To keep a multi-billion operation sustainable, you have to get money wherever you can. That\u2019s why NASCAR commissioner Steve Phelps considers himself a \u201cbig fan\u201d of attracting private equity funding into the sport.<\/p>\n
Up to now, private equity has been limited, but Phelps hopes that NASCAR teams start seeing even more private equity investment in the future. How that works is NASCAR allows its teams, which have ownership charters, to allow private equity firms to purchase minority investment shares of a team.<\/p>\n
Phelps spoke recently with Brian Sullivan on CNBC Sport about how NASCAR is seeing more private equity investment into teams. \u201cWe allow private equity to buy a percentage of a charter, and they are (buying)\u201d Phelps said.<\/p>\n
\u201cHarris Blitzer partnered with Joe Gibbs Racing, and they bought a piece. You have Trackhouse (Racing), which is where SVG (Shane Van Gisbergen), Daniel Suarez and Ross Chastain race, Avenue Capital came in there, Marc Lasry, former owner of the Milwaukee Bucks.<\/p>\n
\u201cAnd then you have Knighthead Capital, that\u2019s based here in the (New York) city, that partners with Legacy (Motor Club). I think it\u2019s a good thing, honestly. So we\u2019re seeing lots of money, lots of capital come into NASCAR teams, not NASCAR proper, but NASCAR teams, buying equity position in the teams. And I think it\u2019s a good thing.\u201d<\/p>\n
Having investment firms buy an equity share helps teams afford to race and be more competitive, as well as hire the best drivers and employees. Phelps then gave several reasons why.<\/p>\n
\u201cOne, I think it makes the race team some more competitive, the fan wins and it\u2019s good for the race team,\u201d Phelps said. \u201cTwo, they\u2019re bringing in, in many cases, knowledge and expertise that the race teams don\u2019t have.<\/p>\n
\u201cAnd three, in many cases, they\u2019re actually bringing in additional sponsorship with businesses they either own or are affiliated with. So I\u2019m a big fan of private equity coming.\u201d<\/p>\n
However, Phelps was quick to point out that private equity firms can buy minority stakes in teams, but they cannot have majority ownership of teams.<\/p>\n
NASCAR does not allow sovereign wealth<\/p>\n
Another thing that NASCAR prohibits is what is called \u201csovereign wealth,\u201d which prohibits countries from buying into the sport, much like Saudi Arabia financially backs LIV Golf.<\/p>\n
\u201cRight now, our charters prohibit sovereign wealth, but we are fans of private equity,\u201d Phelps<\/a> said. \u201cThere\u2019s a percentage that (an equity firm) can own. They can\u2019t go over that percentage and there needs to be a control person that is a person, not a company.\u201d<\/p>\n