What Nascar Learned From the NFL

Ever since Robert “Red” Byron in 1948 drove his Ford over the sands of Daytona Beach, Fla., at 75 miles per hour for a $1,000 prize, Nascar has operated pretty much the same way. Teams showed up at the track with a car, a driver, and a crew and tried to win prize money; they had no larger stake in the enterprise. That all changed this year: When Denny Hamlin of Joe Gibbs Racing took the checkered flag at the Daytona 500 on Feb. 21, he did so as a charter member of Nascar rather than just a hopeful, tire-burning freelancer.

Under an agreement announced less than two weeks earlier, the racing circuit handed out charters—somewhat akin to a team franchise in the NFL or NBA—to 36 cars. The nine-year charters guarantee a slot in every race in Nascar’s top circuit, the Sprint Cup Series, and can be bought and sold. Previously, teams held one-year contracts that laid out the conditions and prizes for racing. They had to qualify for each race. A team owner who wanted to cash out had nothing to sell but a driver contract and used auto parts. “We needed to make a contemporary, modernized business model,” says Nascar Chief Operating Officer Brent Dewar, who hired McKinsey consultants to review the franchise models of other U.S. sports leagues. “We studied everything,” Dewar says. “This is bespoke to us. And it’s something we can build on.”