Dale Jr. Explains Why Charters are Good for NASCAR

Dale Jr. Explains Why Charters are Good for NASCAR

07/01/2021

If the Next Gen proves to be as financially successful as NASCAR wants it to be, the new Cup Series car will ultimately require a significant retooling of how the Xfinity and Camping World Truck divisions operate.

That’s an assertion from Dale Earnhardt Jr., who has explored entering the Cup Series next season but has been unable to secure an ownership charter that would permit JR Motorsports entry into all 36 races, while also providing financial benefits not available to those who enter events without one.

” [The charter] is the only roadblock,” Earnhardt said on Wednesday during an appearance on SiriusXM NASCAR Radio. “I mean, the way they are talking about this new car, it’s going to be more expensive to be in the Xfinity Series than it would be to be in the Cup Series.

“I don’t see how that’s really possible. The numbers that you hear — as far as what the new car in the Cup Series is going to cost and what it should cost to run it — sound very conservative and very positive, too good to be true. But we will have to wait and see. Hopefully, they are right.”

For all intents and purposes, the Next Gen is a spec car, meaning that teams can only purchase parts from one of the 30 approved vendors awarded a contract from the sanctioning body. No single component of the Next Gen car will be manufactured by more than a single parts supplier and teams will no longer be permitted to spend countless millions on R&D to create their own components.

That is how NASCAR intends to keep the cost of competition down moving forward.

A racing platform designed on paper to be cheaper to race has generated a great deal of interest from organization hoping to obtain an ownership charter for next season. There are only 36 charters currently on the market and the supply and demand has made owning or selling one more valuable.

The current rumored asking price to purchase a single charter is excess of $10 million and that’s only good for one car and doesn’t even include the price of then constructing a Next Gen car and fielding the team around it.

“Hearing Kaulig spent $10 million a piece on each of those charters, don’t know if that’s true or not,” Earnhardt said on his Dale Jr. Download podcast. “I thought that the charter market was $5 million, $6 million and now you’re hearing its north of $10 million so you don’t know what to believe.

“That’s my out of my range, I’ll tell you that. JR Motorsports won’t be racing in the NASCAR Cup Series if that’s what a charter is going for — I’m just being honest.”

With that said, Earnhardt praised the ownership charter model of doing what it was designed to do. The system is providing Cup Series team owners value for when and if they decide to sell.

Chip Ganassi sold his entire NASCAR operation to Justin Marks and Trackhouse Racing in a deal revealed on Wednesday. The agreement included two charters, the Cup Series buildings and facilities and all the equipment housed within them.

Knowing what we know, at a minimum about the current value of a single Cup Series ownership charter, Ganassi was able to cash out to the tune of 10s of millions of dollars.

“That’s a great thing that the charters are going up in value as we speak,” Earnhardt added. “That’s exactly what they intended. If you were an owner in this sport 10 years ago and you wanted to sell, you had nothing to sell except parts, cars and pieces that get sold for pennies on the dollars. That’s it.”

Earnhardt likened it to a depreciating boat.

“I’ve never been able to sell one for what I paid for it and that’s what race teams are,” Earnhardt said. “When race teams fold, the equipment gets auctioned off and people get it for a tenth or 20 percent of what it’s worth.

“So now, if you’re an owner, you have real value. You have something that people want and what people are willing to pay for. If you’re selling and you have a charter, that’s $10 million you weren’t going to get when you sold your team five years ago.

“So that’s amazing that they’ve created this charter system, and it works.”

With that said, it’s looking unlikely that JR Motorsports will be on the grid for the 2022 Daytona 500 because of the current asking price from those who might be willing to sell.

“As bad as I want two charters for JR Motorsports so we can go Cup racing, I think it’s awesome that they’re expensive and they’re going up. It’s a good thing for all of us. It’s a good thing for the whole industry.”

Source: Read Full Article