BACK-ENDED $25 MILLION PAYDAY FOR SUPERCAR RECS

A $1million bonus, spread over five years, is coming to each of the current 25 Racing Entitlements Contract holders in Supercars as a result of the pending sale of the series.

In the Supercars equivalent of Afterpay, the $25m will be paid over five years, as a ‘time payment’ of the teams’ revenue for selling their 35% of the business.

The final details of the updated REC, which will now be called a Team Racing Charter once the category changes hands, is being negotiated by Roland Dane and category ‘salesman’ Tim Miles.

The new deal effectively creates a value in each of the RECs at around $1 million, a significant turnaround from recent years when both Tickford Racing and Triple Eight Race Engineering handed RECs back to Supercars without payment until they were re-sold to a new owner.

It’s a far cry from halcyon past years when RECs were reportedly sold for as much as $2 million each. Recently the value had dropped, and the price has been somewhere around $500,000 to $650,000 each if a serious bidder who could support a Supercars program could be found and approved.

However, the full buyout of Archer Capital’s and the teams (REC Holders) ownership in Supercars will result in a total guaranteed payday for each ‘Team Racing Charter’ owner of $650,000 a year for five years.

The sale details reveal that Archer Capital, which has a 65 per cent ownership stake, has shared some of its annual profits from Supercars, which have amounted to around $20 million, with the teams receiving Archer’s 65% share of the initial $19m and Archer receiving only 35% up to the first $19m.

It is understood this was negotiated after the initial sale to Archer once the teams needed additional funding beyond their 35% ownership entitlement to be able to continue to meet their running costs.

This has meant an average annual payday of around $450,000 under the current REC, so with a guarantee of $650,000 per annum for five years, part of that a payment, around $200,000 is due to payment for the REC – hence owners will receive $1 million for a REC.

As other details of the TLA-ARG buyout emerge, it appears that any plans to expand the grid back up from 26 to 30 cars has been rejected by team owners as they look to restrict supply to restore value in the revised REC.

The REC situation has become complicated in recent years as some teams have struggled to find the budgets to field cars and service the REC requirement to compete in every race of the Repco Supercars Championship.

The current REC has a significant liquidated damages component for “no shows” which is well in excess of $100,000 for each missed event.

Former team owner John Faulkner was once hit with a $300,000 penalty for ‘liquidated damages’ when he failed to compete, a penalty that resulted from complicated ownership tangles that was only settled when Holden agreed to sponsor what was then called the Supercars Development Series.

It is understood that the teams gained another significant improvement in terms by negotiating out the liquidated damages component in the new charter.

It is understood that the new version sees the team able to give up the new version REC without further penalty and in turn losing any value in it.

Triple Eight and Tickford each put single RECs up for sale this year and attracted three bidders, but – ironically – the only successful tender came from Tickford, which effectively paid to get its own REC back and received a cheque back as well … In a complicated set of processes, Tickford paid because it had struck a deal with T8 to split any proceeds once either of their RECs was sold.

REC owners are reportedly happy with the new financial deal, which lifts their annual income and also pays them for their REC stake.

“It’s as good as money in the bank. It’s a great turnaround from only a few months ago, when one of two RECS that was for sale went begging and is still on the shelf after an underwhelming series of offers,” one team owner told Auto Action.

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