Wednesday, February 10, 2016

NASCAR's chartered medallion franchises

Mark it down.
Remember it every year.
Tuesday, February 9, 2016.
The Day.

What am I referring to? National Pizza Day, of course!

What? You think I'd encourage you to commemorate the anniversary of the charter agreement between NASCAR and the Race Team Alliance? Ehh.

Yes, Tuesday's announcement was a landmark deal for NASCAR and the owners of its participating teams. For the fans though? In my opinion, not so much. Did the team of your favorite driver get a charter?
  • Yes? Then you're gold. 
  • No? Well, there's still hope because four spots are available every race for your fave to qualify. 
Yet perhaps as expected, an outcry has arisen from the fan base about the deal will be a disaster for NASCAR. Just add the rants to the pile of other things killing the sport...allegedly: chase systems in the cable company and truck series, races on FS1 and NBCSN, Jeff Gordon's retirement, Kyle Busch's Cup title, timed cautions, yada 3x.

Don't get me wrong. I'm truly surprised the idea even left the starting blocks last summer, and I'm mildly surprised one of them deals was completed before the 2016 season began. Some questions remain for me about near-term and longer-term implications, but overall I'm OK with the new relationship.

Field size

Many are bothered by the news Cup fields will be cut from 43 to 40 starters. The 43rd starter has its roots in the champion's provisional. The impetus for it was when seven-time champion Richard Petty missed the show at Richmond in 1989. Had the King been given a mulligan that weekend to race, however, he would not have started 43rd. He would have started 37th as only 36 cars were scheduled to race. NASCAR had a variable number of starters in that era - generally 36 for short tracks and 42 for the superspeedways.

The champion's provisional came about too late for Petty. He missed the Richmond race plus three others in 1989. The number of starters bounced around between 42 and 43 depending on who needed the champ provo. Darrell Waltrip milked the champion's provisional for all it was worth by relying upon it to make a race thirty-two times in the last three years of his career from 1998-2000.

The 43-car field wasn't standardized for all races until 1998 - just 18 years ago. If a prior champion didn't need the spot, another driver was permitted to use it to race based on owner points, qualifying speed, practice times, whatever.

So for me, reducing the field by three cars isn't a big knock on the series.

Loss of the little guys

I believe many are freaked about the 43 to 40 change simply because of the change. I understand, however, many are also bothered by the elimination of three spots that historically have gone to smaller, underfunded teams. Fans enjoy pulling for an underdog story.

I grew up as a Petty fan - hardly the underdog. In addition to following the 43, I also maintained admiration for the truly independent drivers such as Buddy Arrington, Jimmy Means, Cecil Gordon, Dick May, Elmo Langley, James Hylton, Coo Coo Marlin, Dave Sisco, etc. Those drivers and others like them handled it all. They owned the cars, worked on them, re-purposed parts and tires, raced the cars, towed them to and from the track, sold meager sponsorships, ran their small business, hired a part-time often-volunteer crew, etc.

But folks, those days are long gone. Permanently. Cup hasn't had a truly independent owner/driver since the early 1990s when Means ended his driving career. I do miss that aspect of NASCAR, but the fact is Cup has moved on from that era.

Cup still has a handful or regular and part-time lower funded teams such as Tommy Baldwin Racing. The teams and drivers who have shown up the last 15-20 years looking to make the show, however, are infinitely more well off than the independent guys of the 1960s-1980s. 
  • Today's underdog driver hasn't thrashed all week in his block garage living off coffee and carb cleaner fumes. 
  • He hasn't loaded his car on an open trailer to haul it non-stop from North Carolina to Wilkesboro or Nashville's Fairgrounds or Texas World Speedway. 
  • The team has bought a hand-me-down car from an existing Cup program along with some extra engines and parts, loaded them in a full-size tractor trailer rig, and paid the travel expenses and a stipend to a hired driver looking to stay visible in Cup.
Class envy

The rich will just get richer. - It's a paraphrased refrain said by many. To put it bluntly, I view the statement as nothing more than petty jealousy - and I don't mean of the 43's history. For those who don't understand basic American capitalism - or choose to ignore it, that's generally how it works - or how those in business hope it works. The argument can be dismissed immediately upon utterance as it offers nothing constructive to the discussion of the merits of the new agreement. To clarify for those who still don't get it:
  • Teams granted the charters did not have to pay NASCAR for them.
  • An owner selling a charter may well sell it for multi-millions of dollars, but the sales proceeds will not provide a gain for what has been invested in the years preceding the sale.
But what about...
Yes, I do have questions about the deal. The circle-the-wagons refrain has been the new charter system will encourage new, external investors into NASCAR. I'm still uncertain how this agreement will encourage anyone to buy-in.

The market dynamics of charter transactions will be interesting to watch earlier in the 9-year deal vs. years 8 and 9. I could see charter transactions being analogous to short pitting or staying out an extra lap hoping to catch a caution and trap the field a lap down. Bottom line, however, I want this new system to work for racing.

Most of the near-term questions I had about the agreement were answered in the press conference - leasing arrangements, who receives the charters, etc. I still have a Six Pack of questions that remain unanswered though:

1. I'm curious about the long-term effect of the Cup charter system on the cable company and truck series. Will the security of having a marketable Cup charter move an owner to accept more risk and invest more heavily in teams for either of those series? If so, would that investment push more teams in those divisions to the margins - two series that still has a few independent operations?

2. NASCAR announced a charter holder must be in good standing to continue use of it - but without defining "good standing". Knee-jerk definition: don't start and park. But will it really be that cut and dried?
  • What if a team's regular driver gets injured, the driver is out for an extended time, and the sub(s) simply can't get it done? OK, that one may be fairly easy too - extenuating circumstances. 
  • But perhaps an owner loses a sponsor despite having a charter, has to lay off a lot of employees, can't find an immediate angel investor, and simply runs out the string by starting and parking to save costs until an equity solution can be found. If the definition of "good standing" is as wide as exemption provisions for a driver's Chase eligibility, ♫ awkward ♫ ...
3. Have provisionals finally been eliminated - including the obsolete champion's provisional? With all that went into the negotiations, it's hard to see how both sides would allow wiggle room for a former Cup champ not with a current chartered team. But who knows....

4. How in the dickens did Michael Waltrip Racing end up with two charters for the next nine years when the team no longer exists? Oh. OK. Scratch that one. Rob Kauffman led the negotiations on behalf of the RTA. Move along, nothing to see here.

Licensed under fair use via Wikipedia 
5. What sort of  approval or influence will NASCAR have in the transfer of ownership of a charter? A point made during the press conference was a charter can only be transferred once every five years. Sounds like NASCAR will assign a unique ID to each charter to track race entries, owner points, etc. Fine.

But once a charter is transferred to a new owner, wouldn't the five-year clock begin anew? Apparently not. Consider this scenario:
  • Owner B buys the charter of owner A. 
  • Owner B signs a multi-year sponsorship deal to replace original sponsor who left when owner A got out. 
  • New sponsor bellies up 2 years into a 3-year deal. 
  • If I understand this transfer provision, owner B would be prohibited from selling the charter to owner C if a replacement sponsor couldn't be found. 
  • Owner B could surrender the charter to NASCAR, but he could not sell it. Or am I missing something?
6. While a basis for "franchises" has now been established and some early transactions may set the market price for the value of the charters, what about the entry of additional manufacturers? I realize Dodge nor Honda nor Hyundai nor anyone else is knocking down the door to enter NASCAR. But if the marketing plan changes for one or more of those companies, could they mobilize a number of owners and purchase of existing charters to make their entry viable? I think we're pretty well set with Chevy, Ford and Toyota for now - and perhaps a brandless car 15-20 years down the road.

What other questions need to be asked? I'm all ears. Post a comment below of tweet me at @toomuchcountry.



  1. Michael Waltrip racing should have never been included in the charter! This only allows him to take in additional, God knows how much money, as he sells them to the highest bidder! Will this also change the 4 car minimum? If it does, here comes Hendrick with his checkbook!!!

  2. Perhaps we can take up a race fan collection, purchase the MWR charters, then distribute them to promising up & comers. My fear is that NASCAR is shutting the door on the entry of future talent and resources. I'm getting too old to be bothered, but I sure hate it for the "hopefully" new generations to come.

  3. I read that the four car minimum is still in place. And no fifth car for a rookie is allowed. Of course that doesn't mean Hendrick can't lease out some young driver to some other team with a technical alliance blah blah. Also, future talent has become synonymous with I have sponsorship money to bring you (or so it seems). SO with the smaller teams that do have charters apt to change drivers after every year, I think there is still an opportunity for unheard of guys to get opportunities. And, of course, I could be mistaken on all counts.