why the largely unpopular charter system is necessary. It remains to be seen what will happen, but I agree with Hamlin that a deal gets done and will happen before NASCAR has a new media rights deal.
[Dirty Mo Media; photo from Gary A. Vasquez/USA Today Sports]