SBJ/20081103/This Week's News

NHRA recovers for successful ’08

The NHRA’s year of change didn’t begin on script. When a weakening economy led HD Partners to rescind its offer of $121 million for the NHRA’s pro racing division, the letdown was immediate.

“It was disappointing because we all thought we were sitting on a diamond in the rough,” said legendary team owner Don Schumacher.

But the failed deal did little to forecast the year that was ahead. New marketing partnerships and sponsorships, a sparkling new venue and a surge of interest among prospective owners and investors all marked the 2008 season.

The HD Partners acquisition was supposed to validate what drag racing’s stakeholders had thought all along: that they were sitting on one of the best-kept secrets in motorsports. It did to some degree, but the deals that followed amplified the point even more.

“We don’t look at the HDP deal as a horrific negative,” said Tom Compton, the NHRA’s president. “Their management team looked at 30-some properties and decided the NHRA had the most opportunity. That was a strong vote of confidence.”

When the NHRA convenes in Pomona, Calif., this weekend for its season-ending event, the HD Partners deal will have faded from sight in the rearview mirror, even if the validation it provided remains fresh with the series.

“We see the NHRA as a very healthy series that’s well-positioned,” said George Pyne, IMG Sports & Entertainment’s CEO and the architect of a marketing partnership with the series. “It has huge growth potential, maybe even internationally. It’s as good as we thought it was going to be, and its best days are clearly ahead.”

Pyne and others have been drawn to the series because of its fan-friendly access — the pits are open to all fans — and affordability. At a time when many NASCAR team sponsorships exceed $20 million a year, an NHRA primary sponsorship can be had for $3 million.

The IMG deal was one of several game-changing events in 2008:

TV ratings are up 11 percent on ESPN2 and households are up 15 percent.

Caterpillar, Wyndham, NAPA, Motorcraft and Geico came on as new sponsors.

Attendance has been flat against a record-setting year in 2007 when other forms of racing, namely NASCAR, are seeing declining numbers.

The Countdown solidified its place as the NHRA’s championship platform.

One of the sport’s biggest corporate supporters, Coca-Cola, changed its title sponsorship from Powerade to Full Throttle, one of its energy drink brands, because it wanted to build market share. This was part of a two-year extension with Coke through 2013.

And the series visited the Charlotte area for the first time in September at track owner Bruton Smith’s shiny new shrine to drag racing, zMax Dragway. Not only did the event draw nearly 90,000 fans over three days, but it brought the sport to the hub of the motorsports business world.

Agencies with Charlotte offices, such as GMR Marketing, Millsport, Co-Pilott and others spent the weekend kicking the sport’s tires. Pyne, a former COO at NASCAR, compared the NHRA’s Charlotte event to NASCAR’s first visit to Indianapolis Motor Speedway in terms of exposure for the sport.

The NHRA’s move into motorsports stronghold
Charlotte was one of many positives on the year.

“For my 16 years at the NHRA, I took more enjoyment from the Charlotte weekend because so many of those people had never physically been to one of our events before,” Compton said. “It was fun to see people react to what we have to offer.”

That doesn’t mean that the NHRA is about to catch NASCAR. Even though its TV ratings are up, the NHRA’s 0.63 average rating still falls well short of the 1.5 that NASCAR’s No. 2 series, the Nationwide Series, averages. And team owners Schumacher and David Powers stress that the economy’s full impact won’t be felt until 2009.

But the interest in 2008, both on the sponsor and ownership side, could affect the sport for years to come.

Qatar-based Al-Anabi Racing bought into a U.S. team, Awesome Motorsports, and other investors are seeking ownership opportunities with NHRA teams, just as they are with NASCAR teams. The attraction on the NHRA side is that an initial investment would come at a much more affordable price and that most sponsorship deals come with team and league assets in the same agreement.

Matt Doherty, the McLaren Capital investment banker who paired George Gillett with Evernham Motorsports in NASCAR last year, was among those in Charlotte for the NHRA event representing prospective investors from the Middle East. He wondered aloud if the NHRA might be NASCAR 10 or 15 years ago.

While that might be a stretch, there’s considerable evidence that 10 years from now, the NHRA could look back to 2008 and say it was the sport’s pivotal year.

“To see such a degree of expansion in a very difficult market is astounding,” Powers said. “The sport is beginning to see the kind of exposure that it hasn’t had before. A lot of people came away from the Charlotte track saying that they’d never dreamed it’d be like this. Things are definitely changing.”

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