DIRTRACKR Daily Podcast - Episode Transcript

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Everything we know about Brad Sweet and Kyle Larson's plan, 1 year later | Daily 12-3-2024

What is a High Limit charter? What happens if teams that earned one don't return? How much is a charter worth? A year after they were announced, we'll try and answer those questions and more today. Let's go!

It's Tuesday, December 3rd, I'm Justin Fiedler. This is DIRTRACKR Daily presented by Kubota Genuine Parts.

Today's show is being supported by our friends at Knoxville Raceway. Starting this week, four-day ticket packages are on sale for the grandaddy of them all, the 64th NOS Energy Drink Knoxville Nationals presented by Casey's. Go to knoxvilleraceway.com to order online, or call the ticket office at 641-842-5431. Get in early and secure your spot for four nights in Knoxville, Iowa, August 6th through the 9th at the sprint car capital of the world. The best drivers, the biggest car count, with big money up for grabs including $195,000 to the winner, $15,000 to start the Championship A Main and a $100,000 bonus if the winner is using Keizer wheels and hubs. This event has had seven consecutive sell-outs so don't wait, order your tickets now at KnoxvilleRaceway.com!

It was almost exactly one year ago, 51 weeks to be really specific, that I did a daily show where we went deep on the High Limit plan to create a charter system for it's full time teams. Now basically a full year later, I wanted to jump back in and see where we stand right now with charters, and what exactly we know about them. Kyle Larson had some charter comments just yesterday while being interviewed for EPARTRADE's Race Industry Week. And going back to the end of October, Jeremy Elliott talked charters with Brad Sweet on an edition of his Sprint Car Unlimited Deep Dive. The charter conversation was one that remained a subtopic for High Limit all season as we tracked who would be the first five teams to earn one. And pretty regularly, I had questions about what exactly charters were and how it was all going to work. As I said last year, think of charters like a franchise agreement in other sports. It guarantees your position in the league or series, likely some amount of revenue, and it's something of value that can be bought or sold in the future. The system used in NASCAR for their 36 teams is the closest approximation we have right now of what High Limit is working towards. Interestingly though, the NASCAR charter system is currently under fire from Denny Hamlin and Michael Jordan's 23XI and Bob Jenkins and Front Row Motorsports for anti-trust. We'll leave that specific conversation for other forums however. With High Limit though, this ownership setup was a big selling point in drawing teams into their fledgling national series before 2024, and it's one of the main differentiating features between them and the World of Outlaws. High Limit's quote unquote vision is something we've heard a number of drivers talk about over the last year when it's come to joining up. The hope of High Limit is that this system will create a more sustainable, and potentially profitable model for sprint car team owners into the future. As a reset, High Limit's plan was to award five charters after 2024, and based on owner points the teams that earned those initial five are the KKR 49, Rico Abreu's 24, the Clauson Marshall 7BC, the Roth 83, and Brent Marks 19. For 2025, an additional five charters are going to be awarded, and the initial documentation for how that happens reads like this: "At the conclusion of the 2025 season, the next five best highest finishing full-time members (must participate in all of the 2024 and 2025 High Limit Racing Series races) based upon average car owner year-end point finishes during the 2024 and 2025 seasons that were not already granted a High Stakes Charter, shall be granted said High Stakes Charter at the conclusion of the 2025 season." So after those five we just mentioned, the next best five teams from the combined first two seasons will get those next charters. This specific point was reiterated by Brad Sweet during that Jeremy Elliott interview back in October. The entire system then will be implemented for the 2026 season, and the original wording said quote "with the initial grant of ten High Stakes charters, the High Stakes charter system shall commence, with the High Stakes Charter teams being rewarded 50 percent of the streaming monies. The new system will operate by providing the teams with monthly fixed fee payments, which shall be weighted based upon factors that may include average finishing positions over the initial two year period, championships and race wins. The result will be an elimination of tow money and the year-end point fund. However, in no event, shall Charter teams collectively receive less than 50 percent of the streaming revenue." A point of clarification, the word streaming here, really means any media rights fees.

So that's kind of the high level plan for the system. 10 initial charters, 50% of streaming (or media rights) revenue, starts in 2026. What's important to emphasize here though, is that as questions have come in this season, understand that those of us keeping track of this don't have answers to many of them, and it's because High Limit doesn't have answers yet. Sweet said as much back in October, and Larson just yesterday said the same thing. He admitted to Brad Gillie they are still working through how all of it will come together, and said hopefully they will have some info available soon. And that aligns with what I've heard from the team side, that there hasn't been any new or recent communication between the series and the teams about the setup. To be fair, they do still have another year before the system is supposed to go into affect, so still time to work through the details. As we look at the five teams that earned one for 2024 though, Brent Marks' future on tour is in question right now on December 3rd, as is that of the Roth 83. We know James McFadden won't be back, and there is no indication that the 83 will remain a full time, national touring team. So what happens if one or both decide not to return? Based on Brad's comments to Jeremy, those teams won't get the charters. Sweet said those cars must run in 2025 to keep it. He also said then that he knew that some teams who earned them or were going to be close would likely drop out, and that they will have to figure out how to handle that internally. Meaning, what is the process for charter succession if Marks or Roth don't return. The two likely scenarios I think being that the next in line would get them, or that they would just award two more after 2025. If it's next in line, that could mean the Meyers 14 and the Buch 13 would have a shot.

Jumping back to the revenue split, that initial language talked about 50% of streaming revenue, but it's clear from Brad's comments that the final revenue split model is still being worked out. He said he wants it to be an amount of money that eventually gets close to covering the operating expenses of the team, and potentially into profitability. Based on the numbers we've run in the past, that has to mean at least half a million dollars a year per team, and likely closer to a million a year per team for the top cars. That would be a significant increase over the $250,000 champions payout and what was likely around $30,000 in tow money for 2024. Brad Sweet not saying that will happen in 2026, but that's what he's hoping for down the road. To get there, those rights fees would have to go up dramatically, and it doesn't feel realistic right now to think that could all come from the split from FloRacing. The Jeremy conversation with Brad included a mention of selling TV packages, and we know there have been conversations about attempting to bring High Limit to television. We've heard rumors specifically of FS1. We talked about the whole dirt racing on TV situation way back in April on a daily show. There are significant challenges there as well, as even a series like the NHRA isn't in a position where they can share revenue from media rights with their teams. A piece in Autoweek at the end of 2023 pointed towards hopes that the NHRA could get the money flowing their direction after the massive $7.7 billion NASCAR media rights deal, but nothing was certain. And we know that World Racing Group buys time on CBS for their World of Outlaws and other dirt racing TV shows. It will be a serious mountain to climb for High Limit to convince a cable channel or streaming platform to buy their media rights, and for a large enough amount of money that they can pay a sizeable portion to teams. At the moment, the value of the charter is just basically the combination of point fund and tow money. That's been a major question, what are these worth. And going back to last year, I said this isn't more or new money, it's just a different way to pay the teams the same dollars. And that won't change until High Limit starts bringing in larger fees for media rights.

Beyond the initial ten charters, the original documentation laid out provides for an additional four that could be awarded at the series' discretion. I can't really see that happening any time soon, especially given the current economics of the sport. I think the first ten is a good start, and then any teams beyond that who want to join will do so as un-chartered. Brad did talk to Jeremy about a difficulty of the system being how do they encourage teams without charters to still participate. He doesn't want that to be a limiting factor, and he had told me last year that a traditional point fund/tow money setup would likely be available for those other teams.

So there you go, over 1500 words on where we stand right now with High Limit charters. Honestly, if you go back to the show from last December, you'll see that not a lot has changed, and the questions we had then are still basically the questions we have now. This is all new ground for dirt racing, and these are kind of hard problems to work through. It's not shocking that nearly 365 days later, there has been little progress, at least publicly. I think too, regardless of if we had more clarity from the series on how all of this will work, and system verbiage, some of these questions won't be answered until years down the road.

Closing out today, we did have some sprint car ride news from Monday. In Central Pennsylvania, Freddie Rahmer has parted ways with car owner Rich Eichelberger. Mr. Elliott and sprintcarunlimited.com with breaking news. Rahmer will return to his family-owned 51 for 2025, running a very similar schedule around Posse country. Freddie told Jeremy that nothing bad happened, and that it's what he felt was best for him. On the flip side, Eichelberger was surprised by the move, and his team is now in limbo. 25 wins and four track championships together, and it's possible the eight machine could be done altogether. Jeremy also reporting today on his 90 at 9 that the Trone 39 is open again, as Kody Hartlaub and that team also recently separated. That car has been a revolving door for drivers over the past several seasons. No word on who could replace Rahmer and Hartlaub, but there are a handful of Pennsylvania linked free agents, including Devon Borden and Dylan Cisney. Other drivers looking for seats right now include Cale Thomas, Hunter Schuerenberg, Parker Price Miller, Cory Eliason, Chase Randall, and Zeb Wise.

That's your Daily show for today. Hope you enjoyed charter talk. Have a great Tuesday out there, and we'll see you back here tomorrow!