Sunday, January 21, 2018

COMMENTARY: NASCAR's Charter System Headed For Slippery Slope

God help us, it’s happening again.

NASCAR’s Charter System, which guarantees qualified teams a starting spot in each of 36 point-counting races each season and pays enhanced purse and point fund monies to charter-holding teams, has begun to be manipulated in much the same way its predecessor was in prior seasons.

Go FAS Racing owner Archie St. Hilaire announced recently that he has purchased an ownership stake in Joe Falk’s Circle Sport Racing. Circle Sport fielded cars for Jeffrey Earnhardt last season -- in concert with TMG Motorsports – before parting company during the offseason. Go FAS Racing will now use the newly-acquired Circle Sport charter on the #32 car driven by Matt DiBenedetto this season.

After acquiring the Circle Sport charter, St. Hilaire then sold a percentage of his Go FAS organization to Wood Brothers Racing, allowing them to assume control of the charter he used a year ago, for use on Paul Menard’s No. 21 Ford this season.

Let’s review…

Joe Falk owns most of Circle Sport Racing, but not all of it.

Archie St. Hilaire owns most of GoFAS Racing, and now, and a little of Circle Sport.

The Wood Brothers own most of Wood Brothers Racing, along with a little bit of Go FAS.

Confused? Join the club.

Based on the newly announced Wood Brothers/Go FAS “partnership,” it now appears that a Monster Energy NASCAR Cup Series team owner can pay a small amount of money – theoretically as little as $1 -- for a partial ownership stake in another organization, thereby assuming control of that team’s charter.

Much like the insanely complicated glory days of NASCAR Top-35 system, when owners bought, sold and traded owner points with dizzying regularity and few (if any) guidelines, the sanctioning body’s new Charter System has now been manipulated to the point where it no longer resembles what it was expressly designed to be.

Under guidelines hammered out by NASCAR and the Race Team Alliance prior to the 2016 season, 36 teams were granted charters that guaranteed them automatic entrance into every race for the next nine years. The idea was to reward teams for longstanding, full-season support of the series by giving them a tangible asset that could be sold, should they eventually elect to exit the sport. Charter holders were allowed to lease their charter to another team just once in a five-year period, should they elect not to compete themselves.

Despite no announced changes to the Charter bylaws in the last two years, it now appears that an new option has been added; the option to transfer a charter by selling a minority ownership stake to someone else.

As a result, a team owner without a single career start in NASCAR’s top series could – theoretically, at least – acquire a charter simply by purchasing a 1% share in a charter-holding team, instantly assuring himself of a guaranteed starting spot in every race.

That is categorically NOT what the Charter System was designed to be. In fact, it is exactly the opposite of what NASCAR and the RTA had in mind.

The original wording of the Charter bylaws included no mention of “co-ownership.” Either you owned a charter, leased one, or went without.

In addition to muddying the competitive waters, the concept of “co-ownership” strips all semblance of value from NASCAR’s 36 existing charters. Why would a team owner ever again pay six figures for a charter, when he can receive the same financial and procedural benefits by purchasing a tiny percentage of another, charter-holding team?

While it is tempting to point an accusatory finger at the parties involved in last week’s machinations, it would be short-sighted to do so. Falk, St. Hilaire and the Woods simply did what racers have always done; manipulating the gray area to their own benefit, without actually stepping outside the rules.

Falk found a way to protect a charter he was unlikely to use in 2018.

St. Hilaire laid his hands – in whole or in part – on no less than two charters, paving the way for his planned expansion to a two-car organization in 2019.

The Wood Brothers secured a guaranteed starting spot in every race this season, along with the beefier purse and point-fund checks that come with being a Charter holder.

Everyone wins, except for the sport, which once again finds itself sinking into a baffling morass of “how did THEY get a charter” puzzlement, the likes of which we hoped to never see again.

Hopefully, NASCAR will quickly draw a new line in the sand, adding language to its Charter bylaws to eliminate this “co-ownership” malarkey, once and for all.


  1. Agree with you 100% on this one Dave. Nascar needs to step up, and close the loophole. The rule should read: Ownership, lease, or complete sale ONCE YOU EXIT THE SPORT. That will make it impossible for teams to manipulate the rule. If you sell, you sell 100% ownership and exit the sport. No buying into another team to get their charter. You are in or you are out! Period!

  2. Thank you Dave! I was truly hoping I wasn't the only one confused by this new "Malarkey".

  3. Anonymous9:03 PM

    Dave, just think of it as nascar's version of DACA. Wood bros. Been around so long they might as well be legal, even if they haven't paid for it.

  4. Anonymous9:28 PM

    And now bk is using a charter as collateral on a 7 million dollar loan.....

    So what is true charter value

  5. Anonymous9:30 PM

    The thing NASCAR fears more than these silly charter transfer rules is for a charter to be stripped from a team or abandoned. The fans hate this silliness but actually just care that their favorite drivers and teams are on track.

  6. RobertG9:51 PM

    Isn't it up to owners?
    People pay what the market bears. There are only 36 charters.
    If there isn't anyone who Is us willing to sell a portion of their company for a charter, then you have to buy it for a lot more.

  7. Oh well, it seems this is the only way a smaller team can make in Nascar. It won't be long before we only have five teams or so competing in the sport

  8. Add to that the rumor a bank is claiming they took a charter as loan collateral that can really muddy the waters.

  9. TheNASCARJeff8:00 AM

    Questions, Will said minority owner share in any profits the team /teams incurs? If said team wins a race or the championship does is the minority owner featured in team photos and receive a championship ring?

    It was my belief that nobody could have an ownership in two separate teams. Example: If JR Motorsports added a Cup team Rick Hendrick would have to divest himself from the ownership with Dale Jr of the team. So, how can Archie St. Hilaire have ownerships in Go Fas and Joe Falk Racing Teams along with Wood Brothers?

    The answers are he cannot.. this whole bit with the RTA has become a joke in itself which is what NASCAR probably wanted to regain control of what is going on with the teams.

    Oh get rid of the heat/stage racing

    1. Rick Hendrick has 4 teams, that is the limit, that is what is limiting him from JR Motorsports from going to Cup.

      Although I am half suspecting that Hendrick's grooming Junior to at least partially owning Hendrick.

  10. Dave, I agree with you about this mess. However, I am not sure legally how you would stop it. How do you tell a company it cannot sell a portion of their company to another company? How do you tell them how much they have to charge for it? I think these teams have just found a way to show the this current charter system is useless.

  11. I'm not at all surprised.
    NASCAR team owners have shown themselves to be very smart and very adept at finding the grey areas of the rules. This is just a case of the owners finding a loophole and working with in the letter if not the spirit of the rules. NASCAR saw this with the Past Champions Provisional, then with the top 35 rules, and now with the charters.
    A good idea gone a bit bad. So how long til NASCAR has to determine if team A own 20% of a charter/team and team X owns 80% but is not using it... can team X still field a charter-less team and get the money for 'selling; the charter.. then maybe next year they 'buy it back from team A and sell lit to team B.
    in the absence of rules. .the team owners will create them.

  12. Anonymous3:21 PM

    New rule, one majority owner per charter. Charter can only be utilized by the majority owner. Charter can be sold but not transferred. Charter cannot be owned by more than a single team at a time. Charter must be sold for RMV as verified by an independent 3rd party appraiser. Team must use the charter they own, team cannot lease out an owned charter while simultaneously competing under another leased charter.

  13. I don't understand what the problem is, Dave. Other than being very confusing, the charter issue doesn't seem to hurt anyone. It's not unfair to anyone and it doesn't distract from the racing for the fans. There are much more important problems that need to be addressed in NASCAR that do affect the competition and there are many more confusing rules and practices that do affect the fans enjoyment. I would think the answer to the charter problem is that there is no problem at all.

    1. The problem is the sport is trying to create artificial value and isn't succeeding. They want new car owners to come into the sport and they aren't coming, instead existing teams are simply manipulating the system to keep them out.

  14. Anonymous8:39 AM

    The Charter system is a joke! When it started Kaufman got 2 charters that he NEVER used but sold and the Wood Bros got the shaft! The wood bros are exactly the team that charters should have been protecting!!!

  15. I always felt the “Charter System” was a flimflam job by Rob Kaufmann posing as the RTA to extract maximum value out of his soon-to-be defunct team. Honestly, two charters to a folding team and not one to, albeit, part time team with a long legacy in the sport.

    This will all the other permutations in the last 15 -20 years pretty much has me side lined.

    Call me strange but I like seeing the fastest car, period, get the pole. The highest finisher get the highest points and the highest points at the end of the season be the champion. But I am old and don’t do math well.

    Good article. Nice to see someone address this issue.

  16. Anonymous7:50 AM

    Understand and agree will everyones point of view. But alas we do need the Wood Brothers in this sport.

  17. And, lets not forget about how a "Brand Spanking New" team (StarCom Racing) has just been able to "acquire" a charter (from who, not sure) but, tell me that transfer was in the spirit of the charter laws??? Then there is the Premium Motorsports dealings that eventually allow Danica to be guaranteed a spot in her one-off wreck (I mean run) at the Daytona 500 this year! Just like everything else NASCAR does, it all gets messed up sooner or later! Here's to the France family, gots to love them!