NASCAR: What’s wrong with NASCAR? Part 3 – Money and sponsorship

Solution #1

Well, we’ve laid out all the issues, so let’s try to solve them. Some of these solutions aren’t all on me. In fact, some have previously been discussed by sport experts. Let’s get cookin’.

There are two major problem solving techniques I can visualize. The first of which would be to set a budget cap for teams.

For now, let’s talk about team caps. To kick things off, click here by reading an article published in January of this year by SBNation. This article outlines the idea of salary caps in NASCAR. Personally, I’ve considered this idea before, and here is how I envision it.

Executives could implement salary caps in one of two ways. First, there could be a hard cap, meaning teams must may not pass the designated amount of money allowed by NASCAR. For instance, if NASCAR put in place a cap of $50,000,000, teams could not spend even a dollar over that amount. How they spend those resources are up to the team, but no money can be spent beyond the limit.

The second method would include a soft cap. Unlike a hard cap, teams could spend as much as they want. Before you get too frisky on this idea, understand that overspending comes at a price. Teams that overspend would pay a luxury tax to offset their spending.

The penalty would need to be set high enough so that teams would have to make hard decisions on whether or not overspending is worth it. For example, NASCAR could lay out a 40% luxury tax, meaning teams would have to shell out 40% of their overspent money back to the sport.

If the soft cap is $50,000,000 and a team spends $70,000,000, they would pay an additional $8,000,000 in penalties since 40% of the overspent $20,000,000 equals $8,000,000.

I suggest that this penalty money would be put back into the sport and specifically given to underfunded teams. For example, whatever NASCAR collects in penalty money would be distributed evenly to teams without a charter. Considering non-chartered teams don’t currently hold concrete value, this would be perfect to help those teams build on what little they have.

This solution helps teams save money, calls for better budgeting and can level the playing field. Who knows how realistic it could be, but it is worth considering down the road.