American business organization
The Race Team Alliance (RTA) is a 501(c)(6) organization based in Charlotte, North Carolina, founded by businessman and former NASCAR team stakeholder Rob Kauffman. The organization currently consists of 15 NASCAR Cup Series teams and is led by Jonathan Marshall. The organization negotiates with NASCAR on major topics within the league on behalf of NASCAR race teams in said topics, including the implementation of the charter system and negotiating media rights deals. The organization within recent years has also overseen expansion, including the purchase of a motorsports news site along with a now-defunct NASCAR esports league.
The RTA has seen mixed reception throughout the NASCAR landscape; particularly for its influence in creating the charter system and the system's consequences within NASCAR. In recent years, while the system has received praise from some drivers and larger race teams for providing teams with needed tangible assets, the system has also seen mounting criticism from other smaller, independent teams who claim that the system drives out smaller teams, stunting the growth of smaller teams while also favoring larger teams.
While the reception of the organization has been mixed over the years, the charter system has unquestionably added a distinct tangible asset to the portfolio of NASCAR Cup Series team owners since it was founded in 2016.
History
Beginnings
On July 7, 2014, the Race Team Alliance (RTA) was officially announced by then-Michael Waltrip Racing stakeholder Rob Kauffman. At the time of the initial announcement, the RTA had nine teams, with the RTA being formed to negotiate with NASCAR to increase the value and cut costs on behalf of NASCAR teams.[1] Immediately afterwards, the organization came under scrutiny from NASCAR businessmen, including Bruton Smith and Brian France, who found it to be unnecessary and thought that NASCAR was sufficiently supporting them regardless.[2][3] However, by August, the RTA expanded to include every full-time team with the exception of Furniture Row Racing.[4] By 2015, Kauffman declared that his objectives were "overplayed", instead comparing the RTA to being in "kind of in the background and there's not much to talk about" despite possibilities of the RTA negotiating with NASCAR for increased financial aid.[5] Within the same year, the RTA also partnered with DraftKings and Rev the Vote to expand marketing deals.[6][7] By July, Kauffman stated that negotiations with NASCAR had "gone very well so far", praising an uptick in communication between the two organizations.[8]
Implementation of the charter system
In 2015, Hendrick Motorsports owner Rick Hendrick stated that negotiations with NASCAR to "create some sort of permanent value for the teams" were occurring in response to a phenomenon where if a team shut down, the owners would most likely go into debt as they could not sell off their equipment for their proper worth.[9] By December, the RTA and NASCAR COO Brent Dewar were "cautiously optimistic" that a franchising deal that would guarantee an unspecified number of starting spots per race along with some of the television revenue from media rights deals would be made.[10] The next month, Kauffman reported that the two sides were nearing an official deal.[11]
On February 9, 2016, a week before the 2016 Daytona 500, the RTA and NASCAR announced the implementation of the charter system,[12] which sought to cut costs and increase profits for teams.[13][14] With the system, a 36 charters were allotted to teams; this would guarantee them a starting spot in every race along with increased purse money for chartered teams. In addition, the NASCAR Cup Series field was limited to 40 cars and a team owner's council was formed.[12][15] Teams also had the opportunity to sell or lease their charters.[12][15] Three days later, Wood Brothers Racing left the organization as they did not receive a charter.[16] In later years, in response to open teams entering races, Kauffman defended the charter system, claiming that part-time teams devalued the worth of a NASCAR race team and that only chartered teams should enter races.[17]
For their part, NASCAR implemented a rule reserving their right to repossess charters belonging to teams finishing in the bottom three of owner points for three seasons in a row, at NASCAR's discretion,[18] although no team have lost a charter that way; for instance, in 2023, although Rick Ware Racing's No. 51 met the criteria, the team was not stripped of the charter.[19] Teams may also possess no more than four charters per NASCAR's four car limit in the Cup Series.
From the implementation of the Charter System in 2016 to 2024, the value of NASCAR Cup Series team Charters exponentially rose in value. In December 2016, Front Row Motorsports purchased a Charter from the now-defunct BK Racing for $ 2 million in a sale that did not include any other assets.[20] Heading into the 2024 NASCAR Cup Series season, Spire Motorsports reportedly purchased a Charter from Live Fast Motorsports for approximately $40 million.[21]
Business expansion
In January 2018, Sports Business Journal's Adam Stern reported that the RTA and NASCAR were collaborating on creating an esports league on iRacing, an online racing simulation video game.[22] By the end of the year, the esports league was officially announced; although, the league took place on NASCAR Heat 3.[23] Within 2018, the RTA also appointed Jonathan Marshall to run the organization.[24] In October 2019, the RTA purchased Speed51, a motorsport news site that primarily covers short track races.[25] The acquisition saw mixed reception; in an analysis from reporters from fellow motorsports news site Frontstretch, some thought the purchase could expand the marketing potential of NASCAR teams, while others thought it would suppress opinions that NASCAR teams did not agree with.[26] In 2021, the RTA rebranded Speed51 to become Racing America, along with promises of expanded content from NASCAR teams on Racing America.[27]
Attracting Celebrity and Influential Team Owners
Following the advent of the Charter System, NASCAR saw the elimination of the "Start-and-Park" teams in the NASCAR Cup Series. Those teams would start races solely to collect the last-place money after parking their car for various unconfirmable mechanical issues in the opening laps of a race.
With the elimination of the "Start-and-Park", the overall field in the NASCAR Cup Series, while being reduced from a maximum of 43 cars to 40 cars (36 Chartered entries and four Open entries), became much more competitive from top to bottom.
Along the way, many influential new faces crossed over into the NASCAR ownership circles following the creation of the Charter System, which closely resembles the franchise system in other stick and ball sports.
In September 2020, legendary NBA basketball player Michael Jordan partnered with veteran NASCAR race car driver to start a brand new NASCAR Cup Series organization, 23XI Racing.[28]
In January 2021, recording artist Pitbull announced that he had joined Trackhouse Racing as a co-owner alongside Justin marks.[29]
In June 2023, Joe Gibbs Racing announced that it had sold a minority stake in its NASCAR racing team to Josh Harris and Harris Blitzer Sports & Entertainment, which owns the NHL's New Jersey Devils, the NBA's Philadelphia 76ers, the NFL's Washington Commanders.[30]
Disputes with NASCAR, fears of league-splitting
In October 2022, the RTA went public with their thoughts on equitable revenue distribution within NASCAR, declaring that they thought current economic model that NASCAR was using had "little to no chance of long-term stability". Under the economic model, the $8.2 billion, 10-year media deal signed in 2015 allotted 65% of the deal to tracks, 25% to teams, and 10% to NASCAR. The RTA declared that while they would honor the current deal, in the next media deal that was to be made in 2024, they demanded more revenue to "cover baseline costs".[31] The next month, the RTA stated that they were exploring the idea of holding exhibition events that were not sanctioned by NASCAR in response to "struggling to turn a profit... thus forcing them to investigate other sources of revenue".[32] Despite a clause in the current deal prohibiting it, the exploration of the idea led to fears of a potential split similar to American open-wheel car racing between Championship Auto Racing Teams (CART) and the Indy Racing League (IRL) that occurred in the late 1990s.[33][34]
By April 2023, the RTA and its members were boycotting quarterly meetings with NASCAR, stating further displeasure with the revenue sharing system.[35] However, by the next month, the teams backtracked and requested "meaningful dialog", wanting permanent charters instead of requiring charter renewal along with previously stated economic concerns.[36] Part-stakeholder in 23XI Racing, Denny Hamlin, declared that making charters permanent would protect investors and give "security" to their investments to a team.[37] By February 2024, the RTA hired a antitrust lawyer, along with Hendrick Motorsports' vice chairman Jeff Gordon claiming that the team, despite being one of the most successful, had not made a profit within the last decade.[38]
Critical reception
Immediately after the organization was formed, it faced criticism from leaders and businessmen within the NASCAR landscape; particularly to fears of the RTA stunting NASCAR's growth. Three days after the organization was announced, Speedway Motorsports, Inc. (SMI) founder Bruton Smith heavily criticized both the organization and its founder Rob Kauffman, stating that NASCAR had already been supporting the teams sufficiently, declaring that he did not "know anything about it that's good for what we do. I don't see anything that's going to be good for the sport. Nothing."[2] Ten days later, the organization saw further criticism from then-NASCAR CEO Brian France, with him declaring that listening to one combined organization instead of hearing organizations separately "would probably be the worst thing we could ever do", calling the organization "unnecessary".[3] In 2018, in statements given on NASCAR Race Hub, former NASCAR crew chief Larry McReynolds stated his belief that the RTA was "chasing something that I'm not sure we're chasing", believing its existence was not "the healthiest thing for the sport".[39]
The RTA during its formation saw defense from longtime NASCAR personality and team owner Richard Petty, whose team was in the RTA. In interviews, Petty claimed that the RTA only wanted to spur the growth of NASCAR, claiming that "anything we do to tear NASCAR down is cutting our own throats".[40] NASCAR's president at the time, Mike Helton, later released a press statement on behalf of NASCAR in July 2014, declaring that the RTA did not pose a threat to NASCAR.[41] Helton later reaffirmed this position in February 2015, stating that while NASCAR preferred to talk to each owner individually, he had "respect for what the owners do through their business models".[42] Driver Tony Stewart gave comments of praise to the RTA's willingness to collaborate with NASCAR in an interview in July 2015.[43]
Charter system
The charter system has drawn both praise and criticism from various personalities in NASCAR, with the system itself becoming a highly polarizing topic. Current NASCAR president Steve Phelps has praised the system, stating that NASCAR was "all-in" on the system and that the system was "valuable to the sport overall" despite also saying the current system was not profitable to teams that had a charter.[44] The system has also seen praise from multiple beat reporters; when the system was first announced, The Evening Tribune's Ryan Papaserge defended it, stating that the implementation of it was "NASCAR adapting to the 21st century", defending how owners could have more freedom negotiating with sponsors or NASCAR leadership.[45] In 2023, Sportcasting's John Moriello declared that removing the system would "diminish the value of teams faster than cryptocurrencies can devour a retirement nest egg", repelling potential investors.[46]
Criticism of the charter system has come from various groups; particularly from smaller, single-car teams. After the system was implemented in 2016, Mike Hillman and his team, Hillman-Circle Sport, criticized the implementation of the system, which was officially implemented one week before the 2016 Daytona 500.[47] When Germain Racing sold its charter and announced that it would be closing in 2020, the driver at the time, Ty Dillon, stated that he believed that the charter system had made it difficult for single-car teams who had not been "at the top level of the sport or [had] an incredible amount of money to leapfrog into the top spot".[48] Another owner that shut down his team in the same year, Leavine Family Racing's Bob Leavine, stated that he blamed the charter system along with the pandemic as reasons for shutting down, while also stating that he did not get enough from selling his charter than what Leavine put into it.[49] The guaranteed entries for chartered teams also raised comparisons to Indy Racing League's controversial "25/8 rule" for the 1996 Indianapolis 500 by The Indianapolis Star's Curt Cavin.[50]
