As more and more storied NASCAR teams struggle to survive the downtrodden times, the question of NASCAR franchising has become a topic for discussion among those who talk for a living. Even Petty Enterprises CEO David Zucker got in on the act a couple of weeks ago, saying he thought NASCAR needed to franchise. This fundamental part of every major stick and ball American sport is far from NASCAR’s savior in an era of dwindling sponsorships and slumping ratings.
Franchising, if you don’t know, is a process where a governing organization awards the rights to create a team to join that governing body’s league. This limits the number of teams in a sport and ensures they do not grow to unmanageable levels. While this works in other sports because they are limited by geographic regions and fan bases, this makes little sense for NASCAR. Stick and ball sports make their money through ticket sales and tv deals. In NASCAR, the teams don’t see any of that money. Likewise in other sports the teams have some amount of control over their venues, in NASCAR again this is not the case.
For teams right now, the most pressing issue is sponsorship. I think franchising would clearly have little to no effect on teams finding the necessary money. While it may limit the number of teams to say 36 or 43, if you couldn’t sell sponsorship with 45 teams, what makes you think you are going to be able to do it with a few less? Companies are not going to be more attracted to the sport because there are fewer competitors.
This then creates an issue where some of these franchised organizations fail because they have no money. So then should NASCAR be there to bail them out? And if NASCAR bails one team out, then are they going to have to bail out every other organization that comes to them?
If NASCAR is bailing out teams, the issue then becomes, should they be revenue sharing? This is the reason the NFL can afford to open up a line of credit to their teams. This is obviously though something that NASCAR and the teams do not do, and something honestly they should not have to do. Why should a very successful Hendrick Motorsports have to support a struggling organization like Hall of Fame?
Locking in the number of teams also increases team power within the sport. In every other major sport, the league is owned by the team owners. NASCAR is owned by the France family. If they allowed this to start happening they would create something far more powerful than they are and they would surely lose control of NASCAR (this is probably the main reason this would never happen). Now I am sure many of you are thinking that a world without the France family might be a good one, but consider this: if the teams control all the power, then the drivers are going to have to create some kind of leverage over the organizations. This leads to driver unions, something NASCAR has bucked for decades. Are you ready for a driver strike in NASCAR, because I’m sure not.
Franchising would also serve as a massive barrier for entry into the sport, something I would argue is not a good thing for NASCAR. The system that allows anyone with the time and money to come play makes the sport stronger. It makes everyone continue to innovate and get better, but keeps them on their toes for the next great thing on the horizon. Likewise, how would NASCAR even do this? How do you decide who gets in and who doesn’t? Is there a fee, and what would that fee be? Are there expansion teams? Maybe you get rid of the lowest performing teams every season?
In the end, even if I was for franchising, I’m not even sure how it would work in NASCAR. There are so many different moving parts to the sport that make it unlike any stick and ball sport, I am not sure it is even possible. How would NASCAR award the franchises? Would it be by organization? Would they limit the number of teams per organization? I honestly have no idea. I think what works for other sports, does not necessarily work for NASCAR.
So now it is your turn. If you want franchising, tell us how it would work. If not, tell us what you don’t like about the idea. How would this help the so called have-not teams? Who gets in, who doesn’t? What role does NASCAR play? How does this help performance and other issues facing the sport? What does it do for sponsorship? Let us know.
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on Dec 15th, 2008 at 7:25 am
Franchising, Hmmmm, I Don’t feel that franchising is the answer either, but I do feel NASCAR needs to stop restricting what sponsors come into the sport.Case in point Sprint AT&T. Others are also restricted, this makes it very hard for teams to survive. NASCAR does need to assist teams like PE who are strugling to survive, NASCAR does have the power and funding to help these teams make it. I’m not sure if it should be done using TV monies or what but something does need to be done.
I understand NASCAR making sponsors the offical this and that too, I understand the need for being exclusive, but when the offical widget of NASCAR keeps 5-10 possible ponsors from coming into the sport and sponsoring teams, something needs to change.
on Dec 15th, 2008 at 3:27 pm
Steve is correct. The example of AT&T being forced to leave the sport directly led to Caterpillar being wooed by Childress and then consequently leading to the dissolution of BDR.
If you want to make the business model work for more teams, then some change is in order. Nascar takes way too much of the pie and too few teams have been able to share in the sport’s success. With the amount of money that Nascar makes off of team license fees, sanction fees and TV contracts, its absolutely sickening that they would steal Sponsor A away from a team to make it an “official beer,” etc.
I don’t think franchising is the answer either. Journo points out a number of circumstances that make the concept of franchising unworkable. I think that Nascar has made some fundamental mistakes in competition management that has led to the few gaining all of the control in the sport. It is hard to go back now that the damage is done.
Some sort of spending cap is the only thing that can keep this thing under control. The salary cap has allowed every team in the NFL the opportunity to be competitive and with some modifications it could help balance things in Nascar.
However, as I get off my soapbox, I believe that the damage has been done and there is little that Nascar can (or is willing to do) to create competitive balance. I believe the day will soon be here when there will only be 25 full time teams (controlled by 6-7 owners) that will be mainstays on the circuit. If they’re lucky, another 5 teams will remain as part timers and you’ll see a permanent reduction in field size.
on Dec 15th, 2008 at 3:38 pm
I think franchising is the way to go. It protects the snaller teams that have been around for years from just being pushed out by some deep pockets guy who has no real connection to NASCAR. What if George Steinbrenner had decided to enter NASCAR? He would simply outspend everyone and ..poof .. another team or two would be gone .And same with Bill Gates, Warren Buffet etc. And as far as the France family losing control of NASCAR well it is likely to happen shortly anyway. Teams like Hendrick and Roush and Gibbs and Childress control (one way or the other) all the big stars, the majority of the teams and all of the chase contenders. All you need is a couple of these owners to get together and threaten the Frances if they don’t get what they want (like revenue sharing). An owners’ strike would be even worse than a drivers’ strike. TV revenue sharing would help the smaller teams and will be coming eventually (see above) as the owner’s decide they want a bigger share of the pie.
on Dec 16th, 2008 at 7:32 am
All of the above comments have very good points and why this site is great.
Now for the franchising “question”. The real question is not whether franchising is “good or bad” for the sport of NASCAR racing, but whether franchising is even a viable option. Hear me out on this…
Sports w/ team franchises are just that, “team” franchises. Team meaning a group of individuals performing as a “team” on the field of play toward a collective goal of scoring the most points in a game to win that game. Still w/ me here?
Now as much as we like to think of a particular NASCAR “team” (be it 1 of 4 Hendrick group, or Roush’s, or Gibb’s, etc.) as a “team”, the fact of the matter is there is a behind the scenes “team” supporting an individual driver as the “athelete” we cheer for. Before everyone gets upset w/ me claiming that it takes a “team” effort to qualify, win a race or the Cup….I agree 100% that w/o Chad, crew, shop, admin, etc the 48 “team” would not own the cup. JJ, however, is the only team “player” that fans ultimately support. It’s like trying to franchise golf or tennis pros.
Stick and ball “team” sports are, by their very nature, just different sports both on the field and the way they are organized.
on Dec 16th, 2008 at 7:52 am
NASCAR’s attempt at de facto franchising is the Top 35 provisional rule, But it sure didn’t help the DEI 01 or 15 teams survive. And prospects for BDR’s 22 and RYR’s 38 don’t look too promising, either.
on Dec 16th, 2008 at 7:59 am
racer61: We’ve heard and read all about people saying franchising is the way to go. But the question we asked, is how does it work? Give us a feasible plan, then we can decide if its going to work or not. All everyone keeps saying is that it will save the small teams. But how?!
Also, owners still have very little power in the sport. Even if a few decided to leave, NASCAR still holds all the cards. Between the France Family and Bruton Smith, they control all the race tracks. NASCAR and the Frances also have all the leverage because they control the TV contract. It would be very tough to start a competing series with no tracks to race at and no TV coverage…
on Dec 16th, 2008 at 9:42 am
Quote from article: “Stick and ball sports make their money through ticket sales and tv deals. In NASCAR, the teams don’t see any of that money.”
You are incorrect – NASCAR stipulates that a certain percentage of the TV and ticket sales proceeds be included in the prize purse via the sanction agreement. Teams share in the funds based on where they finish on the track. The more competitive a team is, the greater the share of the TV and ticket sales proceeds they collect.
on Dec 16th, 2008 at 9:57 am
Here’s how franchising would work: NASCAR would sell 43 franchises, limit of 4 per owner. The teams that attempted all races last year would get first choice followed by a draw or some other method for any remaining spots. This helps the smalller teams because they are guaranteed a starting spot every week. They can tell a sponsor that their car will be in the show every week. No hauling your car out to California only to haul it back on saturday. And if an owner wants to leave or retire he has something of value to sell (the franchises) for years of hard work and supporting NASCAR.(After 61 years Petty has little left and can be replaced by anyone with a car, hardly seems right).
As for the owners’ growing power, I’m not talking about them starting a new series, but just imagine if Hendrick and Roush got together and said that they would not run a race if there was no TV revenue sharing. A race without Biffle, Edwards, and especially Johnson, Gordon, and the most popular Junior etc.? You think that wouldn’t cause NASCAR to panic?
on Dec 16th, 2008 at 10:35 am
racer61: So with only 43 franchises, now you are limiting the number of teams that can actually exist, and you are hurting some of the competition that has made the sport into what it is today. And you are also creating a massive barrier to entry for any new teams that come along. The only barrier that exists right now is the initial investment.
Also, while it may help a little in the sponsorship search, only having 43 teams for 43 spots doesn’t guarantee these teams could find sponsors. Petty’s #43 was in every race and guaranteed in for every race because they stayed top 35 and had a past champion driving their car. But that didn’t and hasn’t helped them secure a sponsor for the future.
Franchising won’t help Petty to continue to exist. If these smaller teams can’t sell a winning racecar or driver to sponsors, they need be creative in finding other ways to bring value to a sponsorship. It isn’t enough anymore to just have Petty on the sign out front and hope companies will come knocking. These sponsors are spending big money and they want something in return. If they feel they aren’t getting it, they will leave. Franchising won’t help Petty run better or learn how to handle a sponsorship.
And back to owners pulling out. Roush and Hendrick would never pull out of a race for reasons like that, because they have others to answer to. You might convince one sponsor to do it, but not all. AMP, National Guard, DeWalt, Aflac, DuPont, et. al, would be extremely upset to find out their car wasn’t on track for a race after they spent $25 million for the season, just because the owners were mad about TV money. And along with that, you would piss the fans off who spent big money to come to a race, only to not be able to see their favorite driver run. I think a lot of the backlash would come back on the teams for pulling out, not necessarily NASCAR. It would create a big nightmare.
on Dec 16th, 2008 at 11:36 am
Lunch_Time- While that is true, the teams are still not seeing any of that money. 30-40 percent of it goes to the drivers and a large percentage of the rest goes to bonuses for the team members. Winnings have very little to no effect on the bottom line for most of these teams
racer61- There was actually an incident in 1969 at Talladega Superspeedway where all of the major drivers decided to pull out of a race because they were concerned with the speed that could be achieved on the track. Bill France took all of the guys from the prior days race and ran the race with them. People still showed up and the racing went on. The moral of the story is, NASCAR is not going to be bullied by team owners, or drivers. It didn’t happen then and it would never happen today.
on Dec 16th, 2008 at 12:40 pm
T.C. you don’t think that other sports have a massive barrier for entry for new teams? Has it hurt the competition level in the NFL that I can’t just put together a team and show up wanting to play?
on Dec 16th, 2008 at 1:40 pm
racer61: The are serious fundamental differences between stick and ball sports and NASCAR. The reason the other sports have such large barriers to entry, is that major sports teams rely on geography. Only major cities with large populations can support NFL, MLB, and NBA teams. You need a large population as to get a small percentage to show up to the games. You also need those people to contribute tax dollars to build the stadiums. Teams that started in small cities would never survive, as there just wouldn’t be enough people to buy tickets, merchandise, etc. There are only so many big cities in the U.S. so there can only be so many teams.
Stick and ball teams don’t need to be competitive to make money. There are plenty of examples of sports teams that struggle year in and year out on the field, but still make money at the end of the day. NASCAR to its very core is a performance based business. Companies don’t want to sponsor teams that aren’t running up front, because they get less exposure. You need to WIN to be attractive to sponsors.
Another major difference is the leagues. The NFL, NBA, MLB, and NHL are all organizations made up of the owners. There is no one owner of one of those leagues. The team owners collectively own the leagues. More teams means each owner gets a smaller share of the profits. This also explains why those team owners have power. Its because they own the league. The league commissioners are just the chairman of the board. They act as leader for the shareholders (the team owners).
Stick and ball sports teams make most of their money off ticket sales and TV deals. They also earn revenue from merchandise sales, food and beverage sales, and to a smaller degree, sponsorships. NASCAR teams have a very different business model. Teams must derive the bulk of their operating revenue from selling those all important sponsorships. Without them, they don’t exist. They don’t have all these other streams.
There shouldn’t be a franchising system, because there are no real benefits, and it doesn’t make any sense. I have yet to hear anyone suggest a real, feasible, thought out plan on how this would all work, and how it would benefit anyone.
The more NASCAR teams that exist, the better the competition gets, because teams are forced to innovate and advance in order to sometimes even make the races! This competition is what has pushed the sport to be better and faster every year since 1949. And there is yet another difference. Stick and ball teams don’t have to qualify just to play a game.
on Dec 16th, 2008 at 1:49 pm
As mentioned in Journo’s article (para #2) “While this works in other sports because they are limited by geographic regions and fan bases, this makes little sense for NASCAR.” is one primary reason franchising will not work. I live in Atlanta, home of the Falcons, Braves and Hawks, where I’ll pull for those teams (ok…easier in good seasons than poor seasons) year in and year out. There are some players on those teams that I like, don’t like and some I don’t care much about. But by in large, I cheer for and buy a ticket to some games and buy some apparel because they are my “home” team. Now let’s say NASCAR sells franchises to 43 teams. Joe Gibbs Racing (JGR) is awarded (3) franchises for each of his drivers, uh “teams” (Hamlin, Lagono and Kyle Busch). Now unless something big changes, JGR is not associated w/ any particular city in America (unless you consider Charlotte and then 95% of teams are from the same city). JGR, in effect does not have rights to ticket sales, concessions, parking fees, etc for even a single event. So where does the money come from to, not only run the team, but to make being a team owner a very profitable business? Selling sponsorships for over and above the cost to compete. The consumer here is the company sponsoring a JGR car just for the right to paste their name on a quarter panel, which hopefully draws the attention of race fans in person, print or TV. Side note: remember the year the Chicago Bears went to the Super Bowl shuffle and QB Jim McMahon got “in trouble” for wearing a Taco Bell head band??? Jim was in the wrong sport.
Bottom line is NASCAR is a traveling circus made up simply of bill boards that tag along and display their ads 36 weeks a year in different cities. Kind of like a series of trade shows. But how do you get people to show up and spend money collected by the track itself. The actual competition is supposed to be the draw, but is incidental to the main intent of drawing money from fans at the track, advertisers on TV and print and sponsorships for the teams. Unlike F1 or Sports cars, fans don’t show to see the sheer technology and performance of the sexy cars. Heck, the cars are all the same and (except for the trippin hp) really not that all that impressive. Why do you think so many Cup drivers enlist in the 24 hrs of Daytona? It’s FUN! Ask Tony, Jeff, Kyle, JJ, Burton, etc.
On a side note, this is also why NASCAR has never divided the series into an East vs West contest. Jeff Gordon fans in CA will not attend a race and spend money if JG is in the Eastern division.
on Dec 17th, 2008 at 4:58 pm
If Nascar did a better job of managing the competition and more organizations (teams) had a better chance of winning and getting value for sponsors, the sport would do much better as a whole.
Franchising isn’t the reason the #43 is shutting down. As stated here, they finished 21st in points and started every race. You really can’t use the worn out “poor performance” clause with them either. There were several teams behind them in the standings (MWR, for one) that will soldier on with enough money to compete.
The problem is the competitive imbalance and the concentration of all of the wealth with Nascar and a few organizations. Nascar tells AT&T to get lost, but then tells Childress to go raid someone else’s sponsor.
You want to fix Nascar, have another season like 2001 when there were 19 different races winners, 5 first time winners and 15 different pole winners.