A lot of interesting details and comments were made during the PRI Show this week. There was one comment made during the Rico Abreu announcement that really caught the attention of fans, media and teams around the industry… revenue sharing. If you are a fan of NASCAR, you probably know a little bit about revenue sharing and the charter system that they have in place for the teams. The somewhat controversial system was put in place to ensure that teams are treated as “franchises” like they would be in the NFL, NBA or any other professional sport.
When SprintCarUnlimited’s Jeremy Elliot dropped the Abreu news, we got the first public statement about what High Limit and FloRacing are doing behind the scenes for teams and drivers. Part of Rico’s decision making process factored in High Limit’s dedication to safety and what they are doing on the business side of things with charter systems and revenue sharing. You can read Jeremy’s full article for free without a subscription here – Rico Abreu will compete full time for a national series for the first time with High Limit in 2024.
In an interview with FloRacing’s Michael Rigsby, Brad Sweet briefly discussed the topic of revenue sharing and charter systems. He believes that it is innovative and a new way to create sustainability for sprint car owners. In order to get the benefits that High Limit offers, teams sign on and then own a charter that is associated with High Limit Racing. Other details were not released, but it sounds like as the series progresses and teams are consistently apart of it, they will start to see more value and benefits associated with the charter. According to Sweet, they do not have all of the details worked out, but it is definitely part of their pitch to get teams interested in High Limit. Brad starts talking about it around the 5:50 mark of the video below.
So, what does this mean for High Limit Racing and the sport of sprint car racing in general? Is it a good thing that they are trying to bring a NASCAR concept into the dirt world? Will there actually be enough streaming revenue from FloRacing to truly benefit teams? Could it lead to more possibilities down the road that help grow the sport?
In order to understand revenue sharing and charter systems better, let’s take a brief look at how it generally works on the NASCAR side of things. NASCAR adopted their charter system in 2016 to give teams something of value to be able to sell/lease/hold/protect. It provides owners and teams with stability so that they do not have to rely as much on funding from sponsors and other entities.
NASCAR Charter Overview:
- Created in 2016
- 36 Charters (franchises in NFL/NBA/NHL/MLB terms)
- NASCAR can revoke charters based on performance
- NASCAR teams receive about 40% of industry wide revenue
- 25% of streaming/TV revenue goes to the teams
- 65% of streaming revenue goes to the tracks
- Charters guarantee 36 teams a starting spot in every race
- Teams that race without a charter receive less money from purses
Update: Some details regarding High Limit’s charter system have been made public. They are as followed:
- High Limit will reward 10 charters
- “Batch 1” will go to the top 5 full-time teams in points in 2024
- “Batch 2” will go to the next top 5 full-time teams that do not already have a charter based on their average points total from year 1 and 2 in 2025
- Revenue distribution begins in 2026
- Chartered teams will receive 50% of High Limit’s digital streaming revenue
- Charters will replace points fund payouts and tow money in 2026
- Charters cannot be leased to other teams
Unanswered:
- Guaranteed Starting Spots?
- What happens when a team wants to leave the series? How will the charter be valued and sold?
- Where is the motivation for teams outside of the charter program to join or stay with the series during a down season?
- Will un-chartered, full-time teams be compensated with a separate points fund system once the original system is replaced?
As Sweet said in his interview, the NASCAR charter agreement is over 100 pages long and is very complex. Since details have not been fully released, we can’t say how it will work and if both teams and tracks will be receiving benefits. With the cost of owning a sprint car team increasing substantially every year, will there be enough revenue produced to truly help their teams?
NASCAR just signed a new $7.7 billion dollar TV deal across multiple platforms. It is safe to say that we will not be seeing a number like that anytime soon from FloRacing and High Limit. In the original High Limit press conference, FloRacing indicated that the 11-race High Limit season in 2023 generated more than 8.5 million views. Included in those numbers were social media views, Youtube views and other related pieces of content. It did not necessarily mean that 8.5 million people were tuning in and streaming every High Limit race. Additionally, all motorsports coverage from FloRacing reached more than 142 million views in 2023.
With new momentum, a solid driver roster, and tons of excitement surrounding the High Limit series, I think it is safe to say that those numbers will increase. Simply having Rico Abreu running a full, 60-race schedule and the possibility of Kyle Larson running more than 11 races is going to boost those numbers. Add Brad Sweet, fan-favorite Jacob Allen, and rising-star Corey Day to that mix and you have fans from all over the country tuning in.
FloSports does not publicly release how many subscribers they have and how much of their revenue is specifically coming from High Limit or dirt racing in general, but the company has experienced exponential growth over the last few years. Based off of a few different evaluation companies, FloSports has an estimated annual revenue of over 100 million. Specifically, FloRacing has nearly 500,000 followers on Facebook. If just 100,000 of those followers subscribed for roughly $175 a year, thats 17.5 million dollars in just racing specific subscribers.
I don’t know the full streaming numbers, but I do know that if their goals of growing the sport and getting more attention on sprint car racing work out, there will be plenty of streaming revenue to go into the pockets of these teams. Whatever is in that proposal was enough to convince Rico Abreu and 10 or more other teams to sign on full-time to a new series, instead of joining the World of Outlaws, an established company with an impressive points fund and tow package.
Even a tiered, performance based charter system that grows like an investment has to be something that is intriguing to sprint car owners everywhere. Since we now know that High Limit will be providing 10 teams with 50% of their digital revenue, will that be enough to make teams profitable? The fact that the charter system will be replacing points fund money tells me that there is more than enough money to go around.
A few weeks ago, David Gravel was asked about World of Outlaws drivers receiving bonuses from DIRTVision based on streaming numbers on his YouTube show. However, it is important to note that WRG owns the World of Outlaws and DIRTVision, so any money coming from streaming numbers is likely already being funneled back into the World of Outlaws to support the points fund and other things. Revenue sharing is not really an option there and things are a little different on the High Limit / FloRacing side. Yes, FloRacing has invested a minority stake in High Limit, but they do not own the series.
There are a lot of unanswered questions and information that has yet to come out but I do think that this is an important step in growing the sport of sprint car racing. The sheer possibility of having more than a handful of national sprint car teams be able to see some kind of profit during a season is almost unprecedented. Plus, the possibilities that come along with a potential charter system are endless. I am getting way ahead of myself, but in order to grow the sport and make sure that there is a steady interest in High Limit from teams, the series will have to do something to provide sustainability for the current teams and future teams.
What does sustainability look like for future teams? The return of the All Star Circuit of Champions as High Limit’s “Xfinity” series or feeder division. No, this is not even a rumor at this point but I do think that it is absolutely in the cards in a few years. High Limit needs to establish themselves, they need to have consistent support and they need to make sure the sport is healthy for future success. How do they do that? Bring back the All Stars in a few years as their support class. It would be the most logical way to keep local teams happy and keep young talent rising through the ranks.
Not every team can just throw themselves onto a national tour with a young driver and little experience. That is why NASCAR has feeder divisions and why I could see High Limit expanding their charter system into something similar. Time will tell, but I think the words “charter system” and “revenue sharing” being tossed around the sprint car world is a great sign of what’s to come.
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