SBD/December 3, 2015/MMF Conference

Kauffman Hopes To Create More Stable Model For NASCAR Teams With Franchising System

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Kauffman is optimistic a charter system will be implemented in time for '16
RTA Chair Rob Kauffman yesterday talked about laying the groundwork for changes in NASCAR’s ownership structure and why he thinks those changes will leave the sport in a vastly improved condition. Kauffman, speaking during a rare one-on-one interview at the '15 Daytona Rising/NASCAR Motorsports Marketing Forum, maintained the position he took last month with SportsBusiness Journal that he is cautiously optimistic a charter system will be implemented in time for the '16 campaign. The system would be different in many ways from stick-and-ball leagues' typical franchise systems, but would be the closest thing NASCAR has had to such a system since its inception in the late '40s. The move is widely seen as transformational, because up to now, team owners could not accrue long-term values in their operations, no matter how long they were in the sport. Kauffman: "The idea is to create a more transparent and stable model for teams and help the teams operate. The financial element is one (part); the governance aspect of the sport is another -- just to have a little more predictability of revenue and the structure you have." Speaking with Exec Editor Abe Madkour regarding the concept, he said, "Right now, it's sort of an open-contractor system, where you can start Abe Racing, show up at Daytona and race. You can't just start a baseball team and play the Yankees. That's not how big, organized pro sports work. And I think NASCAR is a big, professional sport. ... The (goal is) for the teams to have a sustainable structure where they can pass beyond the current generation of owners to another set of owners and there's a somewhat predictable financial result that you can try to have so you can decide, 'OK, does that work or not? Is it financially viable?' But at least there's some clarity around how the structure works. ... It doesn't (make racing cheaper) per se; it helps put a governing structure in place about how the teams work together, how rule changes happen. ... Because what costs the most money for the teams (outside of paying drivers) is change; the more you're changing bits and pieces ... that's what really drives up the cost."

OWNERSHIP STAKES: Kauffman touched on his decision to purchase a stake in Chip Ganassi Racing, which he said is completed but will not be formally announced until after NASCAR's champions week. He said of dropping his stake in Michael Waltrip Racing, which folded, "I don't like to quit, but at some point, if you're a disciplined investor and business person, you have to make some decisions about whether it's working or not. The team had some setbacks in 2013 from their Spingate issue; we tried to reboot in 2014; in 2015, the team had all the resources I felt it needed to be able to perform, and we weren't able to make that combination. So that, plus the business structure of the sport -- which currently isn't very stable, where sponsor contracts are 70% of your income and you're kind of on a George Jetson treadmill of trying to renew your contracts -- it just wasn't getting it done. ... I don't mind spending money, but I hate losing money."

COMING SOON: Kauffman said the next priority for the RTA after completing the charter system would be the digital media revenue-distribution and structure side. He added, "Everyone feels there's a huge amount of growth in that, and it's pretty big, but it's not anywhere near as organized as it could be. Everyone thinks there's a lot of potential there and that's where we can ... grow the sport."
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MMF Conference, NASCAR

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