The NASCAR Charter Market and the Possible Sale of Stewart-Haas Racing

NASCAR charter prices have experienced a notable increase in recent years. However, this rise could be halted if Stewart-Haas Racing (SHR) decides to sell several of its charters, according to industry sources. Charters, which act as franchises for teams, have seen their value grow from a few million dollars to nearly 40 million in the most recent transaction.

Introduced in 2016, the charter system initially granted these assets at no cost to teams. Currently, there are 36 charters distributed among 15 teams in the NASCAR Cup Series, with a maximum of four per team. SHR, which owns four charters, may sell some due to a decline in sponsorship revenue. The loss of major sponsors like Anheuser-Busch, Smithfield Foods, and Hunt Brothers Pizza has significantly impacted their finances. Although neither Tony Stewart nor Gene Haas have confirmed these rumors, sales are expected soon.

The potential sale of SHR charters coincides with the absence of a new revenue-sharing agreement with NASCAR, which has temporarily depressed the prices of these assets. Industry sources estimate that SHR could sell each charter for between 20 and 30 million dollars. Despite this temporary price drop, charter values are expected to reach new highs in the coming years once an improved revenue-sharing agreement is established and charter availability decreases.

Teams like 23XI Racing, Trackhouse Racing, and Front Row Motorsports are interested in acquiring SHR's charters. An announcement about the sale is expected in the coming weeks. Due to the uncertainty, some drivers and their representatives have started exploring options with other teams for the next season.

The ownership structure between Haas and Stewart is not clearly defined. The partnership began in 2008 and won the Cup Series championship in 2014 with Kevin Harvick and Budweiser as the primary sponsor. SHR has been a dominant team at times, and a significant reduction or closure would have been unthinkable a few years ago.

Cup Series teams heavily rely on sponsorship, which accounts for up to 75% of their annual revenue. However, securing sponsors has become more difficult, and many teams are not profitable year-to-year. SHR has lost several major brands over the past decade, such as GoDaddy and Aspen Dental. The team has avoided commenting on its future beyond 2024.

The previous record for a charter was set in 2021 when 23XI paid 13.5 million dollars for Starcom Racing. Spire acquired Furniture Row Racing's charter for 6 million in 2018. The introduction of NASCAR's seventh-generation car in 2022, designed to lower ownership costs, has contributed to the rise in charter prices. However, NASCAR charters still lag behind other sports leagues' franchise values, such as the NWSL and WNBA.

Unlike traditional sports franchises, NASCAR teams do not own equity in NASCAR itself. Therefore, they have been negotiating to make the charters permanent starting next year, although NASCAR has only offered a seven-year extension concurrent with its media rights.