Examining the Denny Hamlin Contract Talks

This is starting to feel like déjà vu. With race left before the Cup Series playoffs, Denny Hamlin still does not have a contract for the 2024 season with Joe Gibbs Racing. The Denny Hamlin contract negotiations are starting to feel like the Kyle Busch debacle from last silly season. While Hamlin contends that the situations are different, there is still that looming feeling that something is amiss. With both Joe Gibbs and Hamlin speaking strongly about a reunion, what is holding up the agreement? Contract negotiations can be tricky things. However, when both sides are publicly stating a desire to continue the relationship, the lack of an agreement starts to become worrisome. When the calendar is about to flip to September, the fact that the Denny Hamlin contract talks are still ongoing implies there is a major point of contention.

Now, this skepticism of a new deal can age like milk. Before the green flag drops at Daytona, Hamlin and JGR could agree to a contract for the 2024 season (and beyond). However, the fact that this is still an ongoing piece of conversation must mean something is getting in the way. According to Denny Hamlin, the hold up is with 23XI Racing rather than Hamlin himself. The friction seemingly is coming from Hamlin negotiating with Toyota over his personal team. Hamlin has stated that a deal would likely be done if not for his ownership status. If this is the case, what is the issue with Toyota and 23XI Racing? Hamlin’s short lived team has been successful for the manufacturer, especially in the NextGen era. However, that seems to be the sticking point.

Kyle Busch v. Denny Hamlin Contract Talks

It is hard to deny the similarities between last year’s situation with Kyle Busch and this year with Denny Hamlin. Both drivers had massive success with Joe Gibbs Racing and Toyota. Both drivers were not only drivers with Toyota, but also team owners with the manufacturer. Most importantly, both situations saw public statements about both sides wanting a reunion. Kyle Busch ended up leaving. Now, Denny Hamlin is about to hit September without a deal.

In terms of differences, the largest difference is that Denny Hamlin has secured sponsorship for next season. FedEx has signed on to continue being the anchor sponsor for Hamlin in 2024. While it might not be a full season, having an anchor sponsor already in hand is key for any driver. Meanwhile, Kyle Busch lost his anchor sponsor (Mars) and had not secured a personal anchor sponsor for 2023. Was the lack of sponsorship the main issue for Busch leaving? Probably not. As seen this season with RCR, Busch has not had a problem finding funding for his car.

Hamlin has alluded to the issue was salary based mixed with the lack of sponsorship, although Busch publicly stated last season he was willing to make concessions. Hamlin’s impression is that Busch had a desired salary and JGR/Toyota did not want to match it. Lack of a sponsor factored into why they did not want to pony up the cash, however it was not the primary issue.

Team Ownership Complicated Things

Despite the different level of series each team operates, complications about each drivers’ team played a factor into the contract negotiations. Kyle Busch Motorsports (KBM) was a pivotal developmental team for Toyota. Losing KBM might have been a bigger loss for Toyota than Busch himself. The alumni from KBM is noteworthy, including current Cup Series drivers Erik Jones, Christopher Bell, and Bubba Wallace. Despite this, KBM and Toyota’s relationship seemed a bit waning as certain TRD drivers were skipping the Truck Series (and KBM) altogether. Even with a lessened relationship, Toyota still needs a Truck Series team in their developmental tree. TRICON Garage replaced KBM this season. Outside of Corey Heim, it has been a rough season for the newly minted Toyota team.

Meanwhile, 23XI Racing has been the second team Toyota has needed in the Cup Series since Michael Waltrip Racing. Toyota has needed a second multi-car team for a while. 23XI Racing currently has two rides, with Hamlin eyeing future expansion. In theory, 23XI Racing has been the ideal Toyota team. Three different drivers have won four races for the Toyota team. For back to back seasons, at least one car has made the owners playoffs. Although Toyota is bringing Legacy Motor Club in for 2024, it is impossible to argue that 23XI Racing has not been the stronger team. Legacy Motor Club is a reclamation project while 23XI is growing into a potential championship contender. Much like KBM and Kyle Busch, Hamlin’s team has formed some sort of wedge during the negotiations.

Xfinity Driver with Strong Season

Perhaps this similarity is being somewhat overlooked, but the Denny Hamlin contract talks might have Toyota eyeing a younger driver. Part of JGR/Toyota’s willingness to let Kyle Busch walk was Ty Gibbs. Gibbs in his first fulltime Xfinity Series season won eight races and the championship. While Joe Gibbs was hesitant to consider Ty for a call up early in the season, the young driver made a compelling case as to why he did not need to stay in the Xfinity Series. While Ty Gibbs is not on Kyle Busch’s level, Gibbs has the longer future ahead of him, demonstrated great talent in the Xfinity Series, and was financially cheaper.

A similar situation could be taking shape around John Hunter Nemechek.  Clearly, Nemechek does not need more time in the Xfinity Series. At the moment, it seems likely Nemechek is the one to drive the 42 next year. That is a key difference from Ty Gibbs last silly season. Toyota has an open Cup Series ride for Nemechek. With that said, does JGR/Toyota want Nemechek to drive for Legacy Motor Club? 2023 has been a disaster for the team. If there is an issue with Denny Hamlin’s negotiations, could Toyota use Nemechek as a leverage point against Hamlin?

That happened last year with Busch. Toyota was comfortable enough with Gibbs moving up to hold firm against Busch’s wants. If Toyota sees Nemechek is a similar way, it is conceivable that they would use the same tactics against Hamlin. Like Busch, Hamlin’s future is limited while Nemechek has the potential to race for 10-15 years.

The 23XI Racing Factor

Clearly, the sticking point in the Denny Hamlin contract talks is over 23XI Racing. What exactly could be the issue about 23XI Racing that would hold up Hamlin’s contract? Outside of the reporting and quotes about 23XI Racing being the cog in the negotiations, there has been little information about what is the reason for said cog. Obviously, Denny Hamlin negotiating as a team owner is going to differ from his driver negotiations. Hamlin’s driving career is about to sunset while his ownership status will maintain for years to come. This could be the case of long term ambition clashing with short term agreements.

Since its inception, 23XI Racing has laid the foundation to be a large multi-car team. In the schematics of their race shop, it was designed for holding four teams. After only one season, 23XI Racing expanded from one to two teams. Although Hamlin might have reservations about NASCAR’s charter future, 23XI Racing will look to add another team or two before long. While that is the vision for 23XI Racing, does Toyota share the same vision?

The Addition of Legacy Motor Club

With the addition of Legacy Motor Club, Toyota will now have eight Cup Series cars under their umbrella. This will be the most fulltime Cup Series cars Toyota has running since 2011. While Toyota has been lacking the quantity of rides, the quality has been there the entire time. JGR has remained one of the best teams in NASCAR after the switch to Toyota. After Furniture Row switched to Toyota (and aligned with JGR), they were a championship caliber team. Before “Spingate”, Michael Waltrip Racing was a formidable team. 23XI Racing is currently a fringe-championship contender. How does the addition of Legacy Motor Club change that?

As stated previously, Legacy Motor Club is going to be a reclamation project. Unlike 23XI Racing, this is not a brand new team where you have a fresh canvas to set the team up as need be. Not only is LMC an existing team, it is one with a long history and three owners. While it seems that Richard Petty is taking a backseat in his ownership role, Maurice Gallagher and Jimmie Johnson will be hands on with their team. Toyota will have to expend a lot of resources in order to bring LMC back to its 2022 form. If Toyota has a focus on raising LMC’s competitiveness, will that effect the funding for 23XI? If so, then there can be some understandable frustration from Hamlin and his ownership group.

Even taking away the idea of expanding the current lineup, 23XI Racing surely wants to better itself than what it is today. Hamlin and his fellow owners want to win championships. Although there has been consistent improvement, 23XI is still not to that caliber yet. In order to get there, there will need to be investment from both 23XI and Toyota. Does the addition of LMC hinder Toyota’s ability to help 23XI get to that caliber?

23XI Racing to Ford?

In an article from Catch Fence, Lee Spencer discussed how 23XI Racing might be eyeing a change of manufacturers. Allegedly, 23XI Racing representatives met with Ford during Michigan’s race weekend. Could Ford be looking to add to their current lineup? Rather, is Ford looking to potential replace one of their current teams? Stewart-Haas Racing’s current contract with Ford expires after the 2024 season. When asked back in June about their arrangement with Ford, Tony Stewart gave a less-than inspired answer, essentially saying that their contract keeps them with Ford next season. With the downturn in performance, SHR might be looking to jump manufacturer.

In the theoretical absence of SHR, Ford could be looking to exploit a potentially contentious relationship between 23XI Racing and Toyota. On Ford’s end, it would be a wise decision. 23XI Racing is a team on the rise while SHR has been losing steam. The only driver to remain consistently competitive with SHR is leaving at the end of this season.

Meanwhile, if Toyota is playing games with Hamlin and 23XI Racing, it would be sensible to explore feelers from Ford. While 23XI Racing is having success with Toyota, the rise of RFK Racing and Front Row Motorsports must make Ford look appealing. It would not be difficult to imagine 23XI still having the same level of success with the blue oval. Usually, where there is smoke, there is fire.

How Does This End?

More than likely, Denny Hamlin and 23XI Racing will return to Toyota next season. Hamlin will drive JGR’s 11 car. Bubba Wallace and Tyler Reddick will continue to be Toyota drivers. However, 2025 is a giant question mark. The fact that the Denny Hamlin contract talks are currently still ongoing in late August implies there is a significant divide on at least one topic. That topic might be the extended future of 23XI Racing. While it could be about next season, the reported Ford meeting points to a conflict over 2025 and beyond. Hammering out the details of the future might be holding off an agreement between the three parties involved. While a short term solution might be found, expect this topic to continue into next silly season.