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NASCAR faces financial woes
Question of the Day
A scuffling economy and the struggles of the auto sector have put a dent in NASCAR’s growth. In response, the racing body is aggressively looking for ways to cut costs.
“It’s very difficult. It’s on our whole industry,” NASCAR CEO Brian France said. “And there are always some unfunded teams. Now, that’s not anything new. One of my goals and one of our goals is to have a system where you don’t need $26 million to put a competitive team forward. So that is one of the things NASCAR has a lot of influence on and we’re working all the time to figure that out.”
NASCAR has been buoyed by sponsorship deals that were in place before the economic slowdown, and its television contracts bring in an average of $600 million annually through 2014. But at the team level, sponsorships have dropped off, leaving some teams looking for a way to stay alive into next season. Several teams, including Petty Enterprises and Dale Earnhardt Inc., have discussed mergers that could lead to fewer cars on the track.
“Ultimately the sponsors are going to look to the teams that perform well,” driver Denny Hamlin said. “If it kind of gets where the smaller teams can’t do it, it’s going to be tough for them to go out there and race with the guys that have four cars each and every week.”
NASCAR is uniquely affected by the economy because longtime supporters General Motors, Chrysler and Ford are facing unprecedented financial woes. While the automakers are not expected to pull out of NASCAR completely, they could reduce their support by millions of dollars.
“We have every intention of them being a big part of the sport in the future,” France said. “That’s why we’re going to do everything we can to help them get through a difficult business cycle.”
Many teams are expected to lay off employees after Sunday’s season finale at Homestead-Miami Speedway. Meanwhile, NASCAR officials are expected to spend the offseason looking for ways to reduce the amount of money needed to run a team. For example, NASCAR is reviewing a proposal to eliminate or reduce testing before races. Officials said moving to the Car of Tomorrow this season also was a step toward cost-containment.
France said the sagging economy has placed pressure on less successful drivers because sponsors are moving to teams that are winning. Caterpillar will switch from Bill Davis Racing to Richard Childress Racing next year; UPS will switch from Michael Waltrip Racing to Roush Racing.
“By talking to each and every one of them who are having sponsorship difficulties, they acknowledge it’s two-front,” France said. “It is definitely the economy. There are not as many companies who are putting big marketing bets down today as there were 12 months ago. And then most of them would say, ‘Hey, I’ve got to get my performance up to make myself more attractive.’”
NASCAR does not release attendance figures, but financial statements from International Speedway Corporation, which owns 12 tracks, said that through Aug. 31, admissions revenue from all events was down about 2 percent from the first eight months of 2007. Fellow track operator Speedway Motorsports Inc. said admissions revenue rose 11 percent during the first nine months of this year.
The company credited most of that rise, however, to the acquisition of New Hampshire Motor Speedway, which held four events, and new events in Bristol, Va., and Lowe’s Motor Speedway outside Charlotte, N.C. Races in Bristol, Richmond, New Hampshire and a few others managed to draw near-sellouts. Other tracks, including those in Martinsville, Va., and Atlanta, have seen their stands only two-thirds full.
“Certainly in [some] markets, attendance has definitely suffered,” France said. “I equate that somewhat to high fuel prices as well. It’s not just a tough economy, but it’s a combination of those things.”
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