Rumor: NASCAR to copy F1 Cost Cap model

With NASCAR teams losing money despite lucrative TV revenue sharing and race pursues, rumor has it that a cost cap will have to be implemented.

–by Mark Cipolloni–

F1 teams were losing money as well until Liberty Media bought the sport and implemented a cost cap.

Now all the F1 teams are financially stable and worth $1B to $4B depending on the team.  This is helped by the fact that F1 gets 70 million TV viewers per race worldwide and hence sponsors are falling over themselves to get their name on the side of race cars.

NASCAR teams are spending themselves into financial ruin while the owners of NASCAR and most of the racetracks, the France family, continue to get filthy rich.

A cost cap is needed in NASCAR because TV viewership and race attendance are declining precipitously.  Hence the other side of the equation (cost) has to come down.

NASCAR TV ratings have been on a downward decline for many years now with the all-important 18-49 age viewers tuning out the sport and turning to F1 as their new favorite.

While all the NASCAR (as well as IndyCar, IMSA, NHRA and all the rest) races get under 20% of its viewers in the 18-49 age group, F1 gets 40% to 50% of its viewers in the 18-49 age group for all its races.  The recent Las Vegas GP at 1:00am in the morning had 51% of the viewers 18-49 of age.

The 18-49 age group are the viewers sponsors are after, as they tend to spend more and are more easily influenced.  Old geezers (the majority of the IndyCar and NASCAR fanbase) are either retired and on spending budgets, or set in their ways as to what they will buy.

F1 has an annual $140 million per 2-car team cost cap that is audited heavily. The $140 million does not include the salary of the 3 highest employees – typically the two drivers and the team boss.

Generally, the cap relates to a team’s spending that impacts the performance of the race car (excluding the engine, which is subject to a separate set of regulations).

“Our race teams by and large are losing money at the Cup level,” admitted NASCAR President Steve Phelps.

“That is something that we need to solve for. You solve that with two key pillars.

“One is to make sure that they’re getting additional revenue. So they’re interested in getting more revenue from the sanctioning body and the tracks through the purse. That is something that we need to do. The only way you can do that is to have increases in your media rights, which is what we’re doing today. So we are unsure what that is. When there is more clarity, we’ll understand what those financials will look like.

“Second and not small, honestly, is some type of cost containment. So whether that’s in the form of a cap, or whether that’s in the form of the parts and pieces that make up the Next Gen car, or trying to limit those pieces, I don’t know where we’re going to net out on that. I’m not suggesting that our race teams can cut their way to success. I’m not suggesting that because I’ve been accused of that in the past.

“There needs to be a mixture of those things, but both are important.”