Multiple big name veterans are currently free agents and owners are looking into implementing a spending cap and luxury tax. At first, these two things might seem unrelated, but to Dale Earnhardt Jr., it all makes sense.
According to AutoWeek, Junior believes that driver’s contracts are finally reacting to the overall financial climate in NASCAR, which can explain why veteran drivers like Matt Kenseth and Kurt Busch are currently without rides for 2018 as owners look to control costs.
“You’ve got to look at guys like myself. There’s sort of been a major shift in how much drivers are getting paid. How much they’re getting obviously changed with the new agreement we had a couple of years ago. Drivers started taking more of the purse. I don’t know everybody’s contract situation, but there is a less of a base and more purse-driven.
“But one thing that’s changed is that you’ve got a lot of young guys coming in being offered and accepting contracts that are a fifth to a tenth of what veterans are getting paid. And, that’s money that can go into the team, you know?”
Less base pay and hiring less expensive, younger drivers leaves more money for the team to put back into the car. That makes sense, but are the teams just being cheap and trying to get away with the cheaper drivers just to save a buck? Junior doesn’t see it that way.
“These sponsors aren’t giving teams the money that they used to,” He said. “So, the owners and everybody’s got to take a little cut. Everybody’s got to dial it back. Everybody’s got to realize that they have to accept some of that fallback and difference. And that’s the same with the drivers’ contracts. A lot of these veteran drivers are getting paid multi-million dollars; and a lot of these guys coming in are getting a fraction of that.”
So money is down in NASCAR overall, and everyone has to make cuts. Shouldn’t these free agent veteran drivers just be able to take cuts themselves and continue producing for their teams? Again, Earnhardt doesn’t think it is that simple. He gives a hypothetical:
“Well, when you look at it, you’ve got a car, right? Say we all are sitting here with race cars and nobody to drive them. You’ve got a guy that you think has got a lot of talent, very young, a lot of potential. And then you’ve got a veteran who is established. But he wants three, four, five, or six times the amount of money. You’re going to go with the younger guy because it’s a better deal financially.
“So, 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 everything sort of changed and the value of everything changed, the trickle-down affect I think is coming down through the driver’s contract and it’s making a big difference in the decisions these owners are making. You can’t pay a driver 5 to 8 million dollars a year if you ain’t got but $10 million worth of sponsorship.
“That ain’t going to work. Guys aren’t getting $20, $30, $40 million a year on sponsorship. Owners aren’t getting that anymore.”
All of a sudden, the latest Daytona 500 winner without a seat starts to make a little more sense. With sponsorship money drying up, if a team sees a veteran and an up-and-comer as equal talents, it is a no-brainer to sign the inexpensive young driver.
If some of these vets want a ride next year, they are going to have to adjust to the new reality. Dale agrees:
“Drivers are having to sort of understand that change is coming down the pike if it hasn’t happened to them yet, it’s going to happen to them,” Earnhardt said. “And the young guys, they don’t know any better. They want to race and they’re taking whatever they can get. That’s a good change for the owners. Somewhere in a quote years ago, I do believe I admitted to being overpaid (laughter). But I wasn’t going to complain. That’s a shift that’s going to be better for the sport and get those salaries into a realistic range for how much money we have from corporate America.
“All those things have to change, you know? Drivers’ salaries included.”