Rain.
When asked recently about the NASCAR’s biggest challenge, chairman Brian France blamed woes on the rain.
Let’s give France the benefit of the doubt that he dodged the question — and an opportunity to explain how he will tackle an important issue — to avoid creating a negative storyline.
If NASCAR had no serious issues it actually could control, then it would start 2016 with a new sponsor for its biggest series. It wouldn’t experiment with a “caution clock” in its truck series. Its teams wouldn’t need a new business model and tracks wouldn’t rip out seats no longer sellable.
When looking at the state of the sport, look no further than the Sprint Cup logo. Sprint announced in December 2014 that it would exit, effective after 2016, and no company came running to the table with a check of $50 million or more.
It’s a buyer’s market and the fact NASCAR doesn’t yet have a sponsor for 2017 shouldn’t cause grave concern, but it does show NASCAR needs more than an umbrella to weather storms in an industry that grapples with a sanctioning body, tracks, teams and drivers often competing against each other for the same fan and corporate dollar.
Creating sponsor value remains the foundation-stabilizing, unsexy issue that haunts the industry. In addition to NASCAR losing Sprint after this season, teams have lost sponsors such as Go Daddy, Aaron’s, AARP, The Home Depot and Ortho over the past couple years. While some companies have increased their spend, including Jimmy John’s and Dollar General, NASCAR must find ways to make remaining in the sport a no-brainer for corporate executives.
France and the NASCAR industry deserve credit for trying new things and new approaches. After seven years of declining ticket sales (by revenue) for the two main track operators, overall admissions revenue for all racing events at International Speedway Corp.’s 12 tracks went up by $466,000 in 2015 and Speedway Motorsports, which hasn’t announced its year-end earnings, was up a tick going into October.
Those tracks, which continue to remove apparently unsellable seats in hopes of creating more demand early in the ticket-selling process, have also benefited from more creative promotions as well as possibly the new Chase format. Then again, Jeff Gordon‘s final season might have created enough of a boost that the 2015 increase was just a tease.
Opposite of ticket sales, the raw television numbers don’t paint a pretty picture beyond the 46 percent increase in the money the networks will pay NASCAR as part of the new 10-year deal that began in 2015. The money is good: ISC took in $228.4 million from television last year, compared to total ticket sales of $130 million.
NASCAR’s television audience dropped significantly from an average of 5.3 million watching a race and from 62 million unique viewers in 2014 to 5.1 and 54 million, according to ISC annual reports. That slide, possibly attributable to several rain delays, didn’t just start with the TV network change — NASCAR races on cable moved from ESPN and TNT to Fox Sports 1 and NBC Sports Network — as NASCAR averaged 5.8 million a race and 70 million unique viewers in 2013.
With the audience drops, team sponsorships could be worth less. NASCAR and tracks can make up any drop in sponsorship revenue with what they earn from the television package, which increases at a rate of 3-4 percent a year.
Teams get only25 percent of the deal (tracks get 65 percent, NASCAR 10 percent) and any impact on sponsorship, about 70 percent of team revenues, hits them the hardest.
That television contract also strangles the NASCAR schedule, keeping it at 38 major events. The guaranteed money to tracks means that NASCAR can’t pull a race from one of the publicly traded track companies because taking away an estimated $10-13 million — without at least a plan to mitigate the lost revenue — would create a devastating impact on their stock price.
The inability to change venues has created a stale NASCAR schedule.
So how does NASCAR generate excitement?
Daytona International Speedway just completed a $400 million grandstand transformation that could set a new standard for race tracks. Huge concourses big enough for interactive displays as well as areas to sit and eat — and avoid the rain — could provide a blueprint for future grandstand renovation. Other tracks, though, might not generate the corporate revenue of a Daytona throughout the year to cover a big price tag.
On the track, new owners have struggled, so fans shouldn’t view NASCAR potentially going to 40-car fields as a sad commentary on the sport.
Underfunded Front Row Motorsports has one win and nine top-10s in 668 starts. Haas CNC posted just one top-5 in 284 starts before Gene Haas gave half the team to Tony Stewart. Nine recent teams considered underfunded (including now-defunct Swan, Parsons and Hillman teams), have 20 top-10 finishes in 2,205 starts.
With team owners likely having a new business model — the “charter” system mimics a taxi medallion system in which teams can sell the license they have to field a car and earn a guaranteed amount of purse — a drivers union likely will follow.
NASCAR will have to proceed delicately in trying to grant driver wishes without giving up authority to rule with an iron fist.
As France correctly has said, NASCAR has improved communications with owners and drivers. They truly seem to have more productive discussion and debate. With Brent Dewar running the business side and Steve O’Donnell heading competition, they must digest what the drivers say and give valid reasons why they make decisions to keep the industry’s trust.
Dewar and O’Donnell have the challenge of trying to make changes to remain relevant with society while also not alienating traditional fans. They must continue the battle to remain transparent and consistent in decisions in a sport ripe with hard-to-understand technical rules and serious judgment calls. The new pit-road officiating system implemented in 2015 worked flawlessly, a good step in that arena.
The biggest challenge comes as they strive for good racing. NASCAR took a step backward with its 2015 aero package that reduced horsepower, but the industry sees potential in a significantly reduced downforce package in 2016. Team engineers work furiously to regain the downforce lost, but at least drivers enter 2016 with optimism that their talent will play a more integral role.
Optimism also comes with NASCAR’s best rookie class in years, one that includes Chase Elliott, Ryan Blaney, Chris Buescher and Brian Scott. They won in NASCAR’s developmental series, which still remain too much pay-to-play leagues with a huge disparity between the haves and have-nots that doesn’t give the underdog a realistic shot.
So the answer France should have given when asked about the sport’s biggest challenges: NASCAR must add a Cup entitlement sponsor that equally helps teams, tracks and the sponsor itself. NASCAR desperately needs to add another manufacturer that could create a stronger base of teams. NASCAR must have a product in which drivers have more options than just knocking someone out of the way in order to pass and not allow its Chase to become the Wild, Wild West again.
Only then will it see more sunny skies.
