How NASCAR Prize Money Works


How can NASCAR afford to pay some drivers millions of dollars each year?
How can NASCAR afford to pay some drivers millions of dollars each year?
Jerry Markland/Getty Images for NASCAR

Lots of people drive fast simply for the fun of it; however, that can be an expensive hobby, as most fast drivers also tend to collect speeding tickets. For the lucky few who make it as drivers in the NASCAR series, driving fast is more than just a passion -- it's also a job. Sure, it may be a great way to make a living in a position that millions of people worldwide envy; but when it comes right down to it, being a NASCAR driver is still just a job for many drivers in the series.

 

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So, how does NASCAR take a bunch of fast moving c­ars and turn it into cash for the participating drivers and their respective teams? Obviously, ticket sales and merchandising play a role, as well as endorsements and sponsorships. In most cases, a big slice of the NASCAR money-pie comes fr­om prize money offered at each event -- the purse money that's up for grabs at each race. Eventually, all of that money (purse money) is divided between the drivers.

In this article, we'll learn all about how NASCAR prize money works, including where it comes from, how much is typically there for the taking and who gets the biggest share. You may be surprised to learn that it's not always who you may think! We'll also take a glimpse into the salary of an average NASCAR driver.

Keep reading to find out the secrets of the money machine behind your favorite NASCAR races.

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NASCAR Purse Money

NASCAR prize money comes from several different sources.
NASCAR prize money comes from several different sources.
Rusty Jarrett/­Getty Images for NASCAR

­Obviously, for a driver to win prize money in a race, someone has to put the money up for grabs. Of course, if you're a smart investor/sponsor, you're not going to offer several million dollars as a prize unless you're certain you can make several million more as a return on your investment. That's just how the game is played. But the actual cash payout NASCAR offers as a prize comes from several different places.

The single biggest source is from the television rights. Networks like FOX and NBC don't get to broadcast NASCAR races for free. They pay NASCAR a fee for the right to broadcast certain races. In return, the networks make money on advertising. Not all of that money stays with NASCAR, although a fair share does. Most of the broadcasting fee for a particular race goes to the promoters of that race, which is usually the company that owns the race track. Because the track owner has to pay for things like security and track maintenance, they keep a large percentage -- about 65 percent, according to some reports -- of the broadcasting fee to cover their expenses. A smaller chunk of the broadcasting fee goes into the purse. That's the money that makes up most of the prizes offered at a NASCAR race.

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The rest of the prize money comes from race sponsors -- but just because a driver wins the race doesn't mean he or she will get all of the money the sponsors put into the purse. NASCAR purses contain what's called contingency dollars. These contingency payouts are money put in by sponsors, but the only way a driver can win it is if the team uses the sponsor's product and displays the sponsor's decal on the car. Sponsors also offer a variety of other bonuses throughout the racing season. Just as one example, Gatorade offers the Gatorade Front Runner Award to the driver who leads the most laps during the race. There are also a number of cash awards given by sponsors for things like the best strategic call during the race or the fastest lap time.

Now that you know where the money is coming from, keep reading to find how it's paid out. The system may surprise you.

Prize Money Plans

The distribution of NASCAR prize money depends on more than just who wins the race.
The distribution of NASCAR prize money depends on more than just who wins the race.
Jaime Squire/­Getty Images for NASCAR

­It's important to win the race -- after all, that's what every driver on the track is desperately trying to do; however, NASCAR prize money is handed out in such a way that it's entirely possible for the last place finisher in a race to win more than say, the 7th place finisher. So what's the incentive to win? Well, in racing, the largest share still goes to the winner. To date, there's never been a case where the winner of a NASCAR race gets a smaller share than any of the other finishers. But this is where it gets tricky -- beyond first place, the prize money can get a little confusing.

Shares of the race purse are handed out not only based on where a driver finishes, but also on the specific products the team uses -- as in the case of the contingency money we talked about earlier in this article -- how well the team is doing this season, how well the team did last season, and what type of prize money "plan" the team participates in.

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A prize money plan? Doesn't every team have the same plan -- to win as much prize money as possible? Well, of course they do. But NASCAR distributes the money to different teams in different ways. Teams who are in the Winner's Circle plan are the previous season's top 10 teams, plus two "wild card" positions. Teams in the Winner's Circle plan get NASCAR bonus money no matter how they finish in the race.

The remainder of the plans -- the Cup Series Car/Champion Owner Program, Plan 1 and Plan 1c -- each have their own system for payout. Basically, we can tell you that they're all based on the number of points a team has, how long they've been in the sport and how well they've done. NASCAR doesn't publicize exactly how each of these plans pays out prize money.

Why are the NASCAR winnings distributed in this rather confusing manner? They do it for several reasons. The most important reason is to make sure they have an exciting race every weekend throughout the entire season. That's why programs like NASCAR's Winner's Circle are important -- it insures the most talented and most popular drivers and teams will show up for nearly every race. The remaining payment plans are structured to help teams that are just starting out not only to get to the races, but also to reward them for doing well.

Up next, find out just how much money we're talking about.

Up For Grabs

­Now that you know how the money is distributed, we can talk about just how much is at stake. There are 36 races in the NASCAR Sprint Cup season, with more than $4 million in prize money for the taking at each race. Some races offer drivers a chance at a portion of more than $6 million in prize money.

The bonus money to be paid out for leading laps, best strategic moves and best lap times depends on the race and the sponsor; however, you should note that these awards start around $5,000 and move up from there. While the exact amount of prize money a winning driver will take home for any given race cannot be determined prior to the actual race -- mainly because no one can predict who will win each of the bonuses -- we can look back at a few recent NASCAR races as an example.

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­For instance, at the Subway Fresh Fit 500 in April of 2008, driver Jimmie Johnson won the race and took home $262,111 -- the winner's share of the purse as well as a bonus for the best strategic call and some contingency money. The last place finisher, Ryan Newman, took home $110,718 thanks to bonuses and the different team payout systems. Dale Earnhardt Jr., on the other hand, came in 7th place, but only took home $99,125 [source: Sports Club Stats]. At the 2008 Ford 400, no driver took home less than $60,000, while Carl Edwards drove away with the race victory and $365,225 [source: The Inside Groove].

­Keep reading to find out how all this money translates into a living for the best NASCAR drivers -- and the rest of the NASCAR drivers, too.

Easy Money...?

As you may already know, the top NASCAR drivers can make a lot of money. In fact, you've probably seen a few NASCAR drivers on MTV Cribs and maybe even spotted a few others staring back at you from a Coca-Cola machine or a motor oil ad. In the 2008 NASCAR Sprint Cup season, the top drivers earned as much as $8 million. This may sound like a sport filled with easy money, and for some, it is; however, you have to remember that these are the top performing drivers in the series. Not everyone makes that kind of money.

­There are some drivers in the NASCAR series that don't go home every night to a mattress stuffed with money. In fact, the lowest-ranked drivers in the Sprint Cup Series, Eric McClure and Jacques Villeneuve, only earned $22,988 and $22,863 respectively during the 2008 racing season [source: NASCAR.com]. To put these figures into the proper perspective, if you translated their 2008 racing earnings into a 40-hour work week, based on a 52-week year; those two drivers would be making approximately $11 per hour.

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The fact of the matter is, while the top earners are in the minority, so are the bottom earners. Of the 76 drivers in the 2008 Sprint Cup Series, all but 11 earned more than $100,000. And 46 of the 76 drivers earned more than a million dollars. So while the top earners are miles ahead of the bottom earners (sometimes literally), the majority of the pack is bunched together right in the middle -- and making a pretty good living, too.

For more information about NASCAR and other NASCAR-related topics, follow the links on the next page.

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Sources­

  • LeMasters, Ron. "Post-race prize money: Who gets what." NASCAR.com. July 21, 2004. (Dec. 15, 2008) http://www.nasc­ar.com/2004/news/business/07/21/follow_money/
  • NASCAR.com. "2008 Official Driver Standings." (Dec. 17, 2008) http://www.nascar.com/races/cup/2008/36/data/standings_official.html
  • NASCAR.com. "How money is distributed." July 17, 2008. (Dec. 17, 2008) http://www.nascar.com/news/features/race.winnings/index.html
  • Peltz, Jim. "In NASCAR, a lower finish can lead to a bigger payday." The Los Angeles Times. April 17, 2008. (Dec. 15, 2008) http://articles.latimes.com/2008/apr/17/sports/sp-nascar17
  • Sports Club Stats. "Subway Fresh Fit 500 Results." April 12, 2008. (Dec. 17, 2008) http://www.sportsclubstats.com/NASCAR/Races/SubwayFreshFit500.html
  • The Inside Groove. "Ford 400 Results." (Dec. 18, 2008) ­ http://www.theinsidegroove.com/nascar_races/2008/results/results-race-36.php­­