Dale Earnhardt Jr.

There is a lot of uncertainty within NASCAR. Between the safety of the Next Gen car to the rising price of charters to the negotiation of the next media rights deal and the cut that’s given to teams, the sport is in the middle of a lot of change and a lot of unknowns of the future.

The cost to build a Next Gen car has gone down and that brought in a new wave of team owners who entered the NASCAR Cup Series. Denny Hamlin and Michael Jordan with 23XI Racing, Justin Marks and Pitbull with Trackhouse Racing, and Matt Kaulig with Kaulig Racing are three new Cup teams who bought charters around the time of the Next Gen car. Dale Earnhardt Jr. also looked into buying a charter and moving from the Xfinity Series to Cup but held off and he revealed on The Dale Jr. Download that what he was told about buying a charter made him “wait and pause.”

Dale Jr. opened up on some of the internal talks about getting JR Motorsports a charter. Among many details, he was told by the Race Team Alliance that the charter he wanted to buy is a “losing proposition,” that teams are “all losing money,” and that the value of charters have climbed to nearly $30 million.

“The RTA is basically telling me that this charter that I want to buy is a losing proposition…it’s broken.” Earnhardt said. “I don’t want to buy this charter now because it’s not a successful business venture. That’s kind of what I took away from this.”

Co-host Mike Davis said, “But you’re saying you’re leaping to that based off of the fact they’re not getting what they want out of the TV revenue?”

Dale Jr. responded, “They basically said they can’t make any money, they’re all losing money, Mike.”

The two co-hosts were referring to the current negotiations between the teams and the governing body about the teams getting a bigger percentage of TV revenue. Currently, 25% goes to the teams and they’re seeking a higher percentage in order to not be as reliant on sponsorship money. For example, Mars has been a longtime NASCAR sponsor and sponsored Kyle Busch for over a decade, but with them deciding to leave NASCAR, Joe Gibbs Racing had to make some tough decisions in order to make up for the loss in sponsorship revenue. Even if they get a new sponsor, it probably won’t be for the same amount as Mars was paying.

The entire segment is a great look into the economics of NASCAR team ownership. Reading between the lines, it seems Earnhardt is taking a more risk adverse approach based on what he knows about the situation. Because there may very well be people who are willing to pay $30 million for a charter knowing they will operate at a loss right now, in the hopes of it making money in the future. And Dale Jr. said himself, he had a chance “not long ago” to buy a charter when they were going for $6 million and $12 million and didn’t go for it.

Just like in real world economics, the price of something is usually determined by supply and demand and right now, there aren’t many charters up for sale to meet the potential demand. But if there is ever a time that the supply exceeds the demand and lowers the value of a charter, then maybe JR Motorsports will go Cup racing.

[Dale Earnhardt Jr.’s Dirty Mo Media]

About Phillip Bupp

Producer/editor of the Awful Announcing Podcast and Short and to the Point. News editor for The Comeback and Awful Announcing. Highlight consultant for Major League Soccer as well as a freelance writer for hire. Opinions are my own but feel free to agree with them.

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