CHARLOTTE – Denny Hamlin lobbied Wednesday for the revenue distribution model to be shifted in NASCAR’s premier series, giving teams and drivers the opportunity to make more money.
To ensure the long-term economic viability of championship-caliber race teams, whose budgets can exceed $100 million annually to field four cars in Cup, the Joe Gibbs Racing driver believes the reliance on corporate sponsorship should be “bonus money,” and that teams should be able to survive on purse money.
Under terms of a consolidated national network TV era that began in 2001, tracks receive 65 percent of revenue from rights fees revenue, teams receive 25 percent, and NASCAR gets 10 percent. NASCAR signed Fox and NBC in a 10-year deal, which is in its third season, that has been estimated at more than $8 billion.
“The pie has to be shifted for sure,” Hamlin said at a charity event Wednesday morning to promote International Walk to School Day with sponsor FedEx. “The TV dollars coming into NASCAR is higher than it’s ever been, but we’re seeing fewer and fewer teams, and it just can’t survive. So it economically doesn’t make sense. The pie, the amount of TV money that the race teams share, has to go up, in my opinion.”
With sponsorship more difficult to find for teams, the breaking point seems to be driver salaries, which seem to be in an ongoing reset as the Cup Series undergoes a youth movement. Dale Earnhardt Jr. estimated the new wave of drivers will earn a fraction of what his generation made.
Asked whether decreasing driver salaries was a way to address team financials, Hamlin replied: “You’ve got the wrong guy to ask me on that, because I think we’re way underpaid on that as race car drivers. That’s a fact. I think there’s no doubt doing what we do, the schedule we have, the danger we incur every single week, NASCAR drivers should be making NBA, NFL money.
“I really, truly believe that. But it can not come out of the owners’ pockets.”
Do drivers deserve more because they are risking their lives more than in other professional sports or because of the length of schedule?
“It’s a combination of all those things,” Hamlin said. “Essentially the drivers get two months off. The teams get no months off. There just has to be some kind of different revenue sharing. I’m sure this will be in some headline somewhere where ‘Denny says the drivers aren’t paid enough.’
“I’m basing it off all other sports. I’m not including myself. I’m including probably the back half of the field that those drivers are risking the same amount I am, and they should be paid a hell of a lot more.”
Given that tracks earn the largest percentage of the revenue distribution, it would seem they would be the likeliest target for Hamlin’s redistribution plan.
Hamlin said it was incumbent upon tracks to prove worthy of their share by spending on upgrades.
“Racetracks are making a lot of money,” Hamlin said. “And I’m not trying to throw anyone under the bus, but they’ve either got to reinvest that money, which some tracks are. I’m not going to put some on the same island as others, but Dover (has) terrible garage stalls. It’s not even a garage. A garage is defined as something that’s enclosed. We have lean-tos that we’re working under.
“The crew members deserve better working conditions than what they’ve got. We’ve got to hold these tracks to a higher standard, not only with the race surface but the fan experience, the team experience. That money has to be reinvested to give us a better product and something for fans to see.”
Hamlin also saw a warning sign in the K&N East finale at the 1-mile oval last Friday. There were 15 cars that competed, down from 27 last year and 31 in the ’15 finale.
“One of the most disappointing things I saw this weekend was eight cars running at the end of a K&N race at Dover,” he said. “The model is not right. Someone’s got to come in and say, ‘Let’s reset.’ We have to start over from scratch.
“And I get it. Hey, it’s the way it’s been done for 50, 60 years, but the economics of sports have changed since then, and I believe there’s got to be a reset, and it doesn’t come from drivers. It comes from NASCAR switching and helping teams survive on a better basis. You’re going to get a better product on the racetrack. Listen, we don’t want only six race teams to be in NASCAR five years from now, but that’s the way it’s heading.”
Hamlin’s views grew out of a discussion of the 2018 rules that NASCAR announced Tuesday. The new regulations include a common splitter and radiator that are intended to help reduce costs because teams will buy spec parts instead of spending enormous sums on R&D to optimize their own handcrafted versions.
“I think the radiators will be the biggest expense,” he said. “I think really they’re just trying to stack pennies and trying to get to a bigger cost savings. Because ultimately what do we want to see in NASCAR? We want to see teams be able to fund race cars without sponsors being on the side of it. We need to keep this sport healthy.
“We shouldn’t have to rely on the money that comes in from the sponsors. (That) should be bonus money that goes to the team. That’s where I’d like to see it. These teams should be able to survive on purse money, and right now they can’t.”
The economic sustainability of the NASCAR team business model has been a hot-button issue in recent years, notably around the 2014 formation of the Race Team Alliance and last year’s creation of the charter system (which guaranteed participation and revenue streams for 36 cars annually).
In August, Richard Petty Motorsports majority co-owner Andrew Murstein told NBC Sports’ Dustin Long that he had proposed the idea of a salary cap in the Cup Series. Murstein also said that NASCAR drivers relatively are underpaid compared to other professional sports.
“I see hockey guys who play a third of the game make $17 million a year,” Murstein said. “Now you’re talking about (drivers) who are 10th best in the world at what they do getting only salaries of $5 million, so I actually think their salaries are low compared to other sports but the business needs that right now with the sponsorship decline.
“I love the fact of how no other sport has a partner with the athletes where here the athletes get 40 percent of the race winnings. So each race they go into as your partner vs. other sports where they win or lose, it makes no difference at all.”