The View from Here: The Business of NASCAR

I remember as a youngster that we had to come up with games to play (especially during summer vacation when it rained). One of those was taking a deck of cards and building a “house of cards”. Of course, the foundation was very strong–often several cards long. But as the “house” was built, tensions mounted. Ultimately, the house collapsed, not because of a weak foundation but because of trembling hands as we added to the levels of the “house”.

I’m struck by how much NASCAR might be experiencing the “trembling of hands”. First, the fall-off of attendance at races. Then, the diminished TV viewership (albeit, better this year–Gas Prices?). Then, the lawsuit brought by a NASCAR official for sexual and racial discrimination and unlawful employment termination. Now, the economy, which has affected so many aspects of NASCAR–attendance at races, gas prices for teams traveling here and there, termination of the Nationwide series race in Mexico City in 2009, loss of sponsors–including auto manufacturers of races at a couple of tracks. And the list goes on. Add to it the debacle at the Brickyard (those in the “know” are still writing about it).

So, is the “trembling hand” perched above NASCAR? Is the “house” about to crumble? Or worse, for NASCAR to lose its ability to say it’s the “second most popular sport” in the Usof A?

I don’t agree with “Chicken-licken”–the sky’s not falling–YET. And that’s the view from here. Jon

Posted by at 10:47 AM | Permalink | Comments (1)

Change can be hard for folks. We have so much that has been ingrained into our psyche that
any issue, concept, or new item that challenges our core beliefs poses a threat -- either real or imagined.

Either way they take on importance in our lives.

Changes in NASCAR are no different. As someone who has watched this sport grow for 45 years, change has been the proverbial only constant. And sometimes the changes can shake your loyalty to a person, place, or company in this business.

For example, I remember when Richard Petty 'defected' to Ford for the 1969 season (he had even taken up drag racing, with tragic results, in 1965). And yet the sport survived as it is larger than any one company, brand, or even, dare I say it, person.

So all the Toyota bashing is to be expected. It has happened before to others who supposedly 'buy' wins or maybe even supposedly do something more sinister.

And it won't be the last time.

As a recent Wall Street Journal article indicated only 6% of fans seem to care enough about Toyota's arrival in NASCAR to be angry. Now while that sounds small, it could represent as many as 4.5-5 million fans so I won't easily dismiss that statistic. But I will much more easily dismiss any conspiracy theorists, etc. who see Toyota as an 'invader' or a firm who has no economic impact on our country. Let's look at a few numbers:

* Toyota employs approximately 36,000 US workers
* With a payroll of nearly 3 Billion USD
* Has invested nearly 16 Billion USD in America
* Donated 340 million USD to charities
* And has purchased 28 billion USD of parts from US suppliers

While Toyota's US-based workforce is smaller than either Ford (about 55,000) or GM (about 74,000) let us not lose sight of the fact that neither
GM, Ford, (or Chrysler) employ 100% of the workforce, nor have 100% of their sales, within our borders. So those who worry about the repatriation of profits, lighten up -- at least they have profits.

That's (taking) the (long) view from here.

Michael

PS: I drive a Saturn Aura. (But we also have an older VW made in Mexico).

Posted by at 11:53 AM | Permalink | Comments (0)

Phil Richards of the Indianapolis Star takes an overview of NASCAR's diversity issues. Includes comment from Jon Ackley.

Posted by at 9:17 AM | Permalink | Comments (1)

About a week ago I was reading something — blog, newspaper, online — and there was a “letter to the editor” type of item. The author was criticizing NASCAR for wasting gas, given the current economic situation, energy consumption, and gas prices. The writer’s major contention was the NASCAR race cars were wasting gas and even more important, all the fans were wasting gas traveling to the races. At best, it was a rather short-sighted view of the sport; at the very least, it showed a total lack of understanding of the American consumer/driver.

We know in Richmond that the two NASCAR weekends bring millions of dollars into the economy. NASCAR is indeed a multi-billion dollar industry/sport/entertainment enterprise. But if we were to close down NASCAR, we would have very little effect on gasoline consumption. We’d also have to close down the NFL, MLB, NBA, and all college sporting events because fans have to drive to get to those venues as well. We might then be making some impact on gasoline consumption. But we’d also have to throw in trips to theatres and concerts, as well as our kids’ soccer match or baseball game. We now see the short-sightedness of the writer above.

Why do I even bring this up, you ask? Well, on the way to work this morning I was driving my usual 70 mph on the interstate. I never passed one car but was passed by about 50 in the span of 20 miles. And, almost without exception, every car had ONE DRIVER. So, let’s back off complaining about NASCAR’s wasteful ways; it’s a case of the pot and kettle. And that’s the view from here.

Jon

Posted by at 1:58 PM | Permalink | Comments (0)

Everyone who follows NASCAR, especially Sprint Cup, knows what is meant by the “silly season”—the time when owners, drivers, and sponsors consider what their options are for the coming year(s).

To date, we have Chip Ganassi closing one team, leaving Dario Franchitti (last year’s IndyCars champion) out in the cold (yes, he can drive in Nationwide but is that where he wants to be, especially given the “kiss-and-make-up” with the two open-wheel factions). Then we had Tony Stewart getting his release from JGR (a good move on JGR’s part given Tony’s unhappiness with his performance and the owner’s decision to move to Toyota). Recently, Ryan Newman announced he wouldn’t return to Penske next year (and forget Penske’s problem with ALLTEL since Verizon (soon to take over ALLTEL) isn’t grandfathered in the series).

What’s especially interesting from a business standpoint is how owners, drivers, and sponsors make their decisions — the criteria used. For example, why would Tony give up a great ride and team simply to have half-ownership in a third-tier team? When one makes that decision, there has to be more than ego involved.

And consider Ryan’s departure with, according to him, more options than simply joining his pal Tony.

And consider sponsors: Office Depot to Stewart-Haas, Kobalt possibly taking over the Truck series and Lowe’s perhaps becoming the “official home improvement store” as Home Depot’s contract with NASCAR expires this year.

So as Mike and I prepare for our upcoming “The Business of NASCAR” full-semester course, we have lots of interesting assignments for the students, not the least of which is determining how owners, drivers, and sponsors make multi-million dollar decisions. And that’s the view from here.

Jon

Posted by at 4:42 PM | Permalink | Comments (0)

The Concord Monitor takes a look at the financial standing of Speedway Motorsports Inc. Dr. Pitts offered his perspective.

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Tags: Speedway Motorsports Inc.