BK racing bankruptcy provides insight into NASCAR team finances (Update)

UPDATE As BK Racing works to reorganize under Chapter 11 bankruptcy, the Internal Revenue Service submitted paperwork claiming it is owed more than $2.53 million from the team. It claims BK Racing has not paid nearly $1.54 million in taxes, mostly payroll taxes, and owes $829K in penalties and $172K in interest. The IRS also has an unsecured claim for an additional $348K from recent tax periods. The taxes are not from profits – according to an attorney representing Union Bank & Trust at a hearing last week, the team lost approximately $28.5 million from 2014-2016.

02/28/18 The money flowing from BK Racing’s bankruptcy case gives us insight to NASCAR purses under the charter agreement? Per Bob Pockrass of ESPN.com, court documents show the team earned $450,000 for finishing 20th in this year’s Daytona 500.

That’s a strong improvement from 2015, the last year purses were officially released by NASCAR. In that year, AJ Allmendinger earned $348,803 for running 20th. Only the top-six finishers and pole-sitter Jeff Gordon (33rd) earned more than $450K that day.

But that 22.5 percent increase falls flat when we look at BK’s earnings from Atlanta. Running dead last, it made $92,000 for a 36th-place finish that would have earned the team more three years ago.

Back in 2015, Ricky Stenhouse Jr. ran 36th in this race and made $101,370. I don’t think that’s a fair comparison, though; NASCAR contingency awards and sponsor bonuses upped his purse. A better example is JJ Yeley, who ran 34th for the same BK Racing team but earned $93,710 running the No. 23.

The difference? Only about a two percent decrease. But that’s significant enough in a NASCAR environment where operating costs keep increasing.

There’s plenty of reasons behind the purse decline. Atlanta’s sparse crowd likely had something to do with it; that pales in comparison to a sold-out, revamped Daytona 500 superspeedway. Track A can only dole out so much when it’s making less revenue.

The same court document anticipated $385,000 for a 30th-place average finish over the next month. Extending that out over a full season, that produces $3.4 million in revenue for BK Racing. Well, no wonder the company had to declare bankruptcy; how will that equate to $9.1 million owed to potential creditors? But what about sponsor money – well that has plummeted as TV ratings have taken a nosedive. More at Frontstretch

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