NASCAR president: Cup Series teams 'by and large are losing money'
NASCAR implemented a new car ahead of the 2022 season
NASCAR president Steve Phelps confirmed what a lot of team executives have been saying for years: Cup Series teams are not currently a profitable endeavor.
Phelps said in a Zoom meeting during Race Industry Week on Monday that NASCAR needed to figure out how to make owning a Cup Series team make more financial sense. With sponsorship at a premium, teams have been stretching to find as much money as they can to cover their ever-increasing costs. And it’s clear to NASCAR that it’s not sustainable.
“Our race teams by and large are losing money at the Cup level and that is something we need to solve for them,” Phelps explained. “We can solve that with two key pillars. One is to make sure that they are getting additional revenue. They are interested in getting more money from the sanctioning body and the tracks through the purse and that is something we need to do.
“The only way we can do that is to have increases in your media rights, which is what we are doing today,” Phelps said, referring to ongoing rights negotiations. “We are unsure what that is. When there is more clarity, we’ll understand what those financials will look like.
“Secondly, and not small, honestly, is some type of cost containment, whether that is in the form of a cap or whether that is in the form of the parts and pieces that make up the NextGen car, trying to limit those pieces,” Phelps continued. “I’m not sure where we are going to net out on that. I’m not saying our race teams can cut their way to success.
“I am not suggesting that because I have been accused of that in the past. There needs to be a mixture of those two things but both are important if profitability or breaking even is important to our race teams, then you have to do both. That’s something we need to focus on.”
Phelps’ admission comes as teams are looking for more revenue from NASCAR’s new television deal. The current NASCAR TV contract is up at the end of the 2024 season. Fox and NBC are widely expected to continue as NASCAR’s main TV partners, and a report emerged a week ago that NASCAR was exploring selling off as many as 10 summer races to a streaming service.
While a new TV contract could bring in more money than the current one does, teams are also asking for NASCAR to restructure the way the TV money is distributed and get a bigger share of that revenue. Phelps’ comments could bolster that argument.
They also show that NASCAR’s new Cup Series car, so far, hasn’t done what the sanctioning body said it would do. Phelps said in 2021 that the new car would be a “panacea” for NASCAR as one of the biggest selling points of the new design was the possibility of lower costs through parts built by single-source vendors.
Instead, teams have said they are spending more than ever through the first two seasons of the NextGen car. With so many parts coming from the same suppliers, the easiest way to implement a cost cap would be to put price controls on the parts largely used to build Cup Series cars.
NASCAR could also look to Formula 1’s cost-cap structure. F1 recently implemented a cost cap to help rein in spending from its teams, though F1 teams still largely build their own cars from their own parts.
Figuring out a way to decrease spending is a big key to NASCAR’s future. And the sooner NASCAR executives and teams can come to an agreement on how that can be done, the better.
