The Business of NASCAR as Explained by Driver Ryan Ellis.

Recently I had the pleasure of sitting down with 10-year NASCAR veteran Ryan Ellis to discuss contracts, crash clauses, and other legal aspects of a NASCAR driver’s daily life.

In other sports, contracts and their terminology are an integral part of the process. According to Ellis, however, NASCAR’s smaller teams do not place as much emphasis on contracts.

[00:00:43.830] - Jack Bradley

… When did you sign your first contract in NASCAR?

[00:00:58.890] - Ryan Ellis

Yeah, I could be wrong on this. I think my first contract was probably with BK Racing in 2016. So that was probably four or five years, I guess three or four years into my NASCAR real start. But I might have had one before then, but don't remember. But I know I had that one that was like the one obviously I remember signing. I'm pretty sure most of them [contracts] were just like, “Hey, don't crash your car. Here's the race car. Good luck.”

[00:18:22.570] – Jack Bradley

You're working in these lower teams. You don't really have a contract. Would you call it trust in NASCAR? Do they really trust the drivers or are contracts just not fashionable?

[00:18:45.830] – Ryan Ellis

I could be wrong here. Maybe it's just me being who I am, but I think the sport is very chaotic in a lot of ways. Teams have week-to-week deals. Some get put together [at the] last minute. So I think some of it is just we're constantly doing something and they might not cross their mind. I could just be slightly naive on how many contracts are out there. I just… I don't think there are really that many out there. If they are, that's with the really new kids. I'm sure obviously the big team[s], they have their deals, but with the mid-pack or mid-tier teams down, it's kind of week to week. And then part of it is as a driver and as a team, you never want to be known as somebody that's suing somebody, a sponsor. You don't want your name in the press doing that. I've been part of some really bad deals and I'm sure teams have. Everybody has. It's just business. That's life. And if I were out there and I sued everybody that did me wrong, one, I'd probably have less money than I did if I didn't sue them. And two, I would probably not be in the garage very often because people would be like, well, Ryan might sue me. So it's just like I think they just know it's not very actionable in a lot of ways, especially with the money that we're dealing with. And they don't want their name associated and they don't want their partner's name associated with it.

One important feature of NASCAR contracts is the crash clause.

[00:01:26.910] - Jack Bradley

I know a lot of race teams use it, but can you explain what a crash clause is and how you've had to deal with that?

[00:01:37.730] - Ryan Ellis

Yeah, I'll actually have to think of the last time I've had one of those. Once again, I could be wrong on this, but I think the last time I had a crash clause might have been like, in Grand Am racing. But I know if you don't have a large racing background, some of these teams, they're operating at cost, so it's not uncommon to have a crash clause. Usually, it's limited to a certain degree, but I think it depends on driver to driver. Some are like, hey, if you crash the car up to $5,000, you're liable for damage, you're liable for this, but it's hard to delineate some stuff because you can be like, well, the right front tire blew, and I knocked the fence down. That's on the team, but the same with motor stuff. But I'm sure it's changed a lot since I'm so freaking old. But it's scary because as a driver, you're kind of operating at cost, too, for the most part. So I've never been able to really sign a crash clause. So the best-negotiating power is always the power to go down to zero. And I was just like, Well, I can't drive then. … I think it's veteran based. There are probably a few races for three to five years. You're probably past that, I assume. I just don't ever remember having one. I might have had one at my first race, but at the end of the day, as I said, I can just go down to zero and be like, I can't race. If I break like my Xbox, I can't buy a new Xbox.

[00:02:45.210] - Jack Bradley

When you've driven in the past, say, five or six years, is it just a handshake agreement when it comes to a crash clause? Or when you're bringing your funding in, are they just well aware that the race car gets wrecked? Is it just on them?

[00:03:00.770] - Ryan Ellis

.... For these small teams, it's not typical to have a crash pause, probably more likely, especially if you're in your first race. But with most of my guys, I wouldn't survive if I was tearing up stuff. So I'm able to bring up probably a little bit less in terms of sponsorship money just because they know what they're getting. Coming off a crash last week, it doesn't really sound great, but yeah, it's kind of just like, hey, we trust you. We know you've been here, just do your job, and be smart. And at the end of the day, I know that our team will operate better if I don't strike the stuff in. So it's in my best favor to use my head.

Another important aspect of a NASCAR driver’s life cycle in the sport is obtaining funding via sponsorship.

[00:04:30.910] - Jack Bradley

… Your owner, Tommy Joe Martin, stressed the importance of funding and sponsorship to whom they put in the car. You were mentioning your funding. I've seen it in the past, just with Costa Oil and some of your other partners you've had this year. How important is it to find these partners, to get these contracts or deals done to put you in these cars?

[00:04:57.190] - Ryan Ellis

I guess without these sponsors, I'm just not racing, period. I've been around for a long time, but there are certain rides that pop up that are just, hey, you don't need to bring anything, we’ll pay you a little bit. Sometimes they're a good deal, sometimes they're not. Sometimes if you can make the race you're in, you might make a little bit. But with Tommy Joe, I'm always transparent, always honest, and basically, if I don't bring the money, I'm not racing. And it's like that for everybody in our team. It's not just me. So without CorvetteParts.net, without team parts, I'm not at Alpha Prime Racing because that was the base of my deal, and that's what allowed Tommy to make a commitment to me. And then from there. He said, hey, we have these ten, six, whatever it was, races at the time open, and me and my marketing girl Sarah went after it and just said, we're going to try to get as many as we can and we lock a lot down, knocked a lot out, and we’re already doing that for next year.

[00:20:45.390] – Jack Bradley

You mentioned that when you have a sponsor come in, you of course have a contract with them. Is that contract exclusively with you and you just bring the money to the race team, or is it a contract between the three parties?

[00:20:57.870] – Ryan Ellis

So I think done correctly, it's a sponsored driver to team, driver to sponsor, and then driver to the team. But there's no contract between the sponsor and the team. I think that's done correctly from a driver's standpoint because that keeps the separation between sponsor and team, which is one thing that is scary because the drivers always worry about losing the sponsors to teams. Teams are worried about losing their sponsor to drivers. So I think that's the right way to do it, but everybody does it differently. I think that's probably just the most mainstream way. I work with Spire Sports and Entertainment. I have been for about three or four months now and I think we're finally going through our first set of contracts like last week. And as far as I know, I don't even know if there's a team mentioned in it right now. So it's probably just sponsor to me, and then I have a deal with Tommy, and that just keeps it separate and I'm way too dumb to know why that is, but I think it's just mainly from a legal standpoint of having a sponsor and team sue each other.

The ins and outs of contracts in NASCAR are very different from that of other professional sports. I’d like to thank Ryan for his time and for helping build a picture of the business of NASCAR from a legal aspect.

Jack Bradley is currently a Law school student at Duquesne University School of Law and an alum of Georgetown University (MPS) and Penn State University (BA). Jack is also the Co-founder and President of Poppy Packs, a 501c3 charity, and former Head of Marketing and Communications within NASCAR.

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