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SBJ/June 30-July 6, 2014/Leagues and Governing Bodies
NASCAR evaluating souvenir row
Published June 30, 2014, Page 6
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But that tradition may become a thing of the past. NASCAR is in the early phases of re-evaluating its trackside merchandise program, and it is looking to make a change. The company two weeks ago sent a request for proposal to a dozen companies asking them to submit plans for how the sport could change the way it sells merchandise at races.
|Fans are accustomed to browsing numerous big rigs in the hunt for driver merchandise.
NASCAR teams and tracks have offered their support for exploring a change. The initiative is being led by Blake Davidson, NASCAR’s vice president of licensing and consumer products.
The evaluation process follows years of declining merchandise sales in NASCAR. Sales reportedly fell from more than $2 billion in 2008 to $1 billion in 2010. Motorsports Authentics, the motorsports licensing company that was jointly owned by International Speedway Corp. and Speedway Motorsports Inc., nearly filed for bankruptcy, and SMI this year abandoned its stake in the business in order to realize tax benefits that outweighed owning it.
Motorsports Authentics had been responsible for covering the cost of transporting 20-plus truck rigs to each of NASCAR’s 36 Sprint Cup races. The cost of having those trucks crisscross the country became inefficient as merchandise revenue shriveled and attendance decreased at races nationwide.
ISC and NASCAR agreed that finding another merchandise model would be both financially sensible and potentially benefit fans by improving the fan experience. They envision having multiple tents set up with driver autograph sessions and ample room for spectators to browse, try on merchandise and shop for apparel from multiple drivers at one point of sale.
“When we compare what the Super Bowl does, what golf does and other big events have done, they have consolidated merchandise into a more retail experience, and that’s what we’re looking for,” said Craig Neeb, ISC’s vice president of business development. “We believe that could change fan interest in the product versus pressing up against a trailer [to buy a shirt].”
Neeb said he also thinks it could boost sales. When customers go to a truck along souvenir row now, they typically only buy a shirt or a hat from one driver. In a tent “superstore,” he envisions them buying the shirt of their favorite driver, a hat of another driver for their son and maybe some sundry items.
“It can lead to more revenue because [with] the experience at the trailer, people can’t try merchandise on, they can’t shop at their own leisure,” Neeb said.
Joe Mattes, JR Motorsports vice president of licensing and marketing, who handles merchandise for the sport’s most popular driver, Dale Earnhardt Jr., is a supporter of making a change.
“There needs to be a total reset,” Mattes said. “The business model was flawed because it didn’t operate by the same rule as traditional retail.”
Mike Brown, Richard Childress Racing vice president of licensing, added, “There’s nothing broken with what we’re doing, but there’s a chance to possibly improve the fan experience.”
NASCAR sent the RFP to several leaders in the sports merchandise arena, including MainGate, Aramark and Delaware North. ISC-owned Motorsports Authentics and SMI, which owns eight major racetracks, also plan to submit a proposal.
It has asked for companies to reply by Aug. 8, and it is looking to implement at least some changes by June 2015. All the changes to the trackside merchandise would be finalized by 2016.
The business model is expected to remain the same as it is today. Currently, 15 percent of merchandise revenue sold at races goes to the tracks and 10 percent goes to the NASCAR Licensing Trust, which then distributes it to NASCAR teams and drivers. Motorsports Authentics, which carries the cost of transporting the merchandise and staffing the trailers, keeps the remaining 75 percent of merchandise revenue.
Making changes to the current model won’t be easy. NASCAR will have to get buy-in from all the teams and tracks, and there is a variety of ideas about what they should do.
For example, Mattes thinks they should adopt a hybrid model with a primary tent and some trailers. He suggested they shift from selling merchandise from individual driver trailers to selling it from team haulers where merchandise for Hendrick Motorsports’ or Joe Gibbs Racing’s drivers are sold together.
NASCAR also will need to be careful not to estrange its core fans. Those fans have spent three decades getting merchandise along souvenir row, and that’s become a tradition for many of them, somewhat akin to visiting the midway at a fair.
“We believe change is good as long as it’s not just changing to change,” said Don Hawk, SMI’s senior vice president of business affairs. “We’re going to put forward some ideas ourselves, but we do believe like the old wedding expression: There’s got to be something old and something new.”