NASCAR drivers expecting pay cuts
Thursday, Feb. 17, 2011
DAYTONA BEACH, Fla. Given how the economy's slow recovery continues to buffet NASCAR, Greg Biffle believes he and other drivers expecting to sign new deals in the near future are going to experience a market correction.
Although his sponsor, 3M, has weathered the recession and Biffle expects them to re-sign with him and the No. 16 team for next year and beyond, the driver also knows he'll be taking a significant pay cut in his next contract with Roush Fenway Racing.
"I would think so, just knowing the sponsor dollars are going down," Biffle said. "The sponsor dollars go down, let's say, 40 percent or 35 percent. That's a significant number, so that's got to come from somewhere. It's going to be cut back at the team for engineering, personnel, driver salaries, all the way down. We're going to have to economize what we're doing to continue on."
While NASCAR's economic outlook isn't as bleak as it had been over the past few years, a sport powered mainly by corporate sponsorship is going to try to control costs.
With that in mind, Biffle doesn't think he'll be the only driver taking a pay cut on his next deal.
"I think it'll be a big adjustment for a lot of people," Biffle said. "I think it's going to be a significant amount just because I think sponsor programs are going down. A lot of us had some pretty rich deals in the heyday. It's going to get reset, there's no doubt."
Despite wide-ranging cuts to advertising budgets in recent years, NASCAR officials say there hasn't been a mass sponsor exodus from the sport. NASCAR spokesman Ramsey Poston says the number of sponsors has remained relatively stable about 400 companies still invest in the sport, including about 100 in the Fortune 500 even if they have scaled back spending.
Even so, many of the companies that stayed in NASCAR aren't as willing or able to spend as much as they did at the peak of the sport's popularity in the mid-2000s.
"While some sponsors adjusted and made changes, they have remained in the sport because the investment they have made in NASCAR is paying off," Poston said.
Team owner Rick Hendrick says teams are having to do more with less, a familiar refrain across the country that goes well beyond NASCAR.
"I think the economy has affected our sport a ton, and I think we had some miscues," Hendrick said. "The tracks, the owners, the drivers, we all took some things for granted and we've had a reset. I think we might have been a victim of our own success."
Richard Childress Racing driver Jeff Burton believes the economy has hit NASCAR harder than other major sports.
"Every one of our car owners can not exist without major corporate sponsorship," Burton said. "That is the driving factor for our income. If you own a football team, the driving factor for your income is a TV deal, spectators in the seats. For us, it's sponsorship. Our TV deal is much less, and our impact by losing (spectators) is much less. So everything revolves around sponsorship, and that has had a huge impact on the number of teams that are in the garage, the number of high-quality teams that are in the garage. We have enough teams, for sure, right now. But certainly, there's a lot of teams that are in a lot more difficult situation than they were."
And Burton says a NASCAR turnaround isn't right around the corner.
"We're still in tough economic times," Burton said. "Things are not that different today than they were six months ago. They're a little bit different, they may be a little better. But they're not way better. So there's still a lot of challenges ahead of us. This sport kind of is behind the flow of economic times. We always get hit later, and we always recover later. So I think we still have a good year, 18 months of tough economic times in the sport."
Biffle's Roush Fenway teammate, Carl Edwards, is arguably the biggest name in a significant group of drivers who will be free agents at the end of the season. But given the state of the economy, Edwards doesn't necessarily expect to cash in with a new contract as he might have a few years ago.
"Times are changing and things are changing in the world especially our United States business world," Edwards said. "I'm assuming that the next deal that I make will be different in a number of ways. Some of them may be really good. I have some ideas and some people around me have some ideas that could make this next sponsorship negotiation a lot of fun for me and the sponsors. We have just a lot of different ideas."
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