Sprint Cup drivers put their lives on the line every time they step into a racecar.
That’s why they bow their heads in prayer before each race and
cherish a kiss from their wife or girlfriend seconds before they strap
on their helmet.
Then they go out and participate in one of the most dangerous professions in sports.
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They do it for the love of speed and competition.
And for the money.
In most cases, a lot of money.
A full-time
Sprint Cup driver
can earn anywhere from $1 million to more than $20 million a year in
salary, purse winnings and from other sources, depending on their
contract.
Like most sports, a large pay disparity exists between the top stars
and unproven rookies or veterans stuck with struggling teams.
But unlike most sports, no union contract dictates when and how
drivers can sign new contracts or renegotiate new deals. NASCAR drivers
are considered subcontractors, so they can be involved in contract
negotiations or potential new deals — or potential firings — at any
time.
Though their income typically pales in comparison to top athletes in
other sports, those who play the game right can make millions, says
agent Cary Agajanian, who has represented drivers for nearly 20 years.
“The drivers are being fairly paid — I don’t think they’re overpaid; I don’t think they’re underpaid,” he says.
“The system, because it’s such an entrepreneurial or capitalist
system, a supply-and-demand system, it works. It completely works that
guys negotiate and bargain and the teams have decided how much they can
pay a driver and it fits in their budget.”
Where the money comes from
Drivers make their money in three primary areas — salary, percentage
of race winnings and bonuses. Those at the top of the sport can
significantly supplement their income with merchandise sales and
personal endorsements.
NASCAR’s highest paid driver is believed to be
Dale Earnhardt Jr.,
who, according to Sports Illustrated, made $28.1 million — $4.1 million
in salary and earnings and $24 million in endorsements — in 2011.
Forbes estimated his earnings at $28.2 million for June 2011-July 2012
but had a very different split — $13.2 million in winnings and $15
million in endorsements.
Insiders shake their heads at suggestions that any driver currently
in the sport makes more than $10 million in endorsements. Rarely does
any endorsement deal eclipse a half-million unless it’s a major
endorsement for someone like Earnhardt, the sport’s most popular driver,
sources in the sport say.
According to interviews with drivers, agents and a look at various
NASCAR contracts, a driver who wins a NASCAR Cup championship likely
makes between $12 million and $20 million that season.
In 2012, Cup champion
Brad Keselowski
earned $6.23 million in race winnings, $150,000 in special awards and
$5.73 million from the season-ending point fund for a total of $12.1
million. So if he received 40-50 percent of that, he likely earned $5-6
million in racing winnings, plus his salary (probably between $3-6
million) and maybe another million in other bonuses and merchandise
sales to likely eclipse more than $10 million in his championship year.
A driver who makes the Chase for the Sprint Cup and finishes in the
top 10 in the points standings likely will earn around $10 million.
Drivers who finish 11th-20th in the standings typically earn about $5-8
million, depending on their base salaries. A driver near the back of the
pack likely still will clear a few million.
Compare that to the highest paid players in other sports, where salaries, not including endorsements, are known.
Alex Rodriguez
gets $30 million before endorsements. The top-paid hockey player, Brad
Richards of the New York Rangers, earns $12 million, according to USA
Today.
Kobe Bryant of the Los Angeles Lakers will make $27.8 million this season. NFL quarterback
Drew Brees is set to make $40 million, according to The Associated Press.
Just like ugly holdouts or disputable trades in other sports, NASCAR
driver contracts can cause a stir and a driver’s livelihood
occasionally hangs in the balance when their contract is up.
Carl Edwards was in the headlines throughout 2011 when he flirted
with a move to Joe Gibbs Racing before re-signing with Roush Fenway
Racing. This year, Roush teammate Matt Kenseth made the move, signing a
contract with Gibbs that ended his 13-year tenure with Roush after the
2012 season.
Earnhardt, arguably the sport’s biggest star, shocked the NASCAR
world in 2007 when he decided to leave his family’s Dale Earnhardt Inc.
team — a move that led to the organization’s demise — and signed a
long-term deal with Hendrick Motorsports, a deal he has since
renegotiated.
Such moves can be tricky and get ugly.
Clint Bowyer had negotiated a sponsorship deal with 5-Hour Energy
last year but couldn’t convince team owner Richard Childress to keep him
at the salary he wanted. Instead, he took the sponsorship to Michael
Waltrip Racing, a team that needed Bowyer’s star power more than Richard
Childress Racing and was willing to make it work.
“We knew what our financial model was, and Clint knew where he
needed to be, and we just couldn't never come together to make it work,"
Childress said at the time. "We had the car completely sponsored, but
it just didn't work out."
Rob Kauffman, co-owner of MWR, made it work for his team, adding a
third car for Bowyer. He liked that the sponsor was an up-and-coming
company with a product that aligned well with NASCAR and a driver who
could win races. So while RCR wouldn’t do the deal, MWR did.
“Those are the kind of calculated risks you take as a business
person,” Kauffman said. “We’re in a different position — Richard is a
champion. He’s forgotten more about NASCAR than I know. … They were just
in a different place.
“For us to be able to compete with guys that have been in the business for decades is hard.”
Bowyer made it pay off for MWR, winning three races, making the
Chase and finishing second in the final standings in 2012. And he
brought in more than $5.5 million in race winnings for himself and the
team.
Negotiating the deal
Sports is a performance-based business. And compared to team sports, NASCAR drivers know that better than other athletes.
The top drivers get paid handsomely just to strap into their cars,
while those trying to prove themselves typically rely on
performance-based incentives.
Base driver salaries typically range from $500,000 to $10 million
annually, according to those familiar with contracts, with some of the
top drivers possibly even eclipsing $10 million a year. In 2008, Robby
Gordon was coming off a season in which he finished 26th in the Cup
standings and agreed to sell his team to owner George Gillett. His
salary would have been a $3 million base if the deal had not fallen
through.
A top-10 driver likely earns at least $5 million in base salary,
according to Chad Warpula, the former in-house attorney at Dale
Earnhardt Inc. and a current partner at K&L Gates, which represents
several race teams and a few drivers.
Obviously, the better a driver performs, the more money the driver can attract in base salary.
Sometimes a team will base the salary of a driver on the team’s
sponsorship. Roger Penske said at the beginning of the year that
sponsorships for top teams currently bring in $12-15 million, although
it is believed that top drivers can attract more sponsor dollars. The
SportsBusiness Journal, a sister publication to Sporting News, estimates
NAPA’s newest three-year deal with MWR and Martin Truex Jr. at $16
million a year.
Drivers typically command between 30 and 50 percent of what the
sponsor pays the team, with the more the sponsor pays, the more that can
go to the driver. The base costs to field a team doesn’t increase and
generally ranges from $7-10 million.
“I feel like every driver should be paid based on the sponsorship,”
four-time Cup champion Jeff Gordon says. “That’s a little bit more of
how mine is done. … In my case, I know I’m getting a percentage and
(exactly) what percentage I’m getting of the sponsorship.”
Virtually every driver — with the exception of stars such as
Edwards, Denny Hamlin, Kasey Kahne and Jimmie Johnson — took a pay cut
if he signed a deal in the last three years, when the downturn in the
economy has led to a decline in sponsors and reduction in the price
sponsors will pay.
“I think in general everybody out there right now has taken a pay
cut, no different than the cost of a seat in the grandstands is down,”
Ryan Newman said after signing a new deal with Stewart-Haas Racing in
September.
Teams now complete deals knowing they have the sponsorship to cover
the costs. Only a highly marketable, highly talented driver, such as
Kahne, can sign a contract as he did with Hendrick Motorsports — he
signed a contract in April 2010 that did not go into effect until 2012.
“Starting in 2008, and definitely today, you see a big change in the
industry where the teams are unwilling to sign those fixed amount
contracts and put a little more risk on the drivers,” Warpula said. “Now
you’re seeing more contracts that say, ‘You get a percentage of the
sponsorship dollars.’
“That protects the team if the sponsorship goes away or goes down,
they’re not stuck with a contract they can’t afford to pay.
Psychologically, it aligns the driver with the team in making sure they
deliver the best product to the sponsor.”
Jeff Gordon says that’s the way it should be.
“It’s in my best interest to do the best I can, be the best
spokesperson I can because the better I do on the track and off the
track for my sponsors, the better I’ll do financially as well,” he said.
“When the economy hits, it affects the team, with sponsors cutting
back. It should affect me, too. I shouldn’t be oblivious to that.”
A team might have to go beyond what it has locked in for
sponsorship, however, if a driver can command more money on the open
market.
“Car owners deserve to do well,” said Rod Moskowitz, whose Fuel
Sports Management represents drivers Kahne, Hamlin, Kenseth and Jamie
McMurray. “They are exceptionally dedicated and committed to their
massive operations. Car owners should be rewarded for their performance,
which includes making a profit.
“At the same time, the driver wants to be paid his market value. He wants to be rewarded based upon his performance.”
With fewer Cup rides to go around, team owners sit in the drivers seat as far as contract negotiations.
“There are a lot fewer teams around and a lot more teams with
multiple cars so there are much fewer people to negotiate with,”
Agajanaian said. “That has reduced the negotiating strength of a driver.
“There’s no question that has changed the playing field.”
It has changed across the board. Two-time Nationwide Series champion
Ricky Stenhouse Jr. likely will earn much less as a rookie next season
than Joey Logano when he entered the sport in 2008.
“It costs $10 million-plus to put the car on the track when it’s
all-in, excluding the driver’s salary, so that’s a significant expense
and I think the younger drivers are seeing lower salaries than they saw
five to 10 years ago,” Warpula said.
How about the length of driver contracts? Typically it depends on
the length of the sponsorship. Most deals cover two to three years,
although top drivers such as Earnhardt Jr. can attract five-year deals.
“You want to keep your agreement where it’s long enough to have good
stability with the team but short enough where if market conditions
change, both the car owner and the driver can re-visit the arrangement,”
Moskowitz said.
Percentage of winnings
Look at a NASCAR box score after a race, and it lists pretty much
all the essential data. Where a driver starts and finishes and how many
laps completed can give fans an idea of how the driver performed.
And then, at the end of the line, is how much money the driver “earned” for that event.
That amount doesn’t really tell how much a driver really made for the race.
Drivers typically get 40 to 50 percent of their race winnings. The
team owner gets the other 50-60 percent, with a small percentage going
for team bonuses.
Keselowski earned $12,106,255 in race winnings (before the team
split) and point-fund bonuses for winning the Sprint Cup championship
this year — Tony Stewart earned $12,633,171 for winning the 2011 title —
while fifth-place Greg Biffle earned $7,416,099. Stewart, thanks to one
more race win than Biffle and contingency awards, actually earned
$7,932,181 this year despite finishing ninth in the standings.
Earnhardt, who finished last in the 12-driver Chase, earned
$5,816,567 but because he missed two races with a concussion actually
ranked 15th in overall winnings. Kyle Busch, who didn't make the Chase
but had 13 top-five finishes — more than eight of the 12 Chase drivers —
was eighth overall in winnings at $7,202,891.
Aric Almirola, who finished 20th in the standings, earned $5,132,521
in race winnings, while 30th-place David Gilliland totaled $3,494,350.
Sometimes a driver’s percentage of winnings goes up depending on
where he finishes in the final standings. According to his 2009 contract
with Red Bull Racing, Scott Speed was to receive 40 percent of his
winnings if he finished worse than 20th in the standings, 45 percent for
11th-20th and 50 percent for a top-10 finish. Warpula said the standard
on most current driver contracts is 40 percent, with an increase to 50
percent for a race win.
Drivers with underfunded or less competitive teams make less money
as far as percentage of winnings because the team needs to race off the
money it generates week to week rather than sponsorship.
Kevin Conway, who brought his sponsorship to the underfunded Front
Row Motorsports team in 2009 and earned 10 percent of the sponsorship
($540,000 for the $5.4 million deal) — the standard 10 percent cut for
someone who brokers a sponsorship — had his percentage of race winnings
at 15 percent if he finished outside the top 20, 30 percent from
11th-20th, 35 percent for sixth-10th and 45 percent for a top-five
finish.
Bonuses
Drivers typically get bonuses for where they finish in a race and in
the final season standings. Making the 12-driver Chase usually elicits a
bonus — partly because it could kick in a clause in the sponsor’s
contract for extra money going to the team.
When Sterling Marlin drove for Ginn Racing in the mid-2000s, his
bonus structure included $5,000 for each pole, $10,000 for every top-10
finish, $25,000 for every top-five and $50,000 for a win.
He had a $500,000 bonus clause for winning the Sprint Cup
championship, $250,000 for finishing second through fifth, $150,000 for
sixth-10th, $100,000 for 11th-15th and $50,000 for 16th-20th.
The more experienced drivers generally can negotiate better bonus structures.
“There’s some drivers in here that have enough success and enough
following that they get to write the terms,” driver Jeff Burton says.
“And then some of them are pretty equal. It just depends on the
situation.
“If you’re a young team without a lot of success and you’re trying
to do a deal with a driver that has won a lot of races, that is going to
look a little different than if you did it with a young guy that has an
upside.”
Additional revenue sources
Drivers often get 33 percent of the apparel and merchandise profits
that bear their likenesses (with the team and sponsor also getting 33
percent), although sometimes it’s 30 percent as the team takes a little
more as an administrative fee. Some drivers, if the sponsor does not
take a cut, will get 40-45 percent.
While the most popular drivers on the circuit can earn more than
$500,000 in merchandise sales, only a driver such as Earnhardt could
crack more than $1 million a year in merchandise royalties, according to
sources familiar with merchandise contracts and royalties.
Drivers can also supplement their income in several ways.
Many will drive in other series, such as the Nationwide Series or
Camping World Truck Series, if their Cup team owner allows it. Typically
a Cup driver gets paid a guaranteed rate to run a truck or Nationwide
race, likely from $10,000 to $30,000, plus a percentage of the race
winnings.
Though NASCAR limits the purse money for Cup drivers who compete in
those series, a star driver like Kyle Busch can still earn almost $1
million for racing part-time in those divisions. Busch, who won 21
Nationwide and truck races in 2010 and has 64 victories in those series
in the past five years, likely earns much more.
Some drivers can also attract personal endorsements, which could
include a spot on a driver’s uniform or the car. Those endorsements
could pay a driver anywhere from $25,000-$250,000, depending on the
number of appearances.
Most average drivers would earn between $250,000 to $750,000 for
endorsements, with a driver who consistently wins races earning between
$1 million and $2.5 million. The top three or four endorsers might reach
$5 million, according to sources.
According to multiple sources, estimates by Forbes of Jimmie Johnson
and Stewart making $7 million in endorsements while Jeff Gordon makes
$10 million and Earnhardt Jr. makes $15 million are “laughable.” Rarely
does any endorsement deal crack $500,000. There are other items drivers
can get — such as NASCAR licenses, garage passes, seats on a team plane,
personal vehicles, insurance and other travel expenses — that might be
worth another $100,000-$150,000.
And, of course, driver contracts and salaries change depending on performance.
Jeff Gordon said when he first started out as a Cup driver in 1993,
he made $1 million in base salary and more than a million in bonuses.
Hendrick renegotiated Gordon’s contract before it was even up.
Gordon, who won three Cup championships from 1995-98, didn’t even need to hold out to get a new contract.
“It was a very good, very fair deal and made me have to keep working
hard at it but yet get paid very well,” Gordon said. “When sponsorships
are good, it’s good for me. When we win races, win championships, it’s
even better.
“That’s the way it should be. It should be performance-based, that
should be a critical part of it. … (All the drivers) make money off
their performance. Because if they don’t perform, they’re going to be
gone.”