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SBJ/February 14 - 20, 2005/SBJ In Depth
Should you believe all you hear about NASCAR?
Published February 14, 2005
During the 1990s, NASCAR exploded into a period of growth that even the most optimistic sports visionaries could never have imagined. From attendance to ratings to overall popularity, NASCAR rose to a level that had formerly been reserved for sports’ Big Four leagues. Now, with the first four years of a new decade in the books, NASCAR has cemented itself among the major sports properties in the world.
But can you believe all you’ve heard?
SportsBusiness Journal breaks down important issues and major myths that have arisen during this unprecedented growth, cutting through the hype and crunching the numbers to see whether NASCAR is all it’s cracked up to be.
NASCAR is the nation’s No. 2 TV sport.
Every time somebody says or writes that NASCAR is the nation’s No. 2 sport on television, the guys and gals at Major League Baseball burn through another layer of stomach lining. And, you know, this time they’ve got a right to.
NASCAR has been the sports TV story of the last decade, growing when most properties were receding. But it is only No. 2 if you consider it in a narrow way that is long on qualifiers and short on substance. Listen closely when Dick Glover, vice president of broadcasting and new media for NASCAR, describes his product.
“If you look at regular-season, weekly, national network ratings, then clearly we are [No. 2 behind the NFL],” Glover said. “There are other criteria people can use to make a different argument.”
Regular-season, weekly, national, network. Pretty narrow stuff. Only that’s not the way it comes out when others declare NASCAR to be the vice champion.
What comes out is the shorthand: “No. 2 on television.” Or, sometimes, “the No. 2 sport.”
Wally Dallenbach explains the workings of a race car during an NBC Sports broadcast.
Again, by NASCAR’s narrow definition, it beats both handily. But that doesn’t come close to assessing which sport viewers watch most.
Let’s consider the comparison to baseball. NASCAR doesn’t want to count the baseball playoffs, but it does want to count the Chase for the Nextel Cup races. It doesn’t want to count the World Series, but it does want to count the Daytona 500. It doesn’t want to count the All-Star Game, but it does want to count its all-star race.
Here’s a more balanced view: Fox aired 43 baseball games last year, counting both the Game of the Week and the postseason. The average rating was a 6.9. Including the Daytona 500, the Nextel Cup’s average network rating was a 5.6. Baseball’s edge: 23 percent.
Then there are other facts to consider:
Seven of MLB’s postseason games drew larger audiences than NASCAR’s Super Bowl, the Daytona 500.
The seventh game of the ALCS drew 31.5 million viewers, or nearly twice as many as watched the Daytona 500 (17.8 million).
The second-most-watched NASCAR race of last year, the Rockingham 400, delivered a 6.6 rating. MLB had 16 games rated higher than that.
The hyper-hyped Chase for the Nextel Cup pulled a 4.6 rating — or just under half of the 10.0 rating that baseball’s postseason drew on Fox.
“Tim Brosnan [executive vice president of business for MLB], I know this bugs the hell out of him,” Glover said. “But I’m sure Tim is getting his fair share [of advertising dollars] and we’re getting ours and the NFL and NBA and everybody else is getting theirs.
“Everything we say, whether talking to the media or in a presentation to a corporate sponsor, we put the stuff in that’s substantiated by the facts.”
The problem here is that NASCAR’s shout-it-from-the-mountain spin has been extrapolated into a broader statement that doesn’t fairly reflect stock car racing’s place on the national sporting menu.
MLB did a 6.9 for its network broadcasts last year; Nextel Cup did a 5.6.
Now, who’s No. 2?
International Speedway Corp. will build a track on Staten Island.
Ask the local football, baseball, basketball and hockey teams how hard it is to get a major sports facility built within New York’s five boroughs. The last one to open within the city limits was a relocated Madison Square Garden — 36 years ago. Since then, the Giants, Jets and Nets have bolted to New Jersey because they couldn’t get facilities built. The Yankees and Mets have failed to get new ballparks. The Jets are in a political slugfest over a proposed football stadium in Manhattan.
So how tough will it be to build an 80,000-seat speedway on Staten Island?
International Speedway Corp. has made some strides on its project, spending about $100 million to acquire 650 acres of land. To ease concerns about traffic (the island is served by four bridges and a ferry), ISC is pitching a traffic management plan that would require most fans to lock into bus or ferry transportation when they buy their tickets.
The company insists it can make the project work, despite traffic and environmental concerns, and the task of landing public funding toward the project. But this isn’t some backwater hamlet that’s desperate for a big event to fill its hotel rooms.
Chicagoland Speedway isn’t in Chicago. California Speedway isn’t in Los Angeles. A speedway in New York won’t be in New York City.
ISC will crack the New York market, somehow, in the next five to 10 years.
In the city? No. But in the market? Absolutely.
This is a high priority, not just for the speedway companies, but for NASCAR. Part of that stems from the sponsors, who would love to entertain clients in New York for a race weekend. But there’s an even greater motivation on the TV side.
|How NASCAR's ratings stack up|
|NASCAR's expansion west|
|Turnkey Sports Poll|
“One of the reasons we feel strongly that we have growth potential left is that when you look at the leading markets, we do have room to grow,” Glover said. “We’re a mature sport in that we have been around for 50-odd years, but we’re not a mature sport in a number of markets.”
Putting races outside Chicago and Miami and in Southern California has boosted season-long ratings for NASCAR in all three of those markets. A race on the doorstep of the city — as far north along the New Jersey Turnpike as the speedway developers can get — should do the same for it in New York. It would get NASCAR more time on the local sports reports, better real estate in the daily papers, and maybe even a few minutes on the sports talk shows.
NASCAR drivers understand that their sponsors pay for an image and will work harder than other athletes to protect that image.
Hard to argue with this one. What passes for trouble in the NASCAR world — a star getting a DUI or dropping an F-bomb on camera — doesn’t even jiggle the needle in other sports.
Your brand name is safer on the side of a race car than any place else in major pro sports.
NASCAR Chairman Brian France wants out.
This one came up in multiple conversations, and then in print several times, over the offseason. As the story went, France would ditch the family’s stock car business to buy into a new NFL franchise in Los Angeles, which is where, truth be told, he’d rather spend most of his time.
Those who know France best insist he isn’t going anywhere. And logic says that, one year after his father stepped aside to give him the chance he’s always wanted, after a season in which he proved he has not only the title, but the power to make the changes he wants to make, he isn’t going anywhere.
There will be moments, hours, maybe even days when he wants to. But Brian France is running the company that his grandfather founded and his father built. He can’t walk away from that.
The success of NASCAR’s inaugural Chase for the Nextel Cup means it will become racing’s Final Four.
In the ever-changing American sports nation, few things are deemed certain. Time of the year as it relates to sports is one of them. March means college basketball, June and July mean baseball, and October and November mean football. NASCAR, with its Chase for the Nextel Cup, has attempted to shake it up a little and make that last one mean football … and racing.
Glover said the Chase was designed to make the competition on the track better and to increase interest during sports-intensive months. And judging by those goals, NASCAR hit a home run. Kurt Busch won the first Chase for the Nextel Cup by eight points over Jimmie Johnson in the closest final point spread in NASCAR history while the news coverage of the Chase for 54 primary affiliates in the nation’s top 20 media markets increased by some 43 percent over 2003.
But whether its executives will admit it or not, NASCAR, which will begin to renegotiate its current six-year, $2.4 billion television rights deal in 2005, wanted to create a playoff system that would increase ratings during the second half of the season, a two-month period in which its product goes up directly against the mighty NFL.
Taking a look at the final numbers for the entire season, the Chase does not appear to have had a huge effect. In fact, household ratings for the 2004 NASCAR Nextel Cup season were only up 2 percent to a 5.0 average across all networks.
But when you look at the Chase races themselves, the numbers are much better. The Chase finale from Homestead earned a 6.2 rating, up 37.8 percent from last year’s event, while the 10 races combined showed a 12 percent ratings increase, to a 4.6, with an average of 5 million households per race.
In the end, the racing was better, the coverage was more extensive and the ratings increased. But as far as 2005 and beyond goes, NASCAR’s new playoff system will eventually have to post extraordinary rating gains of four and five times what it secured in year one, a level the MLB, NBA and NFL have come to expect from their postseasons, to be deemed a long-term success.
Allowing sponsorships with hard-liquor brands was a good move for NASCAR.
Signing Nextel to replace R.J. Reynolds as series
I’ll drink to that
|Hard-liquor brands wasted little time aligning with teams following NASCAR’s decision to accept their sponsorship dollars. Deals include:|
(Jack Daniel’s brand)
(Crown Royal brand)
|Sponsorship: Roush Racing No. 97 Ford with driver Kurt Busch. The company is primary sponsor for select races, including the Brickyard 400, and associate sponsor for all others.|
Fortune Brands Inc.
(Jim Beam brand)
|Sponsorship: Primary sponsor of the Robby Gordon Motorsports No. 7 Chevrolet with driver Robby Gordon for select races including the Daytona 500|
|Source: SportsBusiness Journal research|
Over a year later, relief came in a controversial form. It came in a liquor bottle.
NASCAR Chief Operating Officer George Pyne said the decision to allow distilled spirits to enter the sport was not affected by the wireless category, but that the executives knew “there would be a benefit for the teams.”
In the three months since NASCAR lifted its ban on hard liquors, Fortune Brands, Brown-Forman and Diageo have all agreed to enter the sport as at least part-time primary sponsors for three different teams through their Jim Beam, Jack Daniel’s and Crown Royal brands, respectively.
Bottom line, NASCAR needs teams to survive and teams need sponsors to survive. In a sport where corporate investment is so important, opening up categories, even the hard liquor one, is good for the sport. And let’s be honest, alcohol is alcohol is alcohol. In fact, maybe a better question would have been, what took so long?
NASCAR fans are primarily Bubbas.
All these years of making its case, and NASCAR still has to fight this one on Madison Avenue.
Here are some numbers to consider:
Scarborough Research shows that avid NASCAR fans are 10 percent more likely than the average consumer to have household income between $50,000 and $75,000.
On the other hand, Scarborough shows that avid NASCAR fans are 36 percent less likely than the average consumer to have a college education, and 37 percent more likely to have a blue-collar job. In comparison, avid NFL fans are 6 percent more likely than the average consumer to have a college eduation and only 16 percent more likely to hold blue-collar jobs.
According to NASCAR, 20 percent of its fans live in the Northeast, 24 percent live in the Midwest, 38 percent live in the Southeast and 19 percent live in the West. That distribution almost mirrors the breakdown of the general U.S. population.
If NASCAR fans really were mostly Bubbas, then 40 percent of them would be Bubbettes. NASCAR says its fan base is 40 percent female.
NASCAR fans pay the highest average ticket price in sports — about $80. They report spending an average of $700 a year on NASCAR merchandise.
The Bubbas still love stock car racing, but they’re not the only people watching. They complain that it’s gone Hollywood, sold out on its core principles and left them behind. But they do it during commercials. There’s no evidence in the Nielsens that they’re turning off their TVs in significant numbers.
NASCAR has grown into a national sport.
Having its headquarters in Daytona, Fla., most of its teams in North Carolina and 16 races in 2005 in either Florida, Georgia, Alabama, North Carolina, South Carolina, Tennessee or Virginia, many people still consider NASCAR a product of the Southeast. And while the sport will always have its roots in the Carolinas and states surrounding, NASCAR is now a national phenomenon.
This season will feature nine races west of the Mississippi and 20 races outside of the Southeast, a drastic change compared to 10 years ago when the circuit was limited to two races west of the Mississippi and only 11 races outside of the Southeast. NASCAR’s most recent expansion locales have included Texas, Kansas, Chicago, Las Vegas and Southern California. The Busch Series will race in Mexico this year and ISC has its sights set on building a track in the New York market.
So in addition to the Southeast, NASCAR has expanded into the Northeast, the Midwest, the Great Plains, the Southwest and coming soon, the Northwest. ISC is searching for land for a track in either Portland or Seattle and would like to be racing there in the next 10 years, a sign that NASCAR’s dream to become nationwide is finally a reality.
But is the expansion leading to increased interest in other parts of the country? TV ratings would say yes. The five largest NASCAR Nextel Cup markets, in numbers of viewers, are Atlanta, New York, Los Angeles, Philadelphia and Tampa. Several major U.S. markets outside the Southeast experienced substantial growth in 2004, including Seattle which was up 28 percent, Minneapolis up 17 percent, Philadelphia up 11 percent and New York up 9 percent.
Under Brian France, diversity has become more of a priority at NASCAR.
The portions of the NASCAR fan base that are African-American and Hispanic, according to the 2002 ESPN Sports Poll, are 8.9 percent and 8.6 percent, respectively. In other words, there are more fans to be had.
“For NASCAR to continue to grow and prosper, we want as many NASCAR fans as possible,” Pyne said.
But to attract minorities to follow the sport, NASCAR has to make diversity a priority, something it hasn’t done in the past.
A partnership between NASCAR and the Rev. Jesse Jackson’s Rainbow/PUSH organization never materialized. A diversity council formed several years ago that distributed scholarships and created educational programs about motorsports created little impact. High-profile black athletes such as Julius Erving and Joe Washington were unable to sustain a racing team. Every diversity initiative that NASCAR has tried has left the racing series virtually unchanged. Still, France calls diversity a “top corporate priority,” while Pyne says “it is the right thing to do.”
In 2004, the Drive for Diversity program’s inaugural year, five drivers earned a place in the NASCAR Dodge Weekly Series and six crew members earned jobs in the NASCAR Craftsman Truck Series and NASCAR Busch Series. In 2005, as many as eight drivers will participate in the program, and the crew member program will be doubled from six to 12 participants.
Last year, Joe Gibbs Racing, with the help of since-deceased NFL Hall of Fame member Reggie White, gave two minority drivers the chance to compete in the Weekly Series, while Bill Lester competed in the NASCAR Craftsman Truck Series with Bill Davis Racing.
Off the track, NASCAR made a splash as well with its Diversity Internship program that provided 30 minority-group members the opportunity to work in the industry with NASCAR, tracks, teams, media partners and sponsors. NASCAR also recently developed a supplier diversity and minority vendor program to foster a more diverse supplier base. The program invites women and minority-owned businesses to be considered equally as subcontractors and suppliers for all goods and services purchased at NASCAR.
As part of its three-pronged approach, NASCAR launched urban marketing outreach efforts in Atlanta and Los Angeles in 2004 to raise awareness of the sport among various minority groups. The strides are still small, but NASCAR’s long-term mentality, along with its internal Diversity Council and an Executive Steering Committee for Diversity, which is co-chaired by Earvin “Magic” Johnson, is new and positive.
“We are in it for the long haul,” Pyne said.
Others have said that before, then gone silent. This is the first time NASCAR, itself, has gotten involved. Maybe that will make the difference. Maybe it won’t.
NASCAR fans are loyal to the sport’s sponsors.
Every time a new sponsor enters the sport, a NASCAR executive or the sponsor’s director of marketing stands up and emphatically states that “a recent survey of NASCAR fans found that 72 percent of NASCAR fans consciously purchase products because of a company’s relationship with the sport.”
That phrase, in fact, has become more accepted than NASCAR’s claim to have 75 million fans and to be the second-most-watched sport on TV. But where did this number come from and when was it last updated?
Bill Doyle, vice president of Performance Research, a Newport, R.I.-based marketing research firm that focuses on corporate sponsorship, said his company first conducted the study in 1986 and first released it to the public in 1994. A 10-year-old study, yes, but one that Doyle says is updated each year with unchanged results.
Doyle did admit that the 72 percent figure is based on a very general sense and that “what we have seen is that for specific product categories, that number has declined.” Doyle would not say which categories were experiencing a decline.
The James Madison University Center for Sports Sponsorship recently conducted its own independent study about NASCAR sponsorship. This study, a national telephone survey of 1,000 NASCAR fans, found that fans recognize and appreciate sponsors’ contributions to the sport. Those surveyed said they had been NASCAR fans an average of 18.6 years and watched an average of 25.5 of the 36 Nextel Cup races last season. Of those fans surveyed, 92.5 percent said corporate sponsors are “very important” to NASCAR, while 76 percent agreed that without corporate sponsors, there would be no NASCAR. While only 42.6 percent said they like corporate sponsorship of NASCAR “a lot,” more than 82 percent said they like it “somewhat” or “a lot.”
Maybe most important, NASCAR fans appear to think their purchasing decisions make a difference. According to the same study, 51 percent of fans agreed that they are contributing to the sport when they buy a NASCAR sponsor’s product and 47 percent agreed that they “like” sponsors’ brands more because they sponsor NASCAR. Whether all this translates to increased sales is unknown, but survey or no survey, fans’ loyalty to the sport’s sponsors is hard to discredit.
You have to run up front to get value from a NASCAR team sponsorship.
As the official beer of NASCAR and primary sponsor of NASCAR’s most popular driver, Budweiser is the king of NASCAR sponsors, having been named as a sponsor by more than 51 percent in the JMU Center for Sports Sponsorship survey. Obviously, though, not every company has $20 million plus a year to pump into a NASCAR sponsorship program, but this recent study shows that that level of funds might not be needed to receive value.
According to the survey, on average 36 percent of fans correctly identified primary sponsors for the top 30 Nextel Cup drivers on an unaided basis while awareness for official NASCAR sponsors averaged 48 percent across nine product categories. These numbers lend credence to the argument that NASCAR sponsorship programs are also valuable to companies that align with non-top-10 teams or the series itself, both of which take considerably less of a financial investment. Industry insiders in fact say that a secondary team sponsorship can go for as little as $10 million while a series sponsorship ranges from $2 million to $4 million.
If anything, smaller team sponsors and league partners should consider better activation plans to add value to their investment. Of the 1,000 NASCAR fans, who on average reported having been NASCAR fans for 18.6 years and watching an average of 25.5 of the 36 Nextel Cup races, only 17 percent of fans agreed that they receive special benefits from NASCAR sponsors, such as promotions or discounts.