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By Ron Lemasters Jr., Special to NASCAR.COM
July 21, 2004
03:55 PM EDT (19:55 GMT)
In looking at the weekly rundown of winnings in the Sunday paper, something immediately jumps out at you: why does the driver who finished 24th, one lap down, earn more money than the driver who finished ninth, on the lead lap?
It's really pretty simple, but you have to know a couple of things about the way NASCAR and the tracks distribute their prize money to keep up.
Let's start with the prize money itself. The prize money comes from several different sources, mainly the promoter of the race itself. For instance, the lion's share of the purse at Texas Motor Speedway comes from Speedway Motorsports, Inc., the company owned by Bruton Smith that also includes tracks in Charlotte, Bristol, Sonoma, Atlanta and now, Rockingham.
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Part of that money comes from the television contract NASCAR signed with FOX and NBC/TNT. Each race has a different purse. For instance, this week's race at New Hampshire has a purse of slightly more than $5 million. The Brickyard 400 at Indianapolis is in the $9 million-$10 million neighborhood and Daytona is even larger. Although NASCAR would not release the specific percentages, the traditional formula for purse distribution of television money has always been 65 percent to the promoters, 25 percent for the purse and 10 percent for NASCAR. Remember, these numbers are by no means absolute: they serve to illustrate the point.
The TV contract averages around $400 million per season, so to set the stage, let's divide that by 36. That division works out to roughly $11.1 million per race. Sixty-five percent of that number is $7.2 million, and that goes to the promoter. The portion paid into the purse is $2.7 million or so. NASCAR keeps $1.1 million, which if you add that up over 36 races totals in the neighborhood of $40 million.
The promoter has the most cash outlay, so it is logical that he gets the lion's share of the TV rights fees. Security, parking, advertising and all the other myriad things that go into the running of a NASCAR event cost a lot of money.
The remainder of the purse money comes from contingency sponsors and from four different plans available to the teams. The four plans are the Car/Champion Owner, Plan 1, Plan 1c and Winner's Circle. Participation in these plans is based on the prior year's performance, performance in the current season and longevity in the sport. Again, specific amounts were not released, but suffice it to say a certain amount of money is released to the teams on the plans at each event.
Matt Kenseth took home over $1 million for his victory at the All-Star Challenge. Credit: Autostock
In the early days of the sport, this was referred to as "tow money," because the sanctioning body -- not just NASCAR, it was sport-wide -- felt the need to keep its advertised stars on the circuit as much as possible. This money was given to make sure teams had enough cash on hand to make it to the next race, and in the early days of the sport, it was quite necessary.
The real ticklish part is contingency funds. The decals that adorn a Nextel Cup stock car are not there for show. They serve to identify which contingency products a particular car is using, and therefore which contingency funds pay into that team's winnings at the end of every race. To be eligible for contingency award payouts, teams must use the product and carry the decal on their car.
NASCAR determines decal placement for its required decals, like Budweiser, Sunoco Race Fuels, and so on, and they go on the front fenders and the front quarters behind the wheel wells all the way up to the door panels and beyond. The teams are allowed certain areas of the car for their own use for primary, associate and other sponsors.
Some teams choose not to run certain decals, and are therefore ineligible for the money being offered for those programs. For instance, when Richard Petty's car won a pole with John Andretti at the wheel some years ago, he did not qualify for what was then the Busch Clash because he had never run a Busch decal on the side of his famed No. 43 machine. His reason? The King said running a Busch decal on his car would have upset his mother, who did not hold with the consumption of alcohol.
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NASCAR sponsors, like Sunoco Racing Gasoline, Busch and so on, have funds set aside to reward drivers using their parts or products both by race and for the season. Other products, like Penske Shocks, Competition Cams, etc., have similar programs set up and issue either cash or certificates worth a set amount of product.
By virtue of the plan each car is qualified for, the number of decals on the car and which contingency programs the teams are involved in, prize money differs per driver per race. For example, Jimmie Johnson, by virtue of his second-place finish in the series point standings last year, is a driver on one of the plans, and he's currently leading the points this year. His car owner, Rick Hendrick, has been in NASCAR for the past 20 years, and therefore, he can finish well down in the order and still make more in prize money than the driver who finishes many places higher.
So what do you have when you cobble all that together? You have a column of numbers that now hopefully make a bit more sense than they did when you called this story up today. It's a lot of money, to be sure, and all you have to do to confirm that is watch the papers every week.
NASCAR.COM's business feature appears each Wednesday afternoon. The opinions expressed here are solely those of the writer.
By Ron Lemasters Jr., Special to NASCAR.COM
July 21, 2004
03:55 PM EDT (19:55 GMT)
In looking at the weekly rundown of winnings in the Sunday paper, something immediately jumps out at you: why does the driver who finished 24th, one lap down, earn more money than the driver who finished ninth, on the lead lap?
It's really pretty simple, but you have to know a couple of things about the way NASCAR and the tracks distribute their prize money to keep up.
Let's start with the prize money itself. The prize money comes from several different sources, mainly the promoter of the race itself. For instance, the lion's share of the purse at Texas Motor Speedway comes from Speedway Motorsports, Inc., the company owned by Bruton Smith that also includes tracks in Charlotte, Bristol, Sonoma, Atlanta and now, Rockingham.
Have a story idea for Ron? Click here and send it!
Part of that money comes from the television contract NASCAR signed with FOX and NBC/TNT. Each race has a different purse. For instance, this week's race at New Hampshire has a purse of slightly more than $5 million. The Brickyard 400 at Indianapolis is in the $9 million-$10 million neighborhood and Daytona is even larger. Although NASCAR would not release the specific percentages, the traditional formula for purse distribution of television money has always been 65 percent to the promoters, 25 percent for the purse and 10 percent for NASCAR. Remember, these numbers are by no means absolute: they serve to illustrate the point.
The TV contract averages around $400 million per season, so to set the stage, let's divide that by 36. That division works out to roughly $11.1 million per race. Sixty-five percent of that number is $7.2 million, and that goes to the promoter. The portion paid into the purse is $2.7 million or so. NASCAR keeps $1.1 million, which if you add that up over 36 races totals in the neighborhood of $40 million.
The promoter has the most cash outlay, so it is logical that he gets the lion's share of the TV rights fees. Security, parking, advertising and all the other myriad things that go into the running of a NASCAR event cost a lot of money.
The remainder of the purse money comes from contingency sponsors and from four different plans available to the teams. The four plans are the Car/Champion Owner, Plan 1, Plan 1c and Winner's Circle. Participation in these plans is based on the prior year's performance, performance in the current season and longevity in the sport. Again, specific amounts were not released, but suffice it to say a certain amount of money is released to the teams on the plans at each event.
Matt Kenseth took home over $1 million for his victory at the All-Star Challenge. Credit: Autostock
In the early days of the sport, this was referred to as "tow money," because the sanctioning body -- not just NASCAR, it was sport-wide -- felt the need to keep its advertised stars on the circuit as much as possible. This money was given to make sure teams had enough cash on hand to make it to the next race, and in the early days of the sport, it was quite necessary.
The real ticklish part is contingency funds. The decals that adorn a Nextel Cup stock car are not there for show. They serve to identify which contingency products a particular car is using, and therefore which contingency funds pay into that team's winnings at the end of every race. To be eligible for contingency award payouts, teams must use the product and carry the decal on their car.
NASCAR determines decal placement for its required decals, like Budweiser, Sunoco Race Fuels, and so on, and they go on the front fenders and the front quarters behind the wheel wells all the way up to the door panels and beyond. The teams are allowed certain areas of the car for their own use for primary, associate and other sponsors.
Some teams choose not to run certain decals, and are therefore ineligible for the money being offered for those programs. For instance, when Richard Petty's car won a pole with John Andretti at the wheel some years ago, he did not qualify for what was then the Busch Clash because he had never run a Busch decal on the side of his famed No. 43 machine. His reason? The King said running a Busch decal on his car would have upset his mother, who did not hold with the consumption of alcohol.
ALSO
More business features
NASCAR sponsors, like Sunoco Racing Gasoline, Busch and so on, have funds set aside to reward drivers using their parts or products both by race and for the season. Other products, like Penske Shocks, Competition Cams, etc., have similar programs set up and issue either cash or certificates worth a set amount of product.
By virtue of the plan each car is qualified for, the number of decals on the car and which contingency programs the teams are involved in, prize money differs per driver per race. For example, Jimmie Johnson, by virtue of his second-place finish in the series point standings last year, is a driver on one of the plans, and he's currently leading the points this year. His car owner, Rick Hendrick, has been in NASCAR for the past 20 years, and therefore, he can finish well down in the order and still make more in prize money than the driver who finishes many places higher.
So what do you have when you cobble all that together? You have a column of numbers that now hopefully make a bit more sense than they did when you called this story up today. It's a lot of money, to be sure, and all you have to do to confirm that is watch the papers every week.
NASCAR.COM's business feature appears each Wednesday afternoon. The opinions expressed here are solely those of the writer.
