Understanding NASCAR Prize Money Distribution

While many enjoy speeding for the thrill, those who become NASCAR drivers turn their passion into a profession. Though it may seem like a dream job, being a NASCAR driver is still a demanding career.

How does NASCAR transform high-speed races into earnings for drivers and their teams? Previously, this was simpler, relying on ticket sales, merchandise, endorsements, sponsorships, and prize money. However, the landscape shifted in February 2016 with the introduction of the owner charter system, a long-term agreement between NASCAR executives and team owners.

This article delves into the charter system, detailing how NASCAR drivers and teams are compensated (to the extent possible) and identifying who benefits the most under this updated framework.

NASCAR Purse Money

From NASCAR's inception in 1948 until 2015, the racing series disclosed the purse for every race in their box scores. Drivers would agree on contracts with team owners for a base salary, often supplemented by a share of the weekly purse. The size of the purse varied based on the race's scale and significance, with larger tracks offering more substantial rewards and smaller tracks providing lesser payouts.

Anyone curious about the earnings from a weekend's race could easily access the information, including the amount the race winner would pocket.

For example, in 2015, the final year before the charter system was implemented, the figures were substantial. Denny Hamlin earned $166,760 for winning the 2015 STP 500 at Martinsville. In contrast, Joey Logano's victory at Daytona that year netted him an impressive $1,586,503, the largest purse of the year. The second-highest payout went to Jimmie Johnson, who won $523,501 at Texas Motor Speedway, less than a third of Daytona's prize.

With the introduction of the charter system, driver payouts have evolved. Continue reading to understand the current structure.

The Charter System Explained

The charter system revolutionized driver payments by introducing 36 ownership charters in NASCAR. These teams benefit from consistent sponsors, drivers, and performance. As reported by Autoweek, charter teams enjoy shared advantages, such as guaranteed race entries, while four open slots are reserved for newer teams aiming to join the Sprint Cup circuit.

Charter values vary based on factors like team history and performance over multiple seasons. Compensation includes guaranteed revenue, past performance metrics, a points fund, and race purses tied to finishing positions. Charters can be sold or transferred, but NASCAR can revoke them if a team ranks in the bottom three for three consecutive years.

Despite promises of transparency, NASCAR has not disclosed detailed prize money distribution, even to some drivers. Under this system, earnings are allocated to teams rather than individual drivers.

Former NASCAR COO Brent Dewar explained to NBC Sports that race purses and individual winnings are no longer publicized, as it doesn't align with the charter system's modern approach. Dewar stated in 2016, "We've moved away from outdated practices to embrace a new era."

Prize Money Is Still Massive

Although the recipients of the prize money have shifted, the amounts remain substantial. For instance, the purse for the 2021 Phoenix race, which concluded the season, exceeded $10 million, while the 2021 Martinsville race allocated nearly $8 million to the teams.

However, purses are not as large as they once were. Insights from BK Racing's 2018 bankruptcy filing revealed earnings for lower-tier teams. BK Racing, often finishing in the latter half, earned $428,794 for a 20th-place finish at Daytona, the highest-paying race, but rarely exceeded $100,000 in other events.

Smaller teams might negotiate deals where the team retains the purse to fund operations while the driver receives a fixed salary. Alternatively, drivers might keep the purse instead of a salary, incentivizing them to perform better for higher earnings.

As reported by Autoweek, NASCAR and the Race Team Alliance (RTA) introduced the charter system to establish long-term value for team ownership. Previously, bankrupt teams like BK Racing had little to sell beyond their race shops, often at low prices. The new system aims to address this issue.

The fairness of this system to drivers remains uncertain.