NASCAR making money, getting itself back on track
Tony Stewart entered the final race of the 2011 NASCAR season in Homestead, Fla. last November needing a victory to overtake Carl Edwards and capture the season-long Sprint Cup title. A hole in his car’s grille and pit-road problems twice dropped him near the back of the pack. Yet the man known as “Smoke” came roaring back, passing 118 cars and taking the checkered flag, narrowly edging Edwards. Deadlocked in the final standings – a NASCAR first – Stewart took the overall crown thanks to four other victories. It will go down as one of the great performances in racing history.
NASCAR is enjoying a nascent comeback of its own. After a multiyear slide that saw big sponsors and fans abandoning the sport, TV ratings for the season increased 10 percent, attendance at the tracks stabilized and 18 different drivers found the winner’s circle in 2011, one shy of the record. “I’m as optimistic about the business side of this sport as I’ve been in five years,” says Marshall Carlson, president of Hendrick Motorsports, the New York Yankees of the sport.
|In Pictures: NASCAR’s most valuable teams|
Much of the optimism derives from the jump in the television audience. NASCAR is still by some measures the second-most-popular TV sport, after the NFL, but average viewership per race peaked at 8.5 million in 2005, according to Nielsen. Then it slid every year for the next half-decade and didn’t reverse course until last year, when 6.5 million viewers watched each race – a needed return to 2009 levels.
As NASCAR prepared to renegotiate its TV rights pacts with Fox, ESPN and Turner this year (they expire in 2014), it was expected to take a massive haircut on its current eight-year, $4.5 billion agreement. Now insiders think the sport can do better – securing a deal that is flat or only slightly lower. Its position got stronger in January, when NASCAR reacquired the rights to its digital business from Turner, after relinquishing them in 2001. “Social media and digital media will help us develop new fans and connect with our existing fans. It is an area we had to have our entire fingerprints on,” says NASCAR Chief Executive Brian France, whose grandfather founded the sport.
Sponsorships, the lifeblood of NASCAR (75 percent of team revenues are derived from them), are creeping back, too. Familiar names like Crown Royal and Red Bull are gone, while brands like Caterpillar, Home Depot and UPS have cut back. But there’s new blood, including Detroit-based Quicken Loans and 5-Hour Energy. Farmers Insurance is the biggest, committing $800,000 per race for 22 races to Kasey Kahne’s No. 5 car, part of the Hendrick stable. “We’re seeing more sponsor activity than we have in three years,” says Zak Brown, founder and head of JMI, which sells and manages motorsports sponsorships.
Danica Patrick will provide additional buzz. After two seasons in NASCAR’s junior Nationwide series she’ll join the Sprint Cup circuit for 10 races starting with the 54th Daytona 500 on Feb. 26, bringing along big-money sponsor Go Daddy and a fan base that made her the most-searched athlete (male or female) on Yahoo! last year.
A rebound in the economy would be nice, too. Only 138,000 fans turned out for the Brickyard 400 in Indianapolis last year, down from 270,000 in 2007. Races in Brooklyn, Mich., Concord, N.C. and Talladega, Ala. saw drops of at least 50,000 fans during that time. “We are always disproportionately affected,” says France. “Our fans drive farther, stay longer and use more gasoline.”
NASCAR’s plans to entice them to races include “no-duh” ideas like supporting credit cards and wireless phone service at venues. Many tracks have cut capacity and widened seats from 18 to 22 inches. Charlotte Motor Speedway unveiled the world’s largest high-definition video board last year, measuring 200 feet wide and 80 feet high. Announced attendance at most races was, thankfully, flat and not down in 2011 compared with 2010. “NASCAR is engaged in an arms race with other professional sports for the fan dollar, and it had fallen behind these sports in the live-event experience,” says Christian Alfonsi, head of strategic planning at Taylor, which conducted an independent fan-engagement study for NASCAR last year.
Still, loyalty remains strong, a key selling point for sponsors. “You have very passionate fans that are not just involved in the race but the entire drama of NASCAR,” says Mike Linton, chief marketing officer at Farmers. After the last few years NASCAR is hoping more of that drama takes place on, not off, the track.
The most valuable teams:
1. Hendrick Motorsports – $350 million
2. Roush Fenway Racing – $185 million
3. Joe Gibbs Racing – $155 million
4. Richard Childress Racing – $147 million
5. Stewart-Haas Racing – $108 million
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