SHEDDING LIGHT ON ISSUES IN SPORTS BUSINESS ONE POST AT A TIME.

For decades, NASCAR has experienced consistent growth – at least since the 80s – and is often the subject of debates over which sports property enjoys the most fan loyalty.  No other sport in America makes an entire weekend or week-long affair of its events and attracts more people to its venues; in fact, a NASCAR venue can seat 75,000 fans (such as the Chicagoland Speedway in Joliet, IL) and Daytona International Speedway easily accommodates over 165,000.  Since NASCAR tracks have such large capacities, the property and its tracks must work that much harder to fill every seat and should there be empty sections at the start of a race (especially those that are televised), each vacant space represents one more bit of evidence of NASCAR’s somewhat troubling position in what is referred to in sports marketing as the “sports brand life cycle.”  Just as the league slowly slides from maturity into decline, league sponsors, television networks like Fox, and fans are wondering what the league is doing to turn the tide and begin a new phase of growth and prosperity.  This week’s article will focus on some of the problems that have plagued NASCAR over the past 5-10 years and a few approaches the league is taking to revive its anemic revenue figures, reassure its sponsors of the league’s viability, and make fans (NASCAR’s greatest asset) an integral part of the remedy.

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“Step Up, We’re Waiting For You”

Volume 12, Issue 40 of Sports Business Journal features an in-depth article on how Brian France is changing his management style in order to revive NASCAR.  Though the words “step up, we’re waiting for you” belong to one motorsports executive, many stakeholders share this sentiment, according to Michael Smith’s excellent article.  Sponsors and partners do not question France’s ability; rather, they question his resolve.  Brian France’s father, Bill France Jr., was a lively and loquacious manager and leader.  He attended just about every race while he ran the family business Bill France Sr. started on the sands of Daytona in the 1940s.  Brian France is seen more as a “behind-the-scenes” leader who prefers to keep a low profile and does not actively seek out the limelight.  According to Smith’s article on page 15, Brian France was taken aback when it was suggested that he is not a “take-charge leader in his six-plus years as CEO.”  With vigor, France replied, “If you’re going to compare me to somebody else, my father or whoever, I’m not going to be somebody else… I have to manage in a way that fits my style and approach.  Not everybody is going to agree with that.”  Unjustly, comparisons to his father and grandfather hurt France’s image in the eyes of team owners, sponsors, and other executives.

To stakeholders, France seemed to be losing interest in NASCAR when it appeared that he may have been looking to head an NFL team roughly five years ago, Smith writes.  He attends only about half of the season’s races and is not very visible when he does.  France contends that NASCAR is very different today from the league 15 years ago when it was only a 100-man operation.  In fact, NASCAR currently employs over 1,700 people and France’s responsibilities outnumber those his father was burdened with as CEO.  Nevertheless, one wonders if better communication regarding the evolution of NASCAR’s culture would have helped France and the stakeholders better understand each other’s situations.

Brian France has done exceptionally well building and developing relationships between NASCAR and primary sponsors and partners. It would be unfair to ignore the fact that only months before he became CEO, France played a key role in the title sponsor negotiation with Nextel (and eventually Sprint) worth $750 million over 10 years, according to Smith’s article.  Also, Michael Smith writes that in 2005, Sirius Satellite Radio agreed to a five-year, $107.5 million deal making it the “official satellite radio partner of NASCAR” beginning in 2007.  The list goes on and on, and though France is partly to blame for the slow progress the league is making in improving its numbers, one cannot dismiss other marco-environmental factors such as the weak economy and new technology.

Before the start of the 2010 season, France’s mission involved meeting with every track management team and broadcast partners to address concerns and devise solutions that would be implemented throughout the season.  Weak attendance at races is a key issue and the solution lay with the fans.  He successfully identified what ails NASCAR and formed plans to bring it back to life, but he did not do it alone.

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How the “Car of Tomorrow” Exacerbated Some of the Problems NASCAR Faces Today

Since NASCAR adopted the so-called “car of tomorrow,” fans and drivers alike have complained that races are less competitive.  Part of the reason it was developed was to address safety issues that largely stemmed from the tragic death of the late great Dale Earnhardt.  Ironically, his son and NASCAR’s most popular driver, Dale Earnhardt Jr., is one of the many drivers who decries the car of tomorrow.  Surely, while every driver including “Jr.” appreciates a safer machine, he points out that it drives very differently from the previous designs and requires the driver to nearly relearn how to race altogether.  Earnhardt and several others feel that NASCAR became less competitive since the introduction of the new machine, but don’t tell that to back-to-back-to-back-to-back and current NASCAR Sprint Cup Champion Jimmy Johnson!  There is no disputing that Johnson worked for every single title in his historic run, but Earnhardt and company may have a point.  Still, it is hard to believe that NASCAR is hurting while Johnson is setting records year after year.  It has been postulated that the “car of tomorrow” and rule changes that favor safety over physicality – such as the elimination of the bump-draft in recent years – are partly to blame for decreased interest in the sport that has enjoyed the nearly unbreakable loyalty of – arguably – the world’s greatest sports fans.

One more thing… the “car of tomorrow” has also left merchandise such as clothing and die-cast toys featuring the previous design in many a retailer’s inventory collecting dust and languishing in obsolescence.  This is another proverbial “hole in the ship’s hull.”

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Conclusions: NASCAR’s Solutions

Decreased interest and participation has led to decreased sponsorship revenue over the past 5-10 years that has been catalyzed and represented by – among other factors including a difficult economy – a thinning of the crowds that attend NASCAR events and lackluster TV ratings.  Though the property has been slow to act over the last 3-5 years, it has recently taken several steps to address such issues as “blandness” and the perceived decline in competitiveness.   Brian France made a personal appearance on the pre-race show on Fox before this year’s Daytona 500 and reassured fans that NASCAR is a “contact sport;” essentially, his presence on TV and subsequent bold assertion certainly answered the call-to-arms from NASCAR stakeholders for the CEO to be more visible and reignited a passion in the hearts of many a fan.  He also sits in on more team meetings and communicates more openly with teams, sponsors, and partners.  According to Smith on page 16, team owner and driver Michael Waltrip says that at meetings France “is the first dude to speak… and that’s good.  He’s the one we want to hear from.”

Rules changes such as the reintroduction of the bump-draft have revived the physical nature of the sport and new drivers like Juan Pablo Montoya and Danica Patrick have increased and diversified NASCAR’s fan base.  Also, NASCAR’s broadcast partners have standardized the start-times of most of their telecasts in order to conform to the pattern established by NFL coverage (Sunday at Noon EST usually signals the beginning of NFL game coverage) so that viewers easily remember that race coverage starts at the same time as NFL programming just a couple of months before.  NASCAR has improved its business-to-business efforts and added more sponsored “fan zones” at tracks like Daytona to generate more revenue and enhance the fan experience at events.  Finally, some of NASCAR’s efforts to revitalize itself come from interviews with actual fans – focus groups consisting of NASCAR fans that represent different demographics and psychographics yielded perspectives and ideas that would help the league out of its slump.

NASCAR’s situation is definitely not bleak.  The league needs a new plan, sure, but it is far from beaten.  Every property experiences rises and falls in its life cycle, but some like the USFL have died off.  I have the utmost confidence that NASCAR will be just fine, though.  It is in capable hands.

So, let’s watch closely as NASCAR deals with these and all of its challenges throughout the course of the season. When you watch a race, look for empty sections in the stands and see if you can identify fluctuations in attendance.  Hopefully, tracks will sell more tickets this year than last.  Also, keep an eye out for on-screen ads.  NASCAR has stepped up efforts to sell these ads in order to increase revenue.  So far, the season does not look too bad… in 2010, the Daytona 500, for instance, posted its highest TV ratings in years.

Cam Suarez-Bitar.

Thank you for your continued readership.  I hope you enjoyed this week’s article and if you have any questions or comments, please feel free to share them.