August 05, 2020 12 min read 5 Comments
Like any sport, motocross racing can pay top dollar to champions, which makes it an attractive option to amateur riders ready to move up in their career. But your income will depend on several things, and if you’re not in the right place at the right time, you may miss out on much of the earnings.
Motocross riders can earn several million dollars per year with sponsorships and endorsement deals and more if they can place in the top spots.
To learn more about the different streams of income that motocross riders try to tap into then keep going to discover how you can get paid as a professional motocross rider.
Motocross riders get their income from several sources, including sponsorship deals through bike manufacturers like Suzuki and Kawasaki. If a rider is talented and earns the top spot on a preferred bike several events in a row, they stand to make much more money than the rider who finishes 2nd or 3rd place.
When a rider pulls the championship spot for the season, they can earn a bonus of up to $1 million from a bike company like Kawasaki by either putting their logos on the bike or winning the race with the sponsor's bike.
Each race has a “purse,” or pot, of money that is divided among the racers according to their place. The first place gets the majority of the purse, while the rest of the spots are given a percentage of what’s left, with the last place getting the least amount of the purse.
For example, if the total purse is worth $66,950, the winning racer gets $12,000 of that purse as the first prize. The 2nd spot racer gets $6,000, and the rest get a smaller amount, which decreases as it goes down to the last spot. If there are 22 racers, the last spot racer will receive $1,415 for that race.
Therefore, to earn top dollar, a rider must place 1st or at least 2nd. If a racer consistently falls to the lower spots, they often have other jobs to support their racing passion. Luckily, there are other sources for pro riders to create an income for themselves.
When a manufacturer sponsors you, you’re part of their racing team, and the salaries are split between the entire team. Riders are paid in 12 equal monthly installments, plus bonuses for winning and championships, and travel reimbursements.
Most sponsored riders are provided at least two bikes to use; a race bike and a practice bike. The race bike is the one that gets factory-tuned by the company and only makes appearances on race day. Professional mechanics are on-site during the race to do general bike maintenance throughout race day.
The practice bike is for you to get seat time in preparing for race day. That way you (and the Sponsor) don’t have to worry about the practice bike being ‘race-ready’ on the big day and you can just concentrate on honing your skills. Often, the team transfers the title of the practice bike to the rider.
Top racers are also requested to endorse products from various companies. The amount of money they earn is negotiated between the company and the agent, but there is no standard payout for endorsing products. A racer may be required to appear in commercials or at several events in rapid succession.
A famous racer may earn millions from product endorsement, as long as it is for the team or approved by the team. (Privateers can go where the most money per endorsement is.) If the endorsement that a rider makes is for a competing team, he is at risk for breaching the contract and being fined, or fired.
Factory team riders must also devote 35 days out of the year to promote the company through autographs, corporate events, or commercials, clearly stated in the team contract. If a rider does not comply, the penalty is a fine.
Privateer riders can participate in as little of activities as they wish, as long as they fulfill the terms of the individual contracts.
Prize money payouts also depend on the bike make or size. For example, if you race without sponsorships, and you’re on a Kawasaki 450cc bike, and place first, you may win up to $50,000. But if you’re on the same bike make, but it is a 250cc engine, you would win $28,000 when winning first place.
Bike makers have certain payouts for different motorcycles, and the more publicity they want for the bike, the higher they will pay for winning first place with that bike. Riders who race for certain manufacturers can earn up to $100,000 in a private deal per race.
The purse payout is the prize money that is split between all riders at the end of the event. First place earns the top prize amount, while 2nd and 3rd place racers earn significantly less. Companies watch who wins or places in the top five as they will then contract with them for endorsement opportunities in the future. Placing near the top in each race opens up more opportunities for additional income sources.
Where racers place in races determines how much they make for the year. If a racer finishes tenth for almost every race, he will earn $52,700 in bonuses and prizes. But if a racer finishes in first place for every race of the season, they could make over $200,000 for the year.
But this doesn’t take into account the endorsement or sponsorship opportunities that racers receive when finishing in the top spots consistently. Some riders earn over a million dollars in prize money alone, not to mention the endorsements and commercial sponsorships they get.
For example, a rider that finished first in every 2015 AMA Supercross race would have won $205,000 in prize money while earning $1,700,000 in factory bonuses and $1 million in a championship and $100,000 Feld Entertainment bonus. In one season, a racer could earn over $3 million.
In that same example, a racer that finishes fifth gets over $51,000 in purse money, then about $16,000 in Feld Entertainment bonus. Some riders have team bonuses set up specific to their skill level and finishing place.
A factory team is a team of riders who race for bike manufacturers. The top three racers in factory teams earn between $6 million and $10 million. Still, most racers earn significantly less than that and are not free to negotiate their private deals with competing businesses for endorsement deals.
Factory team riders can also make more money than privateers because of the different sponsorships they contract with for their marketing campaigns. That means that riders get a larger share of the corporate profits in bonuses and prize money.
Team rider salaries can start at $20,000 per month and can go as high as $100,000 per month. While that’s a significant income for the average person, that is on the low end for professional sports, when most athletes in other sports earn significantly more than that per game. However, some racers want to be on factory equipment so bad that they will take drastic pay cuts, or even ride for free.
While racers on a team don’t need to buy their bikes to compete or practice, they are responsible for their medical care, and insurance, which cuts into their salaries. As independent contractors, they are also responsible for their income taxes.
Should a racer breach any part of the contract, he can be fired within five days, even without cause. They can also be fired for any felony the rider commits while under contract. If a rider breaches a contract item in any way, they can be fined up to $25,000 per time.
If a rider does not make himself available for events promoting team bikes and other merchandise, or be available to autograph signing events, for up to 35 days per year, he could be fined.
Even with all the team’s control over the rider and his career, the rider is an independent contractor rather than an employee. A racer must buy their health and accident insurance, pay for any emergency room costs, and are not paid any workman’s compensation. They are also responsible for their expenses not related to travel.
However, the team provides a professional mechanic during races for each of the riders. Racers are also given a practice bike, along with the title, so they can keep in shape and keep their skills active. While riders don’t have insurance through the team, they do have other benefits that may outweigh the drawbacks of racing with a team.
Some riders prefer to compete on their own because they can control their careers and off-time compared with being on a factory team. When riders are on a team, they can’t do certain things without breaching part of the contract.
But when riders are on their own, they have the freedom to do what they want within certain limits. These riders are called “privateers,” meaning they are not team racers. Their earnings are often limited to prize money from racing. However, if they are talented enough and gain the attention of certain companies, they might become celebrity endorsers for products.
Riders get bonuses from several sources, including sponsors who display their logos on the bikes. A privateer racer can contract with a few sponsors to display their logos on a bike during races. Each bonus then contributes to the overall earnings per race.
For example, Ryan Villopoto earned over $700,000 for the 2014 season, yet only $100,000 of that income came from prize money. The rest were bonuses from sponsors.
In 2013, Valentino Rossi earned $22 million, which is the record for all motorsports. While the average annual salary is $85,000 for motocross racers, many racers find that they can make a lot more money through endorsements, team racing, and other promotional activities. Riders also earn aggregate bonuses to the tune of $100,000 for 1st place in a race. Put together, and the top earners can make quite a killing.
As you can see, earning bonuses during the motocross season can create a solid income for professional riders. Yes, factory team riders can receive significantly more than that and earn a consistent profit when on a team.
If a racer finishes dead last in every race, they may not be able to afford all the expenses that come from racing in motocross events. Costs may range from buying and maintaining a dirt bike to buying gas for the motorcycle to miscellaneous expenses like food and lodging while going to events during the racing season.
And what about tax time? Can you write off these expenses on your tax returns to lower your tax bill? According to one case in 2005 and 2006, the court did not allow the petitioners to write off $57,000 of expenses because it was declared an activity that did not produce income.
If you don’t ride for a factory team, you need to buy a dirt bike, which can cost at least $1,500 or more for a 2-stroke engine, and more for a 4-stroke engine. If you buy new, expect to pay several thousand dollars more.
Once you buy your bike, there are the added costs of maintenance, repair, storage, and transportation to and from events. Bike maintenance includes regular oil changes, air filter, and oil filter changes, and tire maintenance.
If you ride for a factory team, the bike that you use in races is professionally maintained by the team, but if you’re riding as a privateer, you need to figure in maintenance costs before, during, and after the race.
Any maintenance costs eat away at your prize money, and if you place low in any race, you may end up paying more for racing than you earn.
You will need gas for your bike and the vehicle you use to transport your bike to racing events. A standard 2-stroke engine will need a pre-mix fuel consisting of a gas-oil mix, which will cost extra money. But a 4- stroke engine will need a special racing gas, which might cost even more.
Now, if you’re going to several races during the season, you’re also spending quite a bit of money on gas for your vehicle, and if you don’t get good gas mileage, you’re burning up all your potential prize money. It would be wise for you to get a fuel-efficient vehicle that can carry a bike trailer.
Membership in the American Motorcyclist Association (AMA) and local clubs have yearly fees that you need to consider. Most of the time, the fees are inexpensive, but if you’re racing in several classes, the class fees add up to be over a few hundred dollars per year.
If you’re making the money that top earners make, race and membership fees are nothing to worry about. But if you’re only getting a few hundred dollars per event or less, those fees will come from other sources, such as your job, assuming you have a job outside of your racing hobby.
Buying a high-quality helmet with the correct safety certifications can cost $100 or more. While there are cheaper dirt bike helmets available, not all are safety-certified and may not qualify in a race. The AMA has certain gear standards that you must adhere to, or you will not be able to ride. The helmet cost should not be skimped on as it protects your biggest asset--your head and neck.
Boots are another expensive part of your gear that should not be skimped on because they are made specifically to protect your feet, ankles, and calves from any rocks that fly up or keep your ankle from getting crushed in a crash. Prices for quality boots range from $120 to over $400, which you may not have the funds for immediately if you don’t race for a factory team.
Miscellaneous safety gear might include kidney belts, elbow pads, knee pads, and goggles to help keep your body safe while navigating those twists, turns, and jumps. The gear can add up and eat away at your prize money.
Besides the expenses already discussed, you will also incur many other expenses while traveling to and from races throughout the season. Expenses such as meals, lodging, bike repairs on the road, and any vehicle or trailer repairs that need to be done while traveling can add up and cost you more than you may win in a race. Camping costs might also be a factor if you have an RV or a tent.
Should you not budget for these expenses, or should something come up that you didn’t plan for, you might go into debt if you don’t place high in a race.
In 2005 and 2006, a case involved a couple that started a motocross racing business in 2004. While they didn’t get into racing personally, they decided that they were going to sponsor a team that included their son and other experienced riders. The petitioners, i.e., the couple, would pay the racers’ entry fees, maintain their motorcycles, and take them and their bikes to and from race events in exchange for 75% of the prize winnings of the riders.
The couple thought they would recover their investments in their racers when they became professional riders. Still, they were unable to reach an agreement with the riders about professional earnings, and the riders never reached that status and stayed amateur racers. Amateur racers are ineligible for cash prizes.
The petitioners did not create a business plan, did not figure out if they needed a business license, or opened a separate business checking account. They also failed to keep accurate records of the fees incurred for the races or other expenses. After recording losses of $57,986 for both 2005 and 2006 on their taxes, the IRS investigated and brought them to trial.
The court decision was in favor of the IRS because the petitioners did not show that they were engaged in any profit-making activity and did not provide accurate information. Furthermore, their activity was deemed as a hobby and was charged penalties for not reporting accurate records.
If you’re not making a living from motocross racing and you’re not keeping accurate records, then you are not legally able to claim any of these expenses on your tax returns. However, if racing is your only source of income, and you keep accurate records, then there may be things you can deduct on your returns.
Be sure to consult a tax attorney or your tax advisor before you claim any expenses on your taxes, or you may end up being investigated by the IRS.
Professional motocross riders can earn millions of dollars if they are talented and have the right agent. Most of the time racing with a team can earn them more money, but sometimes, it stifles opportunities they might have to earn more on their own than with a team. However, a team can provide consistent income, even in the off-season, while racing privately earns the racer money only during the racing season.
Should you decide to go pro, weigh your options before deciding to race with a team, or go out on your own. Many opportunities to make a lot of money exist, but you need to know how to get it without breaching any contracts.
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