Looks like F1 is not the only race series in trouble. Maybe is they had learned to also turn right.............. NASCAR's Trouble At The Track
02.09.09, 6:00 PM ET
It was NASCAR's "Heidi Bowl" moment, and no one cared. On Nov. 9, with 34 laps to go in a late-season race at Phoenix International Raceway, ABC pre-empted its live national coverage of the event for the umpteenth airing of its cheesy reality show America's Funniest Home Videos
Forty years earlier, NBC tried the same stunt when it cut to a made-for-TV version of Heidi
from an incredible last-minute comeback by the Oakland Raiders over the New York Jets. Irate East Coast viewers fried the network's switchboard in protest. But when NASCAR was snubbed by ABC, only a few bloggers and columnists seemed to care.
The collective shrug is just the latest sign that NASCAR has hit a wall. Though still America's second-most-watched sport after football--this season's 51st running of the Daytona 500 is expected to pull in 17 million viewers--NASCAR is no longer the unstoppable marketing phenomenon it used to be.
The sport is suffering declines in sponsorship, attendance and financial stability, and the roots of the problem go a lot deeper than the lousy economy. Ratings are falling more rapidly than those of other sports. Racing fans, many of whom can barely afford the steep ticket prices at the track, are bored by the lack of drama when they get there. Several of the biggest drivers are look-alike, cleanshaven white guys in tracksuits, and their cars, which now hew to the same technical specifications, are equally cookie-cutter.
Races last season witnessed only two lead changes per caution (the boring slow laps led by the pace car), compared with three in the 1990s and four in the dirt-track 1970s. Last year one out of four races was won by the driver starting the race in the pole position, up from one out of 10 earlier this decade.
NASCAR's regular-season television ratings have fallen 21% since their peak in 2005, a reversal from the prior five years, when they vastly outgrew all other professional sports in viewership. While ad spending on National Football League broadcasts was up 4% from 2005 to $2 billion, spending fell 16% on NASCAR's premier Sprint Cup circuit last year to $351 million, according to Nielsen estimates.
Attendance at the track fell for a third straight year from an average of 130,000 per race to 118,000, according to NASCAR estimates. To fight the decline, International Speedway, the biggest track owner in the U.S., has slashed prices on some 15% of its seats by more than 40% in advance of the upcoming Daytona 500.
Team owners and managers say it is time for a sweeping overhaul of the sport, which has been tightly controlled for 60 years by the France family. The Frances' ownership of the NASCAR sanctioning body gives it negotiating power over all television rights and licensing deals and wide latitude to enforce race-day rules. Thanks in part to a $4.5 billion, eight-year broadcast deal signed in 2005, the sanctioning body grosses between $250 million and $300 million a year, at least $50 million more than the richest racing team. (See "The Most Valuable Teams In NASCAR."
Says the three-time reigning Sprint Cup champion Jimmie Johnson
: "The best thing to be is NASCAR, the second best a driver and the last thing a team owner."
Team owners assume the lion's share of the risk by investing heavily in people and equipment but get a pittance from broadcast revenue and none of the ticket sales, which go mainly to the track owners. It can cost $10 million to recruit a winning driver and $25 million a year to race one car. Most teams raced two or three last year, and 90% of their operating budget came from corporate sponsors. The rich sponsorship deals signed during the fat years earlier this decade are expiring, and new sponsor money is drying up. Domino's Pizza, a primary sponsor of Michael Waltrip Racing, and Eastman Kodak, a sponsor of Penske Racing, threw in the towel after last season. Also gone from teams are Coors Light and Tide.
Sponsors still committed to the sport, such as Caterpillar, Diageo and UPS, are flocking to winning teams or spending their money at the track. Winning brings in money, and the money funds the ability to win. The haves are pulling away from the have-nots. The four richest racing teams filled all 12 positions in the sport's Chase for the Cup playoff format last year. Most of the 43 drivers at this weekend's Daytona 500 will start their engines knowing they have a slim chance of cracking the top 10. Some won't even bother to complete the race.
Teams are folding, merging or taking bailouts from plutocrats. Seven-time NASCAR champion Richard Petty sold his Petty Enterprises team last year to the private equity firm Boston Ventures because he could not raise enough sponsor money. (Boston Ventures recently sold Petty's name to the team owned by multimillionaire businessman George Gillett.) In 2007 Jack Roush sold half of his team to Fenway Sports Group, a firm controlled by the company that owns the Boston Red Sox
. Morgan-McLure Motorsports shut its doors last year after 24 years on the circuit because of a lack of sponsors. Ditto Bill Davis Racing.
Many team owners are clamoring to see the sport turn into a franchise system, similar to professional football and baseball. There would be a fixed number of teams, maybe a dozen or so, with three to four cars each. All drivers would automatically qualify to race each Sunday so that corporations would know their brand would be represented at each race. United Parcel Service was miffed in 2007 when it paid an estimated $20 million to sponsor a driver who didn't qualify in seven out of 36 races.
Team owners would take an equity stake in the sanctioning body, share more of the national broadcast and sponsorship revenue and could borrow, as football and baseball team owners do, against that stake to invest in the drivers and technology that can make their teams better and the sport more exciting. NASCAR has been trying to expand internationally, but some teams can't afford to travel to California, let alone Mexico or Canada.
"It's not NASCAR's job to tell us what we can spend and how to run our business," says Richard Petty, who also sees franchising as a great way to foster fan loyalty. "The Green Bay Packers may lose their quarterback," says Petty. "That doesn't mean they lose their fans." Says Ty Norris, general manager of Michael Waltrip Racing, "Franchising is critical and should become one of the top issues for NASCAR."
Standing firmly in the way of that idea is the France family, which built NASCAR from a Southern backwater circuit into a $2 billion marketing phenomenon in two generations. The man in charge these days is Brian Z. France, the 45-year-old grandson of NASCAR founder William France Sr.
Brian France became chief executive of NASCAR in 2003 and, after the death of his father, Bill Jr., in 2007, inherited an 18.75% stake in the sanctioning body, worth perhaps $300 million. His sister Lesa France Kennedy owns another 18.75%, and his uncle James C. France 36%. Uncle Jim is also chief executive of International Speedway, the sport's biggest owner and operator of racetracks, with a profit of $135 million last year on revenue of $777 million.
For years rival track owners have accused the Frances of blocking other tracks from getting lucrative race dates. An antitrust suit against International Speedway was thrown out a year ago by a U.S. District Court judge in Kentucky.
Brian France says his opposition to franchising stems from something loftier than self-interest. "We are different than stick-and-ball sports," he says. To him, franchising is a sure way to kill NASCAR's founding notion (a myth at this point) that any driver can show up at the track and win on any given Sunday.
"A franchise system would likely create a system that values a franchise more than the need to perform each week at the racetrack," says Brian France. This of course runs counter to everything NASCAR is based upon."
Says H.A. (Humpy) Wheeler, former president of Lowe's Motor Speedway in Concord, N.C., "Franchising is something that's been kicked around for a while. NASCAR doesn't like the idea. It's a control issue."
To preserve the illusion of a track open to all comers, France has made several moves to support smaller one- and two-car teams. Team owner George Gillett is not impressed. "I've seen no evidence at all, none, that having four-car teams has affected in any way negatively the quality of racing," Gillett says.
Since Brian France took over, NASCAR has mandated changes designed to make the sport safer and more fan-friendly. Drivers are required to spend more time signing autographs before races. The sport is definitely safer. There have been no fatalities since Dale Earnhardt Sr.'s in 2001. Losing Speed NASCAR's national TV ratings have stumbled badly the past three years.
But many of Brian France's other reforms have gone down badly and underscore how much team owners feel that he is out of touch. Whereas Brian's father, Bill Jr., was comfortable working on an engine and organized an annual fishing junket with team owners, Brian France is more at home cutting marketing deals in his office atop midtown Manhattan's Park Avenue Tower.
Bill's biggest real estate purchase was a $600,000 house bought in Daytona Beach, Fla., in 1999. Brian just bought a $10.7 million pad on Central Park West in New York City. He also created NASCAR's new green initiative, which includes a hybrid pace car. Admirable, but saving the environment is not exactly a central value in the NASCAR credo.
Since taking over NASCAR in 2003, France has also found time to operate a marketing consultancy he co-founded, Brand Sense Partners in Los Angeles, that counts among its achievements launching Britney Spears' line of perfume. Not exactly grease monkey stuff.
The most criticized change at NASCAR under Brian France has been the Car of Tomorrow program, which required teams to race cars with identical specifications. The program was meant to eliminate the ability of bigger, wealthier teams to gain advantage by bankrolling separate cars suited for different tracks. Some teams owned up to 20 variations for each car they raced.
Despite its good intentions, the Car of Tomorrow program got a hostile reception. Team owners saw the $100 million upfront cost (sportwide) of building all-new race cars as an unfair burden, even if it produced long-term savings by reducing the number of variations. Drivers were outspoken about the new cars' inferior handling and aerodynamics. The new cars have also infuriated many die-hard NASCAR fans because the amount of creativity and technology that makes each car different has been reduced.
Similar unintended consequences might befall NASCAR's more recent move to limit testing time at racetracks. NASCAR says the limits will reduce costs for smaller teams, but they also favor wealthier teams that can afford to build sophisticated garages off the track. Hendrick Motorsports has a 600,000-square-foot garage in Charlotte, N.C., with a $2.2 million dynamometer to test engines and a 3-D lithography printer that can spit out custom part designs.
With NASCAR's growth days waning, the Frances have to face some tough choices. They can give up control and share more of the TV and licensing money by re-establishing NASCAR in the image of the wildly successful NFL. Or they can hang on to the family business, and tinker on the margins to keep racing somewhat competitive.
Jimmie Johnson, a cleanshaven racer in a cookie-cutter car who has now won the Sprint Cup three cookie-cutter years in a row, knows this better than anyone. "In speaking with NASCAR and being around them, they do care. At the same time, nothing's changed in 60 years to create value for team owners."