“Losing $85 Million A Year”: The Biggest Reason NASCAR Started the Controversial Charter System

The NASCAR charter system went through a whirlwind of a journey over the past couple of years and has now finally settled into something that is more favorable to the teams and less so to the promotion. It is quite evident, in the wake of the antitrust lawsuit settlement, that there must be at least some regret in NASCAR’s heart that it began the system in the first place back in 2016.

But there was a compelling reason for it to go in that direction at the time. Bob Pockrass detailed this in an interview on the Awful Announcing podcast. He said, “The charter system was started in 2016 after the teams had come to NASCAR. They had done a study, and the teams were combined, losing about 85 million a year, and they were like, ‘Our current business model is not sustainable.’”

When teams went out of business, they sold their equipment to stay afloat. This dire situation had forced some to give up their tools for as little as 10 cents on the dollar. 

He continued, “If you finished high enough in the standings, you could kind of sell that points position for the following year. If you had a bad qualifying effort, it might get you into a race near the back of the field with the way the system was, but you really had no asset.” This presented a problem for the teams when they were at the negotiating table with their sponsors.

The sponsors wanted to know if the teams would be starting races and how much money they were going to make. There was no way of answering this question with assurance until the charter system was implemented. Once it was, the teams could confidently put forward a guaranteed number of races they would be starting and a minimum amount of revenue they would be generating.

Joe Gibbs Racing president Dave Alpern has spoken about how the charter system protects teams as well. He said in a video posted on the team’s YouTube channel that the system ensures that the 36 teams that are investing in the sport are guaranteed a spot in every race and that the purse is distributed among them all.

He added, “There’s also a smaller pool for an additional four spots every week that are called open spots. But the charter system provides some security for teams who are making these investments again in facilities and people to be guaranteed to show up every week and compete.” Fortunately, this system is still intact, and an amicable solution has been found to keep everyone happy.