SBJ/May 28 - June 3, 2007/SBJ In Depth

Tracks shift gears on improvements

The rain-soaked Nextel Cup race at Richmond earlier this month was a wash. The race cars were covered and put to bed, the drivers long since retired to the comfort of their luxury RVs.

The Neon Garage at Las Vegas Motor
Speedway raised the bar for tracks and
the amenities they provide fans.

But about 10 stories above Richmond International Raceway on that wet Saturday night, hardly anyone noticed that cars weren’t circling the track below. The race had stopped, but the party inside the decadent new Torque Club raged on.

“People were just hanging out, like it was any other bar,” said Mark Lindsey, the Torque architect and one of the race fans who bought a $1,750 ticket and entertained clients in the new upscale bar setting. “Nobody was leaving. It got to the point that people from the track had to come around and say, ‘OK, it’s time to go.’

“It shows how the race is just one function of what’s going on all day long. It’s like the new Busch Gardens.”

Velocity. Torque. Octane. Apex. They sound more like energy drinks than the next wave of designer innovations, but these nouveau clubs and eateries are delivering a much-needed jolt of high-end taste to racetracks. Fans who are willing to pay top dollar are now treated to marble columns, onyx-faced bars, waterfall walls and manicures when they go to the race.

These venues are doing more than providing ticket holders upscale food and drink in climate-controlled settings. They’re easing traffic flow, providing business-to-business opportunities, bringing in business on non-race dates, and perhaps above all else, creating new revenue streams for track operators wary of more ticket price increases in the grandstands.

“Fans want to be treated and pampered at a different scale and we’ve found that they’re willing to pay a premium for it,” said Eddie Gossage, president of Texas Motor Speedway. “You’ve got to be able to offer them the manicure, the high-end meals, the tour of the garage. They want the best experience and they want to get backstage.”

The club concept has been central to a building boom at racetracks. From 2005 to the end of this year, tracks with NASCAR events will have spent more than $600 million to improve their facilities, from repaving to adding luxury accommodations for their highest-paying customers to the grandest project of all, an estimated $120 million extreme makeover to Las Vegas Motor Speedway.

International Speedway Corp. owns more tracks and not surprisingly has spent the most on capital expenditures at $290 million, which includes a projected $90 million in 2007. Foremost among that spending was a $60 million improvement in 2005 to Daytona International Speedway, which included the Nextel FanZone and groundbreaking access for fans to the garage area.

Speedway Motorsports Inc. is on pace to spend close to $280 million over the three-year period, including the Las Vegas infield and sparkling new Neon Garage, another classic bit of one-upmanship between the rival track owners. Just when Daytona bragged that it brought fans closer to the sport than any other track with its FanZone, with its unique perspective into the garage, Vegas tied together overhead vantage points of the garage with its Vegas-style acts to create a Neon Garage party for more than 10,000 fans in the infield.

The Nextel FanZone at Daytona allows fans to
peer into the garage area and watch as drivers
and teams prepare for races.

In that same three-year window, Dover Motorsports will have spent $26 million, part of which has gone to what the company calls the “Monster Makeover” at Dover International Speedway. Pocono Raceway has spent nearly $6 million.

Amenities vs. new seats

“You have to be able to offer a range of experiences, with Octane and Torque at the high end, to the entry level. It’s fair to say that the premium experience had been neglected until recently,” said Roger VanDerSnick, ISC’s chief marketing officer. “When the sport started to take hold and broaden years ago, the experiences at the track didn’t keep pace with the broadening demographic. Tracks had to improve the range of experiences they offered.”

For many years, mostly through the 1990s, tracks went through an expansion phase to accommodate the mass of fans who were drawn to NASCAR, where crowds in excess of 100,000 became common. But the most recent phase of construction has focused on amenities instead of new seats. Tracks are taking the seats they have and making them nicer as opposed to adding seats.

“Motorsports facilities are starting to catch up with facilities in other sports,” said Jack Boyle, principal and senior architect at HOK Sport. “Everything now is geared toward enhancing the fan experience, getting closer to the participants, closer to the action, finding new forms of access to drivers and teams. But there’s also an economic challenge with creating all of these amenities when there are so few race dates over the course of a year. The question always is going to be, ‘What is the return?’ In a lot of cases, the payback isn’t there.”

Track operators estimate that two-thirds to three-fourths of the improvements recently went toward revenue-generating projects.

A weekend pass to Torque, with a capacity of 700 people, costs $1,750. Octane, an even more exclusive 100-person club at Phoenix International Raceway, tops out at $4,000 for a season pass or $1,900 for a weekend.

“Tracks have topped out with attendance and what it can charge for a ticket in the grandstand,” said Dennis McAlpine, a longtime industry analyst. “What tracks are finding is that the problem with ticket pricing is not on the high end. The high end will continue to pay. But they have found that they made a mistake by increasing ticket prices on the low end. The marginal ticket buyer will not continue to show up. Tie that into the price of gas and that’s hurt some tracks and their ticket sales.”

Selling tickets, especially in the grandstands, is harder than ever, said Humpy Wheeler, longtime president at Lowe’s Motor Speedway. Admissions revenue for SMI and Dover declined in 2006, according to their annual reports, while ISC was flat. SMI noted a decline in tickets sales at Texas and Atlanta, while Dover, which includes tracks at Nashville, Memphis and St. Louis, each of which host Busch Series races, noted a sales decline for nine of its 15 events, which also include an IRL and NHRA event.

ISC’s annual report indicated that ticket sales were off at Michigan and Daytona for its July event. During the first-quarter report for 2007, ISC officials described advance ticket sales for the summer as mixed. While Michigan and Daytona might remain soft, though, other events are flat or slightly ahead of pace, said John Saunders, ISC’s chief operating officer.

The slight lag in overall ticket sales has led some to wonder if tracks overextended their capacity during the expansion period.

“Some tracks probably did overbuild,” said Denis McGlynn, president at Dover International Speedway. “We’re feeling the pinch. We’re not selling as many tickets as we did eight years ago. It’s a cycle. Unfortunately, when we lost Dale Earnhardt, we lost our Tiger Woods. While we have several quality drivers, no one has stepped into that role.”

So the focus has turned to creating more upscale experiences. Track operators have found that their clubs attract fans willing to spend and, on occasion, that club atmosphere might draw a non-fan who wouldn’t otherwise attend a race.

Torque is the most recent example of a high-end club that fits neatly on the experience meter between the grandstands and the luxury suites. For the many customers who want an upscale experience, but don’t have a need for a 50- to 70-person suite priced anywhere from $50,000 to $100,000 per year and sometimes more, the clubs deliver the amenities for a fan who wants to entertain a smaller party.

Chicagoland Speedway offers corporate chalet tents and catering for $43,000 for a weekend, but lacks other pricing options, so it has begun plans to create a high-end club in 2008 with indoor and outdoor seating in turn four, track president Matt Alexander said.

“We went from $43,000 for a chalet to $200 for a ticket and had nothing to offer in between,” Alexander said. “So obviously we were missing something. A lot of the clubs are coming from the stick-and-ball sports and we’ve got to ask how we compete. You’ve got to be upscale or else you won’t compete.”

SMI’s Speedway Clubs at Texas, Vegas and Lowe’s Motor Speedway have been a staple of the company’s offerings, accommodating as many as 3,000 guests on race day. McGlynn’s track at Dover will debut Velocity next week.

Like the more intimate Octane at Phoenix, Velocity’s 90-person capacity will offer a cozier setting with a highly personalized level of service for a $900 weekend pass. Tickets are limited to no more than four per individual.

“We decided to stick our foot in the water and see how people respond. If it’s overwhelming, we can always go bigger,” McGlynn said. “Many of our customers come from Philadelphia and Baltimore where new stadiums have been built. We’re measured against those facilities to a large degree. We’ve got to be able to compete.”

Clubs like Torque at Richmond are ideal
for those who want to entertain smaller
groups and don’t need an entire suite.

For the smaller capacity clubs, revenue isn’t always the driving force. With a capacity of 100, Phoenix’s Octane might generate less than half a million dollars for the year in race-related income. But it also might provide track officials with intangible benefits, such as access to the corporate decision-makers in the Phoenix area who might not otherwise attend a race.

Booking non-race events

Track operators also are using clubs and Neon Garage-type entertainment areas to keep the fan occupied after the race. While most concession areas stop serving near the end of a race, the Neon Garage continued with its food and beverage service after the race. For Las Vegas, that meant 10,000 or so fewer fans trying to leave the parking lot after the race.

At the same time, tracks are wringing the most revenue out of these clubs by making them available on non-race dates. Torque is booked for holiday parties and corporate meetings for an average of $5,500 per event. When a trade group from Germany visits Richmond next week, they’ll be entertained by Henrico County at Torque, the track said.

Daytona’s 500 Club will entertain about 100 functions this year, track president Robin Braig said, from weddings and receptions to high school proms. Depending on the scale of the event, rentals can range from $1,000 on the bare-bones end to $20,000 for steak, lobster and an open bar.

Of the $60 million in improvements at Daytona in 2005, nearly $10 million went to the multilevel 500 Club. Track operators tend to look at their return on five-to-10-year timetables, said Braig, who wouldn’t go into specifics about revenue from the club, but said that it’s well ahead of schedule to pay for itself.

“We’re making our money back not only from the fans, but also the corporate sponsors,” he said.

Daytona has sold title sponsorships for its infield attractions to Budweiser, Nextel and Goodyear. Las Vegas is seeking a title sponsor for its Neon Garage, and other tracks are exploring ways to monetize their clubs, either through naming rights or non-race bookings.

“The ROI has far exceeded our expectations,” Braig said.

As tracks seek new revenue streams, the next phase could come in the form of corporate outings and convention business.

Braig envisions his track replacing the golf course as the place to do business, with a driving school and water activities on 35-acre Lake Lloyd in the infield taking bookings away from the Dorals of the corporate world.

“We’ve got to continue to make these tracks better,” Wheeler said. “We’re competing against movie theaters with wide, comfortable seats, arenas, stadiums. When you sell people something today, it’s got to be first class. That’s what they’re used to.”

What they're saying

“NASCAR was born out of its Southeastern rural roots and now it’s graduated into major leagues. The tracks have to maintain their obligation to step up and have major league facilities.”
Denis McGlynn
Dover International Speedway

“In our sport, people don’t just tailgate, go to the race and call it quits. We have 80 percent of our fans on site by 9 a.m. They come early and experience the event all day, and in a lot of cases, all weekend or all week.”
Matt Alexander
Chicagoland Speedway

“You can’t just put guests in the grandstand anymore. You’ve got to have access to a suite or the pits or these clubs. These people are used to being entertained.”
Jonathan Jensen
Relay Worldwide

“We’ve probably had a very standard approach to hospitality at a lot of venues, a bit of one size fits all. It’s met many needs and will meet many needs moving forward, but we also recognize that there are opportunities to offer choices. The big, white tents aren’t going away, but they also won’t be the only hospitality option.”
Roger VanDerSnick
International Speedway Corp.

“Amenities are a different equation for motorsports than for baseball or football or basketball. It’s not just about flat screens and nice china. It’s about access, it’s about getting in and getting out with a low exposure to four-letter words and not getting thrown up on.”
Jack Boyle
HOK Sport

“Some people would have you think it’s doctors and lawyers at the race, but the majority in the grandstand are working people. Some are not too comfortable when you start, what I call, luxuriating. You can make the grandstands nice, but not to the point you make people uncomfortable or price them out. At Daytona and Las Vegas, those fan areas work; it’s a resort-driven deal. When you go to resorts, the chip in your brain says ‘Spend more money.’ Will that work as well in Charlotte and Talladega? Maybe one day, but you’ve got to be careful.”
Humpy Wheeler
Lowe’s Motor Speedway

“The one-upmanship [among the tracks] is prevalent and I like it. The beneficiary is the fan, and you can’t go wrong with that.”
Dean Kessel
Sprint Nextel

— Compiled by Michael Smith

Price range
Atlanta Motor Speedway
Bristol Motor Speedway
$93-$133 (March race); $104-$133 (August race)
California Speedway
Chicagoland Speedway
$195-$350 (a)
Darlington Raceway
Daytona International Speedway
Dover International Speedway
$50-$96 (d)
Homestead-Miami Speedway
Indianapolis Motor Speedway
Infineon Raceway
Kansas Speedway
$205-$310 (b)
Las Vegas Motor Speedway
$80-$249 (c)
Lowe’s Motor Speedway
Martinsville Speedway
Michigan International Speedway
New Hampshire International Speedway
$50-$110 (d)
Phoenix International Raceway
Pocono Raceway
Richmond International Raceway
Talladega Superspeedway
$70-$120 (one-day); $60-$165 (two-day)
Texas Motor Speedway
$42-$130 (April race); $52-$146 (November race)
Watkins Glen International
$55-$135 (a) (four-day weekend tickets)

(a) weekend passes/tickets only
(b) season ticket packages only (five races, two weekends)
(c) does not include suites or club seats. The $249 tickets include all three days of racing.
(d) does not include suites
Source: Tracks  

Racetrack Admissions revenue hits the wall

Two of the three major track operators reported a drop in admissions revenue from 2005 to 2006. Both Speedway Motorsports Inc. and Dover Motorsports cited drops in attendance revenue. International Speedway Corp. experienced a 0.2 percent increase.


Annual report comments: The 2006 increase in revenue resulted from an increase in the weighted average price of tickets for the majority of events. Attendance increased at Homestead, Darlington and Talladega. It decreased at Michigan and Daytona’s July race. Also, two fewer IRL events were held at ISC tracks.


Annual report comments: Lower attendance was reported in 2006 for events at Lowe’s Motor Speedway and Texas.


Annual report comments: Dover reported lower admissions revenue at nine of its 15 races in 2006, which includes NASCAR, NHRA, and IRL events.

Source: Annual Reports

Adding it up

The following shows what International Speedway Corp., Speedway Motorsports Inc. and Dover Motorsports have spent on capital expenditures since 2005. Pocono Raceway provided a grand total, but not a year-by-year breakdown. Figures for 2007 are projections.

2007 — $90 million 2007 — $80 million 2007 — $11 million 2005-2007 — $6 million
2006 — $80 million 2006 — $104 million 2006 — $6 million  
2005 — $120 million 2005 — $97 million 2005 — $9 million TOTAL: $603 million
Sources: Annual reports and tracks

Building Mania

Racetracks that play host to NASCAR events have spent more than $600 million since 2005 to improve their facilities. Here’s a sampling of some of those projects:

Daytona International Speedway
$60 million
500 Club, Gatorade Victory Lane, Nextel FanZone

Michigan International Speedway
$22 million
Champions Club, other upgrades

Homestead-Miami Speedway
$20 million
Champions Club, 16 corporate suites, lighting, track

Lowe’s Motor Speedway
$5 million
Upgrades to Speedway Club

Martinsville Speedway
$3 million
Seat additions, track improvements

Phoenix International Raceway
$25 million
Octane Club, other upgrades

 Atlanta Motor Speedway
$25 million
Club One, Winners grandstand, Trackside Terrace camping

California Speedway
$10 million
FanZone in infield, Apex Restaurant by Wolfgang Puck

Las Vegas Motor Speedway
$120 million
Neon Garage, entire infield

Dover International Speedway
$26 million
Velocity Club, other upgrades

Darlington Raceway
$10 million
Suite renovation, track, tunnel

Source: SBJ research

Return to top

Related Topics:


Video Powered By - Castfire CMS Powered By - Sitecore

Report a Bug