Deloitte to audit NASCAR team finances

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NASCAR taps Deloitte to audit team finances
Move could set stage for cap or other rules for how much teams can spend

By Adam Stern
December 3, 2018

https://www.sportsbusinessdaily.com...2/03/Leagues-and-Governing-Bodies/NASCAR.aspx

NASCAR has hired Deloitte to audit teams’ finances and create a common accounting platform, sources said, an unprecedented step that teams have agreed to in order to help find a new competitive balance framework.

The sanctioning body has been working with teams in its top-flight Monster Energy NASCAR Cup Series in recent years to cut costs and increase revenue, and the efforts have picked up steam under the direction of new Chairman and CEO Jim France. Continued slides in key performance indicators have further increased the urgency.

The idea to have an accounting firm measure teams’ spending to help establish a baseline has been on the table for more than a year, but NASCAR and teams only recently signed off on it, sources said.

The audit could last until well into 2019, the sources said. Establishing a baseline on what teams are spending will help NASCAR determine whether to introduce something as drastic as a cap on spending or less grandiose rules to prevent team owners from overspending. Teams account for their spending in different ways, so creating a common accounting platform is vital before the sport experiments with any new competitive balance framework, sources said. The audit will look at teams’ operational expenses, but not driver salaries.

NASCAR declined to comment.

The idea of a budget cap has been tossed around for years, but some NASCAR team owners have been against the idea. Sports Business Journal reported in May that the potential cap being discussed between teams and NASCAR was between $15 million and $20 million per car.

Some top teams now go beyond $20 million per car. While the cars themselves are expensive, the money spent on research, development, logistics and engineering is said to be the particularly exorbitant part of teams’ expense sheets.

It’s possible that NASCAR and teams will ultimately decide to only add new rules to restrict spending in certain areas rather than implementing an overall cap, which some are skeptical of in terms of the ability to enforce it.

A spending cap would not be totally off the grid. The Formula One racing series, for example, plans to introduce a version in 2021.

As for NASCAR, while a cap wouldn’t fix some of the sport’s broader issues, like falling attendance and viewership, it could help prevent a repeat of a situation like the one this year that saw Furniture Row Racing go out of business after losing a major sponsor. NASCAR teams rely on sponsorship for about 75 percent of their total revenue annually.

A spending cap is far from having finalized parameters or unanimous support, but the sources said if it were implemented, it could be as soon as 2020 or 2021. The first term for NASCAR’s charter agreement with teams expires in 2020, as do NASCAR’s five-year track sanction agreements, which would set up 2021 to be a year of potentially sweeping change in the sport.
 
Future headline if they go down this rabbit hole:

NASCAR teams found guilty of colluding, bankruptcies imminent, nascar to liquidate.
 
If we are going spec, go spec bank accounts. I am good with that. Having said that, this could even be worse than what we have. Better get yourself a manufacturer who has the infrastructure and the willingness to R&D for you because you won't be able to afford it yourself. TRD and Ford Performance have that infrastructure, Chevy does not.
 
Lol this sport wants parity so bad it's sickening.

Yeah, until Corey LaJoie wins the Championship, and literally the 5 people in the stands stop showing up. Parity isn't good anywhere. This has been proven time and again. Dynasty is the thing. Knock the giant off of the hilltop. Whatever NASCAR.
 
“Continued slides in key performance indicators have further increased the urgency.”

It will be interesting to know where this all goes as if a cap is put in place will there be a floor that has to be met? More and more of the grid is field filler and reducing that would not hurt my feelings.
 
Very interesting.

I wonder what P level the infraction will be when they get caught exceeding the spending cap? They may come up with something new.
Along with the cars, teams finishing first and second each week, along with three teams chosen at random, will be required to send their books to NASCAR's R&D center in Charlotte. Any infractions found will be announced on Tuesday. Penalties may include drivers having to spend practice time sitting in their cars while taking Bookkeeping 101 classes on line, and crew chiefs being suspended to reconcile the team's month-end closing statements.

However, teams will now be allowed an additional 'over the wall' crewman, provided he holds a documented MBA.
 
Along with the cars, teams finishing first and second each week, along with three teams chosen at random, will be required to send their books to NASCAR's R&D center in Charlotte. Any infractions found will be announced on Tuesday. Penalties may include drivers having to spend practice time sitting in their cars while taking Bookkeeping 101 classes on line, and crew chiefs being suspended to reconcile the team's month-end closing statements.

However, teams will now be allowed an additional 'over the wall' crewman, provided he holds a documented MBA.
:XXROFL:
 
Along with the cars, teams finishing first and second each week, along with three teams chosen at random, will be required to send their books to NASCAR's R&D center in Charlotte. Any infractions found will be announced on Tuesday. Penalties may include drivers having to spend practice time sitting in their cars while taking Bookkeeping 101 classes on line, and crew chiefs being suspended to reconcile the team's month-end closing statements.

However, teams will now be allowed an additional 'over the wall' crewman, provided he holds a documented MBA.
Late candidate for post of the year :lol2:
 
Been a fan for a few decades and I always wondered how the in-house resources for Engineering, Tooling, and Fabrication factors into the cost of running a team -- and how those costs could be hidden.

For example, Haas and his Haas Automation, F1 program, and possible other businesses, contacts, and resources he has available. Unless you go spec parts for everything, their must be significant advantages (although not guaranteeing a win), to include "working the books" in your favor to hide costs or other shenanigans :).
 
Salary cap incoming for NASCAR
The article explicitly says driver salaries were not under consideration. If those aren't, it's unlikely the much lower salaries of the rest of the team will be capped either. It also pointed out that R&D, engineering, and other non-material costs not directly related building a car accounted for much of the spending.
 
There are so many ways to circumvent and manipulate a cap I can’t wait to see how they do it.

Also if JGR is out performing the others I can hear an Oklahoman squealing about how JGR’s books have not been taken to the wind tunnel.
 
There are so many ways to circumvent and manipulate a cap I can’t wait to see how they do it.

Also if JGR is out performing the others I can hear an Oklahoman squealing about how JGR’s books have not been taken to the wind tunnel.
Everyone knows the books are part of what supports the entire team. As supporting parts, they're tested with the rest of the suspension with a 7-post shaker. Geez, Larry Mac has been showing us the same graphics about it for the last several seasons.

'Wind tunnel'. Gods of us all. :rolleyes:
 
Everyone knows the books are part of what supports the entire team. As supporting parts, they're tested with the rest of the suspension with a 7-post shaker. Geez, Larry Mac has been showing us the same graphics about it for the last several seasons.

'Wind tunnel'. Gods of us all. :rolleyes:

:XXROFL:
 
Yeah, until Corey LaJoie wins the Championship, and literally the 5 people in the stands stop showing up. Parity isn't good anywhere. This has been proven time and again. Dynasty is the thing. Knock the giant off of the hilltop. Whatever NASCAR.
Yep ...works in every sport, having something with constant parity becomes bland and boring.
 
If NASCAR specs a spending cap the teams will do what teams do and exploit the gray areas of the rule. I don't think NASCAR has a test fixture for the books.
 
“Continued slides in key performance indicators have further increased the urgency.”

More and more of the grid is field filler and reducing that would not hurt my feelings.
Not sure I agree with you on this. Depends on what you mean by field filler. I see some of these smaller teams working hard trying to compete, They provide jobs for drivers, mechanics, crew and other personnel. Most aspire to be competitive and a top tier team at some point. I personally don't like the model of having 5 or 6 mega teams with 4 cars each.
 
If NASCAR specs a spending cap the teams will do what teams do and exploit the gray areas of the rule. I don't think NASCAR has a test fixture for the books.
"Mr. Haas, can you explain why SHR shows a $6.3 million dollar expense in 2019 for 'Supplies'?"

"Hey, that's legitimate! Have you seen Tony's Dairy Queen bills?"
 
Not sure I agree with you on this. Depends on what you mean by field filler. I see some of these smaller teams working hard trying to compete, They provide jobs for drivers, mechanics, crew and other personnel. Most aspire to be competitive and a top tier team at some point. I personally don't like the model of having 5 or 6 mega teams with 4 cars each.

yeah a business that doesn't audit the books routinely and see where they are is bad business practice. There are talks about a different cut of the pie for the tracks and the teams. As long as we are all guessing and by gollying, auditing everybody's books including theirs could make it easier to do so among other things. Penske, Hendrick, and Haas are very wealthy industrialists, Gibbs is low man on the totem pole and all of them have factory backing. The gap between the haves and the have nots probably never has been wider.
 
Lol this sport wants parity so bad it's sickening.
I think what the industry wants is economic viability of team ownership. I believe the greatest threat to the sport's long term future is the supply of quality race teams to show up every week to race... an even bigger threat IMO than any demand metric such as TV ratings or ticket sales.

Better get yourself a manufacturer who has the infrastructure and the willingness to R&D for you because you won't be able to afford it yourself.
Yeah, the biggest challenge to a resource cap is cost shifting between the teams and manufacturers, or between the teams and other businesses controlled by the owners. Unless a cost cap picks all that up, it becomes a farce. Gene Haas owns WindShear. TRD supplies engines and has chassis engineering services that Ford and Chevy don't have. Penske and Ganassi have IndyCar teams that have engineering capabilities, and Haas has F1. All this stuff... a big challenge to a cost cap.

More and more of the grid is field filler...
Compared to what? Compared to the past, there is certainly less field filler now than then. Compared to other racing? No major league racing series is as deep in quality teams that I know of. The risk is... how long can it remain this way unless team ownership is an attractive business proposition.
 
yeah a business that doesn't audit the books routinely and see where they are is bad business practice. There are talks about a different cut of the pie for the tracks and the teams. As long as we are all guessing and by gollying, auditing everybody's books including theirs could make it easier to do so among other things. Penske, Hendrick, and Haas are very wealthy industrialists, Gibbs is low man on the totem pole and all of them have factory backing. The gap between the haves and the have nots probably never has been wider.
It's all very simple. Ford teams audit Chevy books, Chevy teams audit Toyos, etc. Next season, they reverse. For their first two seasons, new manufacturers will be 'gang audited'.
 
I think what the industry wants is economic viability of team ownership. I believe the greatest threat to the sport's long term future is the supply of quality race teams to show up every week to race... an even bigger threat IMO than any demand metric such as TV ratings or ticket sales.


Yeah, the biggest challenge to a resource cap is cost shifting between the teams and manufacturers, or between the teams and other businesses controlled by the owners. Unless a cost cap picks all that up, it becomes a farce. Gene Haas owns WindShear. TRD supplies engines and has chassis engineering services that Ford and Chevy don't have. Penske and Ganassi have IndyCar teams that have engineering capabilities, and Haas has F1. All this stuff... a big challenge to a cost cap.

Compared to what? Compared to the past, there is certainly less field filler now than then. Compared to other racing? No major league racing series is as deep in quality teams that I know of. The risk is... how long can it remain this way unless team ownership is an attractive business proposition.

If you feel like rolling chicanes and darts without feathers provide a valuable service all around that is fine with me.
 
If you feel like rolling chicanes and darts without feathers provide a valuable service all around that is fine with me.
I didn't say that, and you're changing the subject. If you don't want to answer the question, it's OK.
 
This just in: Nascar will be using a newly designed laser system to measure teams books before, during and after the races.

Nascar does for rules what Gerald Ford did for late night TV hosts including Chevy Chase
 
I didn't say that, and you're changing the subject. If you don't want to answer the question, it's OK.

If you mean the “compared to what” thing I wasn’t comparing NASCAR’s field filler to another time or another sanctioning body. Where does it say those are prerequisites?
 
There are so many ways to circumvent and manipulate a cap I can’t wait to see how they do it.

Also if JGR is out performing the others I can hear an Oklahoman squealing about how JGR’s books have not been taken to the wind tunnel.

How can you say JGR is out performing others? Labonte is the only in house driver to win a championship. :D
 
Just run two set of books.
One for Deloitte and Tush, and another real one.

Reminds of a job in the 90s having to use JIT or "just in time" resource management.
All you needed was a secret Brick JIT house to beat the system.
 
Just run two set of books.
One for Deloitte and Tush, and another real one.

Reminds of a job in the 90s having to use JIT or "just in time" resource management.
All you needed was a secret Brick JIT house to beat the system.

I remember the JIT. Maybe we should start an IBM deathbed thread. How big blue, went from number one to who is big blue?
 
TRD supplies engines and has chassis engineering services that Ford and Chevy don't have.

Ford does. Chevy has Hendrick still. Keep all of this quiet please, cost cap would play right into the Toyota teams' hands. I love it. Let's do it. If you tied TRD's hands in terms of its ability to support its teams, you would have @StandOnIt dream, and Toyota would leave. That would be bull****. Make the manufacturers step up. I am all in on this. Chevy has been going cheap-o for a while now, and it is showing. Time to spend some of that government bail out money.
 
Ford does. Chevy has Hendrick still. Keep all of this quiet please, cost cap would play right into the Toyota teams' hands. I love it. Let's do it. If you tied TRD's hands in terms of its ability to support its teams, you would have @StandOnIt dream, and Toyota would leave. That would be bull****. Make the manufacturers step up. I am all in on this. Chevy has been going cheap-o for a while now, and it is showing. Time to spend some of that government bail out money.
Thanks Rev. I put my tin foil hat on when I read this thread. You're coming in loud and clear. ISM buys teams, set to buy Nascar, news at ten.
 
Ford does. Chevy has Hendrick still. Keep all of this quiet please, cost cap would play right into the Toyota teams' hands. I love it. Let's do it. If you tied TRD's hands in terms of its ability to support its teams, you would have @StandOnIt dream, and Toyota would leave. That would be bull****. Make the manufacturers step up. I am all in on this. Chevy has been going cheap-o for a while now, and it is showing. Time to spend some of that government bail out money.
The Big three car companies aren't going to invest more in Nascar with it in contraction mode.
 
Big three car companies aren't going to invest more in Nascar with it contraction mode.

That is the thorn in their asses isn't it? The big three won't spend, but Toyota will. That's a big three problem IMO.
 
I prefer spec in the spreadsheet over spec under the hood. All day long.
I hate to pop your bubble, but there isn't anything like spec. I don't know how many examples of that there are, but many. No two engines are the same and neither are the cars, the tires, on and on. And that is without crew chief meddling.
 
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