This may be the only column you’ve ever read that ties NASCAR to Douglas Adams’ 1970s sci-fi spoof “The Hitchhiker’s Guide to the Galaxy.”
“Hitchhiker’s Guide” suggests that the key to navigating universal uncertainty is “Don’t panic.”
That’s good advice for all sports properties trying to survive today’s economic uncertainties. The admonition is especially applicable to NASCAR. The recession will sting all big league sports.
But NASCAR’s unorthodox business model is addicted to sponsorship revenue unlike any other sport. So this recession will change NASCAR.
Can you imagine Major League Baseball on Opening Day not knowing if 20 percent of the MLB franchises will be solvent by June?
Poised to survive
That’s NASCAR’s situation as it heads to the Feb. 15 season-opening Daytona 500. The multicar teams are poised to survive. Yet apparently many smaller teams will shutter soon after the Daytona race.
NASCAR’s drive to the top tier of American sports has relentlessly motored on in the face of challenges before.
NASCAR overcame its outlaw origins in the 1940s, roughneck image in the 1950s, a driver union-organizing attempt in the 1960s, automotive manufacturer withdrawals in the 1970s, a recession in the 1980s and the loss of founding national title sponsor Winston in the 1990s.
Sure, there’s a tough road ahead. Long-term NASCAR sponsors Home Depot and Kodak have departed. Then O’Reilly’s Auto Parts and Ask.com stepped up. There’s a small net loss in corporate sponsorship. It happens.
New dynamics
But this time it’s different for NASCAR because new dynamics are in play:
• The NASCAR organization isn’t much more than a family-owned regulatory and rights-holding entertainment company that owns some real estate. Its product — racing — is provided solely by team owners who are independent contractors.
The owners have no formal equity in NASCAR. Yet without them, NASCAR would be out of business.
Ownership of the powerhouse multicar Sprint Cup teams now rests in the hands of wealthy, non-industry-endemic firms with expansive business acumen.
They will take aggressive and extraordinary action to protect those investments. Sprint Cup team owners have an unprecedented opportunity to influence NASCAR policy.
• Automotive manufacturer support critical to NASCAR is flagging at a historical level. Toyota, Ford, Dodge and GM have slashed racing budgets.
Racing is about beating one’s showroom competitors on the track. If Dodge, GM and Ford leave, Toyota may follow.
• Live attendance and TV viewership are in a three-year slide, according to Advertising Age. A 2008 Team Marketing Report study said that NASCAR’s average ticket prices exceed those of the NFL, MLB and the NBA.
Fans are tired of being gouged by inflated merchandise and hotel prices. They complain about uninspired racing and television presentation.
• Is NASCAR for sale?
The autocratic, hands-on, ever-present, leadership styles of founder Bill France and son Bill France Jr. have evolved into a more distant, management-by-committee approach under Bill Jr.’s son, NASCAR Chairman and CEO Brian France.
Is this a signal that the family is losing interest in running NASCAR? And if that’s the case, why would buyers be interested in purchasing a company whose sole product providers are independent contractors with no equity, many of whom will be leaving the sport soon?
Fixing the problems
If NASCAR is to maintain top-tier kinship with the NFL, MLB, NHL and NBA, a few fixes are in order. It must stop the exodus of the casual sports fan.
NASCAR events are too long for casual fans. Riveting racing moments are sparse. Television production values are predictable. The length and frequency of TV commercial breaks are annoying. With few exceptions, on-air talent ranges from bland to insulting. The drivers are generic. There are no rivalries or compelling story lines. The passion that built the sport has been whitewashed.
All of these are process problems that can be fixed. The bigger issue is the NASCAR business model itself.
NASCAR industry stakeholders — the France family, a few key NASCAR executives, team owners, track operators and drivers — have collectively taken billions of dollars of wealth from the industry. NASCAR’s media and merchandising partners have invested billions of dollars in the sport.
Yet the weight of the entire enterprise rests on a fulcrum of about 25 Sprint Cup team sponsorship salespeople. If they can’t deliver a car to the racetrack, the whole enterprise smacks the wall. It doesn’t make sense.
NASCAR will survive. It’s unique, large and well-managed.
However, today’s recessionary wind could blow NASCAR off its top-tier perch. And it could open the door to a challenger that is willing to recognize the equity of the sport’s stakeholders.
Taking steps
Two immediate steps are required.
First, the stakeholders should infuse support into the system in the form of cash and more rules that drastically reduce the cost of competition, which will help the smaller NASCAR Sprint Cup, Nationwide Series and Camping World Truck Series teams survive.
They represent the pipeline that feeds talent and resources into the sport. And after all, the rich teams need someone to pass on the track.
Second, NASCAR should develop a new business model that recognizes and protects the long-term interests of its stakeholders, and takes the responsibility for survival off the shoulders of the team salespeople.
“Hitchhiker’s Guide” offers the best advice to NASCAR: “Don’t panic.”
Maybe someday people will say that the recession of 2009 compelled changes within NASCAR that cemented its long-term standing within the top-tier of American sports.
Mel Poole (mp@sponsorlogic.com) is president of sponsorship consulting firm SponsorLogic.
