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IRS says BK Racing owes over $2.5 million
It’s fair to wonder just how much longer BK Racing will be competing in the Cup Series.
The team filed for Chapter 11 bankruptcy just days before the Daytona 500. Now, according to ESPN.com, the IRS says the team owes over $2.5 million to the agency through a combination of back taxes and penalties.
The Chapter 11 filing came on the same day a hearing was scheduled with Union Bank & Trust, which says BK Racing owes it $8 million in loans. That’s over $10 million in debt when you combine what the bank says BK owes and what the IRS says the team needs to pay.
BK Racing owner Ron Devine told NBC Sports in February that he filed for Chapter 11 to prevent the bank from seizing the team’s charter. As an owner of one of the 36 charters in the Cup Series, BK Racing has a guaranteed entry into every Cup Series race on the schedule.
“I filed (Chapter 11 bankruptcy) because the bank wouldn’t stop trying to get a receiver (to oversee the team’s collateral),’’ Devine said. “The only reason they wanted to get a receiver was to push the charter off to their third-party offer. That’s where the problem was.’’
According to ESPN, the bank also says BK Racing lost over $28 million from 2014-2016.
The charter system was instituted in NASCAR to give teams some value if and when they decided to sell or were forced to fold their organizations. This scenario is undoubtedly not what NASCAR had in mind when the charters were created, but the charter is serving its intended purpose. It’s probably the most valuable asset the team has because teams with charters get more prize money.
And as you can imagine, a bank has no use for a charter unless it wants to put together a race team. That doesn’t seem like something a bank would do, so a Cup Series team without a charter would seem to be the third-party offer Devine referenced. Sunday’s race at Las Vegas includes 37 cars; the only car without a charter entered is the Premium Motorsports’ No. 55 car.
BK originally had two charters when the system was implemented at the start of the 2016 season. It sold one of its charters before 2017 to Front Row Motorsports, who then leased the charter to Tri-Star.
BK’s driver this year in the No. 23 car has been Gray Gaulding, who drove for the team in 2017. The reunion between the team and Gaulding is a bit curious, given that Devine compared Gaulding and his family to the Kardashians in a 2017 Frontstretch story about the financial arrangement that led to the parting of team and driver.
“If you want to print something, if he says he didn’t get paid then print, ‘the delusional Gray Gaulding of the Gauldashians has lost his mind.’ You can’t get paid a piece of a sponsor money when you don’t pay the sponsor bill.”
Gaulding finished 20th in the Daytona 500 thanks to wrecks that took out many of the race’s top contenders and finished last in last week’s race at Atlanta, retiring after 99 laps with what was officially listed as a steering problem.
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Nick Bromberg is a writer for Yahoo Sports.
