The View from Here: The Business of NASCAR

Scary times are ahead as the US dollar declines and the economy goes with it. Almost all businesses are feeling the pain of the economy going into arrest, and NASCAR is a business that is no different. Retail markets are drying up, and in response, big businesses that double as race sponsors are starting to tighten their belts to insulate their assets. On the NASCAR circuit, the drivers and their teams are the ones feeling the impact as sponsors cut back heavily on their usual spending and advertising.
NASCAR may be in trouble as its main source of income, seventy-five percent of its budget, comes from sponsorship dollars. Compared to even this time last year, large companies that are regulars in the NASCAR world have considered cut backs if not already cutting their spending. Current NASCAR stakeholders worry that the near future may bring widespread layoffs throughout its business structure, and even fielding all 43 cars may become an issue. Drivers are implementing split sponsorships to cope with the changing times and to pay their incurred expenses. “Tip to tail” sponsorship is becoming a thing of the past as most cars that race now are littered with logos from several sponsors, and almost all space on the cars are prime sales for advertisers. Even popular drivers such as Tony Stewart are having trouble finding funding, not just for themselves, but for their teammates.
Drivers are also acquiring sponsors for only a certain number of races per season, instead of the entire season, and are now becoming pressured to constantly find cash investors. The hardest hit are those who are independent car owners that solely depend on sponsorship.
Smaller sponsors are now starting to join NASCAR, and are creating a new stream of revenue that is helping relieve financial plight. But if most of the original larger investors pull out, will these new investors be enough to support the NASCAR business? Outside of NASCAR, how are other motorsports being affected by weakening economies?
Recently the Canadian Grand Prix has been dropped from the 2009 schedule, cancelling all races in North America, and the French Grand Prix has been cancelled as well. It is not only the US that is struggling at this current time; rather, declining economies, increased operating cost and reduced sponsorship are hurting NASCAR and even greater, motorsports as a whole.
And that’s the view from here.
CJ