Commentary

NASCAR playing catch-up when it comes to driver compensation

Stock car drivers raced for 10 bucks and a case of beer in the old days. Today they have million-dollar motor homes and private jets. What happened?

Updated: November 7, 2007, 6:29 PM ET
By David Newton | ESPN.com

CHARLOTTE, N.C. -- Mark Martin cleared just over $142,000 in race winnings in 1982, his first full-time season in NASCAR's premier series. He made just over $1 million in 1989, collecting six poles, one win and six second-place finishes and finishing third in points.

McGee: Dollars And Sense
Let's put this money thing in perspective. Richard Petty earned $8.5 million over a 35-year career that produced seven Cup championships. Yet The King trails Scott Wimmer -- yes, Scott Wimmer -- on the career earnings list.
Ryan McGee

This year, driving a part-time schedule, he's already earned more than $3.8 million without a trip to Victory Lane.

The winner of the Nextel Cup championship in two weeks will receive more than $6.7 million in points fund money alone, clearing more than $15 million when all is said and done.

Yes, Nextel Cup drivers have come a long way on the pay scale.

But are they fairly compensated compared to the top athletes in other sports?

Kobe Bryant will make $33.7 million this season with the NBA's Los Angeles Lakers, according to a recent survey by Sports Illustrated. Alex Rodriguez, Derek Jeter and Jason Giambi all made more then $20 million with baseball's New York Yankees.

Tiger Woods earned more than $110 million -- $13 million in prize money, $87 million in endorsements -- this past PGA season. Phil Mickelson raked in $51 million.

Arnold Palmer, who at 78 is retired from the Champions Tour, cleared $25 million from sponsors Callaway, Rayovac and Rolex.

The highest-ranked Cup driver on the SI list was Dale Earnhardt Jr., who came in at No. 10 at $27.1 million.

[+] EnlargeDale Earnhardt jr
AP Photo/Noah BergerSony hopped aboard the Dale Earnhardt Jr. Express back in June, agreeing to a personal services contract with NASCAR's most popular driver.

NASCAR's most popular driver didn't even make the Forbes Top 25 list, which ranked four-time Cup champion Jeff Gordon (No. 21) as the highest-paid driver at $24.5 million.

"It seems irrational to me to hear guys getting $15 million, $25 million or more to play some other sports," Martin said. "I don't see how what they do generates any more than what we do.

"But the money has escalated phenomenally in this sport the past 15 years and it's been good for me, so I can't complain."

Few do when they consider how far salaries have come. Red Byron collected only $5,800 in race winnings en route to the first NASCAR title in 1949. Lee Petty carried home only $19,000 for winning the inaugural Daytona 500 in 1959 (though that money today would be worth $136,127 in today's market).

Kevin Harvick collected $1.5 million for winning this year's Daytona 500 and Tony Stewart won $334,931 for finishing last.

Granted, the value of a dollar back in 1959 could buy a lot more than that same dollar could in 2007.

"NASCAR and the industry and racetracks and the sponsors have all worked to reward the participants of the sport in a very reasonable way," said Mike Helton, the president of the governing body. "But at the end of the day, it's a matter of whoever participates in what they do for a living do it at a rate that industry allows them to be paid."

The last two television contracts and increased track purses, which to a large degree go hand in hand, have made NASCAR salaries more compatible with other sports.

Jeff Gordon and wife
AP Photo/Rick Hossman Top NASCAR money earner Jeff Gordon won't have a problem providing for wife Ingrid Vandebosch and new baby daughter Ella Sofia.

The payout at the 2007 Daytona 500 was $15.6 million, compared to $3.4 million 10 years ago and $1.3 million 20 years ago. Harvick's $1.5 million share was more than three times the $377,000 that Gordon received in 1997 and almost eight times the $204,000 Bill Elliott got in 1987.

The purse at Martinsville, one of the lower paying tracks, has grown from $266,605 in 1987 to $4.19 million this year. That translates into a difference of nearly $200,000 between what points leader Jimmie Johnson won last month to the $43,000 that Darrell Waltrip won 20 years ago.

"I guess if you take somebody like Tiger Woods as a top guy in golf and you take Jeff Gordon or Junior or myself and what our salaries would be, it's probably not a fair comparison from top to top," said Johnson, who leads Hendrick Motorsports teammate Gordon by 30 points heading into Sunday's race at Phoenix.

"But if you look at the average pay all the way through the field and what drivers are making and compare that to a roster of a football team and make some comparisons along those lines, it's probably on an average better."

Kyle Petty, who is 35th in points and has made only 27 of a possible 34 races, has earned $2.6 million this season. That's about the yearly average that Pro Bowl kicker Adam Vinatieri received when he signed with the Indianapolis Colts.

Terry Labonte, who has competed in only three events, has made $307,000. That's only about $70,000 less than the guaranteed minimum for a second-year player in the NFL.

"A team in any sport, if they can afford to pay a person that kind of money, then they should pay him," Gordon said. "If by bringing Kevin Garnett to your team is going to help you sell more tickets, bring more sponsorship to your arena, bring more marquee players to your team, then you've got figure out what that value is.

"If that's $25 million a year and you can justify that, then that's what the player is worth. That's the way I look at it in our sport -- if a driver can bring in $30 million a year in sponsorships and can perform well at the track and has a good fan base, then they're worth a lot of money."

TV impact
For much of its existence NASCAR was considered a Southern-based sport with a narrow television audience. Then came the addition of Indianapolis Motor Speedway to the market in 1994, followed by Texas Motor Speedway in 1997.

Kansas, Miami and Las Vegas soon followed, taking dates from traditional tracks at North Wilkesboro and Rockingham, N.C.

"Those gave the industry a big boost of exposure and opportunity to expand sponsorship and the fan base," Helton said. "You saw racetracks adding seats to accommodate the growth.

"Then along in 2001 came the first of the TV packages that more correctly identified the value of our sport."

Tiger Woods
AP Photo/John BazemoreWith more than $110 million in earnings in 2007, Tiger Woods' take quadrupled what NASCAR's top money-makers earned.

NASCAR signed a $2.4 billion contract with Fox, NBC and TBS that year, substantiating to the powers that be that the series deserved its recognition as the second-most viewed spectator sport behind the NFL.

This season, the Cup series began an eight-year deal with ABC/ESPN, Fox and Turner valued at $4.5 billion.

But those numbers still aren't close to the NFL package. The league last season began a six-year contract with Fox and CBS valued at $8 billion. Throw in the ESPN Monday Night games and NBC Sunday night games and the total deal is valued at over $18 billion.

Consider that NFL teams split 100 percent of the television contracts while Cup owners get only 25 percent of the NASCAR deal -- 65 percent goes to the tracks and 10 percent to NASCAR -- one can better understand why top-end NFL contracts are so high.

The NFL also has a union and pension plan that NASCAR doesn't.

"If racing is going to be the big-time sport that NASCAR wants you to believe it is, then it needs to do similar things," said Ricky Rudd, who has made $44.4 million in race winnings over his 32-year career. "I'm not going to complain. I've made some good money in this sport, but there are a lot of guys that came before me that didn't.

"So where's the money going to come from? The only place it can come from is if the racetracks and NASCAR change the percentage of TV money they keep for themselves."

That's not likely to happen, said Helton, a former track president.

"The big difference in our sport from football, baseball and basketball is the cost of the arena," he said. "All of our tracks are privately owned, they are very expensive to operate.

"The ergonomics of a race event is much different than for a baseball or basketball game. What happens down the road I don't know, but we think the balance is good now."

Bruton Smith, the chairman of Speedway Motorsports that owns some of the top Cup venues in Charlotte, Texas, Las Vegas and Dallas, said tracks can't afford to surrender a larger portion of the TV money.

"These speedways, mine and everybody else's, they always need things," said Smith, who recently paid $340 million to purchase New Hampshire International Speedway. "To do all these things cost a lot of money. At Vegas we spent about $40 million there [renovating]. I'm happy with what we did. It's fantastic.

"When you're speaking of those kinds of dollars, you can't do those things [if you don't have the TV money]."

Geoff Smith, the president of Roush Fenway Racing, doesn't necessarily agree. He also doesn't see NASCAR or tracks relinquishing their share of the pie.

"There is great resistance by NASCAR and tracks to change the power situation to the driver any further than it is now," he said.

J.D. Gibbs, the president of Joe Gibbs Racing, would love to see owners get a larger share of the TV money. Not so much to pay drivers more, but to keep owners from having to bring in financial partners as organizations such as owners Jack Roush, Ray Evernham and Michael Waltrip have over the past year.

He noted that an organization such as his has to support 440 employees, far more than a football, baseball or basketball franchise.

"The key for us is if you don't have a really good driver you're not going to make it," said Gibbs, whose stable includes Stewart, Denny Hamlin and Kyle Busch. "But you can't pay him so much that you put yourself out of business.

"The biggest thing, from an owner's perspective, if they could find a way to make the owners' program a bigger deal that would be encouraging to everyone. That way if you ever wanted to sell you'd have something of value. Right now, there is no real value unless you're running well."

Team owner Richard Childress has suggested more than once that owners get a larger share of the TV revenue, reminding it costs up to $600,000 to bring his three Cup teams to the track most weekends.

"With only 25 percent of the TV money, it's hard for us to keep going," he said.

Rick Hendrick, who likely will win his seventh Cup title with Johnson or Gordon, reminded that owners are paying out a higher percentage for the car and driver's salary than ever before.

"I don't know what the right formula is," he said. "But when you look at some of these baseball teams, what they pay their players when they don't have anybody in the seats, I don't know how they do it. So it's got to be with TV money."

Gordon said owners are becoming too dependent on sponsors to supplement driver salaries.

"The TV dollars, there are adjustments that could be made there," he said. "You see guys like Michael Waltrip and Ray Evernham, even Jack Roush, having to get partners to help with the money. To me, that shows there is a concern for us in our sport that it's not as healthy and strong as it should be."

Will drive for money
You won't see drivers on the side of the track holding a sign saying they will work for money. But more so than arguably any other sport they have to perform in order to get paid top dollar.

That's because a large portion of many driver salaries comes from the 25 to 50 percent -- the average is around 40 -- they earn from the weekly winnings.

Cary Agajanian, one of the top agents in NASCAR, believes that makes the pay scale more pure than any other sport.

"That's why I think the pay scale to me is fare, because they have to earn what they make," he said. "I've always watched baseball and football, baseball more than anything, and you see these huge salaries being paid and the guy gets out and bats .150 or a pitcher loses every other game.

"Being compensated based on performance is a great way to do it."

Agajanian reminded there was a time until the mid-1970s and early 1980s when almost all of a driver's salary was based entirely on his percentage of the winnings.

He said that slowly began to change when drivers, such as three-time Cup champion Darrell Waltrip, began to be compensated by the sponsor and/or owner. He estimated that about half of the salary of top drivers such as Gordon and Earnhardt comes from sponsors and personal service contracts.

"Every time I look at a new sponsorship package I'm astonished," Agajanian said. "Then you have somebody like Junior come along and that raises the bar again.

"Rick Hendrick saw the value in what he could do. I guarantee before he hired Junior he knew how much he was going to get for sponsors on that car."

Every time I look at a new sponsorship package I'm astonished. Then you have somebody like Junior come along and that raises the bar again.

-- Agent Cary Agajanian

Agajanian said the dynamics of driver contracts escalated when Tony Stewart signed an extension in 2004 valued at $5 million a year.

That's because owner Chip Ganassi and manufacturer Dodge got into a bidding war with Joe Gibbs Racing and Chevrolet that was unlike any before until this year when Earnhardt and Busch put themselves on the open market.

"The Gibbs folks and sponsors and manufacturer stood back and said, 'Let's be creative and find a way to keep him,' " Agajanian said. "I wouldn't say it was groundbreaking necessarily, but it was somewhat different than how it had been over the years."

Gordon, for example, has a lifetime contract with HMS. Most drivers typically resign with their existing team or negotiate with another without getting into a bidding war.

Some, such as Bobby Labonte, don't hire an agent.

"Which might not be the smartest thing to do," he said. "A lot of mine have been done on Post-it notes and napkins. I never came back and said, 'I want this and this.' I've always said, 'That sounds good to me. Let's go.' "

Agajanian said the influx of financial partners that come from non-racing backgrounds like those at Michael Waltrip Racing and Roush Fenway Racing eventually could drive salaries up.

"There could be owners that want to come in and say, 'I'm going to throw around A-Rod money that doesn't relate to our budget but relates to changing our image,' " he said. "Like if a Mark Cuban were to come in and had so much money and wanted the best driver no matter what.

"Guys like that, they don't care how much they have to pay for them because it's all a part of their ego. That could change the dynamics of it, but that's probably a few years away."

Gordon said salaries in NASCAR, like salaries in other sports, should be driven by what the driver brings to the team. He understands that soccer star David Beckham can get a five-year, $250 million deal based on playing and promotions because he's a worldwide star and transcends sports with his marketing ability.

The same goes for Woods.

"Here's a guy that not only is ridiculously the No. 1 guy in his sport, but from a marketing standpoint he goes across so many borders," Gordon said. "If Nike wants to pay him $90 million, then more power to him.

"To me, it's all about my worth and what I bring to the sport. If I perform well and sponsors want to pay top dollars, then I need to get top dollars. If I don't, then I don't deserve to get top dollars and I should be paid a percentage of what those numbers are."

Under those guidelines, Gordon said NASCAR drivers are very well compensated.

"There are some guys that need to be paid more and some that get paid too much," he said. "But just looking at it purely from a race car driver's standpoint, we all are getting paid way more than we should be."

David Newton covers NASCAR for ESPN.com. He can be reached at dnewtonespn@aol.com.

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