Wednesday, November 22, 2023

Dale Earnhardt Jr. Hits ‘Pause’ on JR Motorsports NASCAR Cup Charter Search Due to Price and Revenue Negotiations

JR Motorsports Cup Dale Earnhardt Jr. race team Dale Earnhardt Jr. charter
Dale Earnhardt Jr., who has been open that he’s had an interest in bringing JR Motorsports to the NASCAR Cup Series, says that he has now paused his search for a Charter during the ongoing revenue negotiations between teams and NASCAR. Photo Credit: Sean Gardner/Getty Images

Dale Earnhardt Jr. has been teasing the move of his JR Motorsports team to the NASCAR Cup Series all year long. Earnhardt even joked back in June, in a live edition of the Dale Jr. Download, that he was hoping to land Martin Truex Jr. to get his NASCAR Cup Series team started.

However, less than three months later, Earnhardt says he has put a pause on entering the NASCAR Cup Series owner ranks. And a lot of the reasoning for the pause stems from the Race Team Alliance (RTA)’s current revenue negotiations with NASCAR and the current NASCAR Cup Series teams operating at a loss.

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“One of the things that’s interesting for me is that I’m a potential owner in the [NASCAR] Cup Series. JR Motorsports could be a future owner in the Series and we are actively out here, like a lot of other new owners that are talking to these teams about what these Charters are worth, who’s willing to sell one, how do we become an owner,” Earnhardt asked on this week’s Dale Jr. Download.

“And so, when I heard what I heard from the [Race Team Alliance], it made me go, ‘Hmm, I need to wait and pause,’ RTA is basically telling me this Charter I want to buy is a losing proposition. Or not a money making — it’s broken. I don’t want to buy this Charter now, because it’s not a successful business venture.”

Revenue Negotiations

This past week, representatives from four teams in the NASCAR Cup Series, held a meeting at an uptown Charlotte hotel with a select group of the NASCAR media to discuss the financial strain on the teams and the frustration they are having in their talks with the sanctioning body to get a revenue percentage increase for the 2025 NASCAR Cup Series season.

According to the team representatives, the RTA submitted a proposal to NASCAR asking for an increased piece of the sport’s television revenue, which was countered by NASCAR with what the representatives called a minimal increase from their existing deal.

As things stand, 60-80 percent of the revenue from teams allegedly comes from their sponsorship deals. So, when a team, like Joe Gibbs Racing, loses a prominent sponsor, they are at the mercy of losing a generational talent, like a Kyle Busch, if a new sponsor isn’t able to be found to replace the existing one.

“That puts the responsibility on the owner to find that 60-80% and if he doesn’t, he has to fire people,” Earnhardt explained. “He can’t have the driver he wants, like Kyle Busch. All of these things tumble into disarray. They want a little insulation. They want a little protection. Instead of maybe getting $5 million, they want that to go up significantly so that the TV money comes to the teams and they now aren’t solely responsible to depend on the sponsorships to race.”

Earnhardt admits that he expected the RTA to move the needle a little more into the direction of the race teams from a revenue share standpoint, and hearing how far apart the teams and NASCAR are has caused him to be skittish on making the jump to the NASCAR Cup Series.

“As an interested owner or interested future purchaser of a Charter, I expected that number to get there. I expected them to be able to achieve what they wanted. I expected the RTA to get this done. And when I saw NASCAR came back with a minimal increase, it freaked me out a little bit,” Earnhardt explained.

Charter Prices Skyrocketing

Another layer of Earnhardt’s apprehension in moving his team to the NASCAR Cup Series is the level at which Charter prices have skyrocketed. When the team Charters were first introduced heading into the 2016 season, teams could purchase them on the open market for roughly $2 million. Six years later, they are being listed at roughly 1,300% higher valuations.

This has led Earnhardt, and other prospective NASCAR Cup Series team owners to wonder if this is the true value of the Charters or if the Charters are a bubble that is just begging to burst.

“A Charter has gone, literally, in less than a decade, from $2 million to $28-30 million in value. And everyone is wondering if that $28-30 million valuation is real or if it’s a bubble,” Earnhardt said. “I went from kind of being able to somewhat justify that purchase to no way. Not at that number. Knowing what I know about what NASCAR came back with as an offer, knowing that these teams are operating at a loss. No way I’m going to spend $30 million to get a Charter that is going to operate at a loss and I’m going to get a very minimal amount of money out of the TV deal.”

While Earnhardt seemingly refuses to make a commitment until there is some stability in the financial situation for NASCAR Cup Series teams; if the negotiations do begin to swing in the favor of the RTA and the race teams, it could be too little too late for Earnhardt and JR Motorsports as the price, you would imagine, would continue to rise.

Earnhardt openly admits he probably should have pulled the trigger on a Charter when they were available in the $6-12 million range, but like someone trying to perfectly time the stock market, he just wants the asking price to decrease a little bit from where it is now.

“Now I don’t love the current price tag on the Charter at all. To get in a little lower would be nice. And I understand, we had our chance. We had a chance, not very long ago, to get a Charter at $6 [million], to get a Charter at $12 [million].”

What Kind of Leverage Does the RTA Really Have?

However, another factor in Earnhardt choosing to sit on the sidelines and wait is the fact that he doesn’t feel the RTA has the leverage it needs to force NASCAR into submission in their negotiations.

“I don’t think there will ever be a work stoppage or anything like that. There is nothing like that that is ever going to happen. So, I don’t know how much leverage the RTA really has,” Earnhardt said.

To which his co-host Mike Davis responded, “I don’t think they have as much as they think they have, that’s my personal opinion.”

Which led Earnhardt to question, “So, if they don’t have a lot of leverage, how do they get the number that they want?”

Here is the full 11-minute clip from this week’s Dale Jr. Download, where Earnhardt and Davis talk about the current Charter valuations and the revenue negotiations between the teams and NASCAR:

Where Do We Go From Here?

While negotiations of this nature have never really been public fodder in the world of NASCAR, they are very frequent in other professional sports leagues, like the National Football League, National Basketball Association, Major League Baseball, and the National Hockey League. In those sports, leagues negotiate with team owners and players’ associations to attempt to even the scales for everyone involved.

While this hasn’t been the structure of NASCAR since its founding in 1948, it seems as though there has been a seismic shift in how the sport is made up since the founding of the Race Team Alliance, and subsequently, the Team Charters, which guarantee a place in the NASCAR Cup Series field for 36 teams.

It’s important to note that in these types of negotiations, just because a group goes to the media to explain their side of things, or even air their grievances against the other party, the other side could have just as valid of arguments in their favor, and everything placed in the public domain should be taken with a grain of salt, as anything could be a ploy for more leverage in a negotiation.

It’ll be interesting to see if the sanctioning body chooses to start going public with their side of things as the teams have done recently, or if they’ll choose to keep their talks behind closed doors with the teams themselves.

Toby Christie
Toby Christie
Toby is the Founder, and Editor-in-Chief of Toby is also the co-host of The Final Lap Weekly Podcast. Additionally, he is an award-winning writer, and has followed the sport as a fan since 1993.

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