A lot of people have been talking about the economy and its affects on NASCAR lately. We are certainly guilty, writing on everything from layoffs at the end of the season to poor at track attendance. While the current economic climate is not good, the difficult times could ultimately prove to be beneficial for the sport.
For the last 10 to 15 years NASCAR has experienced massive (and unsustainable) growth on almost every level. Attendance skyrocketed (actually filling some of these massive facilities to capacity), TV ratings hit record levels and sponsorship dollars poured in at almost obscene rates. Just this season Aflac signed a deal with Roush Fenway to sponsor Carl Edwards’ #99 for $26 million per year.
As money becomes tighter and corporations rethink the value of these deals, money is bound to dry up or go elsewhere and sponsorships like the one Roush made with Aflac are going to become very scarce. We are already seeing this with the major manufacturers (they essentially serve as sponsors) who have hit hard times and are pulling back and companies like Texaco/Havoline, Kodak, AAA and the Navy who have decided to leave the sport altogether. It is not that they aren’t spending the same amount of advertising money, it is often times that they just feel it can be used better elsewhere.
Ultimately teams need to realize that the amounts they are asking for are no longer going to be feasible (and/or easy to find). The answer may come in the form of several partial sponsorships or affiliate programs like the one Chip Ganassi Racing runs quite successfully (I believe someone else does this too, but I am drawing a blank at the moment). CGR’s program allows their sponsors an opportunity to sell space as part of a larger marketing deal with corporate partners. This is why you will sometimes see Tums or Polaroid, among others, on Reed Sorenson’s Target car. These deals not only expose new companies to the world of motorsports, it also greatly lessens the burden of sponsorship costs. They are great programs and it is a wonder more teams do not use them.
Along with the massive growth of the sport came increasing numbers of well paid team members. It is not unheard of to have guys in their early 20s making very good money. I know of pit crew members on good teams that are making six-figures (this obviously is not the case across the board). That being said many of these teams need to evaluate the worth of some team members. Owners are going to need to start running their teams more efficiently; eliminating redundancy and putting increased importance on multiple job skills. This is a business after all.
Likewise, NASCAR is arguably not doing anything to help control costs. The COT was NASCAR’s great cost saving measure, that well, has saved no one anything. Ultimately it added a greater burden on the teams for not just building the car, but also for testing and for research and development. A brand new product can not be perfected immediately. Recently though NASCAR has expressed concerns over the current testing policy saying that it could become a burden for teams of every size. Things like this provide hope for the non-mega teams who can not keep up with the runaway costs.
Ultimately I believe the sport will contract. Likely the next season or two will not be as prospurous as the last several and teams will probably fold, leaving familiar faces without rides. Everyone is going to have to cut back and waste is going to have to be eliminated. All that being said, I believe it will make the sport better. Every time NASCAR has faced economic adversity in the past they have overcome it and have become better as a result. Perhaps we can get back to the basics and what ultimately is most important: the racing and the fans.
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on Oct 31st, 2008 at 5:54 am
Oh, the ebb and tide of the racing cycle. Just for kicks, let’s pretend NASCAR manadated a claim rule (like a dirt track enduro series might have) where, for a price, the winner’s car can be bought by any team finishing in the top 10 (keeping a start-n-park team from entering junk only for the rights to buy good stuff). How much would teams spend on a car they may lose (oh God, sounds like Pinks-arrrgh!)? Now….I hate spec series, but isn’t the Car of Tomorrow (today?) intended to cut cost and level the playing field. Heck let’s even say crew members go “with” the car. By the end of the season, everyone gets to know everyone else!
on Oct 31st, 2008 at 9:52 am
The people who authorize the big numbers for NA$CAR sponsorships, like to look smart.
How smart would it look to be jumping into a sport with declining numbers, both live, & the all important TV ratings. On top of that in a sport, run by a legacy, who seems to continue showing a disconnect with reality.
Hello Brian, your racing stinks. 450 miles of boredom, 50 miles of actual racing. Your so called chase stinks, & you seem to still have your head in the sand, ….or somewhere else.
on Nov 1st, 2008 at 12:24 pm
“The people who authorize the big numbers for NA$CAR sponsorships, like to look smart.”
What about you? Your post doesn’t look smart, it just lashes out at…everything, using the current economic downturn as an excuse to rant, rather than to examine what is and isn’t working. The actual post above has a pretty good opinion on NASCAR’s unsustainable growth over the last few years, and what the NASCAR community needs to do to address problems (for example guarantee that the COT actually does save the teams money, and take a hard look at team compensation in a time of decline).
Very much like the stock market, which couldn’t keep climbing forever, NASCAR has hit a glass ceiling for the time being. But just like the stock market, which fundamentally works (people “just” abused it), now isn’t the time to doubt everything about NASCAR and start another ill-informed rant about how much the Chase sucks. Now is the time to position the sport so that it can survive the hard economic times, and prepare it for another surge when consumer spending picks up again.
If we didn’t have the Chase, more people would come to the tracks right now and switch on the TVs? BS. (And yes, the racing could be better. But it could always be better. There have been some great finishes this season, and some boring ones.)
on Nov 3rd, 2008 at 12:22 pm
There is no doubt that NASCAR is going to have to go through a transition phase to adjust to the current economy. Just like Formula One Racing, NASCAR will have to bite the bullet, get mean and lean and ultimately survive. Both the fans and the teams will be better off in the long run.