Getting The Green: How NASCAR Can Help Race Teams Survive, by Tommy Joe Martins

Tommy Joe Martins, 30, is a driver in the Xfinity Series and Camping World Truck Series. His family’s race team, Martins Motorsports, currently fields entries in the Truck Series.

By Tommy Joe Martins

When NASCAR announced a 10-year, $8.2 billion television rights package with NBC and FOX in 2013, it became perhaps the greatest TV deal in the history of sports.

At the time the deal was signed, NASCAR Cup events averaged a 5-plus rating — and now that number is down to less than 3. But no matter the ratings, that $8.2 billion, long-term contract is locked in.

NASCAR hit the lottery and Brian France bought the ticket. He and his team deserve plenty of credit for negotiating a superb deal.

But how that average of $820 million per year is split has been a topic of much discussion lately — with Denny Hamlin among the recent voices to question the arrangement.

NASCAR gets 10 percent, so let’s round off and say that’s $80 million per year. The tracks get 65 percent — roughly $530 million — and if that sounds like a lot, then you’re not the only one that thought so.

I’m not going to act like I know the first thing about the expenses of running a racetrack. So for now, let’s just assume they need every dollar of it.

The teams get the remaining 25 percent of the deal, which is roughly $200 million per year — and that’s distributed through the purse money for each race. That money is then split again among the top three national series. And if you’re not sitting down, you’re going to want to before you read this next part.

As of 2014, the Cup Series got 93.75 percent of the team cut. NINETY-THREE PERCENT. The Xfinity Series got a whopping 5.75 percent (although maybe that wasn’t seen as a big deal since almost half of the Xfinity field is made from Cup teams or affiliates).

But the Truck Series? It got an almost unimaginable 0.5 percent. Half of a freaking percent. That worked out to roughly $1,000 per race, per team.

The entry fee alone for the Truck Series is $1,650 per race.

Thankfully, that horrendous split got restructured in 2015. But best I can tell, the Truck Series still only receives around a 2 percent take. Not exactly the jump we were looking for.

My family’s team, Martins Motorsports, received roughly $14,000 per race in prize money last season. A set of Goodyear tires costs roughly $2,300 per set, and we’re allotted five sets on most race weekends ($11,500). If we didn’t buy used tires from other teams, we’d be broke in a month.

Clearly, there needs to be a change. The goal should be to make teams profitable. Just like teams in every other pro sports league, NASCAR teams should operate in the green.

Now, that’s not to say that team ownership should be lucrative. For a team to do that, it’s always going to take sponsorship. I want small teams to be able to eke out a small profit — around 10 percent each year. It costs a LOT of money to start a NASCAR team. With equipment purchases, engine costs, shop expenses and weekly salaries, the initial investment is massive before ever receiving an awards check from the racetrack. There should be a return on that investment.

So how do we make the adjustment? I think the TV ratings are a good place to start. The ratings for this season are public knowledge, but I did the math for you. The averages are: Cup 2.8, Xfinity 0.8, Trucks 0.4. Theoretically, a TV revenue split based on ratings could be: 70 percent Cup, 20 percent Xfinity, 10 percent Trucks.

That wouldn’t change much for big teams. They don’t count on the prize money to balance the budget — it only makes up 15-20 percent of their income. A reduction to 15 percent of their income isn’t a big deal.

Taking the charter-weighted math out of it (I don’t even want to try; I’m struggling enough as is), each of the 40 Cup teams would still get roughly $3.5 million from the 36 points races. Factor in traditional prize money at only $30,000 per race (and I’m sure I’m low on that number), and that makes for a $4.58 million dollar budget.

Assuming they qualified for all 33 races, Xfinity teams would earn roughly $1 million from the TV money alone. That would be a huge increase from the current deal, and that doesn’t account for traditional track-paid prize money. Let’s say that’s around $15,000 per team, and would make a $1.25 million budget for each team.

It would be an even bigger deal for Truck teams. A $625,000 TV share would be close to double the total prize money our team won in 2015. Factor in $10,000 per race in traditional purse monies (which I’ve averaged out over the past two Truck Series seasons), and that would make for an $855,000 budget per team.

Big teams would tell you that’s not even close to enough cash to run a team for a season. For example, the Lilly’s sponsorship for Roush Fenway’s Xfinity team was reported at $10 million per year — $5 million competition, $5 million activation, while Cup sponsorships can range anywhere from $5 million to $35 million.

So when those teams say this wouldn’t make a difference for them, they’re not wrong. The prize money I’m talking about isn’t enough to run their teams for the season.

Rich teams will always be the best teams. They have the best facilities. They have the best people (because they can pay them more). They have more people and resources. So of course their costs are going to be higher.

But those aren’t necessary costs. They’re optional, self-inflicted costs. If you want to be a big team and you have the money, go for it! Money will always help in motorsports. But you shouldn’t have to spend big money to be successful. And sponsors should be a luxury, not a necessity to break even!

Can you imagine if the Minnesota Twins shut down because Target decided not to sponsor the team’s stadium anymore?

Small teams should always be the backbone of the sport, and if they’re financially viable on their own, they can develop talent for big teams to eventually steal away. And I don’t mean that as a negative thing. That’s no different than how the Yankees treat the rest of baseball. But the Yankees also don’t win every year, and nobody brings $5 million to play first base for New York.

Here’s a scenario: A small team takes a chance on an unproven, talented driver. Maybe they’re discovered in a Late Model or a sprint car. He or she does great, attracts a sponsor, makes the team and driver some money — and at the end, the driver gets a great offer from a better team.

Everyone wins.

Here’s another: A big team cuts a veteran loose, so the small team picks them up. The team gets a great leader to help develop their program and an experienced driver to take care of equipment and a name to sell to potential sponsors.

Everyone wins.

But right now, NASCAR owners have their hands tied. With the financial model we’re currently under, those scenarios are becoming rarer because driver talent is a secondary attribute — and that’s never going to work long term. Quality, veteran drivers are losing rides because they don’t have the funding behind them to balance the budget. Meanwhile, unproven drivers are getting top-flight rides because they have the financial backing.

It’s backward. We need to reward the people that invest in this sport with the power to control their team’s future — not have it decided by outside money like a sponsor or a funded driver.

NASCAR isn’t dying. Far from it. As a sport, we’ve never had more money flowing through the garage area in our history. We’ve got a die-hard fan base that we’re making some great strides to reconnect with.

But we’re never going to be where we want to be unless that kid at the local short track knows that if they keep winning, they’re going to get a shot in the big leagues.

The cream should rise to the top. It’s the same dream all of us have had since we first fell in love with this sport — or any sport — and it needs to come true again.

How this could work

Below are some hypothetical budgets of Cup, Xfinity and Truck Series teams, all under the current schedule and all of which would wind up with a profit at the end of the year.

These budgets assume five things:

1. All budgets assume teams own all necessary equipment.

2. No crash damage cost has been added (from my experience, if you tear up
race cars, you’re always going to be over budget).

3. Races are shortened, tire prices adjusted, or some other form of savings in
the tire budget (bias ply tires, just saying) to keep Xfinity and Truck teams from
spending the full $10,000-$12,000 per race on rubber.

4. Spec motors are used in Trucks and Xfinity competition – drastically reducing operating cost after initial purchase.

5. Travel budgets are kept light by the team driving to most events.

 

36 Replies to “Getting The Green: How NASCAR Can Help Race Teams Survive, by Tommy Joe Martins”

  1. Is it possible a Cup crew chief only makes $125K/yr? Seems way too low even for the small teams. Or am I not reading this right?

    1. On the small teams that’s in the ballpark. His salary numbers are just about spot on for the three series for the most part. There are a couple of teams paying less than that in each series as well.

  2. 1k per week for a cup mechanic??? The guys that pull 65-80 weeks? Often 7 days a week! Far from reality!!!

  3. I don’t care about driver pay or owners. Here’s my problem. I worked on a team for 12 years. Quit in June this year. But you think $1000.00 a week for a road mechanic. The guy who works 6-7 days a week. 12 hour days at the shop and 16 hour days at the track. Not to mention 5 days a week on the road. You drivers drive the cars for maybe 6 total hours during the weekend. While we work 40 hours alone in the garage on a cup weekend. Not to mention most drivers come to the shops in there $500,000 dollar cars. Heck I’ve seen drivers chopper into the shop. A freakin helicopter are you serious. But to get back to my point. You want a cup road guy to take home 700 a week after taxes. Just think about it. The people it takes to get your cars safely to the track and keep them running are not worth much to the drivers.

    1. Good info. If I were a driver making great money as a lot do. I would want to make sure my crew that puts in all those hours make a good living as well. But I’m just a fan with an opinion

  4. Crew pay is way off. Arca and K&N Crew Chiefs are in the $1000-$1500 per week range. Truck Crew Chief is $1500-$2500 per week and on up from there.

    1. I know crew guys on several teams and crew chief and they DON’T GET 1000-1500, and wk. You might if you are in xfinity or cup, but not underfunded, truck team.having to drive to EVERY RACE half decent place to stay or sleep in halter McDonald biscuits and have to pay for lunch at track if you get any
      cup drivers don’t need this amount of money,

  5. I think one of the basic fallicies is the small teams are the backbone of the sport. I believe that is no longer the case. And the large multicar teams are in essence small corporation’s, run as such.
    Therefore the P&L is more important than race results.

  6. I like the idea of allocating series shares based on TV ratings. The problem with that is cable/network placement of races impacts those numbers. So a shift of few races for one series can make or break their numbers. On the positive side it could make drivers and team want to do everything they can over a season to bump up those numbers.

  7. great info,i think the truck series is in trouble,BKR leaving,cant lose too much money or wont stay.Hope nascar takes it seriously

    1. Brad told the press when he announced his departure from the trick series, he can’t afford to lose a million a year any longer. That should sum it up.

  8. This is a pretty good stab at a solution. But as others have mentioned, those at the top of the food chain (NASCAR, the promoters) won’t be willing to change the splits.

    Brian France has been talking up bringing in one or two more auto manufacturers to the sport as his solution to the money problem. But I’m not sure that there are enough quality teams available out there for a new manufacturer to hook up with.

    Another series of shoes to drop for NASCAR will be dealing with the advanced age of the top team owners. Penske and Petty are over 80. Roush, Gibbs and Childress are well into their 70’s. Hendrick, Haas and Visser are in their 60’s. Ganassi will be 60 next year.

  9. I found this really interesting- thanks for giving me some idea of what the disparity looks like in dollar signs.

  10. Why is truck 10% share 625,000 while xfinity 20% share 1,000,000? I’m sure I’m missing something but that doesn’t at up.

  11. All this sounds good but as far as I am concerned doesn’t matter. There is a much BIGGER in NASCAR currently and that is Toyota !!! Hear me out before you bash me. We all know Toyota throws a LOT of money at the Networks that televise the races and also a lot at the announcers. Giving 50-70 thousand dollar vehicles to the announcers and lord knows what else should not be allowed.
    And then having your two front men [The mouth and his little brother] as announcers is again wrong. It is killing NASCAR teams and it will only get worse. Why you say ?? Sponsorship !!!! Corporations that are into sponsoring a NASCAR team check all the stats for a team/driver and I don’t mean won/loss I mean how many times was their sponsored car shown and/or talked about on National TV. With Toyota into the pockets of so many of the Networks/announcers Gibbs/Front Row get an absurd amount of mentions/TV time. And yes I realize they are at the top now but this has been going on for a long time and it is starting to show.
    With the Fox crew as teams pit the race call will be by the drivers name most times but when a Toyota pits they will say the drivers name and mention Toyota at least once during a pit stop and sometimes 2 or 3 times. Remember how the truck series was a few years ago when Toyota was giving the announcers money for every time they said Toyota ? Every third word out of their mouths was Toyota, I quit watching trucks then.
    How about watching practice ? There are days you will see every JG team before they show anybody else to start a show. And this happens every show !!!!!

    1. I’m with ya there. The Toyota takeover is killing it for me. Went to Kentucky race earlier this year and everything was Toyota this, Toyota that. Toyota signs & banners everywhere. The first race I’d ever been to that had a teeny little Ford display in the back corner of the midway, and I never did find the chevy display at all. Just a chevy merchandise trailer, while Toyota had a massive display, taking up half the midway. It sucked.

      1. Toyota plant is in Kentucky.

        “Toyota Motor Manufacturing, Kentucky, Inc. (TMMK) is Toyota’s largest vehicle manufacturing plant in the world, with annual capacity to produce 550,000 vehicles and 600,000 engines.

        Since 1988, over 11 million vehicles have rolled off Toyota’s assembly lines in Georgetown, where full-time employment is more than 8,000. In addition to the Camry, America’s best-selling car, TMMK manufactures the Camry Hybrid, Avalon and Avalon Hybrid as well as four-cylinder and V-6 engines.

        In 2015, the plant also started producing the Lexus ES 350, marking the first time a Lexus vehicle has been made in the U.S. More than 1.5 million training hours and an investment of $360 million went into bringing Lexus’ best-selling sedan on-line at TMMK.”

    2. You’re right Dave. People don’t realize that the auto industry in Japan is subsidized by the Japanese Government. They HAVE to win.They gave Gibbs $114 million just to change to Toyota. If you go to Daytona , the biggest and gaudiest displays are from Toyota. It’s Toyota this and Toyota that. Toyota pace cars, announcers saying Toyota 5 times in one sentence. If you look at the drop in attendance in Nascar, it coincides with the inclusion of Toyota into Nascar. Personally, since they let Toyota into the series, I have all but quit watching,except for Daytona and Talladega.

  12. He is referring to a basic team without sponsorship. If you read the article he talks about a small team and assuming no sponsorship. He says larger teams ad sponsorship on top of that. I know teams that have volunteer crews and work pay nothing.

  13. So, maybe as Junior mentioned, some of the drivers, who can afford extravagant lifestyles with what they get paid, should be willing to make less to distribute team income more fairly?

  14. Great ideas and plans. I’m not sure about the incomes either. But I think there was another reason for the seats being removed? The TV revenues are based on the percentages of seats sold…how many spectators per the tracks number of possible sells. Now the percentages are better…because less seats

    1. Activation is basically money that is earmarked to promote the team and market that the company sponsors this particular team. So hospitality tents, promotional appearances with show cars, etc.

  15. Excellent piece! While I maight take issue with some of your math the overall message is right. I agree that the sponsor money should be a bonus, not a requirement for participation.

  16. Why it ain’t happenin’

    The deal Is structured the way it is – simply “NASCAR” is a expense of the tracks. Look at things. There really, for intents, are TWO major track owners. One, International Speedway, is ironically owned by the same family that owns NASCAR itself. The other, Speedway Motorsports, is a publicly traded company. But with a LOT of pull over things because in most cases, if a race isn’t at an ISC facility it is at an SMI facility. The only OTHER entity with anywhere near as much pull is the Indianapolis Motor Speeday. Why? Despite the sagging attendance, it was the arrival of Indy that opened the national corporate floodgates and, even though to locals the event has reached the importance of a Colts’ training camp session, the TV ratings stay up and are often the only ones to that go up from the prior year. ‘Nuff said.

    Then throw this in. The structure works PERFECTLY to skirt the antitrust laws. On paper, it would seem the two track ownership cartels would look a lot like the theater cartels in the 1930s whose attempts at locking out smaller theaters led to Hollywood biting the antitrust bullet. But, the France family and Bruton Smith have worked out a very good end-around. “NASCAR” gets paid, and then pays the tracks. But in reality, for ISC, they are just an accounting shuffle. It’s all (still) in the family. And without raising an eyebrow they can make a lot of money. For SMI, the “deal” is just that. Done so Bruton doesn’t try his hand at a competing series (NASCAR is NOT the NFL and darned well knows it would be whacked hard by a second national series) and if it keeps the family happy, all is good. The cartel works, and covers it’s you-know-what with the DOJ.

    And the teams, well they have always been treated as “contractors”. Again, a smooth workaround to potentially fun labor issues. And it by nature limits the power of the owners or, well, look what happened to open-wheel racing. So keep them underfed and overneedy. They’ll stay in line.

    But the owners and drivers are starting to smell the coffee. Especially now that drivers have seen how the other half of the world lives (remember, Penske and Ganassi have Indycar and IMSA exposure, and Gene Haas is in Formula 1). So the only thing keeping them in line is a bone thrown and lawyers.

    Eventually the bones start tasting bad and the lawyers, they will go where the money is. And NASCAR, that wall is NOT soft!

    1. Your some what correct on the monopoly aspect but it would take someone to be harmed by Nascar. ISC or SMI. They let team owners compete in competing series without repercussions. They allow competing race series like ARCA and ASA and the IRL race at their tracks and they allow the manufactures to race in competing series. They allow drivers from other competing series race in Nascar and Nascar drivers race in other racing series. I kind of think a lawsuit would fall flat on it’s face.

  17. What the other sports have that NASCAR doesn’t have is a draft system. If the team that finishes 40th in Cup points this year gets first shot at William Byron that would change everything. The big teams get all the best drivers, crew chiefs and mechanics while the small teams get the rest. Don’t know how a draft system would work but it would help distribute the talent.

    1. The downside to a draft system is that all teams aren’t anywhere near equal. There is a reason the 40th place team is in 40th!

  18. Tommy, I like your budget idea. Very interesting information. I don’t know how you could keep the rich guys from spending more money, though. I favor rules that would limit the number of cars and engines a team could have in a season. Serialize them, mark them with hidden marks only Nascar would know. There is no reason they need 15-20 cars a season. many top teams in the past ran the whole season on just 2 or 3 cars. The poster above who was a former crewman is spot on. I was in Charlotte this past weekend for the Legend’s dinner, and I decided to visit Hendrick Motorsports to see what it was like. I almost became ill when I saw it. NASA would be envious. There is absolutely no justification for that kind of lavish facility to race a car built from a pile of pipe on a surface plate. Nascar wants to know what is turning off long time fans? Visit Hendrick’s museum and shop. You are greeted by an ARMED security guard at the door into the museum and gift shop, complete with scanners to make sure no kid makes off with toy he didn’t pay for. As for the shop, you are only able to view a thru a opening into it that is separated from you by a fence. Every trophy, car and what have you is either cordoned off, or protected by glass. Very welcoming!

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