Did You Notice? … How little a NASCAR sale of a charter is worth? After months of bids, a North Carolina court revealed the winning bid for BK Racing in bankruptcy court was $2.08 million. Front Row Motorsports will take over the charter and most other assets; two other teams purchased other, small portions to raise the total to $2.38 million.
If it holds (the judge has granted until Thursday, Aug. 23 for possible objections) it’s the most detailed insight yet as to how much a Monster Energy NASCAR Cup Series team is worth. It’s the most public sale of an organization since the sport moved to the current charter system in 2016.
Let’s compare that price to the latest sale of a franchise in other major sports.
NBA: Houston Rockets ($2.2 billion) – Tilman Fertitta, 2017
MLB: Miami Marlins ($1.2 billion) – ownership group led by Bruce Sherman, 2017-18
NFL: Carolina Panthers ($2.275 billion) – David Tepper, 2018
NHL: Carolina Hurricanes ($420 million) – Tom Dundon, 2018
MLS: D.C. United (partial investor) – Patrick Soon-Sheong, 2018, team valued at $500 million
That’s a stark difference for NASCAR compared to other, longstanding franchise systems. The attorney for trustee Matthew Smith even voiced his disappointment more money wasn’t raised for the sale. The value is literally .09 percent (that’s not a misprint – one-tenth of one percent) of either the NBA or NFL price fetched above.
What’s worse for BK Racing is that liabilities against the organization, per court filings, are well over $44 million. Just the IRS claim alone for $2.9 million won’t be covered by money raised from the sale. That means BK’s creditors will never fully recover the monies owed from years of stockpiling debt.
Why this sale is important, beyond the basic changes in NASCAR ownership ranks, is timing. We’re in the middle of a potential NASCAR sale where the sport’s CEO was arrested for driving under the influence and additional drug charges. Wall Street is trying to place a valuation on a sport whose financial figures have been trending downward aside from its impressive television deal.
If the cost to get a guaranteed spot on the NASCAR grid is just $2.08 million, what does this mean for the valuation as a whole? One could argue, of course, teams don’t need the charter to make races under the current system. Four spots are available each week for any team to qualify with a car that meets Cup Series specifications. With only two DNQs total this year, any owner with a team doesn’t have a high bar to qualify. So why pay $2 million for a guaranteed spot, especially to buy equipment that has just three top-20 finishes all year?
But the data point, despite that reasoning, looks terrible by comparison. Combined with the France arrest, there are millions hanging in the balance while the inner house inspection goes on regarding NASCAR’s finances. It also shows how tenuous the business model can be for a now-former team owner like Ron Devine looking to break into the sport. It took just seven years for him to rack up $40+ million in debt while never becoming even semi-competitive.
Most importantly, a sale like this one leaves the future of several employees hanging in the balance. It’s uncertain at this point whether Front Row would run a team in 2019 or simply sell the charter to someone else. Even if they did expand, would all of BK Racing’s employees be kept on board? As we wrote about Monday, there’s a small group of loyalists who did nothing wrong here. Their crime was simply to work for an organization that couldn’t stay financially viable.
Let’s hope there’s the happiest ending possible here. But like those disappointed faces in the courtroom, it’s hard to put a smiley face on this sale.
Did You Notice? … Once Elliott Sadler retires at the end of the season, just four NASCAR drivers in the sport’s top three series can say they ran a Cup race with Dale Earnhardt?
After much consideration and many conversations with my family, I’ve decided this will be my last season racing full time in NASCAR. (Full Statement: https://t.co/iLQnNG215o) pic.twitter.com/cKEclUt55F
— Elliott Sadler (@Elliott_Sadler) August 15, 2018
It’s clear, then, with Earnhardt’s son also retired, the sport is losing its connection with that era of competition. Millennial fans 25 or younger were a max of eight years old upon Earnhardt’s death in February 2001; most of them weren’t even born.
So what would we call this current era of NASCAR racing? Who would we say has the drawing power that Earnhardt had in his prime? I would argue that, right now, the sport doesn’t have one and that’s a problem. Kyle Busch is certainly a draw and a polarizing figure. Jimmie Johnson has a fair amount of popularity (but limited national crossover). Chase Elliott won to the cheers of a sellout crowd this month but doesn’t have the resume yet.
Who is going to step up in the wake of all these drivers retiring? It’s a question we’ve asked many times the past few years and we’re still awaiting NASCAR’s next great star. In order for the sport to fully transition, putting the Earnhardt era behind them, they need an answer.
Did You Notice? … Quick hits before taking off….
- We’re approaching the one-year anniversary of Jeremy Clements‘ impressive underdog win at Road America. But one of the XFINITY Series’ longtime underdogs hasn’t been able to harness more momentum. He heads into this race without a top-five finish since.
- Everyone is interested in how Bill Elliott will do stepping behind the wheel of GMS Racing’s No. 23 car this weekend at Road America. But let’s temper expectations for one of the sport’s best drivers. This NASCAR Hall of Famer, now 62 years old, hasn’t earned a top-10 finish in any series since 2004. His two road course victories came way back in 1983 & 1993, respectively; they were never his strong suit in what was otherwise an outstanding career. Simply completing the race inside the top 20 would be an incredible accomplishment considering the circumstances.