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The Cost of NASCAR

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by BethAnne, Special To NASCAR news, fantasy racing advice and statistics On Pit Row

I am the field producer/photographer of the syndicated radio show/website ON PIT ROW. When Steve and Charlie ask me to 'jump', I say "Yeah right."

June 16, 2009 12:25 pm CDT No Comments

When we, as fans, watch a NASCAR race, we think about the speed of the cars, the technology used to make them sleek and fast, the skill of the drivers (and sometimes their looks or personalities), and the purse that the winning team will take home. Seldom do we think of the cost of these races, except in terms of what we pay for our tickets and spend at the concession stand.

The reality, of course, is that a NASCAR team is a business, just like any other, and as such, there is a serious amount of outgoing cash. Keeping in mind that these numbers are based on a mid-level, two-car team, and that actual expenses vary from team to team, here’s an overview of just how much money is being spent in a given year.

Largest Operational Costs

There are six main types of operational costs:

·    Research and development for in-house engines and other technology. This averages around $3.5 million a year, or more.
·    Team salaries. This includes the payroll for everyone from the accountants to the engineers, to the pit crew - everyone except the drivers, basically. For a typical team of 90-100 people, this will nearly equal the money spent on R&D - about $2.5-$3.5 million.
·    Driver salaries. These have a wide amount of variance, depending on the driver and the team, but drivers are typically guaranteed some kind of base salary, a percentage of the purse if they win, and fees for appearances, once they have some level of success. In 2005, cup rookies were starting at about $400,000 / year, and in 2004, according to a story in Forbes magazine, driver Jeff Gordon made $19.3 million, though only $8.3 million of that was from track winnings.

·    Travel. Including board and gear transport, this is about $1 million per team, each season.
·    Tires. Another $1 million a year, assuming about $20,000 per race weekend plus testing.
·    Cars. $1-3 million per team. From the ground up, including the labor and the engine, a race-ready Nextel Cup car costs a minimum of $125,000 to build, and most teams keep between twelve and fifteen cars ready at any given time, building cars all year (not just during the season), and sell the spares to newer teams, or teams outside of NASCAR.

One glaring omission in this list of expenditures is insurance. There are three types of insurance associated with NASCAR - or any racing.

1.    Track Insurance: Liability insurance held by the track owner, which covers injury to spectators, and damage to property, or off-track injury to drivers, crew, and track personnel.
2.    Driver Insurance: Once the responsibility of the team, there has been a growing tendency to pass this cost to the drivers themselves, especially in the light of many dramatic on-track car accidents.
3.    Insurance on the Cars and Team. The team insurance is essentially the same sort of benefit package most employers provide. The insurance on the cars, however, is generally written  by exclusive insurance companies that specialize in racecar insurance. Included is coverage for theft or damage to vehicles, as well as the cost of insurance trailers, tow trailers, and trucks to safely move cars from place to place (race cars, after all, are not street-legal) This racecar insurance also extends to cover gear left in the truck or trailer, and insures the cars when in the paddock. While there are no publically available numbers to detail the cost of such insurance, it’s known that the street-legal Bugatti Veyron has an insurance tab nearly equal to its sticker price; it is therefore a reasonable assumption that racecar insurance is just as expensive.

Who Pays for This?

The incredible total - millions of dollars each year - is partly funded from track winnings, and partly from sponsorships - all those stickers emblazoned upon the cars, and on the drivers’ gear represent hard-won corporate sponsorships, without which NASCAR could not run.

The next time, then, that you’re sitting at home watching a race, or even sitting in the stands cheering on your favorite driver, consider how much you spent for snacks and /or your tickets, and then think about the cash flow of the teams themselves, then try not to die of sticker-shock.

Photo credit: Charlie Turner - OnPitRow.com

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