Friday, January 29, 2010
A 10 percent pay cut? Welcome to the club
Every NASCAR driver and team owner just took a 10 percent pay cut.
NASCAR is reducing the purse money by 10 percent for every Sprint Cup, Nationwide and Camping World Truck Series event this season.
A lot of folks across the country would say welcome to the club. Others would gladly accept that sacrifice compared to no pay at all.
However, this is a little different. The lost purse money for the competitors is going into the pockets of the track owners. Track income just got a big bump.
We're not talking about chump change. Take Texas Motor Speedway, for example.
In 2009, TMS paid a total of $18.3 million for it six NASCAR events, two races in each series. That's a $1.8 million savings for 2010.
One-quarter of the purse money comes from television revenue paid to the tracks, more of which the speedways can keep now.
But the tracks aren't padding the coffers. What this really does is help make up for the income speedways lost last year with decreased attendance and reduced ticket prices.
This also is an indirect way for NASCAR to pay itself, at least as far as the France family is concerned. The Frances own NASCAR, but they also have controlling interest in International Speedway Corp., which owns 12 tracks that play host to NASCAR events.
Bruton Smith's Speedway Motorsports Inc. empire owns eight tracks that have NASCAR events, including TMS. Smith, by the way, proposed last week that NASCAR pay more purse money for winning.
So what about the race teams and drivers? They are taking a hit. This isn't quite as bad as it seems because TV revenue is increasing slightly this year (about 2.5 percent).
That aside, let's illustrate how this could affect one driver.
Clint Bowyer finished 15th in the 2009 standings. Assuming he had the exact same results in 2010, his race winnings would drop $441,066, from about $4.4 million in 2009 to about $3.9 million in 2010.
Drivers typically keep about 40 to 50 percent of purse earnings.
Yes, I know. You aren't shedding any tears for racing millionaires. And no Cup teams, with the possible exception of a couple of start-and-parkers, make ends meet off prize money from races.
That doesn't come close to paying the bills for Cup teams with several hundred employees. It takes millions of dollars in sponsorship.
But any cut in income is painful these days for NASCAR teams, many of which have renegotiated with sponsors for less money to keep them around.
For the speedway owners, congratulations. Things just got a little better in a tough economy.
For drivers and teams, things just got a little worse. Welcome to the club.