BK Racing won’t be operated by team owner Ron Devine when the team shows up at Texas Motor Speedway for the April 8 Cup Series race.
A bankruptcy court appointed a trustee to oversee the team on Wednesday after a hearing involving the money owed by Devine to various entities, including the IRS. BK Racing currently fields the No. 23 car for Gray Gaulding and used to be a two-car operation.
BREAKING … Bankruptcy judge grants motion to have a trustee appointed over BK Racing and encourages #NASCAR team owner Ron Devine to work with the trustee. Motion comes with millions money owed by team to various creditors.
— Dustin Long (@dustinlong) March 28, 2018
BK Racing will be operated by a trustee as team owner Ron Devine lost financial control of the NASCAR Cup Series team in bankruptcy court Wednesday. U.S. District Court Judge J. Craig Whitley agreed to appoint Matthew Smith of The Finley Group as the… https://t.co/FomKN8lKLN
— Bob Pockrass (@bobpockrass) March 28, 2018
BK Racing’s debt financial situation is significant for NASCAR given its status as a charter holder. When NASCAR instituted the charter system in 2016, 36 teams were given charters. Those charters entitle the holders to a bigger share of prize money than non-charter teams and are a ticket for guaranteed entry into every Cup Series race.
The charters were also touted as a way for teams to add value to themselves. In theory, a team could sell a charter for many millions and recoup some investment when and if it decides to leave racing instead of simply closing shop and having nothing but used equipment to get rid of. It was also seen as a way for teams to secure loans as it could be used as collateral given its perceived value.
That theory isn’t working in reality, at least in the current Cup Series climate. Only the Daytona 500 has seen a full 40-car field in 2018 and there’s only been one brand-new team that’s entered the Cup Series (StarCom Racing) since the charter system was introduced. Basic supply and demand tells you that when there’s not much demand for your product, the value of your product — the charter in this case — isn’t worth too much.
Devine said in February that he filed for Chapter 11 bankruptcy because he didn’t want his charter seized. BK was initially granted two charters when the system was implemented and sold a charter in 2017 to Front Row Motorsports.
Filings have shown Devine has lost a lot of money on his team in recent years. The IRS says the team owes over $2 million in back payroll taxes and a bank says the team owes $8 million in unpaid loans.
Per the charter system rules, NASCAR would have the right to revoke the charter for BK Racing if it wanted. Devine hinted in February that there was a “third-party offer” for the charter if control of it was taken away from him, though he didn’t identify who that offer was from. Premium Motorsports is the only team that has fielded a non-charter car in each of the season’s first six races.
– – – – – – –
Nick Bromberg is a writer for Yahoo Sports.
More from Yahoo Sports:
• Declining an honor, ex-NFL player tells a grim story
• Seahawks cut backup QB after brutal assault allegations
• Protesters in Sacramento again force lockdown of Kings arena
• Spurs’ Popovich calls out Trump for ‘cowardice’ on guns