July 23rd, 2009 
T.C. I’m not sure if you saw this little tidbit today, but amid the endless Mayfield talk and the announcement from Roush Fenway Racing that DeWalt would not return as a sponsor next year, was Jimmy Spencer floating the rumor that Earnhardt Ganassi Racing may somehow merge next season with Joe Gibbs Racing. The rumor mention was part of a larger piece about NASCAR owners and the future. (See Jimmy’s piece here).
Before I dig into what I really want to say, let me first throw some thoughts at you about this possible EGR/JGR deal. If JGR has three teams, and EGR has two teams, how can they merge and make four teams? Doesn’t three plus two equal five? And who does this really make sense for? Does it really benefit either side? Chew on that a little and tell me what you think…
On to the future of ownership in our sport.
There is, what appears to be, a common thought that in the future only a handful of owners/teams will dominate the Cup landscape. The usual suspects include JGR, RFR, Hendrick Motorsports, and Richard Childress Racing. Somehow through their own teams and technical alliances all 43 cars will somehow be associated with these mega organizations. I’m not really sure how the math works out, but I will go with it for the sake of argument.
This idea of a small ownership group is certainly something interesting to consider, and it could possibly happen, but I don’t believe personally that it’s a realistic view of NASCAR’s future.
I think it’s easy to look at the current points standings, pick out the big teams and say “yep, those guys are dominating, there is the future.” But what some fail to realize is the cyclical nature of the sport. Some teams will be really good for a while, but then things change and other teams move to the forefront. RCR and RFR are perfect examples. Both had a ton of success last year, but just aren’t the same teams this year. Even JGR seems to be off a bit.
There are just too many variables for a team to control to be able to maintain the type of dominance it would take to drive some other owners out of the sport completely. Between sponsorships (coming and going), driver movement, crew changes, outside investors, the auto manufacturers, and many other factors, the odds are stacked against this small ownership group theory.
What we see currently is the NASCAR model going through a correction. The years of escalating sponsorship deals and endless cash flow have ended and now what it’s going to take to remain viable as an organization is different. Owners scrambled this year and last to align themselves so as to cut costs and survive the downturn. But once they realize how to survive, and find their way in this new NASCAR, things will change again. Teams will split back apart or new owners will pop up, or both.
Let me give you a scenario to help illustrate some of my ideas. Take Stewart-Haas Racing for example. Tony Stewart comes in this season, takes control of a mediocre business, and in a few short months turns it into a contender. Granted many of the elements for success were already in place, but Tony and his team made some smart decisions that allowed them to move quickly and be successful early. One was their alliance with Hendrick Motorsports. This partnership allows them to use Hendrick engines and get technical and engineering support. And just like that Tony is the points leader.
But what if this alliance is only temporary? What if Stewart uses the support to make his team great, solidify the future some, and then starts building his own mega team? Stewart is a great driver, but he is also a great (and diverse) business owner. What if he has grand designs of taking SHR and making it rival Hendrick and RCR? He could theoretically become the team supplying engines and chassis to other teams. It would take several years for something like this to evolve, but it isn’t unrealistic.
I don’t know specifically if this is what Stewart is thinking, but it illustrates my point. There is no reason that other owners can’t come into this sport and find ways to contend and grow among the giants. Just like the business world, those who are at the top are constantly changing. Only a few short years ago AOL owned the Internet, and now they are struggling to remain in business. And while they were on top, a small company called Google was gaining traction. NASCAR is no different. The current crop of mega teams wasn’t always at the top. And this group won’t always be at the top.
So to believe that the future of the sport is going to be dominated by a handful of owners is unrealistic and a little premature, I think. Partnerships and alliances will come and go. Teams will rise, and teams will fall. But NASCAR is, by its very nature, a competitive world. And as long as people love racing, and there is money to be made, small teams will always try to become big teams, and big teams will always try and stay big teams. And along the way, some of those little guys will figure out ways to become big teams.
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I don’t think that ownership consolidation will occur through what we’ve seen for the past 60 years of NASCAR. It will happen through certain teams replacing Detroit as the main suppliers of engines and chassis. The downfall of the Big Three combined with the four-team rule is leaving opportunities open for several teams who currently dominate the sport to expand into suppliers as well as racers.
Hendrick is rapidly moving in that direction as the Chevy supplier. Roush already supplies all the Fords except those of the Wood Brothers’ part-time effort (and I can easily see Roush chassis + Wood Brothers engines in the near future). JGR seems the most likely candidate to do the same for Toyota. Dodge, unfortunately, will probably be shuffled out in the near future. RPM is moving towards Toyota (slowly), and if Penske loses all factory support from Dodge, he’ll either buy from Hendrick or brand his cars as Saturns.
Intelligent people don’t waste their time with Jimmy Spencer, “Mister Excrement”.
NASCAR is making plans for franchising.
They know the next TV package will be for a LOT less than the current one, because the product turned to garbage with the Car Of Today, so they will suppliment their income by making people pay big bucks to be a part of it.
But, surely the current players will be reluctant to step up and pay millions to continue is a sport that they built, so they will offer a “grandfather” deal to existing teams and NEW teams coming in will pay out the wazoo.
And where will the new teams come from: Honda, Hyundai, Kia, Mercedes, VW, whoever.
Now, how can that be possible you ask?
Just like they screwed up the car, with their “one-design” they are about to do the same with the engines.
There will be a “spec” engine, so the new teams won’t have to spend the millions needed to develop a “Boat Anchor” pushrod, carburated V-8. (Most of them don’t even OFFER a carburated model anymore.)
This will free up MILLIONS for them to give to NASCAR.
So, you just pay the Franchise Fee, build your POS COT, drop in NASCAR’s engine, and YOU’RE IN THE GAME.
One final note: The lower “Grandfather Franchise Fee” is why they have “disposed of” the “little guys” like Carl Long and Jeremy Mayfield, because they don’t want to “waste” the Franchises on guys like that. More of this “weeding out” action to come, Nemecheck and the others are endangered species, at best. Why let them in for $20 million when they can get a Mercedes team for $50 Million?
On a slightly different subject, watch what happens to the Nationwide series when they mandate the POS COT. It will be decimated like the Truck Series.
I think your right about the owners. It’s just a symptom of the economy, right now. Once it picks up, you’ll see more owners come in/back.
But the the disconnect from years past is that most of the new owners will be pure businessmen. The days of Richard Childress working on his own cars, then growing it into a megateam are no more. The days of John Henry buying into a successful operation and taking it to the next level are upon us.
But that does make the success of SHR and MWR all the more impressive. They sought out the businessmen to run it rather than taking an Alan Kulwicki/Ricky Rudd/Darrell Waltrip approach.
What if, for the sake of argument, the Jimmy Spencer theory did happen? It would cut out the little guy and we’d lose the romantic and nostalgic image of a driver/owner showing up with grease under his fingernails. But might it actually improve the racing? Make things more competitive and cause drivers to really fight for a win?
I dunno. Just a thought…thanks in advance for not ripping me a new one everyone!
This topic makes my head spin. What is a team? How do you deal with Hendrick being a team owner on one hand and engine supplier to other teams on the other hand? Exactly what is an “alliance?” When does an “ally” become a teammate? Let’s assume that Hendrick = Chevy, Roush = Ford, and JGR = Toyota. Three teams? “I don’t drive for Rick Hendrick! I drive for Rick Hendrick’s wife!”
Franchising is another one that baffles me, although I think it may make sense: you want to play in this league, pay up and take your seat at the table. Tulsa can’t just announce that it has a baseball team and schedule games against the Yankees. Why should Joe Doakes or Joe Nemechek be able to do that in NASCAR? (Sorry, Joe – nothing personal in the least.) But can Rick Hendrick buy 12 franchises? Can Rick have 4, Mrs. Rick have 4, and Gordon/Hendrick Enterprises have 4?
Tom, I’ll join you in mourning the possible demise of Robby Gordon Motorsports and Jeremy Mayfield Racing and all the rest of them, but in terms of quality of competition, isn’t NASCAR better off with all “Mercedes teams” that 2/3 “Mercedes teams” and 1/3 Yugo teams?
And somewhere in the back of my brain is the idea of “relegation,” used in British soccer: you play in the top echelon, but every year the two or three bottom teams in that league drop down to the next level, while the top 3 in the minors step up to the majors.
Have I mentioned that this is a terrific website?
Interesting Topic, I don’t really see NASCAR doing the Franchising thing. If the brainiacs at NASCAR did this you would most likely see the CAR USAC IRL issues of the past decade and a half. You may see USAC or ARCA take a run at NASCAR. These origanizations would be able to court larger teams t cme play in their areana. i.e. Penske and so on. just something to think about