So, here goes, the cost of racing in NASCAR's big leagues. And it's bringing a whole new meaning to the phrase "sticker shock".
Incoming Cash Flow
Money coming in can be broken down into three basic types — sponsorship, manufacturer support, and prize money. The biggest numbers, not surprisingly, come from those stickers on the hood.
Types of Sponsorship
- Primary: Hood and rear quarter panels plus uniform and equipment logos — $12-16 million, though the largest accounts in Nextel Cup are now approaching $20 million.
- Major Associate: Rear deck lid or rear quarter panels plus prominent logo on uniform — $2-4 million
- Associate: B or C post or lower rear quarter panels — wide range from $50,000 to $500,000 depending on level of off-track appearance and advertising guarantees.
- Contingency Sponsors: Smaller decals that cover the front fenders, programs typically set up with NASCAR and then offered to teams in exchange for decal placement. Example: Bud Pole Award, Raybestos Rookie Contenders, MBNA Mid-Race Leader Award. Cost of sponsorship varies widely and payouts to teams vary from program to program. Teams aren't required to run contingency sponsors, and typically don't if there is a conflict with one of their primaries. Hood and rear quarter panels plus uniform and equipment logos — $12-16 million, though the largest accounts in Nextel Cup are now approaching $20 million. Rear deck lid or rear quarter panels plus prominent logo on uniform — B or C post or lower rear quarter panels — wide range depending on level of off-track appearance and advertising guarantees. Smaller decals that cover the front fenders, programs typically set up with NASCAR and then offered to teams in exchange for decal placement. Example: Bud Pole Award, Raybestos Rookie Contenders, MBNA Mid-Race Leader Award. Cost of sponsorship varies widely and payouts to teams vary from program to program. Teams aren't required to run contingency sponsors, and typically don't if there is a conflict with one of their primaries.
Each sponsor typically negotiates separately for a specified number of driver appearances (i.e. personal services). Those negotiations happen either through the team or more increasingly through the driver's personal management group.
Because of the escalating cost of primary sponsorship, many teams are negotiating two-sponsor deals, guaranteeing a certain number of pre-determined races to each of the co-sponsors. Roush Racing has proven to be the pioneer in this practice, with multi-primary deals in place on the four of the five Roush cars. (Which is why Carl Edwards had Scott's on the hood at Atlanta instead of Office Depot, which was featured as a major associate.)
Different teams receive different levels and entirely types of support from Detroit. The vast majority of support comes in the form of parts and research, which are provided by the Big Three behind the age-old idea of "Win on Sunday, sell on Monday." Ford, GM, and Daimler-Chrysler send everything from sheet metal to floppy discs fill of information. All teams that choose to run a certain make receive at least something, but the larger organizations, a.k.a. "factory teams") (Roush, Hendrick, Yates, RCR, Evernham, etc...) benefit the most while the smaller teams wait for the info gained to trickle down.
One very big freebie that all teams enjoy at least a little of is paid-in-full wind tunnel time, which can cost as much at $10,000 to $30,000 a day.
As Rusty Wallace told us on NASCAR Nation, "If you are going to try to fund your team with just prize money, you're going to go broke." But the amounts of cash still aren't anything to sneeze at. In 1985, Sterling Marlin's team took home $300 grand for winning the Daytona 500. In February of this year, Jeff Gordon's DuPont squad won five times that amount.
But how in the world did Jimmie Johnson win eight grand more than Carl Edwards at Atlanta, despite the fact that he finished second? The answer is complicated, but basically boils down to a series of incentive and "club" payout plans. Because Johnson is the series points leader and an established NASCAR star, he receives a much bigger share of all those contingency plans we mentioned earlier.
For his 2003 Brickyard 400 win, Kevin Harvick won $418,253. According to a study done by The Charlotte Observer, that money came from a grand total of 22 different sources, ranging from money provided by the track ($211,075) to a bonus for running a sticker from 3M ($1,500).
But the driver doesn't keep all of that cash. Just most of it. Which brings us to the painful part for a team owner — writing checks.
Outgoing Cash Flow
No set of numbers will ever be the same from team to team, but most of the owners and general managers we talked to agreed that the proportion of each expenditure can be universally broken down into six groups. Here they are in order from most costly to least (although "least" is a relative term).
Keep in mind these numbers are for a standard mid-level two-car team. For the big boys on the block, you could easily multiply these numbers by one and a half or more and still be within reason.
Operational Costs, from largest cost down
- In-house engine program: $3.5 million+
- Team salaries (for a typical 90-100 person team): $2.5-3.5 million
- Driver salary (varies, see below)
- Travel: $1 million per team
- Tires: $1 million per team ($20,000 per race weekend plus testing)
- Cars: $1-3 million per team*
*From the ground up, including the engine, a race-ready Nextel Cup car costs about $125,000 to build:
Car - $70,000
Engine - $40,000
Labor - $15,000
Mid-level organizations like to keep about 12-15 cars built at all times for each team. The organization will actually keep building cars year-round and sell the spares to ARCA teams or other new Cup teams. The same goes for engines, though they are cranked out at a higher rate.
The most shocking ranking for most fans is that driver salary is third on the list, nearly equaling (and in some cases surpassing) the payroll for the entire remainder of the race team.
How much of the weekly prize money actually goes into the driver's pocket and how much goes into the owner's varies from team to team, depending on the driver's contract. Typically, a driver is guaranteed a base salary, plus a percentage of what the team wins at the track, the numbers varying wildly from driver to driver and team to team.
Current Cup rookies come in with base salary around $400,000, plus incentives for winning poles, races, or picking up points positions. The more successful they are, the more money they get...and when you win like today's rookies seem to do, raises are frequent and large.
But most drivers make much more than their team pay through a combination of sponsor appearance fees, sponsor incentive bonuses, straight endorsement fees, and merchandise sales.
According to Forbes, Jeff Gordon made $19.3 million in 2004. But according to NASCAR, he won only $8.3 on the track. Actually, he probably took home about 40% of those winnings. The remaining $11 million came from salary, appearance fees, bonus incentives from his sponsors, and endorsement fees.
Not a bad gig if you can get it.