It essentially comes down to money, Dale Earnhardt Jr. said Saturday in one of the most insightful and revelatory answers yet about a tumultuous season of driver movement in NASCAR’s premier series.
Younger drivers “taking smaller contracts” is a good thing, the 14-time most popular driver said.
“You’ve got a guy who you think has got a lot of talent, very young, a lot of potential and a veteran who is established but he wants three, four, five, six times the amount of money,” Earnhardt said between practices at Watkins Glen International. “I mean, you’re going to go with a younger guy because it’s a better deal financially. That’s something that I think is transitioning in the sport. It took a while, but when we had our major reset when the recession hit and the value of everything changed, the trickle-down effect is coming through the drivers’ contracts and making a big difference into the decisions these owners are making.
“You can’t pay a driver $5 to $8 million a year if you ain’t got but $10 million worth of sponsorship. You can’t. That ain’t going to work. Guys aren’t getting $20, $30, $40 million a year on sponsorship. Owners aren’t getting that anymore.”
Despite the availability of Kenseth, the 2003 champion with 38 career victories, Hendrick Motorsports recently announced relatively inexperienced Alex Bowman as the replacement for Earnhardt, who is retiring after the 2017 season.
Cup rookie Erik Jones is replacing Kenseth at Joe Gibbs Racing, and Hendrick still is mulling whether to keep Kahne after his Brickyard 400 win (Xfinity Series rookie William Byron is a candidate to fill the No. 5 Chevrolet). Busch’s status for next year is unclear after Stewart-Haas Racing declined to pick up the option on his contract.
After the introduction of team charters last year altered how teams’ revenue streams from NASCAR work, drivers’ contracts were reworked in a way that became more driven by purses (which haven’t been made public since last year) than base salary.
The new wave of young drivers consequently are signing for far less guaranteed money than veterans whose deals began before the charter system, Earnhardt said.
“You’ve got a lot of young guys coming in being offered and accepting contracts that are a fifth to a 10th of what veterans are getting paid,” he said. “And that’s money that can go into the team. These sponsors aren’t giving teams the money that they used to, so the owners, everybody’s got to take a little cut. Everybody’s got to dial it back. Everybody’s got to realize they have to accept some of that fallback and difference. That’s the same with the drivers’ contracts.
“So a lot of these veteran drivers are getting paid multiple millions of dollars. A lot of these young guys coming in are getting a fraction of that.”
At NASCAR’s peak sponsorship climate in the mid-2000s, a driver salary could comprise as much as 40 percent of a championship-caliber team’s budget (which typically ranged from $20 to $30 million annually).
Earnhardt, who is a co-owner of the JR Motorsports team in the Xfinity Series, said it’s a positive that driver salaries are being reset because more money will flow into team coffers and make the business more sustainable.
“Drivers are having to understand that change is coming down the pipe,” he said. “If it haven’t happened to ‘em yet, it’s going to happen to them. And the young guys, they don’t know any better. They’re taking a nickel to race. They’re taking whatever they can get. That’s a good change for the owners. Somewhere in a quote years ago, I admitted to being overpaid, but I wasn’t going to complain.
“That’s a shift that’s going to be better for the sport. Get those salaries in a realistic range for how much money that we have from corporate America. All those things have to change, driver salaries included.”