Key Takeaways:
• NASCAR’s new seven-year media rights deal, which begins in 2025, will bring in approximately $1.1 billion annually, a 40% increase.
• The allocation of this income from media rights is a key issue in ongoing charter agreement negotiations.
• NASCAR teams, heavily dependent on sponsorships for revenue, want an increased share from the media rights deal.
• Continue to struggle financially due to the complicated nature of the sponsorship landscape.
• NASCAR aims to increase overall viewership through its diverse selection of broadcast partners.
Understanding NASCAR’s 2025 Media Rights Deal
NASCAR is about to embark on a fresh journey of broader reach and revenue with a new media rights deal in 2025. Fox Sports will open the season by broadcasting the first 14 races. Amazon will follow, streaming the next five races on Prime Video, then Warner Bros. Discovery simulcasting another quintet of races. The season will close with NBC Sports airing the final races.
Also, Amazon and Warner Bros. Discovery will broadcast practice and qualifying sessions throughout the season, adding another layer of complexity to the new media rights deal. While Fox Sports keeps the NASCAR Craftsman Truck Series, CW Network will take over the NASCAR Xfinity Series.
The Key Issue: Revenue Distribution
This new deal is projected to increase NASCAR’s revenue to approximately $1.1 billion annually. It’s a huge figure but the tricky part lies in how it is divvied up. Currently, tracks receive 65% of TV revenue, NASCAR takes 10%, leaving 25% for the teams. This arrangement is under scrutiny, with teams pushing for a larger slice of the pie. Teams are not guaranteed a profit and generating more revenue from broadcast rights could be a game-changer.
How NASCAR Teams Survive
Most North American sports leagues stand on multiple revenue sources, like ticket sales. However, NASCAR is a different animal. Owned by the France family, it stands on mostly private grounds. Teams predominantly rely on sponsorships for income.
A 2023 report revealed that 93% of the sport’s value resided in NASCAR and the tracks, only leaving 7% for the teams, emphasizing the financial unevenness. Teams are seeking increased revenue from broadcast rights to ease financial pressures and enhance their sustainability.
The Role of Sponsorship in NASCAR
In 2023, NASCAR’s biggest sponsor invested a hefty $35 million. The entire season saw an overall sponsorship value of $425.06 million. But sponsorships can end, with severe impacts on teams such as Joe Gibbs Racing, who lost a major sponsor in Mars, Inc., in 2023, creating a $20 million void.
Moreover, RFK Racing President Steve Newmark stated that most teams were losing money in the current economic model. This confirms that the reliance on sponsorships for overall sustenance is becoming increasingly difficult for teams.
The Implication of the Changing Sponsorship Model
The flavor of NASCAR sponsorships has altered over the years. Now, alliances through technology partnerships are at the forefront. This trend is projected to grow, especially with the introduction of the Next Gen car in 2022. Newer, tech-focused partnerships could provide support to teams but also expose them to financial risks.
The Media Rights Deal: Will it Suffice?
With escalating costs and an intense sponsorship environment, teams are desperately seeking better revenue sources. By increasing the teams’ media rights allocation, NASCAR could ensure enhanced financial stability, enabling them to invest in upgrades and competitiveness.
Broadcast quality has an important role to play in increasing fan engagement and viewership. The success of the media rights deal depends on how well Amazon, Warner Bros. Discovery alongside others promote their NASCAR races. While the potential for substantial growth exists, continuing the status quo won’t stabilize teams financially in the long run.