The Economics of NASCAR

As a sport, NASCAR has grown in popularity to become the biggest racing competition in the United States. This premier stock car racing event was launched in 1948, with races hosted in small dirt tracks that were growing in popularity across different cities in the country. Over time, the race grew to feature three different series, including The Xfinity Series, Monster Energy Cup Series, and Camping World Truck Series.

Like many great ideas, this popular auto-racing event started from alcohol. During the prohibition era, alcohol smugglers would modify their vehicles to help them run faster during police runs with moonshine in their trunks. When alcohol became legal again, the drivers still craved the thrill of the race and impromptu races started popping up across the country.  Today, the NASCAR is the world’s largest racing governing body with over 1,500 races and contributing millions of dollars to the economy every year.

Most of NASCAR’s revenue comes from advertising and broadcasting rights, like in other major sports organizations across the US. In 2023, corporations and sponsorships looking to get a slice of NASCAR’s advertising rights brought in 425 million with a portfolio of 58 deals. Their sponsorship appeal is mostly concentrated in the US, with over 90% of American brands backing their racing series. The popularity of this racing series in the US has also given rise to NASCAR futures betting, which fans can enjoy with FanDuel’s promo for June on SportyTrader.

Investors looking to get into NASCAR’s racing action can sponsor a car for upwards of $20 million annually. Team owners also incur huge costs to compete in NASCAR races, including track costs, engines, and more. For example, racing for a week at a track can cost a team over $400,000 for a single race. The engine oil alone also costs about $100,000 and it requires replacing every week.

For the Daytona 500 (one of the biggest NASCAR races), major engine builders supply 40 engines for teams. The cost alone has previously made small teams lease engines. Each team can use two engines – one for the qualifying round and another for the race. That’s around $200,000 for a single race, but some teams also choose to participate in a third race that weekend.

Because of the costs incurred, the success of a racing team in NASCAR is directly related to the amount of money they have. That’s why big teams with rich sponsors dominate the NASCAR racing series since small teams have to run the same engine for several weeks in a row to reduce their costs. Additionally, rule changes are continually driving prices up with no signs of reducing in the future.

Looking at the economics of NASCAR races in the US, it’s evident that this premier racing event accounts for over $400 million in revenue across US states. However, with the high costs of managing teams and the rise of competing races in the US, the future of NASCAR seems uncertain. However, NASCAR remains the greatest American race in 2024.