NASCAR profit is a complicated equation. While it is a popular sport with a lucrative, multi-billion-dollar television deal, building these high-performance cars takes a hefty investment. This can leave many fans wondering if NASCAR is profitable for teams, owners and venues.
NASCAR can be profitable for fully sponsored chartered teams with successful performance histories. However, a struggling team or a racetrack which produces lackluster racing will have difficulty making money, and so NASCAR isn’t always profitable for teams, owners and venues.
Wins and losses are not the only factors dictating financial success for NASCAR teams. Below you will learn more about how owners fund their teams and why tracks feel pressure to perform, just as drivers do.
Does NASCAR Make A Profit?
NASCAR as an organization makes a profit through a portion of its television deal and selling marketing deals to advertisers. 10% of the $8.2 billion television deal signed in 2014 is pocketed by NASCAR, dispersed over the course of the ten-year contract.
For most of its history, NASCAR has sold naming rights for its Cup Series. Winston was the first, followed by Nextel, Sprint, and Monster Energy. Sprint was estimated to be paying NASCAR between $50 and $75 million annually before its contract expired in 2016.
Since 2020, NASCAR has four so-called “series premier sponsors” instead of one exclusive naming rights deal. Relationships with these brands extend across mediums, from the televised race to online sponsored content. NASCAR is a private company, so it does not disclose specific year-end details, but it is safe to conclude that NASCAR does make money.
Is NASCAR Profitable For Teams?
NASCAR is profitable for some teams, but not all. Teams that have success in the sport, like in any motorsport, are likely to be more profitable than those at the back of the field. The high costs involved in NASCAR mean that not all teams are able to make a profit over the course of a season.
Teams competing for wins make more money than struggling teams.This may seem obvious, but it is a notable difference from other sports. The Dallas Cowboys could lose twelve games every year and still turn a major profit based solely on their brand. NASCAR teams instead need to run well to maximize profits, both to increase purse earnings and to keep sponsors happy.
The NASCAR moneymaking benchmark may be Hendrick Motorsports. The team is successful on the track, having won the Cup Series championship in 2020 and 2021. All four drivers have one main sponsor anchoring their team for most of the season while other companies jump aboard for select races during the year. This is the best-case scenario for teams: compete for wins and secure full funding.
Likewise, if a driver struggles for a team intending to contend for wins, their racing career may be short-lived. The owners can grow frustrated with the lack of success, and their sponsor may choose to take their ad dollars elsewhere versus continuing to sponsor weak finishes every race.
It is common to see smaller, underfunded teams running towards the back. These teams lack the resources of larger organizations like Hendrick and endeavor each week to grind out the best possible finish. They have lower-end sponsors, sometimes none, and usually have far fewer employees and parts at their disposal. Breaking even is often their best-case scenario.
Sponsorship Is Key
Teams have come and gone throughout NASCAR’s history. Once established teams like Daytona 500-winning Bill Davis Racing went defunct within six years of their big season-opening victory. A similar fate befell championship-winning Furniture Row Racing in 2018, which folded only one year after winning the championship with Martin Truex Jr. because its main sponsor left.
Many big money sponsors have left successful teams and NASCAR altogether. Lowe’s left seven-time champion Jimmie Johnson before the end of his career and longtime NASCAR sponsor M&Ms is leaving two-time champion Kyle Busch after the 2022 season.
Team owners hurt financially when their partners no longer perceive NASCAR as a worthwhile advertising investment. Not only can this affect their ability to turn a profit, but it may also force them to exit the sport.
How Much Does It Cost To Own A NASCAR Team?
The cost of owning a NASCAR team is estimated to be somewhere in the region of $10 million to $20 million per year. Owning and running a top NASCAR team may cost upwards of $400,000 per week, which over the course of a season sees a NASCAR owner spend more than $15 million.
Current NASCAR owners are typically independently wealthy, either from other business ventures or from decades spent building equity in the sport. Michael Jordan is reported to have spent $150 million when he bought into the sport in 2020. Longtime owners like Rick Hendrick and Roger Penske have racing and car dealership empires which allow them to spend freely on their NASCAR programs.
The three current manufacturers – Chevrolet, Toyota, and Ford – also provide research and development support, knowing it reflects well on their business if their cars run well. Sponsorships also help cover many costs associated with racing at NASCAR’s top level. Despite this, the initial investment is cost prohibitive for most people.
Some of the smaller teams cut costs where they can just to stay afloat. They will sometimes use the same engines for multiple races while the larger teams start fresh each week. This is legal, just not advisable if your goal is to win the race. This is another example of how race teams are not created equal.
Next Gen Car Designed To Lower Costs
NASCAR has recognized and addressed inflating ownership costs by designing and implementing the Next-Gen racecar for the 2022 Cup Series season. Projections indicated to NASCAR and its teams that these cars will be cheaper to build and to fix.
NASCAR collaborated with teams and designed the new cars also hoping they will create more parity amongst teams. If this happens over an extended period, NASCAR hopes more teams will compete for wins and the overall racing will improve. This could help entice sponsors to reevaluate NASCAR as a real opportunity to expand their brand, potentially easing the issues we discussed earlier.
NASCAR’s Cost-Saving Moves
NASCAR wishes to be more attractive to new owners and manufacturers in the future, and they believe a cheaper car and more leveled playing field will help accomplish that. Naturally, if overhead costs decrease without diminishing overall revenue distributed among the sport, NASCAR becomes more a profitable endeavor.
NASCAR has also changed its on-track scheduling for most race weekends. In previous seasons, it was common for the Cup Series to be on the racetrack three days with multiple practice sessions Friday and Saturday plus qualifying and the race itself. Now, some weekends are condensed into two days, further lowering the costs for teams.
How Do NASCAR Teams Make Money?
NASCAR teams make money by performing well in races and selling car sponsorships. Sponsorship details are usually an industry secret and not publicly available, but estimates place the value over $500,000 per race for a primary sponsorship at a top organization.
NASCAR also created a charter system in 2016 to create more value. Think of charters as a franchise model, like an NFL team. Chartered teams have a guaranteed starting spot in each race and earn an elevated portion of each week’s purse payout. The charter has altered the marketplace for owners looking to leave NASCAR as well as owners looking to invest.
Prior to the charter system, owners exiting the sport had little recourse but to sell their used cars and equipment to other teams, recouping little off their initial investment. But now, each charter has a value associated with it depending on the marketplace at any given time. This value gives owners with a charter equity in the sport which they can cash out if they choose.
Rising Charter Value
In 2021, Spire Motorsports sold two charters to Kaulig Racing for $10 and $8 million. These sales allowed Spire to recoup its initial investment and gave the new Kaulig team access to the top level of NASCAR. The rising market is a double-edged sword, however.
NASCAR Hall of Famer Dale Earnhardt Jr, who owns a four-car Xfinity team, has said he is interested in expanding to Cup Series racing. But so far, the rising charter costs have prohibited him from doing so. It is clear you must spend a significant sum in order to be a viable racing team at the top level and may only reap substantive rewards when it comes time to sell.
There are teams that compete without a charter spot too. These teams typically race part-time, picking races where they believe they are more likely to run well, such as at wild card tracks like Daytona, Talladega, or road course races. But because of the prohibitive costs without the guaranteed charter revenue, some races begin without a full 40-car field.
Reasons For Optimism
One encouraging sign NASCAR can be profitable for owners is the type of people buying into the sport. Michael Jordan, Pitbull, and Floyd Mayweather all have ownership stakes in teams. These celebrities and entrepreneurs not only enjoy racing, but they view the new NASCAR landscape as a worthwhile business endeavor.
Current drivers are also reinvesting in the sport, further reinforcing the idea that NASCAR can be profitable. Denny Hamlin partnered with Jordan to create 23XI Racing, and 2012 Champion Brad Keselowski bought into Roush Fenway Racing as an owner/driver.
These racers know all about the sport’s inner-workings, having spent their careers under longtime successful owners in Joe Gibbs and Roger Penske respectively. It is unlikely they would reinvest in ownership of their own if they did not believe in its profitability.
Is NASCAR Profitable For Venues?
NASCAR can be profitable for venues, but only if they are able to sell enough tickets and put on a good show year after year. As NASCAR venues make a lot of their money from the TV deals, they need to be able to put on good races in order for NASCAR to deem them worthy of this money.
A reported 65% of the $8.2 billion television deal signed in 2014 goes to the venues on NASCAR’s schedule. All tracks also take in money from selling grandstand tickets, and bigger tracks also have pricey RV camping spots available in the infield. Tracks often book music acts to perform during the weekend, adding bang to the attendee’s buck.
The quality of racing at a track directly ties to its financial viability because fewer fans will want to show up to a race that is often unremarkable. This thinking is why Atlanta Motor Speedway invested major money to redesign its racetrack in 2021 to create closer racing. This resulted in the track’s highest attendance in eight years for its March 2022 race.
NASCAR’s Increased Urgency
NASCAR has shown in recent years that it is willing to pull venues from its schedule if the racing becomes dull in favor of new locations. Longtime NASCAR staples like Michigan, Texas, Dover, and Pocono all lost one of their traditional two race dates in 2022, hurting their ability to be financially solvent. Others, like Chicagoland Speedway and Kentucky Speedway, have lost all NASCAR dates.
NASCAR itself owns 12 of the tracks on its schedule. The other player is Speedway Motorsports, which operates 9 tracks on the current Cup Series schedule. When a track loses a race, it is often replaced by a track owned by the same company. Instead of the track owners losing money when NASCAR leaves, the communities hosting the races are the big losers because they lose tourism dollars.
How Much Does It Cost To Run A NASCAR Race?
It’s estimated to cost a NASCAR team around $500,000 or more per car to run a NASCAR race. It’s hard to find exact numbers on NASCAR expenditure, but we can be certain that it costs a lot of money to run a car in a NASCAR race.
NASCAR is different from other sports that operate with a higher level of financial transparency. You can look at any number of websites to learn how much a football team spends on its players, for example. NASCAR is always vague with these numbers, so we rely on researched estimates to give us an idea of operating costs.
One 2012 analysis concluded it costs each NASCAR team over $500,000 for each car it enters in a race. This total includes parts for the car, transportation, driver pay, and employee compensation. This is an average number, and higher caliber teams may spend more than this. It also explains the estimated sponsorship costs.
As you have now learned, the Next Gen car is designed to help alleviate some of these expenses. However, it is estimated any of those lower costs will not be felt before the 2023 season because of the high initial costs of adapting to the new car bodies and parts.
NASCAR can be profitable for teams and venues, but only if they perform well. A team needs to attract sponsors through good performances, and NASCAR venues will only remain on the calendar if they can consistently put on good races. NASCAR isn’t profitable for many smaller teams.
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