NASCAR Roundtable Part I: Coping With The Struggling Economy

With NASCAR's '08 season concluding this weekend at Homestead-Miami Speedway, a number of influential NASCAR stakeholders recently gathered at THE DAILY's Charlotte HQs to participate in a roundtable discussion on issues facing the sport. Participants included: SMI VP/Business Development Michael Burch, NASCAR Media Group President Paul Brooks, Octagon Racing Exec VP Mark Coughlin, Motorsports Authentics CEO Mark Dyer, Bank of America Senior VP/Motorsports Michael Hargrave, Chip Ganassi Racing President Steve Lauletta, Speed President Hunter Nickell, ESPN VP/Programming & Acquisitions Julie Sobieski, Michael Waltrip Racing Owner Michael Waltrip and The Wheeler Group President Trip Wheeler. The following is part one of a three-part special.

Wheeler Worries Of Ticket Sales Drop Due To Long Distances NASCAR Fans Travel

WHEELER: I think it's happening now. The ticket sales at the track, the gas crisis has hurt, TV ratings have held steady, because it's cheaper to watch a race at home. NASCAR is unique because people do travel a longer distance to go to a race than they do for a (Carolina) Panthers game. If you're driving from Pennsylvania, it gets even more expensive, and then you have hotel minimums. It's definitely affecting us today. 

BURCH: We see the ebb and flow off that with the local attractions. For everybody in Pennsylvania who can't make it, there's a guy in Gastonia and Matthews [North Carolina] who's not going to Disney World or can't make it Myrtle Beach and is wondering, 'What's going on in my neck of the woods?' So maybe there's a shifting of your marketing focus and instead of looking regionally, you're looking at how you get more of the local people there. Look at most of our facilities, we're in major metropolitan areas. Maybe we need to look at how we get more of the local people to the track to offset some of the people who are not traveling. 

BROOKS: I don't know any sector that's not going to be affected by these markets and times. The great thing for us in the sport is that when you look at the core fundamentals, whether that's TV, the number of fans who are going to the race, which is significant, whether it's the corporate community that continues to invest in NASCAR -- there's more money coming into the sport than ever before -- all of those underlying trends are good long-term. 

WALTRIP: As a car owner, it challenges me to over-deliver to my sponsors. That's what I stress to my people. Look, NAPA has committed millions of dollars for us to race this car and I'm going to race as hard as I can. But if there's anything else we can do, to get them something they didn't pay for, to get them extra exposure, let's do that. Another thing, as I'm sitting in a TV booth at Talladega for a Truck race on Saturday afternoon, there's thousands of people there. Sure, the crowds are down, but darn when you look around on Sunday, the crowds are huge. The fans are passionate and excited. It's a chance for them to escape getting hit upside the head with the market and what's happening with the real world. I see fans saying, 'It's good to be here.' We owe it to our sport to always try to remember it's not all doom and gloom. I know I'm probably he worst one here because I'm thinking everything is great. I mean, I race a car for a living, I'm not one to say there's a whole lot wrong with NASCAR, but I can make a bunch of points about what's good in NASCAR. 

HARGRAVE: As a sponsor, this is a great time to be in the sport. If you're one of the few that can be in, it's a great time to grow your business. There are still 110,000 people at the track, there are millions of people watching on TV, it's still a great place to market your product. That hasn't changed. And as a sponsor, we say, 'Wow, let's take advantage of it.'

COUGHLIN: In certain places, too, there's starting to be a shift in the leverage. It's going to more of a buyer's market instead of a seller's market. There are a lot of good opportunities, just like there are in the stock market right now. If you have cash, boy, it'd be an awful good time to buy. We're seeing, in a lot of '09 planning, there's a lot of contingency planning going on because nobody knows if the bottom is here or not, so they're limiting their contractual obligations to a certain extent. On a rights fee basis, if anything comes up for renewal, there's careful examination. What are the must-haves that can't be cut? And if you're locked into a long-term right deal, the unfortunate part is that budgets remain flat or go down, but contracts remain solid. That's great for the rights holder, but it's not so great for the activation. It's not so great for the brands involved. If they have these great rights, but they don't have the cash to use them, to make it ring the register, the return is going to be that much worse. Contingencies are in place for 5% cuts, 10% cuts, 40% cuts. It's just good business sense to create those plans. 

LAULETTA: The good thing that comes out of times when the corporate budgets are getting smaller and the consumer dollar is under scrutiny, it forces all of us to be innovative, to think differently than we have in the past. Things you might have taken for granted from a sponsor perspective, you open your eyes and go, 'Wow, maybe we need to pay attention more.' The sponsor, if you're not in a position to tell your partner why you do something, you're in big trouble because you're never going to be able to justify the spend and it's just going to go away. From the corporate side, the team side, the track side, I look at this as a gut check, how do we get more innovative, to keep our momentum going? It'd be a different conversation if it was just focused on motorsports or focused on NASCAR. But I talk to friends at the L.A. Lakers, the Milwaukee Brewers, they're all facing the same thing.

Sobieski Says ESPN Looking To Boost Value For Sponsors

SOBIESKI: For us, it's dominating a lot of conversations. The point of innovation is really important. We're constantly rethinking how we can deliver more value to our sponsors. At this time of year sports is a great distraction, but there's also a lot of competition in the marketplace for eyeballs, for sponsorship dollars. It makes it even more important on the NASCAR side to be doing it better and to make it the most viable option. There's a ton of tremendous value this property delivers, so it's a matter of rethinking it and working with Speed, working with tracks, working with teams and all of us working together even more than we have in the past. 

NICKELL: We've spent a lot more time talking to the tracks, but more now than ever we talk to people like Michael (Waltrip) about ways we can work together. While we're grateful TV ratings have been solid this year, we're totally connected with the tracks because we've got to find creative ways with these guys to keep the live attendance value going. 

BURCH: The point about value is what dominates our conversations. How do we make it worth the effort for the fans? How do we make sure we have a full weekend? We've had more conversations with our network partners this year than at any time in five years. With teams, with NASCAR, we all have different pieces of the puzzle. How do we deliver more value? How do we get consumers more interactive, get them in the garage. The money is there, it's just under closer inspection. But if you show you can bring the value, now is a great time to build your brand. There was a great story during the (NASCAR) sponsorship summit about Kellogg's and how the investments they made during the Great Depression really won them the advantage that they still hold today. The companies that understand where the value is will have a huge leg up when things turn back positively. 

BROOKS: We're definitely seeing more collaboration in the industry to move forward in a better way. The tightening up is forcing us to look at how we can work closer together. We're so fortunate because how many sports do you hear their athletes and the first thing they talk about is adding value for sponsors. There's a real awareness that that's what drives our sport and we have to take care of those sponsors. I see us all coming together in better, smarter ways than we have in the past. These times are forcing that and that's healthy. 

WALTRIP: That's partially why I wanted to be a car owner, because I thought I could do more for my sponsors than what I saw other owners doing, to try and deliver value on the marketing side or more importantly, marry all these sponsors together so they can grow their businesses away from the track. I'm as much into that as I am anything in the car. I'm all-in on all aspects of this owner deal, but the thing I'm most interested in is how to deliver that value. It's there if we're smart enough to get it. There are opportunities everywhere. 

HARGRAVE: It's on our minds all the time, but the key for us is that our world is changing so fast, we have to be tremendously nimble going forward. The strategy changed 10 days ago and it¹s going to change again soon. We've got to be ready to move and it's critical that we have partners willing to pull together the various entities that make this sport unique and they're willing to listen to what we have to say. 

LAULETTA: I think collaboration is getting better, but it's so minimal compared to what could happen. We all go racing every week and we're not talking to Michael Waltrip Racing that much from a team perspective. And there probably are things we could do together. Not us taking NAPA or them taking Target, that's where we are right now, we're all feeding off the same mound. But there are things we could do better team-to-team or team-to-track. You get that in other sports. The White Sox and Yankees can feed off each other with ideas because they're in different markets and have different approaches. It'd be really interesting to see if NASCAR could formalize that and get people to think beyond their own team boundaries. If somebody like Target needed a personality that was a Michael Waltrip personality, I should pick up the phone and say, 'Hey, man, let's do something. You could be a fit in this program.' You're not going to paint your car white and put a bull's eye on the hood, but we should be able to do this. That doesn't happen enough because there's too much of a mentality of 'Stay away.'

Waltrip Feels Young Guns A Good Example Of Working Together

LAULETTA: We have the only diversity driver (Montoya) in the highest series of the sport. I guarantee you there are a lot of sponsors who could take advantage of him in their program. Not to take NAPA, but if Michael is trying to keep NAPA and he could say, 'I can bring you Montoya to make three appearances in this market or that market' and it would throw the deal over the edge, why wouldn't you do that? It's up to all of us being willing to take a piece of the pie instead of trying to eat the whole pie. It has to be a feeling that we're protecting each other for the good of the sport, to maximize the benefit, as opposed to a sponsor staying in for two years and saying, 'That didn't work for me, I'm out.' Instead, they say after two years, 'That was great, I'm in again.' We can't have the rotating door of a year or two and out. The way you do that is to work together. 

BROOKS: We've seen that with Speed and ESPN cross-promoting their races, for the first time ever, I think. In the interest of the sport -- they're very competitive in their own right -- they're helping to build the sport and it's working for both. 

NICKELL: It's been a really solid start. 

SOBIESKI: We have a lot of discussions about what else we can do. We don't want to stop there.

See tomorrow's SBD for part two of the three-part roundtable special.

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