By Jordan Kobritz
On July 7, nine team owners representing 25 cars that compete in NASCAR’s premier Sprint Cup series announced the formation of the Race Team Alliance (RTA). The move signals the beginning of a seismic shift in power in the sport of stock car racing.
The RTA could simultaneously be the best thing to ever happen to team owners and their drivers and the worst nightmare for the France family, owners of NASCAR since it was first organized in 1948. In traditional stick-and-ball sports the governing body is run by team owners who elect a commissioner. However, when Bill France, Sr. formed NASCAR he anointed himself as the sport’s dictator. That title was inherited by his son, Bill, Jr., and today his grandson, Brian, is the third generation of the France family to run the sport. But in the past six decades, little has changed in how the sport operates. NASCAR sanctions races at certain tracks, negotiates national sponsorship and television contracts, disciplines teams and drivers, and makes up the rules of the sport as it goes along.
Unlike other sports, there is no negotiated revenue sharing of the proceeds derived from sponsorships and media contracts. However, NASCAR voluntarily distributes approximately 65 percent of those revenues to the tracks, 25 percent to the teams and retains 10 percent for itself.
Another issue that is of obvious concern to the RTA is the absence of centralization of franchises in NASCAR. Race teams do not really have any value — other than their real and personal property. There is no “franchise” that can be bought and sold like, say, the Los Angeles Clippers who recently fetched $2 billion. It takes a minimum of $10 million to run the full 36-race Spring Cup schedule and anyone with the necessary spare change can show up at the track every week and attempt to qualify. For comparison purposes, you cannot just show up at Yankee Stadium with a group of MLB wannabes and challenge the Yankees to a game. (NOTE: In NASCAR the word “team” is used to refer to a single car, such as Dale Earnhardt, Jr.’s No. 88 “team,” and the owner of a car or cars, such as Hendrick Motorsports, owner of Earnhardt’s team and three other teams [NASCAR imposes a four-car limit on teams]).
As owners of NASCAR, the Frances have a clear conflict of interest. In addition to owning the entity that oversees the sport, a sister entity controlled by the family, International Speedway Corporation (ISC), owns and/or operates 13 of the 23 tracks that host Sprint Cup races. Nineteen of the 36 races that comprise the Sprint Cup schedule are run at ISC tracks. That is akin to Roger Goodell serving as commissioner of the NFL, owning half the stadiums in the league, and staging half of the league’s schedule of games, all while unilaterally establishing and enforcing the rules of the sport and determining the revenue formula that teams must live by!
In announcing the new organization, RTA chairman Rob Kauffman, co-owner of Michael Waltrip Racing, went out of his way to emphasize that the group is a “business alliance,” not a union. Kauffman emphatically stated that RTA’s primary goals, at least in the foreseeable future, were to pool resources and buying power to generate additional revenue and reduce costs. In an interview with USA Today, Kauffman focused on the latter, mentioning car parts and hotel rooms as two expense items the group would soon address. He repeatedly used the word “collaborative” in a calculated effort to avoid sounding confrontational.
Despite Kauffman’s conciliatory tone, it is doubtful that RTA members expected NASCAR to welcome the group with open arms. The governing body’s initial comments could best be described as a cautious non-response. A prepared release from NASCAR headquarters stated that although it was aware of the RTA — Kauffman had previously emphasized that team owners had kept NASCAR apprised of the RTA’s intentions — it had “very few specifics on (the group’s) structure or purpose. It is apparently still in development and we’re still learning about the details so it would be inappropriate to comment right now.” A stronger response quickly followed.
Prior to the following Sprint Cup race at New Hampshire Motor Speedway, NASCAR president Mike Helton said in an interview that the sanctioning body would “continue to operate the way we have for the past six decades.” Helton went on to say, “Part of our method of operation over the last six decades is to make decisions, and we make those decisions by listening to a lot of individual stakeholders in the garage area. Every car owner in here has a voice, crew members, drivers, crew chiefs. And we take that input and we make what we think are the best decisions that are good for the whole sport. We will continue to operate that way.”
It does not take a code-talker to parse those words, but in case anyone needed clarification, Brian France provided it in an interview with Sirius XM’s NASCAR channel. He said that dealing with the RTA “would probably be the worst thing that we could ever do is to listen to one voice, even if it were a consensus voice.” Later, NASCAR and International Speedway Corp. both said that any communication with the RTA would be handled through attorneys.
In other words, no one should expect NASCAR to suddenly volunteer to negotiate with a collective body as other sports are required to do. The governing body will continue its practice of taking action unilaterally, until such time as it is forced to do otherwise. But make no mistake, the RTA is for real. The organization has bylaws, which every member is required to sign, assesses dues that will be used for operational purposes, and has hired an international law firm to represent its interests.
NASCAR will not confront the RTA alone. Long-time rival and critic Bruton Smith, Chairman of Speedway Motorsports, Inc., owners of eight tracks that host Sprint Cup races, was quick to criticize the RTA. “I don’t know anything about it that’s good for what we do. I don’t see anything that’s going to be good for the sport. Nothing,” said Smith. “What little bit I know about it right now, it seems it will damage the sport.” Smith and NASCAR have repeatedly clashed, sometimes in court, over where and when the governing body awards races. But Smith pledged his support for NASCAR. “If NASCAR needs us, we’re there with NASCAR on the deal. We’re there every day, every hour, if they need us,” he said.
Apparently, NASCAR’s — and Smith’s – less than warm embrace of the RTA did not intimidate the folks in the garage. Five weeks after announcing its formation with nine members, the group doubled in size to 18, which includes owners of all but one of the full-time Sprint Cup race cars (teams that don’t compete in the full Sprint Cup schedule are ineligible for full membership but the RTA is considering associate membership).
This is not the first attempt to form an “alliance” in NASCAR history. In 1969, Richard Petty, the most famous and winningest driver in stock car racing history who’s also one of RTA’s original members, along with a cadre of fellow drivers formed the short-lived Professional Drivers Association (PDA). The group led a boycott of Talladega Speedway’s first race over concerns their tires would prove dangerous at the track’s high speeds. NASCAR ran the race with replacement drivers and the PDA quickly fizzled.
But this is a different era. RTA members have more investment in the sport than drivers had 45 years ago. While it takes a minimum of $10-15 million to run a Sprint Cup car for the entire season, some teams’ budgets exceed $30 million per car. Technology and equipment companies have consolidated over the years and most of them are controlled by RTA members, not NASCAR. Perhaps most importantly, the teams control the drivers, the biggest factor in marketing the sport. Fans want to see the Earnhardt, Jr.’s, Johnsons and Gordons race, not a bunch of no-name drivers. In short, teams now have real clout. Whether they choose to exercise it in any potential showdown with NASCAR remains to be seen, but perhaps the mere threat of using it will encourage the Frances to be conciliatory.
The RTA has not discussed an end game or released a laundry list of issues it may wish to address with NASCAR. Those may include the race schedule, competition rules, franchising, discipline, and revenue sharing. As important as those matters may be, these are also critical times for auto racing. The sport is emerging from a recession that cut sponsorship dollars, race attendance and television viewership substantially.
But brighter days appear to be on the horizon. A 10-year, $8.2 billion TV deal with Fox and NBC, a 50 percent increase over existing contracts, will kick in next year. Regardless of how those revenues are ultimately divvied up, one thing is certain: More collaboration in the sport is on the horizon.
Jordan Kobritz is a former attorney, CPA, and Minor League Baseball team owner. He is a Professor in the Sport Management Department at SUNY Cortland and also maintains the blog: http://sportsbeyondthelines.com. Jordan can be reached at jordan.kobritz@cortland.edu.
