Numlock Sunday: Neil Paine on the rise and fall of NASCAR

By Walt Hickey

Welcome to the Numlock Sunday edition.

This week, I spoke to my friend Neil Paine, a sportswriter at FiveThirtyEight who can also be found at Neil’s Substack. I’ve been following some recent spat going on in NASCAR between ownership and the different charters; here’s a recent thing I covered about it:

NASCAR team owners collectively boycotted a quarterly meeting with NASCAR leadership over a kerfuffle over the sport’s business model, which they argue pays track owners considerably more than it pays the racing team owners. The $8.2 billion media rights deal inked prior to the 2015 season splits the money 65 percent to the racetracks, 25 percent to the teams, and 10 percent to NASCAR itself, though there are just two track operators: Speedway Motorsports and, well, NASCAR, which owns most of the tracks on the Cup Series. Team owners don’t like this arrangement, and argue that they have to spend a great deal of time trying to recruit sponsors in order to make their money, saying that sponsorships are 60 percent to 80 percent of the budgets of the 16 chartered teams.

Fascinating! It’s a corporate battle with billions on the line! What’s not to love here! I knew Neil was into NASCAR and I wanted to talk to him about how the sport got into this mess and what the heck happened to it.

Neil can be found at FiveThirtyEight and Neil’s Substack. Incidentally we can also be found out our hockey-related friend podcast A Couple of Goons.

This interview has been condensed and edited.

All right. Hey Neil, how's it going?

Hey, Walt. Good to be here.

People know you from many different places, primarily FiveThirtyEight, where you're a sports writer. But I wanted to talk to you today about a thing that I think is going to be very off-topic for a lot of readers in my newsletter and maybe even some reviews in your work, which is some extremely fascinating stuff that's happening in NASCAR, a league that has long existed but has diminished in notoriety.

You and I have been talking a little bit about this on the side and I am just endlessly fascinated by some of the machinations going on in it. I just wanted to have you on to talk all about it. Do you want to talk a little bit about your experience with NASCAR and what drew your attention to it?

Yeah, so I'm from the South. I'm from Atlanta and grew up watching the races and following the sport as a child. I think that that was something that was a lot more common at that time. We're talking about the '90s and the early 2000s being the heyday of not just my fan interest but also a lot of people's fan interest in the sport.

I've recently gotten back into it over the past couple seasons, I don't really know why. I've definitely gotten more into motor sports in general with Formula One also coming back on my radar. That has actually been very popular among American audiences, I think, since you saw the Netflix series Drive To Survive and just people getting into the dramatic aspects of that, not necessarily maybe the on-track drama, but the personalities and the soap opera between the drivers and the teams, and all of the different backstabbing. Machinations is a good word for it that you used earlier.

You see that in pretty much every motor sport though. I think that people, if they wanted to expand their horizons to a sport like NASCAR, there are so many beefs between drivers in NASCAR. The great thing about NASCAR is in Formula One, you do see sometimes drivers, they will wreck each other in the sense that they won't give someone space around a turn or something and they might touch wheels, or they might run into someone. But when you run into someone, it's the end of their day because the open wheel cars are pretty fragile, comparatively speaking.

Whereas in NASCAR, these are big freaking tanks of vehicles that can hit each other. Often, there’s this term, "rubbing is racing," where basically if you're not bumping people while you're out on the track, you're not really fighting for position. You can hit someone and as long as you don't put them into the wall, you can keep going.

I think that that is unique in the way that it feeds into the aspect of rivalry and aspect of animosity between drivers, because you can get back at someone later in a race if they did you dirty earlier in a race, in a way that in Formula One, if you hit and mess up your front wing or whatever, you're both done for the race.

Neil, I'm exhausted at the fact that you found another sport that is basically just hockey.

Yeah, I know the checking aspect, definitely, the full contact aspect bleeds over between the two, I think.

That's cool. I didn't know that you followed it when you were a kid, that's nice. I guess you got on my radar recently because there's beef on the track obviously, but there's also lately a lot of beef between NASCAR itself and the people who own the franchises. It's got this really interesting structure. Do you want to talk a little bit about that?

Yeah, so starting in 2016, they put into place what's called the charter system, which for people that don't know, basically there are like 40 cars on the track for every NASCAR race. And in the past, you showed up for the race weekend and it didn't matter if you were a low tier team or one of the best; you still had to qualify and make a certain lap time and be among the top 40 or so qualifying cars to make it into the race on Sunday and, therefore, to get paid for the weekend.

At the peak of NASCAR, if you go back and watch some of the old broadcasts, you'll see they list out a dozen or more teams that didn't qualify. So, cars that tried, they made the effort, they came out to the track, they got everything ready and they just didn't go fast enough to make the cut and they didn't end up making any money from that.

Starting in 2016, they put into place these charters, which guaranteed that 36 cars would at least be able to have entry into the race. So, it only left four chances for teams that weren't part of the charter system to scratch and claw their way into the field for any given race. For those 36 teams, it offered a lot of cost certainty and also income certainty and it made things a lot easier for their dealings with sponsors, which, we'll probably go into as well, is a huge deal for NASCAR teams, more so than maybe any other sport.

And so this charter system, it was put into place to make it more attractive to invest in a NASCAR team. I think since you've seen those go in, you've seen that Michael Jordan owns a team now, or co-owns it, the 2311 racing team, and you're seeing people because they can now latch onto these franchises, it's essentially the same ideas like the New England Patriots and the Atlanta Falcons. The teams that go into the charter is a car and the car number that goes with it. Sometimes the same owner can own multiple charters. So, Joe Gibbs Racing — Joe Gibbs is a former NFL coach who also runs a super successful NASCAR team — he has four charters, so he has four different cars on the track. But some teams only have one charter and these charters can be bought and sold between the different team owners as well. They can transfer the rights to the charter and that has allowed the value of those charters to go up.

But the problem is that the charter system, when it was put into place, it has to be renewed. It's not like a permanent fixture in the way the sport is structured. So, there's some opposition at the top of the NASCAR food chain, because NASCAR itself is just the governing organization that oversees all of the races.

It has said, "We're not really sure if we're going to renew the charters." And the teams are like, "You better renew the charters because this is the one thing that's driving our value in investing in your sport and making it more attractive for people to come in as owners and know that they can have that secured spot." That's a big part of this battleground, like you mentioned, between NASCAR, the organizing body, and the teams themselves.

There are also the racetracks in the mix as well. The way that the money is split for a television contract, for instance, they have a big TV deal coming up I think after this season, maybe the NBC rights are up or whatever. They have to figure out a new TV contract and then figure out how that pie gets divided up among the teams, NASCAR itself, and the racetracks.

The teams have complained that pretty much all of the money, or the overwhelming share of the money, goes to NASCAR itself and the tracks, and that they're not really getting that much, and it's much less equitable than you see in other sports, where in the NFL or Major League Baseball, you see roughly a 50/50 split between the teams and the players.

In their mind, they're thinking of themselves as franchises that then supply the talent, the players, or in this case the drivers to the league, which would be NASCAR. NASCAR sees it differently. They see the drivers or the teams and drivers as independent contractors, and just part of this mix that also includes the racetracks that they have to coordinate with to stage the actual race events themselves.

Combine that with the fact that advertising makes up a huge share of the revenue for any of the teams and teams are starting to lose really high profile advertisers. We’re talking about the early to mid-2000s, the heyday of NASCAR, you had a lot of companies that just seemed like it made a ton of sense for them to be in NASCAR. Lowe's Home Im