With charters, NASCAR and teams enter a new era

Michael Waltrip Racing owner Rob Kauffman is likely to be the first owner to test the value of one of NASCAR's team charters. Robert Laberge/Getty Images

NASCAR has set a news conference for Tuesday, when it will announce the implementation of a franchise-like system, according to those with knowledge of the discussions.

Now that the paperwork is signed, how much one of these franchises -- "charters," as NASCAR will call them -- is worth in the coming years is as big a guess as picking the winner of the Daytona 500.

The new system is to guarantee 36 owners a certain amount of revenue as well as starting positions in what will be a 40-car field, down from 43.

There would be no buy-in for the initial 36 charters -- they will go to owners whose cars have attempted every race since 2013. The owners, who likely will have to meet a performance clause to keep a charter, can opt to sell them to the highest bidder.

"Starting evaluation will be more of a technical revaluation, where you can look at the guaranteed revenue of the team and apply some kind of multiple to that to how exclusive the sport is and being part of the sport gives you," said Andrew Kline, a former NFL player with the St. Louis Rams and now managing director of sports investment bank Park Lane.

"From there, it's all art. It's the market that will dictate what the value is."

There currently are 38 full-time teams announced for the 2016 Sprint Cup season; four would not meet the criteria to get a charter. Joe Gibbs Racing and Stewart-Haas Racing are expected to purchase two charters from the now-defunct Michael Waltrip Racing.

The other two -- Wood Brothers Racing and one of the two HScott Motorsports cars -- would either need to purchase a charter from an existing team or have to be among the four at-large qualifiers each week. There have been 41 announced entries for the Daytona 500, although that number could change.

The system should give organizations more value to potential investors and buyers. Teams will still need sponsorship to be competitive -- sponsorship makes up about 70 to 75 percent of a team's revenues.

It is likely that whatever MWR owner Rob Kauffman sells his charters for, it will at least set an initial standard. And it remains to be seen whether future owners will come from racing fans with money or private equity firms.

"The jury is out still on NASCAR if that is a place where guys are going to be able to invest and find value in the short term," Kline said. "But I wouldn't doubt it. There is more capital than there are good deals and there are some really, really smart people looking at deals.

"And you have Rob Kauffman, who is a tremendous private equity guy who is setting the foundation for this and my guess is he is setting it up in a way so guys like him who are institutional investors can get comfortable with the way it is shaking out."

Kauffman decided to shut down MWR after seeing his team not be as competitive as he would have liked despite pouring his own money into the organization. A car buff and amateur sports-car racer, Kauffman made a decision with his wallet instead of his heart.

How the heart plays into the price of charters could dictate how much someone is willing to pay.

"If you grew up in New York and you grew up a Mets fan and you are a billionaire and your lifelong dream is to own the Mets, then when they come up [for sale] -- they rarely come up -- if it's you and four other billionaires, that's where the price jumps through the roof," Kline said.

"I don't know if NASCAR has that effect. Are you going to say, 'I have to own the No. 3 car?' I don't think so. You're more just buying an opportunity to run a team as opposed to buying a franchise in the true sense of sports where the franchise has a brand, it has a legacy, it has a devote fan following.

"In NASCAR, fans follow the driver."