The FTX implosion has turned a spotlight on coverage of the fallen crypto king—who, even while under investigation, can’t stop talking to reporters. “There were a lot of people who believed in him,” says one Forbes journalist, “and the media portrayal of him is a reflection of that.”
Last week, as Sam Bankman-Fried’s crypto exchange, FTX, was imploding, a journalist from Forbes sent him an email. A year earlier, the magazine had put Bankman-Fried—or SBF, as he’s known—on the cover of its annual Forbes 400 issue, hailing him in a profile as “the world’s richest 29-year-old.” He was worth $22.5 billion. Now, Chase Peterson-Withorn, who coauthored the story, was writing Bankman-Fried to notify him that the publication planned to drop him from the ranking, given that he had lost nearly all of his money in a matter of days, amid a liquidity crisis after FTX allegedly used billions of dollars’ worth of customer assets to fund bets by Alameda Research, a sister trading firm.
“He hadn’t really been talking to anyone,” Peterson-Withorn told me. “Presumably, he was hard at work trying to save FTX and FTX US and Alameda and all this money from his investors and his customer user funds.” Which is why the journalist was surprised to get an email back on this comparatively trivial matter. Bankman-Fried said he couldn’t “confidently dispute” that he was no longer a billionaire, as he was “not totally clear” on his net worth at the moment. This was two days before FTX, once valued at $32 billion, would file for bankruptcy. “He’s talking when other people wouldn’t,” noted Peterson-Withorn.
Indeed, even as he’s now under federal investigation, Bankman-Fried can’t stop talking. A few days later, he was on the phone past midnight with New York Times reporter David Yaffe-Bellany. And a few days after that, he DM’d Vox’s Kelsey Piper, a fellow effective-altruism proponent, to try to explain himself, leaving Piper “appalled by much of what he said.” “Each individual decision seemed fine and I didn’t realize how big their sum was until the end,” Bankman-Fried wrote at one point. (At another: “fuck regulators.” Hours later, he tried to walk some of these comments back.)
Bankman-Fried’s swift rise played out through the media—and now the same is happening with his downfall. A few months ago he graced the cover of Fortune alongside the question, “The Next Warren Buffett?” Jeff John Roberts, who wrote that cover story, noted this past week how “it felt odd” to now be writing about the possibility of his subject going to prison. When later asked on Twitter what he would have changed about his approach, Roberts replied: “Always easier in hindsight but…I would have pushed harder for documents. I asked but didn’t insist on them.”
The unraveling of one of the world’s largest cryptocurrency exchanges and the shattered mythology of its leader have already prompted scrutiny of the media, which has previously wrestled with criticism for propping up past business or tech wunderkinds, like Theranos’s Elizabeth Holmes. And coverage of Bankman-Fried extended well beyond the business section as his stature grew in Washington—not only as one of the biggest Democratic donors, but as a voice in Capitol Hill policy discussions about crypto regulations. Journalists are not only facing questions about past coverage; the Timeswasaccused this week of not pressing Bankman-Fried hard enough during Sunday’s interview, with Gizmodo calling the article a “bizarre softball.”
Frank Chaparro, editor-at-large at crypto news firm The Block, said the media played a role in validating Bankman-Fried “as a serious, honest market participant,” along with major players publicly linked to FTX—from top venture capital firms (Sequoia, SoftBank) to blue-chip investors (Alan Howard, Paul Tudor Jones) to NFL star Tom Brady, who starred in an ad campaign for the company. “It’s very difficult to exactly pinpoint what it was that bred this legitimacy in the beginning, but once it started to snowball, I mean—people trust Tom Brady. People trust CFTC commissioners. People trust Fortune magazine,” said Chaparro.
The extent of the damage is just starting to come into focus. The first detailed look at FTX’s business came in a bankruptcy filing on Thursday, in which newly appointed CEO John J. Ray, who has overseen large-scale bankruptcies, including Enron’s, said he had never seen “such a complete failure of corporate controls.” Hundreds of thousands of people may be impacted. More revelations are sure to follow. (Bankman-Fried has maintained that FTX did not directly invest customer deposits, and in the Vox interview, he blamed FTX’s losses on “messy accounting.”)
“Along the way there were a lot of people who believed in him, and the media portrayal of him is a reflection of that,” said Forbes’s Peterson-Withorn, adding that “the media didn’t invent Sam Bankman-Fried. There were all these investors throwing big money behind him and lavishing praise, and celebrities doing high-profile ads with FTX,” by the time Forbes put him on the cover. “Once everyone else is on board,” he said, “then it starts to take off.”
Journalists might not have invented Bankman-Fried, but he appeared irresistible to profile writers and TV bookers (and apparently authors, as Michael Lewis spent the past six months or so embedded with him). His quirkiness was emphasized in various profiles (including one commissioned by Sequoia for its website)—a vegan crypto mogul with unusual sleeping habits (on a beanbag chair in the office, when not in the Bahamas penthouse he shared with about 10 roommates) and a penchant for wearing shorts and playing video games. There’s a telling moment in one such profile, published in the Times in May, in which Bankman-Fried’s colleague recalls how he once suggested that the FTX cofounder cut his hair before a TV appearance, with Bankman-Fried reportedly replying, “I think it’s important for people to think I look crazy.” Bankman-Fried knew how to use the media to his advantage, and he was also donating to nonprofit investigative outlet ProPublica and investing in newly launched Semafor—while reportedly trying, unsuccessfully, to court journalists Matt Yglesias and Nate Silver for a Substack competitor.
For all his eccentricities, Bankman-Fried was also personable and seemingly sincere, which surely helped charm the media. “I interviewed SBF at Coindesk’s Consensus event in NYC back in early 2018, before anyone knew who he was,” said reporter Ian Allison, whose story on Alameda’s balance sheet for crypto news site Coindesk prompted FTX’s collapse. “I remember he spoke very rapidly and was full of passion about trading techniques, much of which was beyond me,” but “he struck me as a decent chap, and also kind and patient, explaining things to me, etc.”
Peterson-Withorn said Bankman-Fried “at least gave the impression of being very forthcoming,” noting how “you can help shape the narrative if you are someone who always answers the phone.” He’d engage with reporters directly and on air, talking about everything from politics on Meet the Press to cryptoregulation and Russian oligarchs on CNBC. “There was this degree of flexibility in what he would be interested in prognosticating on that got him in front of a lot of people, a lot of journalists,” said Chaparro. “Once he became a multibillionaire, I always pondered, Why is he still doing this? Why is he still literally talking to reporters every day? Shouldn’t he be running the company?”
It’s not like no one was asking questions; as early as 2019, Chaparro pressed Bankman-Fried on the potential conflicts of interest between Alameda and FTX. “But COVID and the period of go-go momentum that resulted from it created the perfect opportunity, in my mind, for someone like this to rise to the top without being questioned,” Chaparro told me. In an interview from April that’s been recirculating in recent days, Bloomberg Opinion columnist Matt Levine suggests Bankman-Fried is “in the Ponzi business,” and he doesn’t totally disagree.
When I asked Alyson Shontell,Fortune’s editor in chief, about the media’s handling of Bankman-Fried, she directed me to a newsletter she wrote defending the August cover. “The best covers visually capture a moment in time, creating a cultural symbol that depicts that moment’s leaders and trendsetters—even if their success is fleeting or their triumphs end in disaster,” she wrote. “I’m proud that we had the foresight to capture SBF at his peak.” In an email, Shontell noted that the magazine hadn’t dubbed Bankman-Fried the next Warren Buffett—that had been suggested by a longtime crypto insider—and that the cover had included, below that provocative question, how Bankman-Fried could still “crash and burn.”
When Hong Kong’s pro-democracy news outlets Apple Daily and Stand News were forced to close by authorities in 2021 under a sweeping Beijing-led crackdown on dissent, Jane Poon made herself a promise.
Poon, a Hong Konger who worked in the city’s media for nearly three decades before moving to Australia in 2017, promised to do whatever she could to keep the spirit of the defunct outlets alive.
After more than a year of planning, Poon’s vision became a reality in mid-January with the launch of The Points, a new online media outlet dedicated to covering news about Hong Kong and its growing diaspora.
Based entirely overseas, The Points, which publishes in Chinese, hopes to fill the gap left by the demise of most independent media in Hong Kong, where journalists now face the risk of arrest and imprisonment for coverage considered critical of Beijing.
The Points’s staff is made up of former employees of Hong Kong media, including Apply Daily and Stand News, who moved overseas amid the city’s crackdown on press freedom and other civil liberties.
With staff in Australia, Canada and the United Kingdom, the outlet hopes to be the first 24-hour news operation for Hong Kong that is based outside the city.
The Points’s recent coverage includes the Hong Kong Legislative Council’s unannounced decision to redact the names of legislators in transcripts of official proceedings, and a recent meeting between Hong Kong activists and Australia’s Minister of Foreign Affairs Penny Wong.
“As some Hong Kong journalists disperse to other places, I think that although the Hong Kong media is in a difficult situation, it might also be a chance to turn a crisis into an opportunity,” Poon, who worked for Apple Daily’s parent company as the head of digital news for Next Magazine, told Al Jazeera.
“We could set up a media platform for the journalists in various places who may work together to cover stories across countries for the Hong Kong diaspora, and also cover stories which are not allowed to be published in Hong Kong anymore.”
Hong Kong, a British colony for more than 150 years before its return to Chinese sovereignty in 1997, was long regarded as one of Asia’s most vibrant and freewheeling media scenes until the imposition of a Beijing-drafted national security law in 2020.
Jimmy Lai, the garment-factory owner turned media tycoon who founded Apple Daily, is facing up to life in prison in a sedition and foreign collusion trial scheduled to begin in September following repeated delays.
In November, six of Lai’s former employees, including Apple Daily’s editor-in-chief, pleaded guilty to conspiring to collude with foreign forces by advocating for sanctions against the Hong Kong and mainland Chinese governments.
Two former editors of Stand News, which closed in December 2021 after its offices were raided by national security police, are currently on trial for sedition.
More than 1,500 journalists in Hong Kong have been put out of work in the crackdown, according to an analysis carried out by Bloomberg News last year, with many former media workers moving into other industries or migrating overseas.
At the same time, the growing Hong Kong diaspora — about 150,000 Hong Kongers have moved to the UK alone since the passage of the National Security Law – has created opportunities for new ways to report on Hong Kong.
The Points follows the launch of a number of other Hong Kong-focused outlets located abroad, including Flow HK, which is based in Taiwan, and Commons Hong Kong, which is based in the UK and Taiwan.
“There’s always a need for a vibrant, independent press. It’s hopeful to see resilient journalists inside and outside Hong Kong continue their excellent journalism,” Iris Hsu, China representative for the Committee to Protect Journalists, told Al Jazeera.
“If the overseas media outlets provide a safer platform for Hong Kong’s critical journalism that has been under attack for years, it would help preserve Hong Kong’s press freedom and slow the government’s deliberate erosion of checks and balances of power.”
The Hong Kong government has repeatedly insisted that the city’s press freedom remains intact. Hong Kong’s leader John Lee last year said there was no need to talk about defending press freedom because it “exists and we attach great importance to press freedom”.
Reaching across the divides
For now, The Points has a modest size and reach.
The outlet relies on six full-time journalists and freelancers, according to Poon, who said the website attracts about 3,000-4000 readers each day, although that number is growing fast.
Finn Lau, The Points’s executive director, said the outlet relies on a small pool of reader donations to pay its staff and is exploring other sources of revenue, which could include government grants or wealthy donors.
“Financial sustainability is one of the key issues, that’s why it took us around 15 months to prepare our media before launch,” Lau told Al Jazeera. “For the upcoming two years, our top priority must be to get the media [outlet] to be financially sustainable.”
Despite its links to Apple Daily, The Points is also keen to reach Hong Kong people from across the political spectrum and to avoid charges of political bias and sensationalism that critics levelled at the defunct tabloid, said Lau, a Hong Kong activist known for his opposition to Beijing.
“On the other hand, we don’t want to self-censor. So we are trying to find a dedicated balance between being a tabloid or being a so-called … intellectual newspaper.”
Apart from financial challenges, The Points has had trouble getting the word out on social media.
Soon after its launch, the outlet’s Twitter account was suspended without warning or explanation, Lau said.
Lau said the account had not violated Twitter’s terms of service, but it may have been targeted with vexatious complaints by pro-Beijing figures or fallen victim to the shortage of staff at the platform following Elon Musk’s takeover. The account has yet to be reinstated.
“We are very frustrated with Twitter and we are still considering what we should do with this platform,” he said.
Still, Lau has big ambitions for the media outlet.
“I am rather optimistic about the visibility of this project. Actually I am a pragmatic dreamer,” he said. “That’s why I believe it might take one or two years to stabilise.”
For Poon, the launch of The Points is about more than upholding press freedom. She hopes the outlet can help preserve Hong Kong’s distinct culture and values.
“We have our next generation. We have to look after our children,” she said.
“That’s why it’s important to have our own media, to tell our own stories. Then our history and everything can be given down to our next generation.”
As large corporations make headlines showcasing an apparent decline in Canada’s newspaper industry, Kevin Weedmark and the Moosomin World-Spectator continue to thrive.
Weedmark purchased the southeast Saskatchewan weekly paper in 2002, with a circulation of 1,700. Today, that number sits around 5,000, bringing overall circulation to 43,000 when the publisher’s two additional regional papers are included.
“When I bought this newspaper, I didn’t think of it as a business-first. I thought of it as a community service-first,” Weedmark said Monday.
“There’s nothing magical about Moosomin, or what we’ve done here, that you couldn’t do anywhere. I mean, a proper newspaper that’s there to serve its community first is going to be successful.”
It’s a stark contract to the reality playing out for some major papers owned by Postmedia Network Corp.
Postmedia employs about 650 journalists across Canada, and also owns Saskatchewan’s two major urban daily newspapers: the Saskatoon StarPhoenix and the Regina Leader-Post.
It’s selling the historic StarPhoenix building and all remaining journalists will work from home. The papers’ printing press will also be moved from Saskatoon to Estevan, Sask., located around 200 kilometres southeast of Regina.
LISTEN | What does the future of newspapers in Saskatchewan look like?
Blue Sky50:02What does the future of newspapers in Saskatchewan look like?
It’s a time of great change for Saskatchewan’s two biggest daily papers and those changes are very alarming for the people who work at those papers and those who depend on them for local news. Today on the show we take a look at what is to blame for the latest Postmedia problems and we talk to weekly newspaper editors across this province who say the future is hyper-local. We heard from Journalism professor Patricia Elliott, Moosomin world spectator Editor Kevin Weedmark, Prince Albert Daily Herald Editor Jason Kerr, and Steve Nixon Executive Director of the Saskatchewan Weekly Newspapers Association.
Austin Davis, a journalist with the Regina Leader-Post since 2014, tweeted about the changes on Jan. 25.
“It’s more uncertainty for beleaguered, resilient newsrooms and hardworking reporters,” Davis wrote.
“I can’t and won’t defend these decisions. In nine years, I’ve seen dozens of colleagues take buyouts or leave due to burnout, stress and low pay. The survivors are expected to continue publishing the same standard of product. It is impossible.”
‘Maddening and frustrating’
Trish Elliott, a distinguished professor of investigative and community journalism at First Nations University of Canada and an executive member of J-Schools Canada, wrote an opinion editorial for CBC Saskatchewan published Monday and joined Blue Sky later that day to share her thoughts.
“It’s just madding and frustrating. The state of media concentration in Canada has been this like growing train wreck,” Elliott told CBC’s Heather Morrison.
“It seems like every 10 years we have a commission saying that the way media is owned here needs to be better regulated. But nothing ever happens.”
Elliott pointed to the fact her local newspaper in Saskatchewan is currently owned by a hedge fund in the U.S.
“We’re not being protected from foreign ownership, obviously, as the majority shareholders are in the U.S. for Postmedia. And again that is a regulatory failure,” she said.
Steve Nixon, the executive director of the Saskatchewan Newspapers Association, also pointed out the impact large corporations are having on the overall state of print media.
“Good journalism costs money,” Nixon said.
“The money that’s being used to pay journalists is being sucked out, mainly, by two major companies, neither of which are owned by a Canadian entity.”
Independent daily seeing success
Jason Kerr is the editor of the employee-owned and operated Prince Albert Daily Herald, one of Canada’s few independent daily newspapers.
In 2017, a group of employees reached a tentative deal to buy the paper from Star News Publishing Inc., preventing the paper from folding. The deal was completed on May 1, 2018, with the Prince Albert Herald beginning operation under FolioJumpline Publishing Inc.
“It’s definitely been a lot of work, but it’s been very rewarding and the community has responded by backing us,” Kerr said.
Kerr, who has worked at the paper since 2015, said being employee-owned and operated has allowed the paper to focus in on local stories and support community events.
“It just left a huge gap, so there’s not a lot if you want to get your news from a print newspaper,” Kerr said, adding the north is often referred to as a “media desert.”
“A place where there’s just a ton of stuff happening, a ton of news, both good and bad, that’s going unreported because there aren’t enough reporters up there.”
The independent publishing company behind the Herald has looked to fill that void. It prints a monthly stand-alone newspaper called The Northern Advocate, which is distributed across northern Saskatchewan and Manitoba.
Kerr said the other great thing about being an independent entity is having the choice to reinvest in the community and support local events.
“There’s really no discussion,” he said. “We just look at and go, ‘Yeah, this is something we want to support and we support it.'”
When senior team executives in NASCAR filed into a Team Owner Council meeting this month, they were struck to find both Jim France and Lesa France Kennedy there. France, the chairman and CEO of NASCAR, often attends the quarterly meetings of the council that was founded in 2016, but France Kennedy’s attendance is more rare. France Kennedy is the executive vice chair of NASCAR and niece of France, whose father founded the sport in 1948.
Their combined attendance came on the heels of a tumultuous last six months that included the teams infuriating NASCAR’s brass by going public with a dispute over revenue sharing. The strained talks turned some relationships frosty between NASCAR executives and team leaders.
While France Kennedy was in Charlotte in part for the NASCAR Hall of Fame ceremony, the fact that both showed up at the first major meeting between the teams and NASCAR this year shows that NASCAR’s ownership remains engaged toward striking a new revenue-sharing deal with the teams, sources say. Such a deal would effectively bring labor peace through the duration of the next media rights agreement, which could run near or past the end of this decade.
NASCAR is celebrating its 75th anniversary season this year, and whether and how the tenuous situation is resolved could affect NASCAR until its 100th.
At issue is that teams want to get more money annually from the league, saying they face a major struggle to turn a profit. The largest revenue stream in NASCAR is the $8.2 billion, 10-year media rights agreement with Fox Sports and NBC Sports that started in 2015 and expires after 2024. NASCAR could try to hash out a deal with teams after it strikes the new media rights agreement, sources say, but instead it plans to negotiate with teams as media talks advance. Teams do get other monies, but the TV revenue is by far the largest stream, sources said.
In the current TV agreement, tracks take in 65% of traditional media revenue, while 25% goes to teams and 10% to the sanctioning body. Via the sport’s governing charter system, teams earn as much as about $8 million to $10 million per car, per year, from the league if they are the sport’s best performers, while poorly performing teams sometimes earn around half that. But teams say it can cost around $18 million for the top performers to run the annual operations of a single car, and the rest needs to be supplemented by ever-scarcer corporate sponsorship.
Under the next deal, teams want a greater percentage of league funds to cover their expenses, asking for upward of $16 milion-$18 million annually, or roughly double the current amount for the best performers. That could give them a better chance to turn a profit if they get enough corporate sponsorship and run a lean operation.
NASCAR has acknowledged that teams deserve more money but has been resistant to the demands. Still, sources say the sanctioning body has seemingly started to soften in recent weeks to the idea of finding an agreement.
In the meantime, teams have started to try to build leverage, such as acknowledging that they’re considering staging offseason exhibition races to supplement their usual income.
“The best deals are ones when everyone feels a little bit of pain, and a bad business deal is when one side feels they got a better deal than the person at the other end of the table,” said Jeremy Lange, the former president of defunct NASCAR team Leavine Family Racing, who now is the co-founder and partner of The Surge Connection marketing agency. “You want both sides feeling like they could have gotten more but are happy with what they got, and I’m not sure they’re there yet.”
For all the talks going on, NASCAR Chairman Jim France is seen as the one with ultimate authority on when it gets done.getty images
■ ■ ■ ■
For years, NASCAR teams have privately complained that they deserve more league revenue, particularly as sponsorship became tougher to come by after the 2008 recession and as NASCAR’s key performance indicators slipped from their heady peaks. What’s changed from the last TV cycle until this deal is that teams have rallied around a more unified voice. That’s because the Race Team Alliance was founded in mid-2014, not long after the last 10-year media deal was negotiated. The RTA membership consists of 16 teams, which field 36 cars (one charter for each car) in the premier Cup Series.
Teams also have a better sense of NASCAR’s finances. When NASCAR took track owner and operator International Speedway Corp. private in 2019, the sanctioning body had to release sensitive financial information that teams pored through. Teams have then taken that information and shared key takeaways publicly to make clear that they believe they’re getting a raw deal. They claim that NASCAR’s assets make up 93% of the value of the sport, while teams’ assets are only worth 7%. That’s based on an assumption that the entire sport’s assets could be valued at $10 billion combined, while the 36 car charters are worth $20 million each, or $720 million. This is where teams see the opportunity share in the overall revenue pot.
In 2023, teams are due to receive around $201 million in TV money and around $210 million in 2024, according to information seen by Sports Business Journal. Based on comments that NASCAR has made to teams recently, teams believe that NASCAR has a solid idea of how much increased revenue it stands to make in the next media cycle.
23XI investor Curtis Polk is seen as a disrupter in the talks.23XI Racing
The financial statistics gathered by the teams seemed to have caught the eye of, among others, Michael Jordan and his right-hand man, Curtis Polk, as they invested in the sport in 2020 by founding 23XI Racing with Denny Hamlin. Polk first sent a signal to the industry last February when he told SBJ that NASCAR “is a sleeping giant, but from the team ownership side it’s very sponsor dependent and we need to address that model.”
Polk has been seen during these talks as a ring leader of sorts for the teams. In one meeting, he compared the overall revenue splits in NASCAR to other sports, particularly the NBA. As basketball-related income, the NBA’s national media rights revenue — some $2.6 billion of the league’s $10 billion-plus overall revenue — is divided between league owners and players in a roughly 50-50 split.
Hamlin raised eyebrows further in May when he suggested that until he and his business partners saw a change in NASCAR’s business model, all further major investments in the team — including a new headquarters — were on hold. The team has since decided to move forward with breaking ground on its new headquarters in the hopes that the talks will be successful, though it could still pivot if they fail.
In a meeting with media last fall to discuss the dispute, Polk called NASCAR a “money-printing machine” before adding: “But the teams and drivers are putting on the show.” That theme is one that has become central to the teams’ messaging during the current negotiations — that the teams and drivers are the talent and show and should be compensated far higher commensurately.
Ty Norris, president of Trackhouse Racing, echoed that sentiment in early October that the teams had just been a “recipient of whatever NASCAR brought to the teams, but in this round, the teams are wanting to position themselves to receive what we believe is the value of the show. We are the show.”
Teams say the sport has long relied too heavily on sponsorships.getty images
Teams’ concern about the financial model was heightened after last season’s debut of the seventh-generation car, dubbed the Next Gen. Before last year, traditional garage logic had that it cost around $20 million to run a top-flight car every year, but that was supposed to drop to around $12 million with the new version by forcing teams to buy more parts from a single source. Previously they could research and develop a greater number of their own parts, sparking an expensive arms race.
The new car was projected to be far cheaper, but that was before global inflation, supply-chain problems and issues specific to the car arose in 2022 and left top teams paying close to 50% more than original projections, or around $18 million for top teams, sources say. The envisioned savings didn’t materialize, at least last year, though NASCAR did help subsidize some of the additional costs.
The fact that teams can only earn up to $10 million in league revenue at best for operations that can cost closer to $20 million means that they have long had to rely on sponsorships or other forms of money for more than half of their annual total revenue, with some teams putting their annual sponsorship percentage closer to 75%, an exceedingly unrealistic target.
NASCAR argues that teams could run more efficient operations to cut costs, though teams say that would simply mean mass layoffs. The top teams are known to spend heavily to find an advantage, something NASCAR executives have long bemoaned as contributing to what they perceive as an over-spending problem. The notion, shared by others in the industry including some track executives, is that teams are their own worst enemies, constantly spending beyond their means. Without changed habits, those skeptics say, some teams will remain under financial duress, even with a new revenue model. To get an agreement, team executives have emphasized that they’re willing to examine all costs, revenue and budget ideas, including a spending cap and possible tax system if teams go over the cap.
SBJ contacted multiple track executives to ask about the talks but many declined or spoke only on background, noting that these negotiations are technically between the sanctioning body and the teams. Tracks contend that they need their revenue slice because of the high cost of developing and maintaining the facilities, which have to seek alternative forms of revenue the bulk of the year when they don’t have NASCAR events.
LFR, the defunct team that Lange was president of, earned around $6 million in league revenue in 2020, its final year before folding, after finishing 20th in points, which is roughly mid-pack out of 36 charters. Lange said that if league funds could cover two-thirds of annual performance costs instead of one-third, his team might still be in business. LFR, which owned a charter, left the sport after the 2020 season after years of trouble making the owner model work.
“We were staring at one-third [covered by league funds] and two-thirds [where sponsorship was needed]. If it was [the other way around], I think they could have stomached that potentially,” Lange said of the former team owners. “The [New York] Mets aren’t signing all these guys because they’re going to get more [sponsorship] money from Citibank – it’s based off the TV deal.”
Skeptics say teams are their own worst enemy by spending too much to gain an advantage on the track.getty images
■ ■ ■ ■
After Polk and Hamlin made their public waves in the early part of last year, teams largely went silent on the topic as they started working behind the scenes. They created a sub-committee to negotiate with NASCAR and put together a seven-point proposal to send to the sanctioning body about what they want in the next deal.
The sub-committee was made up of Polk, Hendrick Motorsports Vice Chairman Jeff Gordon, Joe Gibbs Racing President Dave Alpern and Roush Fenway Keselowski Racing President Steve Newmark. On NASCAR’s side of the negotiating table has been President Steve Phelps, COO Steve O’Donnell, Executive Vice President and Chief Legal Counsel Garry Crotty and Senior Vice President, Racing Development and Strategy Ben Kennedy.
Meanwhile, while NASCAR deal-making has long been based on relationships, sources stress these team leaders have been empowered to make difficult decisions about their future, keeping longtime team owners like Rick Hendrick and Roger Penske at arm’s length, for now, from NASCAR.
As summer turned to fall, teams grew frustrated when they didn’t get a response from NASCAR to the proposal that they had sent over in June. That led them to schedule the early-October meeting with a group of media in Charlotte before a playoff race weekend to publicly confirm that the sides were at loggerheads.
The impromptu news conference featured rarely seen candor in the typically private sport about the financial struggles of being a NASCAR team. For example, Joe Gibbs has always been known as a master salesperson with sponsors but he does not own any outside business empires that could subsidize the team, and JGR’s Alpern at the meeting called himself “terrified of what happens after Coach [Joe Gibbs] is gone – I’m talking about survival.”
The RTA also began consulting with Wasserman to assess the value of team rights and other strategic alternatives; around the same time, NASCAR started consulting with CAA subsidiary Evolution Media Capital while also maintaining a relationship with Sports Media Advisors, with whom the league had worked on its prior media cycle.
Talks between the teams and NASCAR stalled in the ensuing months after teams went public. Teams believe that their public move didn’t backfire, but it didn’t advance negotiations either, and some executives from other parts of the industry have questioned whether the move was wise.
Still, talks have since picked back up in recent weeks, sources say, raising hopes that a deal could eventually be made.
Asked how confident it was that it will come to an agreement with its teams, NASCAR told SBJ in a statement: “We have a 75-year track record of being good partners and working hard to understand the priorities and needs of the many stakeholders in our sport. We are confident our industry will continue to work together to build on the momentum from our historic 2022 season and drive long-term growth for our sport, stakeholders and fans.”
As for the RTA, it declined comment. But Newmark told Motorsport.com this month: “There is a model that works for everybody which actually helps take the sport to the next level. There’s just a lot of pieces and we have to figure out how to get there. The reason I have so much optimism that we can get a deal done is because the sport is growing. If we were in the situation like five years ago where the sport was stagnated, it might be more difficult to come up with a whole new paradigm.”
■ ■ ■ ■
That new paradigm is more than just money. One other major sticking point for teams is they want to make the charter system permanent. There’s also been chatter that drivers could eventually try to negotiate for retirement pensions.
The charter system, NASCAR’s version of franchising, was introduced in 2016 in a nine-year deal set to end in 2024 concurrent to the TV deal so that the sides could re-evaluate how it was working. Charters are now worth eight figures and rising in value, and teams believe it’s only natural to turn the system into a permanent one.
If there is to be a revenue deal with teams, one of the major avenues toward progress will likely be through the potential swapping of ancillary rights and agreements. For example, in exchange for granting teams more annual revenue, NASCAR will likely want teams to agree to some form of a spending cap and could seek additional digital and content rights from teams or time commitments from drivers for marketing purposes. Teams have also offered to approach sponsorship in a new, more unified way, versus the cutthroat, dog-eat-dog world of NASCAR team sponsorship that currently exists.
But for all the technical negotiating going on between the team presidents and NASCAR executives, some feel that the deal ultimately is going to get made between Jim France and NASCAR’s old-guard owners such as Hendrick, Penske and Gibbs. That’s why France and France Kennedy’s combined attendance at the team owner council meeting this month was seen as an important indicator.
The revenue split is only one of two negotiations NASCAR is facing this year but it could be the harder of the two, because when it comes to negotiating the deal with media companies, NASCAR and its advisers say they like their hand. The sport has continued to hold its own in a crowded sports media landscape, finishing the 2022 Cup Series season up 4% in viewership from 2021 to an average of 3.04 million.
Led by NASCAR’s Phelps, there has been a new sense of experimentation in the sport, with its first stadium race, held last year at the L.A. Coliseum, and finalized plans for its first street circuit race, set for this summer in Chicago. Moreover, to show it isn’t abandoning its past, NASCAR will take its All-Star Race back to North Carolina’s historic North Wilkesboro Speedway this year as part of its 75th anniversary.
“We are extremely bullish on NASCAR,” said Alan Gold, partner and head of sports media at Evolution Media Capital. “Their audience is a massive, passionate fan base that consistently tunes in week after week. With viewership up year-over-year, and NASCAR’s continued innovation both on and off the track, there is tremendous momentum heading into their rights discussions.”
Lange summed up how important it is that NASCAR and the teams eventually come to terms.
“They depend on each other, and with this deal, they both have much to gain — and just as much to lose —depending on how well they work together.”