Some of the biggest tweaks made for the 2009 NASCAR season didn’t come under the hood, but on the balance sheet. We asked some of the many people linked to the business of the sport to describe how they are approaching the new season. They share their stories inside.
All around Daytona International Speedway, the ravages of the economy and struggles of entertainment businesses are painfully clear.
From empty seats at Miami Dolphins games to discounts at Florida’s famed theme parks, sports and entertainment companies are desperately seeking ticket buyers. That environment prompted the speedway to slash prices on 4,000 seats for the Daytona 500. Those tickets sell for $55, down from $99 — the cheapest they’ve been since 1995. The track has about 168,000 seats overall.
Daytona International Speedway has cut the
prices on everything from tickets to hot dogs.
The enticements didn’t stop there. Track executives worked with area hotels and tourism leaders to secure lower room rates and reduce requirements for minimum stays. Even hot dog prices went on a diet, to $3 this year from $4.
“What hit home for us was after Christmas when Disney dropped their pricing” at the company’s Orlando theme parks, said Robin Braig, Daytona International Speedway president. Since the track made its latest offers, “we’re still way off pace, but at least the phones are ringing again.”
Last year, the track celebrated the 50th running of the Daytona 500 and sold out the previous October. To measure the 2009 event’s sales results, the track has used the 2007 race as its baseline for comparisons — and still has come up lagging.
Braig anticipates making the same discounted ticket, hotel and concessions offers for the speedway’s July Sprint Cup race. Renewals for that race, the Coke Zero 400, have been slow thus far. In both cases, Daytona is emphasizing its policies of free parking and allowing fans to bring coolers to the track.
On the sponsorship side, Daytona, like all tracks, is coping with reduced spending and promotion from auto companies and other corporate partners. Hospitality commitments are down as companies choose to bring fewer clients to the race to entertain.
No matter who attends, the speedway still wants to make sure fans have plenty to do — and watch. For the Daytona 500, Keith Urban will perform, and Dierks Bentley will perform at the Bud Shootout.
“We’ve got to deliver a great experience even during this tough economic time,” Braig said. “You can cut expenses, but you have to have the entertainment.”
— Erik Spanberg, correspondent
At 44, Bobby Labonte believes he has plenty left in the tank. His résumé boasts the 2000 NASCAR championship, 21 career victories and more than 500 starts.
Bobby Labonte’s offseason
turned into a wild ride that
led to Hall of Fame Racing.
So how did Labonte end up scrambling to find work just six months after he signed a new deal with Petty Enterprises last summer? Welcome to NASCAR’s new economic reality, where even veteran drivers with plenty of pedigree are navigating bumpy roads in search of a ride.
This season, Labonte will drive for Hall of Fame Racing in a car backed by lead sponsor Ask.com. Hall of Fame was thought to be on the brink of collapse after the 2008 season, but with new partners Yates Racing and a deal with Roush Fenway Racing to provide engines and equipment, the team lives on — and Labonte sits behind the wheel after a harrowing offseason.
“It was a little bit like riding a roller coaster and [being in] a horror movie and a sitcom all in one this winter,” he said. “There was a lot of emotion and a lot of thoughts and what-ifs.”
Soon after Boston Ventures bought a majority stake in Petty Enterprises last summer, Labonte agreed to a new four-year contract with the team. By December, after the economy had begun wreaking havoc on Petty and other struggling teams, Labonte asked to be released from his contract. Without sponsors and with waves of layoffs in the works, Petty’s ability to contend looked dubious. (Petty later merged with Gillett Evernham Motorsports.)
Ask.com will be the primary sponsor on
Labonte’s Sprint Cup entry this season.
That led Labonte to the newly formed Earnhardt Ganassi Racing, itself a marriage of economic-ravaged convenience. Reports speculated that the deal was all but done. Until it wasn’t.
Labonte offers few details — other than a hiccup in “timing” — for his sudden switch to Hall of Fame in January, just weeks before the 2009 season opener in Daytona. The on-again, off-again drama got his attention, though.
“My guy that works for me said, ‘When you get flushed, on the other end you’ll be better,’” Labonte said. “I was, like, ‘Hmm, that’s a good call, I’ll look forward to that.’ I’ve been put through a little bit, but I’ve come out a little stronger on the other end.”
— Erik Spanberg, correspondent
Where others see carnage, Tommy Baldwin sees opportunity.
Against all odds, Baldwin has started a one-car NASCAR Sprint Cup team and is ready to run with or without a sponsor on board. The former crew chief and competition director with several NASCAR teams points to the current economic woes of teams and sponsors as the perfect environment for getting into the business. And, in a counterintuitive way, he makes a good point.
Overhead is lower because Baldwin has leased shop space near Charlotte. Baldwin estimates that he’s cut operating costs in half by buying and hiring from defunct NASCAR teams.
Former crew chief Tommy
Baldwin is ready to roll as
owner of a single-car team.
Badwin is bankrolling the venture, so he doesn’t have loans to pay. And, perhaps most important, an anticipated dearth of full fields could leave room for Baldwin’s team to make it on the track for most, if not all, Sprint Cup races this season.
“The timing is right,” Baldwin said. “We have an opportunity to start fresh, not owing anybody any money. Right now we can do our program much cheaper than most and still give (companies) the same on-track performance and the same hospitality that top teams get.”
In a matter of a few frenzied weeks, Baldwin hatched his plot to start a team, hired a dozen workers and enlisted Scott Riggs as his driver. He’s out beating the bushes for sponsors, promising unspecified discounted rates for companies looking to receive big league exposure at minor league rates.
Even if he still lacks a sponsor for the first few races of the season, Baldwin intends to put Riggs on the track. Then again, if companies continue to balk, Baldwin could be out of business by Memorial Day.
Either way, he’s in for a hell of a ride.
— Erik Spanberg, correspondent
No, David Ragan won’t be racing the UPS truck this season. He’ll have his own identity in commercials that have their own message, unique from what Dale Jarrett has been doing all these years.
Life after Jarrett begins this year for one of the most active sponsors in NASCAR. Some have called it a transitional period for the sponsorship, while others describe it as “A new day” for UPS Racing.
UPS is welcoming driver
David Ragan to the fold with a geared up marketing effort.
One thing’s for sure, there’s going to be a new look. Replacing the retiring Jarrett with the 22-year-old Ragan screams for change, and UPS has already started with a new look on its Web site and an edgier paint scheme on Ragan’s No. 6 Ford at Roush Fenway Racing. Or, as edgy as you can get with brown.
“They’ll stand out because of the plan they have in place and because a lot of people are pulling back,” said Zak Brown, CEO of Just Marketing International, which handles activation for UPS. “You’re going to see that UPS is fully committed to NASCAR and that they have a long-term vision.”
UPS is one of the few NASCAR sponsors looking to increase its advertising spend in 2009 as it promotes the new relationship with Ragan. The official delivery company of NASCAR has five different racing commercials planned for this year to set the foundation for what it believes will be a long-term relationship with Ragan. UPS was with Jarrett for eight years.
In addition to the aggressive commercial campaign, run by The Martin Agency, UPS plans to use Ragan to announce scholarship winners to the NASCAR Technical Institute and later this year to conduct safe-driving programs for teens.
“David is going to be a part of a completely redesigned UPS racing package,” said Mark Dickens, UPS’s manager of international public relations. “It’s going to be dynamic and high energy, consistent with the younger fan base he attracts.”
— Michael Smith
The week before daylight saving time begins in early March (kind of the unofficial start to grilling season), Kingsford Charcoal will adorn the hood of the No. 47 Toyota for the NASCAR Sprint Cup race in Las Vegas. That same weekend, Kingsford, driver Marcos Ambrose and the race car will be front and center on the Sunday advertising supplement run by Smith’s, a grocer that has at least 10 stores in Las Vegas.
This is how JTG Daugherty Racing has been attracting consumer goods like Kingsford for the 14 years the team has been in business. During that time, JTG fielded a car in the NASCAR Nationwide Series, but this season for the first time, owner Tad Geschickter is taking his team Cup racing.
The idea of running a one-car operation seems borderline suicidal in these days of four-car megateams. But Geschickter is making his Cup debut with a fully funded car and a driver with international appeal — Ambrose, a native Australian, might be better known outside of the U.S. than inside.
JTG Daugherty Racing uses its retail
ties to add value for its sponsors.
It was during a promotion last year that Ambrose’s face became the first to run on Little Debbie packaging in the U.S., other than Debbie herself, the team said.
How is JTG able to make these kinds of breakthroughs for its sponsors, which this year will include Kingsford, Little Debbie, Clorox and Bush’s Beans? Geschickter, a former Procter & Gamble sales manager, has surrounded himself with other former P&G executives to create what amounts to a marketing agency that just happens to field a race car.
“We’ve got a different approach that works,” said Jim Richards of ST Motorsports, the marketing arm of the team.
Not only do the sponsors write a sponsorship check to JTG, they also write their activation check to the team as part of a separate contract, just as it would with any other retail marketing agency. The team, with its retail connections from its P&G days, then does the work of an agency to secure space for its sponsors on the grocery aisles and in the Sunday ads.
“There are probably 10,000 SKUs trying to get the attention of the vice president of marketing at Kroger,” Richards said. “When you can come to them with something different, like a racing program, that gives you an advantage.”
— Michael Smith
Rich Feinberg is in the unenviable position of having to produce the same high-quality NASCAR races at the same time as he has to cut budgets within his division at ESPN.
Feinberg, ESPN’s vice president of production for motorsports, said he has spent hours in meetings this year trying to figure out how he can cut costs in ways that won’t be noticeable to viewers at home.
“Part of my job is to manage our budgets,” Feinberg said. “We are trying to be smarter today than we were yesterday about our expenses. We’re no different than anyone else.”
Just last month, ESPN instituted a hiring freeze and projected that it would wind up cutting about 200 jobs over the course of the year. Feinberg would not identify specific areas where the network plans to cut back on the channel’s NASCAR coverage. He said he didn’t want to draw attention to areas that he doesn’t think average viewers would notice.
The key for ESPN’s Rich Feinberg
is to cut costs without harming
production quality.
Given the realities of the economic recession, especially as it hits NASCAR’s core partners, cost-cutting meetings are happening throughout the industry.
In the past, TV executives have pointed to travel as the most obvious place for cuts. That means, potentially, using discount airlines or making travel plans well in advance when prices are lower.
But cutbacks also could translate into fewer cameras at the events. Already, there’s a difference of about 30 cameras from some of the bigger tracks, like Talladega, to some of the smaller ones, like Bristol.
Still, despite challenges from the economy, Feinberg expects ESPN’s NASCAR telecasts to look the same as they have in past years.
“We’re tightening our belts, but we’re being fiscally responsible in a way that race fans won’t see a difference.”
— John Ourand
Motorsports Authentics spent much of 2008 making sales gains with merchandise commemorating anniversaries and new arrivals: the 50th running of the Daytona 500, the 10th anniversary of Dale Earnhardt’s win at Daytona, and Dale Earnhardt Jr.’s switch to a new team, car and sponsor.
That combination, along with reductions in trackside trailers and employees, helped sales top $200 million as the company posted its first profit since being formed from the ashes of Action Performance Companies in 2005.
Now comes a slew of new challenges, topped by the abrupt departure of president and CEO Mark Dyer less than a month before the Daytona 500. Don Hawk, a member of the company’s four-person board of managers, assumed Dyer’s role on an interim basis.
Motorsports Authentics faces a tough
season as consumers trim their spending.
“This company needs to make more money stick on the bottom,” Hawk said. “It’s been ineffective making money. It’s one thing to generate cash, it’s another thing to keep some of it (in profits) to put back into the business.”
Dyer’s 18-month run as president included a reduction to 348 employees from 508 as part of an overall 30 percent cut in expenses. Motorsports Authentics is likely to look for more expense reductions this year. Hawk points to slashing inventory and renegotiating with vendors who make merchandise. He sees more conservative merchandise runs that are easier to sell out.
Expect price cuts on merchandise as well, to attract cash-conscious fans. Hawk cites some $25 T-shirts selling for $20 and some hats cut to $15 from $20.
“This is not an easy one to fix,” Hawk said of Motorsports Authentics. “But it’s not an impossible thing to fix.”
— Erik Spanberg, correspondent
To call Calvin Rowland anything less than a passionate NASCAR fan is an understatement. After all, he proposed to his wife at Bristol Motor Speedway in 2003 and later celebrated an anniversary at Atlanta Motor Speedway.
Now Rowland and other fans are trying to support the sport they love as the economy roils and the expenses of attending a race stand out more than ever.
Rowland and his wife live near Chicago and usually make a couple of race pilgrimages each season. This year, because they’re expecting their first child in August, the Rowlands will likely sit the season out.
Calvin Rowland and his wife enjoy
a trip to Homestead Miami
Speedway in 2008.
They may have plenty of company.
Rowland buys tickets for the Bristol spring race every year. When he decided to skip the event this year, he was shocked to find little interest from friends and family to buy the once-coveted tickets. He didn’t even get a nibble when he put the tickets on Craigslist.
It fits a larger problem facing the track. For the first time in many years, the Bristol race has yet to sell out. Track officials say the unsold tickets are from corporate customers who have cut back on hospitality spending.
“We wanted to sell them to friends,” Rowland said. “And we really had to reach to find somebody to buy them. That’s unheard of.”
Rowland and his wife have stable jobs and feel reasonably confident about their finances, so they plan on retaining at least some of their NASCAR consumerism. His wife’s favorite driver is Tony Stewart, who has a new team and sponsor this season. And Rowland’s favorite driver? Ryan Newman, Stewart’s new teammate, also behind the wheel of a new car.
“We’re both getting clipped on that deal,” Rowland said, chuckling over the prospect of buying new merchandise offered by each driver. “We’ll be getting some new stuff — we’ve both been fortunate enough to remain employed.”
— Erik Spanberg, correspondent
