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SBJ/Aug. 4-10, 2014/Leagues and Governing Bodies
Are changes coming in how NASCAR divides TV money among teams and tracks?
Published August 4, 2014, Page 4
NASCAR is considering a change to the way it splits TV-rights money among teams in its three top series.
Chairman Brian France said last month that the sport is “rethinking” how it divides TV money among teams with an eye toward increasing the amount given to Nationwide Series teams. He added, “That’ll be something that we will consider and we will look at to make sure that the appropriate values are where they need to be.”
The potential change would come as NASCAR begins a new TV-rights agreement with Fox and NBC next year. The broadcasters will begin paying NASCAR $820 million annually in 2015, a 44 percent increase from the $560 million that Fox, Turner and ESPN are paying this year.
Teams in the Nationwide Series could see a higher share.
The TV money is split across all three series according to a formula NASCAR developed in the early 2000s when it sold its rights collectively for the first time. Tracks receive 65 percent, teams receive 25 percent and NASCAR receives 10 percent.
The money NASCAR teams receive is then split by series. Sources said approximately 93 percent of the total revenue goes to Sprint Cup Series teams; 5 percent goes to Nationwide Series teams; and 2 percent or less goes to Camping World Truck Series teams.
NASCAR is looking at reducing the percentage of TV money that goes to the Sprint Cup teams and increasing the amount that goes to the Nationwide Series. The idea would be to make the percentage reflect viewership and ratings for the two series, according to sources familiar with NASCAR’s plans. The Sprint Cup Series last year averaged a 3.6 Nielsen rating and 5.8 million viewers a race, while the Nationwide Series averaged a 1.2 rating and 1.7 million viewers.
NASCAR declined to comment on France’s remarks and the potential for a change in the way TV money is split among teams.
Sprint Cup teams rely on TV money for about 20 percent of their total annual revenue, so a decrease in their percentage of TV money would have a limited effect on their bottom line. But a change in the split would come at a time when TV money is being discussed throughout the sport.
Sprint Cup teams recently pulled together to create the Race Team Alliance, a business association designed to help teams reduce costs and increase revenue. The group has said it doesn’t plan to lobby NASCAR to change the way it divides TV revenue, but several owners in the past have called for increases in the amount of TV money teams receive, and the organization and NASCAR have had to field several questions about TV revenue in recent weeks.
Under the current formula, Sprint Cup teams are receiving approximately $140 million. That total next year would rise to $190 million for teams if the current 93 percent formula remained in place. But if NASCAR reduced the total money it allocates to the Sprint Cup Series by, say, 3 percent, Sprint Cup teams would share $184 million.
Many of those Sprint Cup teams like Richard Childress Racing, Roush Fenway Racing and Joe Gibbs Racing own Nationwide Series teams, so the losses they incur would be offset by increases in the amount of TV money awarded to Nationwide Series teams. But several Sprint Cup teams wouldn’t be as lucky. Teams such as Hendrick Motorsports, Ganassi Racing and Stewart-Haas Racing currently don’t field Nationwide Series teams. As a result, they wouldn’t be able to recoup any reduction in Sprint Cup-related TV money.
Race Team Alliance President Rob Kauffman downplayed any potential change in the TV split among teams and noted that increasing the amount of money that goes to Nationwide Series teams had the potential to help the sport.
“It’s up to NASCAR to decide how they want to allocate the money,” Kauffman said. “It doesn’t strike me as a very profound change.”