How to lose $30 million fielding a NASCAR Cup Series team — and go bankrupt, too
Bankrupt NASCAR Cup Series team BK Racing lost $11.0 million in 2014, $10.1 million in '15 and $8.45 million in '16, court documents cited by ESPN.com show as the team finds itself under reorganization.
The numbers as a whole are stunning and when itemized, per the documents, offer an intriguing peek into NASCAR teams' finances.
The bottom line: If you aren't flush with sponsors, you're going to struggle to survive, as BK Racing did with only $2.5 million in sponsorships over the 2015 and '16 Cup Series seasons, the two campaigns covered by a detailed breakdown of team expenses and revenues.
Team owner Ron Devine will find out after a key court hearing Thursday whether he can operate the team or a court-appointed trustee will take over the financial operations, ESPN.com reported, adding this insight: "The filings show the challenges of operating a race team unless the owner is willing to put in a significant investment if no sponsorship materializes."
In 2016, with two full-time cars (David Ragan drove the No. 23, Michael DiBenedetto drove the No. 83, both Toyotas) and a third car that competed in nine races and a fourth car in the Daytona 500, BK Racing cars had 82 opportunities to race over the course of the season and earned $7,822,596 million in prize money.
That represented roughly 79 percent of total revenues ($9.93 million) because the team had so few sponsors. Typically, ESPN.com noted, the percentages of revenue from prize money vs. sponsorship are reversed for bigger Cup teams.
Among BK Racing's biggest expenses in 2016, according to its court filings:
— Payroll and wages: $5,896,898 (27.5 percent)
— Engine lease: $4,093,761 (19.1 percent)
— Tires: $1,916,327 (8.9 percent)
— Travel: $1,801,822 (8.4 percent)
Some interesting smaller expenditures: $493,120 on entry fees, $292,512 on transmissions, $162,494 for brakes and $138,880 for decals
Thus far, the two biggest creditors to file claims in bankruptcy court are Union Bank & Trust ($11.47 million) and the IRS ($2,893,509). Creditors have until April 26 to file claims, at which point it will become clear how much BK Racing owes.