NASCAR's most valuable teams
Ten miles outside of Charlotte, N.C., stands the Herzog family's white elephant: A sprawling NASCAR garage, 33,620 square feet of dormant body shop, conference rooms, hauler bay and parts storage. Their recently reduced asking price: $3 million.
During NASCAR's years of growing sponsorship and small, competitive teams, such a facility in the heart of NASCAR country would have been the happy home of a one- or two-car team making a run at stock car racing's Sprint Cup Series. But now, with small teams an endangered species in NASCAR's top circuit, the Herzogs may end up leasing the vacant race shop to an upstart Formula 1 team based in the U.S.
By all accounts, NASCAR is suffering from myriad challenges – among them a 13 percent decline in TV ratings – roughly a third of the way through the 2009 season. The sport's top brass acknowledged as much last month when it held two "State of the Sport" meetings with NASCAR "stakeholders," a misnomer since NASCAR is the only major sport in which team owners do not own a stake in the sanctioning body, but rather operate as independent contractors.
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Fighting for a bigger slice of a shrinking pie have been the sport's most valuable teams, which continue to consolidate power at the top of the Sprint Cup Series standings. To date, all 13 races have been won by five of the sport's most valuable teams; six have come from Hendrick Motorsports, which tops our list this year. No. 2: Roush Fenway Racing. Richard Childress Racing is third.
Since our valuations last year, four of the top 15 most valuable teams have disappeared, either through mergers or an exit from the sport, leaving a bigger divide between the haves and have-nots. We estimate the average top 10 team fell in value by 6 percent to $148 million in 2009 from $158 million last year. Partly to blame: Sponsors renewing deals with teams now have more leverage than ever to negotiate a better deal.
The biggest splash in this year's values came as a result of star driver Tony Stewart's move into an ownership role (as well as driver) at Stewart-Haas Racing. Stewart attracted sponsors Old Spice and Office Depot to the team, which had been sponsored by its owner, CNC Haas, prior to this season.
Stewart has continued an existing relationship with Hendrick Motorsports whereby Hendrick produces all engines for the team at a fixed cost of about $4 million per car – a cheaper and more dependable alternative to building up the team's own shop and infrastructure. Also helping the bottom line at Stewart-Haas: roughly $7 million in licensing revenue that comes with being one of NASCAR's most popular drivers. Add Stewart's leading position in the points standings, and we estimate the team roughly doubled in value from last year.
The gap between the most valuable teams and the least widened among the top 10 by $33 million this year, or 13 percent, as sponsors gravitated to teams with the best chance of winning and, thus, exposure for sponsors' brands and logos. With less sponsorship revenue, on average, and steady expenses like driver salaries (roughly 30 percent of budgets), the average top team stands to earn $7 million in profits this season, compared with $12 million last year, a decline of 36 percent.
The biggest example of continued consolidation came prior to the season as Dale Earnhardt Inc., our sixth most valuable team last year, merged with Chip Ganassi Racing, our eighth. The two outfits had raced seven cars in the Sprint Cup Series last season, but in an effort to cut costs have fielded just a two-car operation this year.
Cost-cutting is driving the consolidation throughout the sport. Efforts by NASCAR, including the Car of Tomorrow program and limits on testing time at race tracks, have failed to meaningfully reduce the burden on teams to keep up with Hendrick and Roush Fenway Racing without breaking the bank. Teams began taking matters into their own hands two years ago, culminating with the combination of Petty Enterprises and Gillett Evernham Motorsports just prior to this season.
The net result for teams able to field more cars is more room for sponsors' logos, and lower average costs since operating more cars out of the same garage only marginally increases overhead expenses. Sharing the costs while bringing in more sponsorship revenue is the kind of scale that has helped make Hendrick, Roush and other three- and four-car teams successful.
To value the teams, we determine revenue by adding up what teams get from sponsors, winnings and ancillary businesses like engine-leasing programs, and apply multiples from past relevant deals that range from 1.25 to 1.80. Winnings are based on the teams' season so far, scale of operations and pro-rated to determine their likely cut of TV money funding the total purse. Team budgets vary widely, in part because of driver salaries and research and development expenses. Profits are often re-invested or used to guard against future budget shortfalls.
The top five:
1. Hendrick Motorsports: Slideshow
2. Roush Fenway Racing: Slideshow
3. Richard Childress Racing: Slideshow
4. Joe Gibbs Racing: Slideshow
5. Richard Petty Motorsports: Slideshow
• See more teams
