Stewart-Haas Racing, which has won 69 NASCAR Cup Series races and two season points championships since 2009, will be out of the sport at the end of the year.
I’m trying to think of an equivalent in stick-and-ball sports; there is none.
Teams in MLB, the NFL, NBA, NHL, just don’t close up shop.
Is that because those leagues share more than 25 percent of their revenues with their teams?
“Racing is a labor-intensive, humbling sport. It requires unwavering commitment and vast resources, with a 365-day mindset to be better than everyone else. It’s part of what makes success so rewarding. But the commitment needed to extract maximum performance while providing sustainability is incredibly demanding, and we’ve reached a point in our respective personal and business lives where it’s time to pass the torch.”
That’s from the statement put out by Tony Stewart and Gene Haas on Tuesday announcing the pending end of their Cup and Xfinity series teams at the end of the 2024 season.
The “vast resources” line is what stands out to me. One team president, Steve Newmark, at RFK Racing, has said that sponsorships account for “60 to 80 percent” of a NASCAR team’s operating revenues; for context, RFK Racing, owned by the Fenway Sports Group, which also owns MLB’s Boston Red Sox, gets 12 percent of its operating budget from sponsorships, according to Newman.
Industry estimates peg the cost to run a competitive car for a full season at $25 million to $30 million, so for Stewart-Haas, a four-car team, you’re talking $100 million to $120 million a year as the bottom line, with a need to account for around $80 million to $90 million a year from sponsor dollars.
That’s a lot of decals on cars and drivers remembering to nod to how good the Dude Wipes Cherry Vanilla Coke Zero Progressive Insurance Little Caesars Cheezy Breadsticks Toyota was out there on the track.
And even at that level, most teams lose money, and lots of it.
This reality is at the heart of an ongoing dispute between team owners and NASCAR, which is set to start getting $1.1 billion a year from its new TV deals beginning with the 2025 season.
The teams are asking NASCAR to bump their collective share of the TV dollars from 25 percent to 45 percent, which would guarantee them roughly $14 million per car per year, a not-insignificant amount – in the range of half of what it costs to put a good car on the track each week.
“In all partnerships, if you grow the pie, that means your business is going to continue to grow. And to grow the pie, you’ve got to make sure everybody’s healthy within the partnership. If our ownership in NASCAR is losing money, and NASCAR’s the only one making money, that’s not a good partnership,” said Michael Jordan – yes, that Michael Jordan – the co-owner, with Chesterfield native Denny Hamlin, of 23XI Racing, a three-car team.
Indeed, that’s not how business works, and NASCAR is most certainly a business, like everything else in sports is.
Everybody involved wants to win, of course, but at the end of the day, they also want to make money.
If the likes of Stewart-Haas is getting out of the business, and it sure sounds like Jordan is at least thinking of following suit, if not now, then not too far down the road, I don’t know, who is out there waiting in the wings with hundreds of millions of dollars to light on fire that might replace them?
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Chris Graham
