Is NASCAR engaging in a tug-of-war with certain teams?

While from a purely sporting point of view, the NASCAR is preparing to begin its playoffs this weekend in Atlanta, Georgia, behind the scenes, the governing body of American stock car racing would certainly have preferred to avoid the prevarications currently underway. While dialogue has been underway for about two years with the teams to reach a new franchise agreement (which could be compared to the Concorde Agreements of the Formula 1), two teams have not signed an official commitment which was required for September 6.

Introduced in 2016, the franchise concept guarantees 36 cars participation in the 36 events of the NASCAR Cup Series season per year. The teams also recover a portion of the revenues linked to commercial rights sold on television. A new cycle of television rights starting in 2025, NASCAR wanted to coincide with a renegotiation of the agreement binding it to the teams. An agreement concluded until 2031, the end date of the television rights. They will notably see Amazon Prime broadcast races for the first time on its streaming service.

This is, according to sources close to the paddock, one of the first points of difficulty in the negotiations. The majority of teams would like a system similar to that of the NFL or the NBA, namely unlimited franchises in time. This could of course help in the resale of these various franchises, by guaranteeing the buyer a place in the championship for the entire duration of his commitment. The introduction of a deadline could lead in the future to a loss of franchise, at the whim of NASCAR, or a competition between more than 36 applicants for the available places. Initially free, the franchises are now exchanged for a minimum of 40 million dollars, a sign of the impressive growth in the valuation of NASCAR in recent years.

NASCAR has agreed to a change in team compensation, which will now receive, in the latest proposal, between 35 and 40% of the amount of TV rights ($1,1 billion per year for seven years), compared to 25% in the previous agreement. But this appears to be accompanied by a decrease in revenue in other areas, which could ultimately have no effect.

A showdown with Michael Jordan?

The American Association then tried to set a deadline of September 6. The goal was to settle the negotiations before the start of the playoffs this weekend. Without a signature, the teams could lose the franchises they currently have in their possession. Finally, all the structures signed, except two of them. Front Row Motorsports, Bob Jenkins' team which notably won the 500 Daytona 2021, and especially 23XI Racing. The team of Denny Hamlin and Michael Jordan, is the regular season champion thanks to its driver Tyler Reddick. 23XI issued a press release:

“23XI has decided not to respond to NASCAR’s proposed franchise for the 2025-2031 term within the deadline. 23XI’s position, as expressed in a letter to NASCAR, is that we have not had the opportunity to fairly negotiate a new franchise agreement. We notified NASCAR in writing that there were outstanding issues on September 6. We look forward to engaging in constructive discussions with NASCAR to resolve these issues and move forward in a manner that will allow for a fair resolution of this matter, strengthening the sport we all love. At 23XI Racing, we reaffirm our commitment to competing at the highest level, while firmly believing that NASCAR must be governed by fair and equitable practices.”

NASCAR has yet to respond to the statement, which could result in the loss of two franchises for 23XI. Denny Hamlin told reporters that his team could continue without franchises. However, that would have a significant impact on his team's finances, as it would no longer have a guaranteed seat at every round of the season.

23XI Racing is one of the youngest teams in NASCAR, only in its fourth season. But with Michael Jordan on the roster and the track record of Bubba Wallace, Tyler Reddick and Kurt Busch, 23 XI is one of the top teams in the championship. It therefore has leverage in these negotiations. Brad Keselowski, RFK Racing's driver-owner, offered a more nuanced view of NASCAR's demands, which he signed on the deadline: " We are pleased that economic conditions have improved and the media landscape has evolved. Currently, sport evolves according to the television rights agreement. There are a lot of comparisons between NASCAR and other sports leagues. This industry is watching the NFL, NBA, etc. closely and seeing their situation improve dramatically, and we all want the same thing."

It remains to be seen whether NASCAR will consider the situation closed and lead to the loss of the franchises for 23XI and Front Row, or whether a new round of negotiations will begin, during the ten weeks of playoffs ahead of us...

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