NASCAR’s Four Car Team Limit Rule: Kasey Kahne in 2011 While at Red Bull

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I asked Kasey Kahne on the NASCAR teleconference this week if he is able to have unlimited contact next season with the Hendrick Motorsports group while racing for Red Bull in 2011. I wondered if there are any regulations or rules related to the four car team ownership rule that would restrict him from testing or limits as to what he can do with Hendrick Motorsports next season while he’s at Red Bull, since it is already arranged that he will move to Hendrick Motorsports in 2012.

Kahne answered, “Actually I was kind of wondering some of that same stuff. To this point I haven’t really asked a whole lot about it because I have been more worried about what I was going to do next year and what I was going to be doing the following year.”

Understandable. In the past – limitations have been managed by the teams themselves. If a driver is moving to a new team the next season – the team he is on and the one he is moving to (and the contract the driver signs) usually settle what, if any, limitations there are regarding team meetings, testing, information sharing and the like.

But this arrangement is a bit different. Since Kahne is only going to be at Red Bull only until the way can be cleared for a seat at Hendrick Motorsports in 2012 are there limitations related to the four car team limit? Well – technically Kahne is not Rick Hendrick’s driver until 2012. It’s drawn up simply as if he’s racing for another team in 2011.

I took a look into the four car team limit rule in the 2010 NASCAR Sprint Cup Series Rule Book to see if anything applied. The outcome – I don’t think any rule covers this situation and it does not appear that there is any limitation outlined by NASCAR.

Here’s the rule:

3-7 Minimum Car Owner License Requirements

A. To secure and maintain a NASCAR Competitor License as a car owner, a NASCAR Member at a minimum must :

1) Be at least 18 years of age, unless the applicant is a business entity

2) Own a racing car

B. NASCAR will issue the license in the name of the car owner as named on the license application. If the car is owned by a partnership, corporation or other business entity, the license will be issued in the name of the partnership , corporation or business entity, and the license will further indicate the name of the individual principally responsible for the ownership and operation of the business entity. That person will be the party responsible for all communications and contact with NASCAR regarding all business (as opposed to racing competition) matters in connection with the car.

C. NASCAR will indicate on the license the car number assigned to the licensee by NASCAR, subject to sub-section 3-7D. The licensee may use the assigned car number on the car or cars owned by the licensee as follows. During an Event, the licensee may use an assigned number to identify a particular car. A number may not be transferred by the licensee to another car during the Event except as provided by sub-section 9-6F. At a subsequent Event, the licensee may use the number to identify a different car owned by the licensee,so long as the number is not transferred again during the Event except as provided in sub section 9-6F. Points and other prizes for car owners will be awarded to the licensee, depending upon the performance of the car identified by the number assigned to the licensee. If NASCAR changes a car owner’s number during the season, NASCAR, at its option, may transfer to the new number championship points accumulated using the previous number.

D. NASCAR reserves the right to revoke, reassign, or transfer car numbers to another licensee at any time. Car numbers are non- assignable and non transferrable, except by NASCAR.

E. A car owner Competitor License is non assignable and non-transferable. The licensee shall inform NASCAR Headquarters in writing promptly if the partnership is altered in any material manner or the corporation’s stock or assets are sold (other than routine daily stock sales) or become the subject of a merger or the business entity’s ownership interest materially changes. When NASCAR is informed of such a change by the licensee or otherwise, NASCAR, in its sole discretion, may revoke the license as of the date of the change or otherwise. If NASCAR revokes the License, the new partnership, corporation or business entity must submit a new license application. NASCAR may assign the old number or numbers to the new licensee, or it may assign a new car number or numbers. NASCAR in its sole discretion may assign to the new licensee championship points earned by the former licensee if doing so is in the interest of competition and stock car racing. NASCAR may make such other determinations regarding scoring, point funds and the distribution of the purse or prize monies, as it determines to be in the interest of competition and stock car racing.

F. (1) During a single racing season, unless otherwise authorized by NASCAR, NASCAR will not assign more than four (4) car numbers to Teams participating in the NASCAR Sprint Cup Series that are owned and controlled by the same Car Owner or by a “Affiliate Group.” Two (2) or more Car Owners will be deemed an “Affiliate Group” if:

a. one (1) or more of the Car Owners is entitled to receive (or actually receives), directly or indirectly, from the other Car Owner(s) any financial consideration or other form of value based upon the participation, performance or degree of success of the car(s) entered by the other Car Owner(s); or

b. the Car Owners are subject to any direct or indirect form or amount of common, joint, or shared control, ownership, financing, management or revenue-sharing.

By way of example only, an Affiliate Group may include two (2) or more Car Owners that have formed a cooperative relationship for any race-related purpose , or that are controlled or indirectly by an automobile manufacturer and/or its intermediaries, or that supply or share at or below cost engines, chassis, parts, competitive engineering data, personnel, services, and/or any combination of the foregoing which creates a potential threat to racing competition.

2) The determination(s) whether Teams are owned or controlled by the same Car Owner or by an Affiliate Group or whether two(2) or more Car Owners constitute an Affiliate Group will be made soley by NASCAR and shall be final, non- appealable and non-litigable. In making such determination, NASCAR may consider all facts and circumstances with respect to the relationship between or among the Car Owners, including without limitation the following:

a. any ownership interest in the Car Owner, whether tat ownership interest is held directly or indirectly by or through another person or business entity and whether it is held as a limited or general partner, shareholder, trustee or other form of ownership: and/or

b. any financial interest in or of the Car Owner, including but not limited to the financial investment, underwriting, below market capital funding, below market private or public loans or other similar interest and/or

c. the scope and extent of management or other control exercized by, over or through the Car Owner, whether through the ownership of voting securities by contract, de facto, or otherwise: and/or:

d. any receipt or consideration of services, property and/or other form of value, or of the proceeds from the sale or barter of any services, materials, and/or competitive data on other than a free market basis basis.

3. If, after NASCAR has assigned car numbers to the Teams of one (1) or more Car Owners, those Car Owners enter into or otherwise become an “Affiliate Group,” NASCAR in its sole discretion may take any action deemed appropriate by NASCAR with respect to such Car Owners including but not limited to revoking its assignment of the car numbers, ceasing to award championship points, refusing to accept an entry, and/or prohibiting a Car Owner from competing in any Event. If NASCAR elects to revoke its assignment of car numbers to one (1) or more Car Owners in the Affiliate Group in order to limit the assignment of car numbers to the Affiliate Group to a maximum of four (4), NASCAR will consult with the Members as to which car number assignment(s) will be revoked but NASCAR’s decision in that regard will be final, non-appealable and non-litigable.

4. NASCAR may make reasonable requests for information from a Member, including without limitation a Car Owner or Car Owner Competitor License applicant as it deems necessary for purposes of making a determination regarding the existence and make up of an Affiliate Group. Each Member or Member applicant shall cooperate fully with NASCAR’s reasonable requests, under an appropriate confidentiality agreement. NASCAR may refuse to approve an application for a Car Owner Competitor License if the applicant fails to cooperate with such requests fully and on a timely basis. NASCAR may suspend or terminate a Car Owner Competitor License if the Member fails to cooperate with such requests fully and on a timely basis.

5) Not withstanding any other provision of this sub-section 3-7, a Car Owner may submit a fifth car number for competition in a maximum of seven (7) starts during the 2010 racing season for the purpose of enabling a rookie driver, as determined and approved by NASCAR under sub-section 9-4-D, to become familiar with NASCAR Sprint Cup Series Competition.

The regulation as outlined above does leave itemsup to NASCAR’s discretion. It doesn’t appear that Red Bull is an “affilate group” of the Hendrick Motorsports Operation in any way. It would appear that there will be no limitations. But I am not an attorney – and, again, there is just enough open area in the above rule outline to make it subject to NASCAR interpretation and oversight.

Again, outside of what Red Bull feels is fair during the year Kahne races for themand that Red Bull has drawn up in the contract Kasey will race within, I’m not sure that there need to be limitations on testing or contact. One would think Red Bull would manage that and mandate in the agreement what is comfortable for them without the need for NASCAR to limit any contact or relationship that Kahne shares with is future employer, Hendrick Motorsports.

Your thoughts?