NASCAR’s Highest-Earning Drivers

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NASCAR’s Highest-Earning Drivers

By Peter J. Schwartz, Forbes.com
Jun 16, 3:24 am EDT

The top-earning NASCAR drivers make more money off the racetrack than on it. Jeff Gordon, the sport’s all-time leading money winner, made $32 million over the last year; $17 million came from endorsements and royalties on merchandise, and $15 million came from his salary and race winnings.

Dale Earnhardt Jr., the second-highest earner at $31 million, made $21 million from licensing and endorsement income from the likes of PepsiCo, Anheuser-Busch and Adidas. Earnhardt’s passionate following, which has its origins in his famous father’s career, has translated into an abundance of riches despite his declining performance (he won six Sprint Cup races in 2004 but only three since).

Sponsors are so eager to associate their brand with the most popular drivers that they’re willing to invest millions in short-term deals even though their brand names are often blurred at 200 miles-per-hour. Example: In April, Subway restaurants agreed to pay race team Joe Gibbs Racing an estimated $4 million to be the primary sponsor of Tony Stewart’s car for only three races this season. Of that sum, Stewart will personally pocket $700,000.

Drivers have also boosted their earnings by negotiating guarantees in their contracts that call for owners to make up the shortfall if a driver fails to earn a predetermined amount from race winnings, endorsements and merchandise royalties. Such agreements assure Joe Gibbs Racing’s Kyle Busch and Denny Hamlin $10 million a year, regardless of whether they ever reach the winner’s circle.

Other drivers have ventured into direct ownership. Gordon, in addition to being Hendrick Motorsports’ highest-paid driver, is a minority owner of teammate Jimmie Johnson’s car as well as his own. Kevin Harvick owns Nationwide and Craftsman Truck Series teams, though due to escalating costs, turning a profit in NASCAR’s minor leagues has been difficult as of late. Tony Stewart recognized this challenge and ventured outside of NASCAR, investing in a lower-tier, open-wheel racing team that earned him an estimated $300,000 in the last year.

Then there’s Juan Pablo Montoya, who in exchange for one of NASCAR’s highest annual salaries – estimated at $6 million last season – retains few rights over his commercial sponsorship program. Instead, his team, Chip Ganassi Racing, reaps the lion’s share of endorsement revenue generated by Montoya, who has a wide international following from his years competing on the Formula 1 circuit. Ganassi is leading NASCAR’s push to go global, aggressively pursuing sponsorship deals in South America, China and Dubai; a far cry from a decade ago, when the sport was almost exclusively popular in the American South.

Prize money and TV contracts go hand-in-hand. In a given race, the drivers’ purse is primarily fueled by 25 percent of broadcast rights fees and contributions by racetrack owners (which are made possible by their 60 percent cut of TV revenue). Last season marked the start of NASCAR’s new eight-year TV deals with four networks, ushering in a golden age for drivers’ paychecks. The networks will pay an average of $560 million a year – including $47 million from Fox for the Daytona 500 – a 21 percent increase from prior agreements.