Did You Notice? … The money flowing from BK Racing’s bankruptcy case gives us insight to NASCAR purses under the charter agreement? Per Bob Pockrass of ESPN.com, court documents show the team earned $450,000 for finishing 20th in this year’s Daytona 500.
That’s a strong improvement from 2015, the last year purses were officially released by NASCAR. In that year, AJ Allmendinger earned $348,803 for running 20th. Only the top-six finishers and pole-sitter Jeff Gordon (33rd) earned more than $450K that day.
But that 22.5 percent increase falls flat when we look at BK’s earnings from Atlanta. Running dead last, it made $92,000 for a 36th-place finish that would have earned the team more three years ago.
Back in 2015, Ricky Stenhouse Jr. ran 36th in this race and made $101,370. I don’t think that’s a fair comparison, though; NASCAR contingency awards and sponsor bonuses upped his purse. A better example is JJ Yeley, who ran 34th for the same BK Racing team but earned $93,710 running the No. 23.
The difference? Only about a two percent decrease. But that’s significant enough in a NASCAR environment where operating costs keep increasing.
There’s plenty of reasons behind the purse decline. Atlanta’s sparse crowd likely had something to do with it; that pales in comparison to a sold-out, revamped Daytona 500 superspeedway. Track A can only dole out so much when it’s making less revenue.
The same court document anticipated $385,000 for a 30th-place average finish over the next month. Extending that out over a full season, that produces $3.4 million in revenue for BK Racing. Well, no wonder the company had to declare bankruptcy; how will that equate to $9.1 million owed to potential creditors?
But this article is not about fixing BK; how the team went broke is a different story. It just shows that the revenue earned through these races doesn’t come close to covering operating costs. And compare that to Hendrick Motorsports, one of the richest teams in the Cup Series with a $325 million valuation through Forbes.
How are these smaller teams supposed to compete under the business model? It also makes you wonder how much open cars walk away with considering they get a smaller fraction of the purse. It could explain why car count has dwindled aside from the 36 chartered teams. After all, if you can’t make a profit, why go to the track? Racing is a business after all.
Also, how can XFINITY and Truck series organizations survive with revenue that’s a fraction of what BK’s expecting? It’s another reminder the business model on the team side for NASCAR simply needs to be fixed. Operating revenue less than operating costs typically means disaster in the long run.
Can you say revenue sharing?
Did You Notice? … Monster Energy requested another title sponsorship extension from NASCAR? According to the Sports Business Daily, the energy drink needs more time to decide on their two-year option to renew for 2019-20.
At this point, you start wondering what Monster is waiting for. A longtime sponsor of the Busch brothers, Kurt and Kyle, they’re not exactly a rookie in this sport. A year involved with NASCAR gives them an idea of what to expect on the title sponsorship level, sure. But activation was already lagging behind and little in the way of new ideas has been presented for 2018. What more does the company need to decide? What new idea or financial incentive is causing indecision here?
The story seems to indicate there’s “little doubt” Monster will re-up in the end. But how long can NASCAR wait? The previous title sponsor, Sprint, gave them nearly two years’ notice they wouldn’t renew and the sport still struggled to find a replacement. Monster is putting the Cup Series in an extremely difficult position, vulnerable to the rug being pulled out from under them.
The company also hurts its own branding in the sport by wavering. In a difficult sponsorship climate, wouldn’t a two-year renewal at the top signal faith with NASCAR’s recent changes? Couldn’t it push companies on the fence to sponsor contingency plans or race cars to jump on board? All we hear about these days are which companies are leaving the sport. Monster’s renewal would send a strong reversal to that message that could trickle from the top down.
It’s hard to believe it was just 15 years ago that Winston was finishing up its 30th season as title sponsor. Now, NASCAR’s struggling to get a company to commit to more than two.
Did You Notice? … Quick hits before taking off…
- Fans may have scoffed at the way Kevin Harvick laid waste to the field Sunday at Atlanta. But the 24 lead changes in that 500-miler were the same as in last Sunday’s Daytona 500. Different pit strategy and Harvick’s own struggles on restarts made the stats on paper look far more competitive than they were.
- Think Hendrick Motorsports will fix what ails them Sunday at Las Vegas? Think again. The organization placed just one car inside the top 10 last year (Chase Elliott) and hasn’t won there since 2010 with Jimmie Johnson.
- Speaking of Johnson, he’s got the fewest points (11) of any driver who’s run both Cup races in 2018. Among those ahead of the seven-time champ in the standings: DJ Kennington (13 points), Mark Thompson (15) and Gray Gaulding (18). The No. 48 car has now gone eight races without a top-10 finish, the longest such drought in its history.
About the author
The author of Did You Notice? (Wednesdays) Tom spends his time overseeing Frontstretch’s 40+ staff members as its majority owner and Editor-in-Chief. Based outside Philadelphia, Bowles is a two-time Emmy winner in NASCAR television and has worked in racing production with FOX, TNT, and ESPN while appearing on-air for SIRIUS XM Radio and FOX Sports 1's former show, the Crowd Goes Wild. He most recently consulted with SRX Racing, helping manage cutting-edge technology and graphics that appeared on their CBS broadcasts during 2021 and 2022.
You can find Tom’s writing here, at CBSSports.com and Athlonsports.com, where he’s been an editorial consultant for the annual racing magazine for 15 years.
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I guess on it’s face you can say the DAYTONA 500 was sold out. But in my mind I still think of the back stretch that was built then demolished. Wiping out a bunch of seating that went unsold, then claiming capacity seating for what is left….yeah whatever.
“How are these smaller teams supposed to compete under the business model?”
The business model also relies on getting sponsorship money. You kind of left that out of the conversation.
While I agree that a business model that relies on sponsorship to make a profit (or at least not end up bankrupt) isn’t a very good model, it’s been that way forever. I’m not saying that there shouldn’t be revenue sharing, I am just pointing out that you left sponsorship money out so that you could prove your point.
Thanks as always for commenting. It’s not so much that I left sponsorship money out but that it’s harder to come by these days. It’s not picking money off trees for any of these teams like it was 10 years ago.
Two points on that. One, for the teams that do get lucky (see: No. 33 and Hulu last year) performance is so far behind you almost need MORE money than the Hendricks of the world in order to catch back up. So you’re asking a company, as a 30th-place team, to give you twice what your market value is in order to have an opportunity to climb back up the ladder. That’s problematic.
Two: There’s such a built-in advantage for the top teams to begin with it’s impossible for sponsorship money to make up the gap there. Again, we are talking market value. If I’m Nationwide, am I going to pay $20 million for a team that runs fifth every week or 35th?
It’s a cycle that continuously feeds and repeats itself.
Yep, I agree. A model where a team has to rely on sponsorship to not only excel but just to survive is not a very good one, but without sponsorship money none of the teams would survive for long whether HMS or FRR. It would work if the costs rose and shrank with sponsorship availability, but as we know, costs only go up and rarely come down.
The team sponsorship money started drying up a decade ago when NASCAR forced team sponsors out of the sport because they were competitors of official NASCAR sponsors of this and that. Who can forget the whole AT&T debacle in 2007/2008 and to a lesser extent, the Shell/Pennzoil kerfuffle after Harvick won the 2007 Daytona 500 and the debate over how big the patches were on the crew member uniforms? From that point, the exodus was on.
Don’t forget Coke-Pepsi and the winner’s circle roof debacle.
Verizon was slated to be full-time on Keselowski’s car in 2010, but Sprint wouldn’t allow them to have the Verizon name on the car, just the check mark symbol.
They did the same to Robby Gordon and Motorola when they were NEXTEL.
Great comments by rg72. But to add to his comments they stole sponsorships that teams had so a sponsor could become the official X of NASCAR. Why should Jack Rousch make money off the UPS sponsorship when they can become the official package company of NASCAR. Why should Oreo be on an RCR car once or twice a year (Remember that paint scheme?) when they can be the official cookie of NASCAR. Official cookie? Seriously?
A point about the BK Racing situation that wasn’t mentioned was “potential revenue of 500,000 to 900,000” over the next 4 races. I would like to see a definition of what that meant. Did that include other income streams for the teams? Or perhaps if they won all 4 races?
But remember in all this that the top teams HMS, JGR, SHR, etc. have a very nice net wealth only down 2% if I recall correctly. And if I recall correctly the drivers for those teams were VERY well paid. So I suppose its a case of the haves and havenots. Racing has pretty much always been that way, even at the local short tracks.
And nascar/ISC doesn’t need a sponsor they can afford to do it themselves. In fact the “sport” might be better off if they were. But of course they prefer, as I would to have someone else pay the bils.
I don’t think all of the HMS, JGR, SHR drivers are paid drivers. There are ride buyers in there for sure. Almirola and Suarez for sure bring money, lots of it. Even Kurt Busch brings money from Monster I think the Hendrick guys are all paid, but the kids are not getting much compared to the Jimmy Johnson’s of the world. There are no 7 figure salaries for the kids these days.
Plus SHR is covering a bunch sponsorship for Busch and Bowyer with Gene’s own Haas CNC company logo, not exactly sponsorship money flowing into the bank account. Not to mention that the newly introduced Haas F1 car mainly is self sponsored except for a few small sponsorships from Richard Mille watches, Alpine Stars, and a store called Jack Jones. And it takes a considerable amount of coin to dance at the F1 party
My point was that by going to ‘more affordable” drivers the teams can cut a significant amount of their paper losses. So I would expect to see that trend continue all across nascar as existing contracts expire.
Number one the purse for a race is in escrow before the race is run. Attendence will only determine a profit, or loss. Number two TV money is paying the freight these days. Unless TV ratings start to rise again the next tv contract will not be as lucrative as the current one. Everyone talks about Cup tv ratings and atttendence but totally ignores the Xfinity and truck series. These two series are in deep trouble attendence wise. The tv money is keeping those series afloat. The attendence for both is pathetic. Bill France always maintained that the attendence pay all expenses and the tv money would be the gravy, Now the opposite is true.
Things are no different today then they were years ago. In fact the entire auto racing industry from the dirt bull rings to Indy has depended on paticpants losing money. It has bee quoted many times that it takes fifteen to twenty million dollars to sponsor a top Cup Team. A charter guarantees you let’s say four million dollars. Easy to see how a team needs additional money from other sources. Talk to a racer that races in the lowest class at a bullring and he’ll tell you how much he loses every night he races. Now talk to a guy that runs a super late model or 410 sprint car at LIncoln Speedway in Pa. super late at Hagerstown in Md. To win at either track you need fifty thousand dollar engines. And you need more then one engine for the season. Lincoln pays around three thousand dollars to win a weekly show. If you could win every weekly race there you would be hard pressed to break even for the season. NASCAR isn’t the only series facing dwindling car counts. It’s nationwide at every race track. Most short tracks can’t get a full field of twenty four cars for any one class. It’s all about the money and the expenses to race are out weighing the income for everyone. Look at Indy the biggest race in the world and the Daytona 500 both just get enough cars to fill the field. Used to be fifteen to twenty racers would go home after failing to qualify for either race. It has been a struggle for the last several years for everyone involved in the sport. It’s a merry go ‘round. Expenses go up for everyone so the race teams need more money, the track owners need more money but ticket prices are maxed out everywhere. Somethings got to give. If the truth be known auto racing is the slowest dieing sport in the world. Every year tracks continue to close.
As far as series sponsorship goes since when was this necessary. For years we didn’t have it. Let’s not forget that NASCAR is the France Family. They own it lock, stock and Barrel. When Winston came in they did wonderful things. They spruced up race tracks, sponsored races, advertised races etc. . What they spent beyond what they paid NASCAR, the France Family, was unbelievable. No series sponsor since has done near as much. As far as I can tell Monster sends some pretty faces to victory lane. That’s it. Other then being mentioned as series sponsor by the media and it’s abbreviated in written text what are they getting out of the sport? And as far as race sponsorship goes i’ll Tell this. I liked it when it was the Southern 500, World 600, Mason-Dixon 500 etc. not the Burger King, Pepsi Cola, Twinkie presented by Verizon 500..
Regarding Monster. This is pure speculation on my part, but..
When asked in Daytona about the future of Monster and NASCAR the CEO said that they are working on it and that “anything is possible”. If you couple this with the rumor that NASCAR is for sale it is not to far of a drive to get to Monster and/or parent company Coke putting together a deal to buy NASCAR.
I have no evidence but fun to speculate.
Monster seems to have reputation of dragging these types of contract decisions out. I would like to see them re-up to provide some brand stability to the Cup Series. However, I would like to see them up their activation game. They seem to put more effort into their Supercross shows than NASCAR at this point. I’ve heard its different with NASCAR because they have to work with the track owners, but I want to see Monster Girls with flamethrowers! Again, I only went to the Glen last year and outside of signs, I saw no evidence of Monster in the fan midway.
Simple solution; Costs HAVE to be cut, end of story. They big money well has dried up. That ship has sailed. Number 1, all teams have to get by with less. That means no helicopters or corporate jets, or multiple haulers and motor coaches. Number 2, the Xfinity and/or the truck series need to go away. They are taking sponsors, team owners, and ticket buyers money that could be used in Cup. Let the feeder series be what it used to be, the local short tracks. This is the only chance of long term survival.
NASCAR has several issues.
1) If they want to save the xfinity/truck series they need to get them away from the cup series. They need to run them at tracks the cup series doesn’t go to. Especially adding short tracks to their schedule where they can run and more likely pull in local crowds.
2) Stop with the cars being super aerodynamic. Give them less downforce and make the drivers have to drive them.
3) Lose the 6 minutes repair rule. Yes I understand the point of not waiting cars of the track coming back and having parts fall off. But Harvick is a good example at Daytona. He got in the wreck, but because the sheet metal on the door was taken off and can’t replace panels, his race was over for a car that most likely could have still raced. Sponsors are paying to have a car in the race. Do what you can do get the cars that are still raceable back in the race. If they go back out and parts fall off the car, then give them a penalty.
4)If you want cost savings measures, The best idea is limit teams to x amount of chassis. This way they can’t build a car for every track. And left them replace a chassis is destroyed in a wreck and unrepairable or exchange chassis after so many races (i.e. each team gets 8 cars and can replace 2 after the halfway point or 4 at the beginning on the year)
Anyone notice only 36 cars in the line up where it use to be 43?
Limit the rules and you get more cars on the track. I race at Oakshade Raceway in Wauseon, Ohio and we have four classes that bring in a total of 120 to 150 cars each saturday night. Cut the rules and let guys experiment with everything from the chassis to the engine and guys will race for peanuts. We only get paid 150 dollars to win in my class but we have 50 cars in my class every single weekend. Everybody talks about car counts falling, but my track is old and rickety with no real restrooms, the pay is lousy, and nobody complains about any of it.