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NASCAR Franchising Value Needs Serious Work

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A Sports Business Journal report surrounding the value of NASCAR franchises? If true, charters have been sold the last year or two at an average value of $2-3 million. According to the article, Tommy Baldwin Racing was one of the higher-end examples of what franchises have been worth. The team, which spent a decade at the Cup level, sold its charter for $3.5 million to Leavine Family Racing for 2017 and beyond.

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It’s fair to say prior to the franchise system, a team like TBR could wind up gutted without sponsorship. Equipment could be auctioned off for a fraction of the price while the owner got saddled with debt. These numbers, according to SBJ, don’t include assets like cars, equipment, even race shops themselves.

But let’s compare that $3.5 million, base number to the franchise values of other major sports. Here’s a look at the last sale of a franchise in each of the stick-and-ball counterparts for NASCAR.

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The simple math makes NASCAR look miniscule by comparison. Even with hockey, the lowest-priced franchise sale described above the total was 43.5 times more than what another team paid for TBR. You can add the equipment, cars and race shop to the total value of the franchise but no way it adds up to $152.5 million.

For a stock car series sporting a ten-year, $8.2 billion television deal those numbers are difficult to stomach. Clearly, there’s urgency for the Race Team Alliance to establish equivalent value for their teams.

Why is franchising, still in its infancy, struggling to gain more financial traction? The answer is as simple as what we saw Sunday at Martinsville: two empty spots on NASCAR’s 40-car grid. With only 38 cars starting, just two of the four “open” spots filled by non-charter teams, there’s no push for outside ownership to get involved in the sport. NASCAR’s purse structure, which rewards franchised teams at a higher percentage than those “open” participants, also puts the squeeze on new ownership.

So new owners aren’t testing out the sport. If the charters themselves were still changing hands, new faces getting involved through franchising, that wouldn’t be so much of a problem. But no “new” owner has shown up to compete on a full-time basis, period in 2017. In fact, the charter breakdown shows sales or leases to teams already competing. The grid is rearranged within that exclusive group so everyone still gets a piece of the franchising pie.

Only two owners, Mark Beard and Marty Gaunt, have debuted on the circuit this season and both only plan to run the four restrictor plate races. There’s no indication from either they’re in the market to purchase a charter. Instead, both are dipping their toes into events where engine parity gives their small operations a chance to compete.

When there’s no demand from owners, then looking to get involved at stock car’s highest level the value of their franchises takes a hit. It’s a simple case, to me, of supply and demand. Say I’m selling a bottle of water to you after the race. If you’re the only one who wants it, in a crowd of 50,000 well I might be willing to sell it to you for 50 cents. But if five dozen people want it? And they’re all really thirsty? That same bottle of water may wind up sold for $4.99.

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