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The tension is at an all-time high as race teams and NASCAR remain entangled in negotiations on a new charter agreement. With the current agreement set to expire on December 31st, Denny Hamlin believes that the lack of progress on the deal is because both parties continue to take one step forward and then two steps back. At the core of the ongoing negotiations remains race teams’ fight to secure permanent charters, ensuring NASCAR will be on par with other sporting leagues.

As things stand, race teams lose money every year due to the current state of affairs. The situation has prompted Denny Hamlin to further elaborate on his response to NASCAR CEO Jim France last week about permanent charters.

NASCAR team owners unite for charter demands

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Unlike other sports, NASCAR doesn’t have permanent charters. With teams losing money because of the current agreement, bringing in outside investors to invest in their operations has become very challenging, especially for smaller teams. As things stand, 23XI as well as Hendrick Motorsport, Joe Gibbs Racing, and Roush Fenway Racing have assured the other 15 teams that they won’t sign a charter agreement unless the same terms are offered to all.

As co-owner of NASCAR team 23XI Racing, Denny Hamlin expressed his frustration about the latest document issued by NASCAR, which was the ‘worst one yet’ according to team owners. Speaking on his Actions Detrimental podcast, Hamlin said, “It just seems to be going backward. Time after time that the the newest and latest is certainly not very good so it just seems like we always take one step forward and two steps back. And you know, I just don’t know the reason for it. It was very interesting because we had one-on-one meetings with NASCAR executives and we felt like those meetings went well and we thought we were heard and then when you get a document that doesn’t cover any of the things that we talked about.”

NASCAR has publicly stated that it cannot guarantee what broadcast rights revenue will look like beyond the next seven years. However, Denny Hamlin believes that it’s all about money, control and power. He said, “I quickly said, ‘permanent charters don’t cost anything’ and they still do not cost anything. The only thing it costs is control and that’s the thing. Every agreement gets renegotiated after every TV contract. So, if the TV contract went to $10 in seven years, we still renegotiate the terms (over) that. So, it’s not like we were saying, and we have never ever said that we need this amount of money for eternity — as long as we’re part of this sport, we need this amount of money.”

 

While there has been plenty of back-and-forth between the team owners and NASCAR regarding the revenue expectations, the charter expectations seem to be insurmountable as things stand. NASCAR never expected its charters to be like ‘franchises’ to begin with. It was their way of guaranteeing revenue to teams competing full-time. In other sports, ‘franchises’ have a say in the decision-making process, power that NASCAR isn’t willing to relinquish at this moment. Meanwhile, team owners want a permanent seat at the table, or a higher revenue slice, which would make them less dependent on sponsorships.

Denny Hamlin believes charter investments need to be honored

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Team owners have been asking NASCAR to address four key points that are important to them. An increase in revenue for teams to be less dependent on sponsorships, having a voice in the decision-making to protect themselves from unexpected costs, permanent charters, and a slice of revenue from any new business opportunity.

After signing a multi-billion dollar TV rights agreement last year, NASCAR has already committed to increase teams’ revenue share significantly. However, a major hurdle that lies in the deal is the length of the charter agreement. NASCAR CEO Jim France has said that they can only commit for the next seven years, which is the duration of the existing TV deal, but teams want their charters to be made permanent, to protect their investments.

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USA Today via Reuters

Speaking on the Actions Detrimental podcast, Denny Hamlin said, “All we’re saying is that Rick Hendrick, Roger Penske, Joe Gibbs have spent decades building this sport and you cannot deny they built the sport with their drivers, with their teams, and everything. That they deserve the blue sky which is, they have an asset that they can pass down to their kids and their grandkids.

Especially a family organization like Joe Gibbs Racing, they want to have something they can give their kids. Hey, this business is now yours, this charter is yours because in the instance that it all goes crumbling down like in Stuart Haas’ scenario, they were able to sell something to get back some of that investment that they spent over decades.”

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With the existing charter agreement ending on December 31st, team owners could run the risk of not being able to renew their existing charter if an agreement isn’t found before that timeframe. While NASCAR has publicly said that they have no intention of taking the charters away, it’s more likely that there will be an extension to the existing agreement than reaching an entirely new agreement.

Do you think NASCAR and the team owners will reach a charter agreement soon? Let us know in the comments!