BK Racing uh oh

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Today's court hearing must not have turned out to their liking. I assume they'll race at Daytona. They're already there and even the last place money will help. I wouldn't be shocked, shocked if NASCAR gave them some 'help' in order to get that 40-car field, at least for the green flag. I dunno about anything after that, either at Daytona or later in the schedule.
 
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BK Racing’s charter guarantees it a minimum of $2.9 million for competing in all the races, according to an affidavit filed by a Union Bank & Trust executive as part of recent litigation. The affidavit states BK Racing would earn more than $200,000 for the Daytona 500 and an average minimum of $75,000 for 36 other events throughout the year. It is not clear if that assumes a particular race finish or a last-place finish in every event. NASCAR no longer releases driver earnings following each race, but a $2.9 million base would be fairly consistent with a team 35th in points (drivers who finished between 33rd and 36th in 2015 earned $2.9-$3.2 million). NASCAR would not comment on the accuracy of the bank’s estimates.

Bob Pockrass
 
jws926 said:
BK Racing’s charter guarantees it a minimum of $2.9 million for competing in all the races, according to an affidavit filed by a Union Bank & Trust executive as part of recent litigation. The affidavit states BK Racing would earn more than $200,000 for the Daytona 500 and an average minimum of $75,000 for 36 other events throughout the year. It is not clear if that assumes a particular race finish or a last-place finish in every event. NASCAR no longer releases driver earnings following each race, but a $2.9 million base would be fairly consistent with a team 35th in points (drivers who finished between 33rd and 36th in 2015 earned $2.9-$3.2 million). NASCAR would not comment on the accuracy of the bank’s estimates.

Bob Pockrass
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The question I have is, even at a bare minimum of effort, what is it going to cost them to enter every race and get their 2.9 mil?
 
I dunno. Would a start and park approach be cost effective? We haven't see anybody try that in a while.

My question is, is the 2.9 million more or less than they can get for the charter? If they're discussing running strictly for the money, it would imply they can't get that much for the charter.
 
Charlie Spencer said:
I dunno. Would a start and park approach be cost effective? We haven't see anybody try that in a while.

My question is, is the 2.9 million more or less than they can get for the charter? If they're discussing running strictly for the money, it would imply they can't get that much for the charter.
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The charter they sold to FRM reportedly went for $2 million.
 
Charlie Spencer said:
I dunno. Would a start and park approach be cost effective? We haven't see anybody try that in a while.

My question is, is the 2.9 million more or less than they can get for the charter? If they're discussing running strictly for the money, it would imply they can't get that much for the charter.
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Formerjackman said:
If true, that speaks to the REAL value of the charter if you can more than recoup your purchase price in the first year. Try THAT in just about any other sport.
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At minimum, a charter is worth the difference between finishing 36th every week with one and doing the same thing without.

The difference is not an insignificant amount.
 
But if you can buy one for 2 million and earn 2.9 million with it in one year, that doesn't say much for it. If you buy a house to rent it out, and you can cover the mortgage with one year's rent receipts, that doesn't say much for the value of the house. That tells me that the sellers are unloading these charters for whatever they can get for them. I don't think this is what Rob Kaufman had in mind. Based on the one year return rate, the charters should be selling for at least 10 million, IF there was any real demand for them, which we know there isn't.
 
Formerjackman said:
But if you can buy one for 2 million and earn 2.9 million with it in one year, that doesn't say much for it. If you buy a house to rent it out, and you can cover the mortgage with one year's rent receipts, that doesn't say much for the value of the house. That tells me that the sellers are unloading these charters for whatever they can get for them. I don't think this is what Rob Kaufman had in mind. Based on the one year return rate, the charters should be selling for at least 10 million, IF there was any real demand for them, which we know there isn't.
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You don't seem to understand that there are 2 different figures that could be earned for the same finishing position. Nor do you seem to understand the difference between earning with an asset and paying for it. A year's worth of mortgage payments doesn't cover the cost of a house. Rather like your assertion that cutting 6 races off the schedule reduces a team's costs ... with no mention whatsoever of the fact that 6 races worth of assorted revenue streams would disappear.

And those are not the only things about the business of business in general and auto racing in particular that you don't understand.
 
Formerjackman said:
The question I have is, even at a bare minimum of effort, what is it going to cost them to enter every race and get their 2.9 mil?
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Good question, I am interested to know what the per race break down cost wise would be .
 
jws926 said:
Of course it does, I should of been clear, for BK racing, what is their cost per race.
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There's no way for us to know that.

If they use all their tires for a weekend the cost of that is approx. $25,000. If they wanted to finish last every week to collect the 2.9 million, they could develop a handling problem on lap 50 and turn unused tires in. That would reduce their tire bill to about $5,500. Reduce maintenance costs on this week's car by not doing much ... run a higher gear and use the same engine 3 or 4 races in a row ... cheaper accomodation for the at-track people ... no catering ... no rental cars and on and on. Lots of ways to skin that cat.
 
aunty dive said:
There's no way for us to know that.

If they use all their tires for a weekend the cost of that is approx. $25,000. If they wanted to finish last every week to collect the 2.9 million, they could develop a handling problem on lap 50 and turn unused tires in. That would reduce their tire bill to about $5,500. Reduce maintenance costs on this week's car by not doing much ... run a higher gear and use the same engine 3 or 4 races in a row ... cheaper accomodation for the at-track people ... no catering ... no rental cars and on and on. Lots of ways to skin that cat.
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Just dont short Joey Arrington
 
aunty dive said:
You don't seem to understand that there are 2 different figures that could be earned for the same finishing position. Nor do you seem to understand the difference between earning with an asset and paying for it. A year's worth of mortgage payments doesn't cover the cost of a house. Rather like your assertion that cutting 6 races off the schedule reduces a team's costs ... with no mention whatsoever of the fact that 6 races worth of assorted revenue streams would disappear.

And those are not the only things about the business of business in general and auto racing in particular that you don't understand.
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Oh, I understand perfectly. There is no way in hell I am selling an asset for 2 million if the buyer is going to use it to gain 2.9 million with it the first year he owns it UNLESS, I can't afford to keep it, and there are no other decent offers. I'm not selling a house for 10,000 if the new owner can rent it out for 1000 a month. That tells me nobody REALLY wants the thing unless it's SO cheap they can't miss. Notice too that all of these charters are are going to teams ALREADY in the game. Most of those cars are going to run, charter or not, it's just that when you can realize a gain so quickly, you would be a fool NOT to buy it. The charters will not have any REAL value until people on the OUTSIDE are clamoring to get a hold of one, the way people do in other sports. The very fact that you can still compete without having a charter (which I agree with) automatically makes the charter less coveted.too. As for shortening the schedule, I'm not even suggesting it as a money saver (although it certainly WOULD be for just about everybody except the track owners and NASCAR), I suggested it as a way of making life better for the people IN the sport, and make it more attractive to the audience.
 
Formerjackman said:
Oh, I understand perfectly. There is no way in hell I am selling an asset for 2 million if the buyer is going to use it to gain 2.9 million with it the first year he owns it UNLESS, I can't afford to keep it, and there are no other decent offers. I'm not selling a house for 10,000 if the new owner can rent it out for 1000 a month. That tells me nobody REALLY wants the thing unless it's SO cheap they can't miss. Notice too that all of these charters are are going to teams ALREADY in the game. Most of those cars are going to run, charter or not, it's just that when you can realize a gain so quickly, you would be a fool NOT to buy it. The charters will not have any REAL value until people on the OUTSIDE are clamoring to get a hold of one, the way people do in other sports. The very fact that you can still compete without having a charter (which I agree with) automatically makes the charter less coveted.too. As for shortening the schedule, I'm not even suggesting it as a money saver (although it certainly WOULD be for just about everybody except the track owners and NASCAR), I suggested it as a way of making life better for the people IN the sport, and make it more attractive to the audience.
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I personally liked the 29 race seasons. I think the entire garage area may have had a better quality of life. Just my opinion.
 
Formerjackman said:
Oh, I understand perfectly. There is no way in hell I am selling an asset for 2 million if the buyer is going to use it to gain 2.9 million with it the first year he owns it UNLESS, I can't afford to keep it, and there are no other decent offers. I'm not selling a house for 10,000 if the new owner can rent it out for 1000 a month. That tells me nobody REALLY wants the thing unless it's SO cheap they can't miss. Notice too that all of these charters are are going to teams ALREADY in the game. Most of those cars are going to run, charter or not, it's just that when you can realize a gain so quickly, you would be a fool NOT to buy it. The charters will not have any REAL value until people on the OUTSIDE are clamoring to get a hold of one, the way people do in other sports. The very fact that you can still compete without having a charter (which I agree with) automatically makes the charter less coveted.too. As for shortening the schedule, I'm not even suggesting it as a money saver (although it certainly WOULD be for just about everybody except the track owners and NASCAR), I suggested it as a way of making life better for the people IN the sport, and make it more attractive to the audience.
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The buyer does not "gain" $2.9 million in the first year he has the charter.

There's nowhere to go with this discussion until you figure that part out.
 
aunty dive said:
There's no way for us to know that.

If they use all their tires for a weekend the cost of that is approx. $25,000. If they wanted to finish last every week to collect the 2.9 million, they could develop a handling problem on lap 50 and turn unused tires in. That would reduce their tire bill to about $5,500. Reduce maintenance costs on this week's car by not doing much ... run a higher gear and use the same engine 3 or 4 races in a row ... cheaper accomodation for the at-track people ... no catering ... no rental cars and on and on. Lots of ways to skin that cat.
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Of course there is no way to know for sure, it was a mix of figurative and actual curiosity all rolled into one comment.

But yes, I understand what you are saying, there are many ways for them to save money, switching to Geico could save them as well.
 
aunty dive said:
The buyer does not "gain" $2.9 million in the first year he has the charter.

There's nowhere to go with this discussion until you figure that part out.
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I'm reading it as implying that using the charter would guarantee the holder 2.9 million dollars more than doing the same thing without holding the charter. If I am misreading that, than someone please supply the actual numbers and we can discuss it from there. I don't think it will change my contention that the charters have very little value as far as providing any kind of equity to the holder. After this fiasco, I bet you won't see any banks take them as collateral either.
 
You misread it.

Roger Penske bought one for the 12. I’ll go with that.
 
If I understand it correctly, the $2.9 million figure is essentially the minimum amount of purse money (which includes TV money distributions) a chartered team is guaranteed by running every event. If the same team were not to have a charter, their place in the field each week is not contractually guaranteed, and they receive lower purse money.

But it's not $2.9 million vs. $0, it's $2.9 million vs. an unknown lesser amount.
 
gnomesayin said:
If I understand it correctly, the $2.9 million figure is essentially the minimum amount of purse money (which includes TV money distributions) a chartered team is guaranteed by running every event. If the same team were not to have a charter, their place in the field each week is not contractually guaranteed, and they receive lower purse money.

But it's not $2.9 million vs. $0, it's $2.9 million vs. an unknown lesser amount.
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Correct.
 
Ok, now if somebody can tell us what that lesser amount is, we could make some sense out of this. I'm not holding my breath waiting for anyone that ACTUALLY knows to come forward with that information though. If it weren't for the occasional court filing, we wouldn't even know what little we know.
 
aunty dive said:
The current 36 + race TV deals expire in 2024.
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Thanks, I did not know that. I'm guessing the current deal didn't include the old provision of each race starting 43 cars? I seem to recall that was in the last TV contract.
 
Formerjackman said:
Ok, now if somebody can tell us what that lesser amount is, we could make some sense out of this. I'm not holding my breath waiting for anyone that ACTUALLY knows to come forward with that information though. If it weren't for the occasional court filing, we wouldn't even know what little we know.
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I’m not having any trouble making sense of it.

“According to NASCAR chief operating officer Brent Dewar, per a report at ESPN.com, chartered teams now get a fixed portion of each race purse, plus another portion based on their three-year performance. Non-chartered teams will get 35 percent of what the chartered teams get.

How much a team and driver receives depending on their finish in each race is the same for all teams, but their finish can affect their fixed income.”

http://www.sportingnews.com/nascar/...gs-2016-sprint-cup/1p5aybkl5v29x11f70k6do71sh

In other words, non-chartered teams that qualify for a race earn a guaranteed amount that represents 35% of the guarantee paid to charter holders. In addition to the guarantee, all teams earn based on their finishing position with no distinction made as to charter.

And: https://www.thoughtco.com/how-nascar-splits-the-money-2470773
 
mack said:
Thanks, I did not know that. I'm guessing the current deal didn't include the old provision of each race starting 43 cars? I seem to recall that was in the last TV contract.
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I don’t know but would guess that they got agreement for fewer starters / 36 charters.
 
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