NASCAR: Change is on the horizon
NASCAR heads into the 2020 season set to make more seismic business changes to the sport than perhaps any time in its 72-year history, including one proposal that would levy fines on tracks that don’t sell enough tickets to their race weekends.
The season begins Feb. 16 with the Daytona 500 before an expected grandstand sellout crowd of 101,000 at Daytona International Speedway, where executives on hand will be working behind the scenes on major initiatives and structural changes that will lead to a new era in 2021.
While this year will see NASCAR implement its $2 billion acquisition of International Speedway Corp. and roll out a new sponsor model, changes in the works for 2021 are just as weighty, including a radically different schedule, a next-generation car and new terms for sanction agreements with tracks and teams. This is part of the plan to reinvent nearly every aspect of the sport under NASCAR Chairman and CEO Jim France.
Industry sources describe as unprecedented the proposed requirements from NASCAR that tracks reach a certain capacity toward a sellout for Cup Series races or else face a fine, a development that has not been previously reported. Sources said the new threshold is proposed to be in the 70% range.
NASCAR executives to watch this season
With 2020 being the first full year under the newly combined NASCAR-International Speedway Corp., several executives have taken on newly expanded roles. Here are four to keep an eye on heading into Daytona:
1 — Daryl Wolfe, executive vice president and chief sales and operations officer. With ISC President John Saunders moving into an adviser role, and ISC COO Joie Chitwood III having left the company last year, track presidents are reporting to Wolfe in 2020 as his power increases. Wolfe was already one of the top executives at ISC, formerly serving as CMO, and was one of the architects of the new tiered sponsor model rolling out this season.
2 — Ben Kennedy, managing director of racing operations and international development. As the scion of the France family, Kennedy continues to take an increasingly visible role in the sport. For example, Roger Penske singled out Kennedy as the point person that Indianapolis Motor Speedway worked through to change this season’s Xfinity Series race from the track’s oval course to its road course. Kennedy was on hand with Penske at the announcement at IMS in January.
3 — Frank Kelleher, senior vice president and chief sales officer. A longtime sales executive at ISC, Kelleher was promoted to NASCAR’s top sales role this offseason. At a time when NASCAR continues efforts to increase sponsor revenue, including a pending wireless deal with Verizon, Kelleher will play a key role. He replaced Jon Tuck, who left NASCAR this offseason.
4 — Jill Gregory, executive vice president and chief marketing and content officer. Gregory is a veteran of the NASCAR leadership ranks but has some different verticals reporting to her this year. As part of the changed structure implemented with the ISC deal, Gregory now oversees NASCAR’s media rights relationships while continuing to oversee marketing efforts. — A.S.
Lauri Eberhart, co-founder of the Apollo Sports & Entertainment Law Group and a former executive vice president and general counsel for track operator Speedway Motorsports Inc., noted that the move makes sense if NASCAR offers tracks incentives to sell out in new ways.
“There’s so much intrinsic value in having a full crowd or having a sellout. It’s a goal, something you brag about and that drives demand long term. It looks better on TV and in photos,” said Eberhart, when told about the proposal. “It’s kind of a new game in NASCAR with all of the changes being made, and that sets the stage to look differently at how we’ve always done things.”
NASCAR and other motorsports executives declined to comment about the proposed policy, including how large of a fine tracks could face. But the proposal is part of the new track sanction agreements in the works that will take effect in 2021.
In the meantime, NASCAR is coming off what President Steve Phelps says was a historic 2019 with America’s top motorsports series turning things around after a decade of drops in key performance indicators including television ratings and attendance.
“When we look back in five to 10 years, if you’re part of the NASCAR [industry], you will look at 2019 as the year the sport bounced back and started its growth trend,” said Phelps. “Coming off the 2019 season, which I think frankly took a lot of people by surprise, we’re poised to take it to the next level of that plan as we head into the 2020 season.”
Among the most important moves this year will be how Phelps and France engineer a new schedule for 2021. NASCAR’s five-year track sanction agreements expire after this season, giving the sport an opportunity to shake up the types, and locations, of tracks the sport visits.
NASCAR has said it wants to release the 2021 schedule by April 1, though Phelps noted that date could change. While Phelps wouldn’t divulge specifics, sources say NASCAR has contacted a broad mix of venues as diverse as Chicago’s Soldier Field and the L.A. Coliseum.
“I won’t get into any specifics on different venues we’ve had discussions with, but I would say that there are opportunities that we are exploring that might seem radically different,” said Phelps. “Would a stadium race or a street course around a stadium make sense? We’re trying to cast as wide a net as we can to see what the opportunities look like. Whether they come to fruition, I don’t know yet.”
More traditional venues that are thought to be in play as candidates for races as soon as 2021 include Circuit of the Americas in Austin, Texas; Nashville Fairgrounds Speedway; and World Wide Technology Raceway near St. Louis. While NASCAR will be unshackled from the five-year track sanction agreements in 2021, Phelps noted that some of the proposed changes to the schedule may take longer to implement. For example, street races are notoriously challenging to set up because of the red tape involved.
NASCAR is not expected to increase the total number of points races from the current 36, so any additions would likely result in a current track on the schedule losing a date. The tracks seen as most vulnerable are those with two race weekends aside from the sport’s crown-jewel tracks in Daytona, Talladega and Charlotte, plus short tracks and/or venues that have had recent renovations such as Richmond and Phoenix. One track that fits that profile is Michigan International Speedway, although sources have not singled out that facility.
While setting up the new schedule is taking up a lot of Phelps’ time, it also comes as he implements plans for the newly combined NASCAR-ISC. NASCAR now owns 14 tracks as part of the deal.
One of the first big changes happening with the combined companies is NASCAR setting up a new internal management model for tracks, where their strategies for areas such as marketing and communications will be set by the sanctioning body, a development that had not been reported.
“The strategy and plans are going to be built at a central level and then they will be implemented at a local level,” he said. “We’ll still have local people at the race track doing marketing and communications, but it all ladders up to one central strategy.”
That change is among the first major initiatives under the newly combined company. At a time when NASCAR has newfound debt service to pay, industry executives are also keeping an eye on whether and when the sanctioning body will implement layoffs.
Other deals that NASCAR will finalize this year ahead of 2021 include the new sanction agreements with teams and tracks. There are expected to be some changes to the terms of the deals, including the proposed fine structure for under-performing venues.
Driver shuffle coming
If NASCAR’s busy upcoming year with new schedules, cars and sanction agreements wasn’t enough, the sport is also poised to have a chaotic driver transfer season over the coming months.
On top of the retirement of Jimmie Johnson after 2020, several other drivers have contracts that will expire after this season, and the team landscape could look dramatically different by next year. The search to find Johnson’s replacement should dominate the headlines over the coming months, with Chip Ganassi Racing’s Kyle Larson likely to end up on Hendrick Motorsports’ short list.
Other drivers with expiring contracts after 2020 include Stewart-Haas Racing’s Clint Bowyer and Aric Almirola, Joe Gibbs Racing’s Erik Jones and Richard Petty Motorsports’ Bubba Wallace. — A.S.
NASCAR will work with teams to lock in the new parts and pieces that will comprise the next-generation car slated to debut in 2021. The changeover would leave teams with a significant amount of one-time costs in the short term, which has turned into a point of contention, but it is supposed to save teams money in the long term. NASCAR is also hoping that the new car, and a new engine formula, will help it crack the code on landing a fourth manufacturer to join the series.
Sources said NASCAR could give teams one chassis for free as part of the changeover, but the shift is still expected to cost teams seven figures for every entry. For example, a four-car team would be facing at least $4 million in one-time changeover costs.
One way the car will save teams money is by going to a new spec chassis that will be made by a single supplier, whose identity has yet to be announced. This is a split with prior NASCAR history when teams employed their own fabricators to make the basic structure of the car. This change is expected to lead to significant competition-side team layoffs after this season, which over the long term will reduce owners’ overhead.
Steve Newmark, president of Roush Fenway Racing, said that most teams are “cautiously optimistic that the new platform helps on the business model,” but he added that the main reason for shifting to the new car was to improve racing and appeal more to car manufacturers. Honda and Hyundai are the names most commonly mentioned as brands considering entering the sport.
On the key performance indicators front, NASCAR will try to build off of TV ratings that were up for the vast majority of last year but ended flat, as well as an increase in sellouts that it saw in 2019. NASCAR is midway through its 10-year media rights deals with Fox Sports and NBC Sports; typically the exclusive negotiating window begins two years before the a deal expires.