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How NASCAR Driver Contracts Work

Posted by chadmusselman on February 1, 2008

Hendrick TeamEver wonder how the contracts for NASCAR drivers are structured? Yeah, me too. It’s not like other major sports where they’re in a union and you can look up the salaries on any sports website. Each NASCAR driver is an independent contractor working for the team, so their contracts and other finances are their personal business. So, do they get a base salary, and the winnings from the races, just a percentage of the winnings, or what? Well, I did some researching, and here’s what I found.

Today’s top NASCAR drivers make money from four main sources: Base salary, a percentage of prize money, a percentage of merchandise sales and personal endorsements. Total compensation can exceed $10 million.

Forty plus years ago drivers only got a percentage of their race winnings, but that changed in 1967 when an Indy Car team signed a driver for $100,000 (in cash, up front by the way), and they split the race winnings. Most contracts after that were still probably a percentage of the winnings, but for the drivers of today, they do have guaranteed contracts and get a percentage of the winnings.

In a 2001 Playboy interview, Dale Earnhardt Jr. mentioned the percentage of race winnings that he gets to keep: Jr. won the 2000 All-Star race and the prize was $515,000. He didn’t mention how much his base contract was, but said that he got 45% of that since he won. Outside the top 10 his percentage of the winnings goes down to 30%.

In 2003 Tony Stewart signed with Joe Gibbs racing for $5 Million per year, which apparently has become the benchmark for other drivers to negotiate against.

Last year Sterling Marlin and Joe Nemechek filed a lawsuit against their race teams for breach of contract, and out of the lawsuit, their contracts became public knowledge. Here’s what we learned from them:

Base Salaries

  • Marlin’s base salary in 2006 was $1.1 Million
  • In 2007 it was bumped up to $1.2 Million
  • Nemechek was paid $900,000 in 2004
  • In 2007 he also made $1.2 Million

Both drivers get 45% of the prize money won in a season

  • In 2006 that was just over $1.8 Million: 45% of the $4 Million in race winnings
  • Marlin’s take was about $1.2 Million: 45% of about $2.5 Million in race winnings

Each driver receives bonuses based on race performance

  • $50,000 for winning
  • $25,000 for a top 5
  • $10,000 for a top 10
  • $500,000 for winning the series title, scaling down to $50,000 for finishing in the top 20

Each driver also gets the following perks

  • Personal car
  • $500 travel allowance per race
  • Seat on the team plane
  • Hotel room

Appearances are also dictated in their contracts

  • Unlimited track hospitality events (30 minutes or less)
  • Personal appearances (50 Hours)
  • Time for photo/commercial shoots
  • Other obligations to the mediaWhat wasn’t able to be disclosed was the amount of money the drivers earn from merchandise sales, bonus, and any other pay they get from the sponsors.As you can see, and would expect, the contracts for even mediocre drivers are pretty good, and they’re making a decent amount of money. The drivers continually in the top 10 are even more lucrative. In Sports Illustrated’s 2007 list of the 50 top paid athletes the following NASCAR drivers showed up:
  • Dale Earnhardt Jr. #10 overall – $7.1 Million in Salary/Winnings, $20 Million in endorsements
  • Jeff Gordon #16 overall – $7.4 Million in Salary/Winnings: $15 Million in endorsements
  • Jimmie Johnson #31 overall – $15.7 Million in Salary/Winnings: $2 Million in endorsements

So, are the NASCAR drivers making the amount of money that other sport stars are making? Not quite, but the top earners are up there among the other sports’ elite. The fact that there are only 43 drivers and 36 races limit the number of drivers that can be paid the premium money.

There are 1400 NFL players, 750 MLB players, and ~380 NBA players. The fact that 3 NASCAR drivers (7% of the total) made this list is actually pretty impressive. The NBA was the only other sport to put 7% of their athletes in the top 50 (25 NBA players made the list). For the NFL to do this they’d need 98, and MLB would need 50.

Source for most of the information in this post came from:
http://www.nascar.com/2007/news/business/09/11/smarlin.jnemechek.lawsuit/index.html?eref=/rss/news/business
http://www.usatoday.com/sports/motor/nascar/2005-08-18-agents-cover_x.htm
http://sportsillustrated.cnn.com/more/specials/fortunate50/2007/index.html

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4 Responses to “How NASCAR Driver Contracts Work”

  1. judith said

    I found this very interesting… I was surprized at how pay out works…

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