When now-defunct NASCAR team Michael Waltrip Racing looked earlier this year at ways to cut costs, team executives realized that by selling their two private planes and working with a third-party carrier, the savings would be significant.
The move, which earned the team millions of dollars in recouped revenue, was part of a wider effort by the Race Team Alliance to pool together to save money on air travel — something which, according to group Chairman Rob Kauffman, has already begun to pay off considerably for teams.
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“These are just bottom-line, cash-flow boosts for the teams.”
Rob Kauffman
Race Team Alliance
Photo by: GETTY IMAGES
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The RTA, which comprises 18 NASCAR Sprint Cup Series teams, was created to improve the business model of the sport from the team side and help teams leverage their strength in numbers.
Kauffman, who helped found the RTA last summer and was formerly principal owner of MWR, said in the alliance’s first year and a half, collective savings by the teams on air travel alone have grown well into the high seven figures and potentially even into the low eight figures.
“We had two goals [when the RTA was founded], and the first thing we figured out was what were the big costs among the teams,” Kauffman said. “Air travel definitely stuck out. … At MWR, we sold two airplanes and used a third-party carrier. The money from selling two planes is millions, but also per year, you’re saving a lot of money [by not having to] maintain a hangar, pilots and these sorts of things, instead of just paying for a seat.”
As more teams set up their travel collectively and fly together, the savings will only increase, said Kauffman, who’s now a minority owner in Chip Ganassi Racing.
“The more teams that are participating, the more attractive it is for other people [in the airline industry] to come in and make a proposal, so it’s kind of creating a nice, virtuous cycle,” Kauffman said. “As teams that have planes go on, [their fleets] start to age and need maintenance, so they go, ‘Well, maybe it makes sense now that these other teams are doing it and seems to have a critical mass; maybe we should just do that instead.’ So it’s starting to get some nice benefits.
“As I said in the early days, no one really cares how teams get to the tracks as long as they’re there.”
While growing teams’ revenue was a major goal of the alliance, which has struck sponsorship deals with DraftKings and Rev The Vote so far, lowering costs was prioritized as well. In that sense, Kauffman said he thinks the RTA is on track in achieving its objectives.
“It’s kind of what we were hoping for, and it’s turning out to be true,” he said. “Probably another area that’s unexciting but is a significant cost item is insurance, so we’re looking at a pooling concept that will take a little time to implement but will hopefully have savings of more magnitude. These are just bottom-line, cash-flow boosts for the teams, so it’s a huge move.”
Andrew Murstein, principal owner of Richard Petty Motorsports and Medallion Financial Corp., which brokers taxi medallions in a system that’s not entirely unlike the still-developing NASCAR charter system, agreed with Kauffman that savings over the last year and a half have been positive.
“We are definitely moving in the right direction and feel there can be significant cost savings in the future,” Murstein wrote in an email.
Steve Newmark, president of Roush Fenway Racing, added that future opportunities for savings could include rental cars and lodging.
“The savings that we’ve seen on the aviation side have been meaningful, and we’re hopeful that there are other opportunities down the road that will be similar in nature,” Newmark said. “By working together and recognizing, ‘This is an area of inefficiency and a place, by working together, we can do a better job,’ I think that’s what’s happening, we’ve consolidated our air charters on a number of teams, and that’s allowed teams to save a lot of money.”
Trying to implement the charter system for 2016 is the RTA’s chief priority, but Kauffman said another area it eventually wants to focus on is cutting down on competition-related costs.
“The rules process and testing policy are seven-figure or more costs to the teams in aggregate by themselves, so it’s pretty big magnitudes,” he said. “A top-quartile team costs roughly $20 million a season [to run], plus or minus. If you can knock proportionately half a million out of those costs, that’s a big difference.”
