There are three obvious questions hanging over NASCAR when it comes to the end of its media rights deal in 2024 and the dawn of its new one in 2025 — and sanctioning body president Steve Phelps addressed them right off the bat.
“What it looks like? I don’t know,” Phelps said Friday. “Are we getting toward the end of this process? We are. Did I think we would have a result earlier? I did. But we haven’t. It’s an incredibly competitive marketplace.”
He then added: “With that said, I want to assure all our race fans, anyone who is listening, and certainly the media corps here: We have had tremendous interest in our sport from a media rights standpoint.”
Phelps took the time to provide this clarity on a year-plus-long discussion on Friday afternoon in Phoenix Raceway during his annual State of the Sport address, a few days before NASCAR’s premier Cup Series championship on Sunday afternoon. The new media rights deal is among NASCAR’s most urgent issues as the sanctioning body’s $8.2 billion, 10-year agreement with NBC Sports and Fox Sports is set to expire at the end of the 2024 season.
Phelps’ comments of “tremendous interest” was substantiated earlier in the day by an earnings call comment made by Lachlan Murdoch, where the Fox Corporation CEO reportedly told stakeholders that a new deal with NASCAR is imminent.
“We’re currently in, I think, the final stages of a very constructive negotiation for our NASCAR renewal, we’d look forward to continuing that, that partnership with NASCAR,” Murdoch said. “It’s been a great partnership for many years, and, and obviously, you know, NASCAR exceeds our expectations into from, from a ROI point of view.”
Phelps said NASCAR Cup Series TV ratings were slightly down in 2024. But that hasn’t deterred the interest NASCAR has garnered by broadcast partners to attain media rights for 2025 and beyond. In fact, the Xfinity Series in NASCAR, which can be thought of as the Triple-A equivalent beneath the Cup level, inked a lucrative deal over the summer that made the CW Network the exclusive home of the Xfinity Series starting in 2025 and running through 2031 — a deal reportedly worth about $800 million.
“The amount of interest in attaining our media rights for 2025 and beyond exceeded our expectations,” Phelps said Friday. “It is our expectation that not only having a great result with the CW with our Xfinity Series, and what’s going to be an incredible 33-race schedule on broadcast television, we believe that we’re going to have a very strong result with media partners that will look at a combination of broadcast, cable and streaming to some degree.”
NASCAR charter agreement negotiations ongoing
Phelps made clear that finalizing NASCAR’s media rights is the priority of the offseason of 2024. But the sanctioning body’s president offered an update on where charter negotiations stand with the teams.
“We’re currently having discussions with our race teams,” Phelps said. “We had a meeting last Wednesday with a team owner council where the entirety of the meeting was about charters, charter extensions.
“We’ve acknowledged that we want to change the paradigm for our race teams, and we need to make sure our race teams are profitable competing on the racetracks. We are interested in having their enterprise value climb.”
The current charter system, to put it simply, makes each team in the NASCAR Cup Series a franchise, just like the Carolina Panthers are in the NFL and just like the Charlotte Hornets are in the NBA. Each NASCAR Cup Series franchise shares perks under the NASCAR Cup Series umbrella. Among those perks: teams with charters have guaranteed starting positions in each Cup race, and they each share revenue from TV contracts and similar agreements.
Team owners and NASCAR officials have engaged in efforts to try to amend the model so that it is more beneficial to race teams. Those efforts have gotten contentious at different moments in the past 13 months or so.
In April, for instance, frustrations from the owners over finding a sustainable business model in the sport came to a boil when team owners boycotted a regularly scheduled meeting with NASCAR because they reportedly believed NASCAR wasn’t negotiating in good faith.
NASCAR team executives first publicly expressed in October 2022 that they needed additional revenue streams to fix the sport’s financial model. Among the teams’ biggest grievances then: 93% of the sport’s value resides with NASCAR and the tracks, with the remaining 7% going to the teams. Team executives also said that the teams and NASCAR have a similarly inadequate deal with the sport’s TV revenue-sharing model. (About 65% of the TV money goes to the tracks; 25% goes to teams and 10% goes to NASCAR.)
Those numbers were slightly different, per NASCAR, which said that teams receive about 40% of industry-wide generated revenue. Still, teams claim, it has forced teams to rely too heavily on sponsorship for revenue.
Phelps was asked to elaborate on where the hold up between the two entities is coming from, and he said he didn’t want to get into specifics.
“If you think about race teams, what do they want? They want to be competitive on the racetrack, they want to make sure they’re break-even or profitable. As it relates to the charter specifically, they want to increase their enterprise value,” Phelps said.
He added: “I won’t get into numbers where we stand from an enterprise value standpoint, but when the charters change hands at the end of the year — we know at least one will — there will be a significant multiple that race teams will have from a charter enterprise value standpoint.”