The big money of motorsports

Teams without top-35 status the previous year are connecting the dots for sponsors. When racer Michael Waltrip left Dale Earnhardt to start his own team with Bill Davis Racing, Earnhardt wouldn't sell the car Waltrip had driven to a top-35 finish the previous season. So Waltrip merged (in Wall Street parlance) with a team owned by Douglas Bawel (Jasper Racing) that already had a top-rated car. Waltrip's sponsor, Napa Auto Parts, followed the defecting driver to the new outfit.

What are the top Nextel Cup teams worth? FORBES calculates value by determining each team's total sponsorship and race-related income from all of its cars. We then assigned a multiple to revenue based on the number of cars (the more scale, the higher the multiple), the record of its drivers and level of commitment from its car manufacturers (Ford gives more R&D help to a proven winner like the Roush team than less prominent teams get from their manufacturers). Our multiples range from 1.3 to 2.

The most valuable NASCAR team is Roush Racing, by our calculations worth an estimated $218 million. Roush has an estimated $100 million in sponsorship revenue in the bank and thus far in 2006 has $8 million in race winnings. We afford the Roush team a high multiple of two times revenue because of its success on the track, as well as the research and manufacturing support from Ford that it leverages across its stable of cars.

The downside to NASCAR's new point system is that it may make it tougher for untested newcomers to get sponsors. BMI Motorsports provides a good example. The team's managing partner, Robert Balachowski, had been meeting with private equity firms and working the phones for three years hoping to fund an entry in next year's Nextel Cup Series.

VALUABLE NASCAR TEAMS Click the links below for a full breakdown of each racing team. 1. Roush Racing 2. Hendrick Motorsports 3. Joe Gibbs Racing 4. Richard Childress Racing 5. Chip Ganassi Racing 6. Everham Motorsports3 7. Penske Racing South 8. Dale Earnhardt Inc. 9. Robert Yates Racing 10. Petty Enterprises 11. Bill Davis Racing4 12. MB2 Motorsports 13. Haas CNC Racing 14. Waltrip-Jasper Racing 15. Valvoline Evernham Racing Source: Forbes

BMI claims to have a technology edge with its R&D boss (formerly a head of research at Boeing) that Balachowski says "makes a top-ten finish well within the realm of possibility. But I've been hung up on — and laughed at — by potential sponsors."

That's a problem. While BMI has scraped together the money to go Cup racing next season, funding shops, cars, crew and drivers without sponsorship money makes it almost impossible to compete.

Stakes in teams are bought and sold sporadically in NASCAR. In 2003 Chartwell Investments, a small private equity firm in New York, purchased a stake in Richard Childress Racing that valued its seven cars at $85 million, or roughly two times revenue. With $56 million in revenue now, we value the current Richard Childress Racing team at $100 million, fourth highest in NASCAR. We calculate that the average team value has increased by 20 percent over the last three years.

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