Did You Notice? … The money flowing from BK Racing’s bankruptcy case gives us insight to NASCAR purses under the charter agreement? Per Bob Pockrass of ESPN.com, court documents show the team earned $450,000 for finishing 20th in this year’s Daytona 500.
That’s a strong improvement from 2015, the last year purses were officially released by NASCAR. In that year, AJ Allmendinger earned $348,803 for running 20th. Only the top-six finishers and pole-sitter Jeff Gordon (33rd) earned more than $450K that day.
But that 22.5 percent increase falls flat when we look at BK’s earnings from Atlanta. Running dead last, it made $92,000 for a 36th-place finish that would have earned the team more three years ago.
Back in 2015, Ricky Stenhouse Jr. ran 36th in this race and made $101,370. I don’t think that’s a fair comparison, though; NASCAR contingency awards and sponsor bonuses upped his purse. A better example is JJ Yeley, who ran 34th for the same BK Racing team but earned $93,710 running the No. 23.
The difference? Only about a two percent decrease. But that’s significant enough in a NASCAR environment where operating costs keep increasing.
There’s plenty of reasons behind the purse decline. Atlanta’s sparse crowd likely had something to do with it; that pales in comparison to a sold-out, revamped Daytona 500 superspeedway. Track A can only dole out so much when it’s making less revenue.
The same court document anticipated $385,000 for a 30th-place average finish over the next month. Extending that out over a full season, that produces $3.4 million in revenue for BK Racing. Well, no wonder the company had to declare bankruptcy; how will that equate to $9.1 million owed to potential creditors?
But this article is not about fixing BK; how the team went broke is a different story. It just shows that the revenue earned through these races doesn’t come close to covering operating costs. And compare that to Hendrick Motorsports, one of the richest teams in the Cup Series with a $325 million valuation through Forbes.
How are these smaller teams supposed to compete under the business model? It also makes you wonder how much open cars walk away with considering they get a smaller fraction of the purse. It could explain why car count has dwindled aside from the 36 chartered teams. After all, if you can’t make a profit, why go to the track? Racing is a business after all.
Also, how can XFINITY and Truck series organizations survive with revenue that’s a fraction of what BK’s expecting? It’s another reminder the business model on the team side for NASCAR simply needs to be fixed. Operating revenue less than operating costs typically means disaster in the long run.
Can you say revenue sharing?
Did You Notice? … Monster Energy requested another title sponsorship extension from NASCAR? According to the Sports Business Daily, the energy drink needs more time to decide on their two-year option to renew for 2019-20.
At this point, you start wondering what Monster is waiting for. A longtime sponsor of the Busch brothers, Kurt and Kyle, they’re not exactly a rookie in this sport. A year involved with NASCAR gives them an idea of what to expect on the title sponsorship level, sure. But activation was already lagging behind and little in the way of new ideas has been presented for 2018. What more does the company need to decide? What new idea or financial incentive is causing indecision here?
The story seems to indicate there’s “little doubt” Monster will re-up in the end. But how long can NASCAR wait? The previous title sponsor, Sprint, gave them nearly two years’ notice they wouldn’t renew and the sport still struggled to find a replacement. Monster is putting the Cup Series in an extremely difficult position, vulnerable to the rug being pulled out from under them.
The company also hurts its own branding in the sport by wavering. In a difficult sponsorship climate, wouldn’t a two-year renewal at the top signal faith with NASCAR’s recent changes? Couldn’t it push companies on the fence to sponsor contingency plans or race cars to jump on board? All we hear about these days are which companies are leaving the sport. Monster’s renewal would send a strong reversal to that message that could trickle from the top down.
It’s hard to believe it was just 15 years ago that Winston was finishing up its 30th season as title sponsor. Now, NASCAR’s struggling to get a company to commit to more than two.
Did You Notice? … Quick hits before taking off…
- Fans may have scoffed at the way Kevin Harvick laid waste to the field Sunday at Atlanta. But the 24 lead changes in that 500-miler were the same as in last Sunday’s Daytona 500. Different pit strategy and Harvick’s own struggles on restarts made the stats on paper look far more competitive than they were.
- Think Hendrick Motorsports will fix what ails them Sunday at Las Vegas? Think again. The organization placed just one car inside the top 10 last year (Chase Elliott) and hasn’t won there since 2010 with Jimmie Johnson.
- Speaking of Johnson, he’s got the fewest points (11) of any driver who’s run both Cup races in 2018. Among those ahead of the seven-time champ in the standings: DJ Kennington (13 points), Mark Thompson (15) and Gray Gaulding (18). The No. 48 car has now gone eight races without a top-10 finish, the longest such drought in its history.
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